	Insufficient Invoice Review and Approval Process Increased FBI’s Vulnerability to Payment of Unallowable Contractor Costs

FBI’s review and approval process for Trilogy contractor invoices, which  was carried out by a review team consisting of officials from FBI, GSA,  and Mitretek, did not provide an adequate basis for verifying that goods  and services billed were actually received by FBI or that payments were  for allowable costs. We identified about $10.1 million in  questionable contractor costs paid by FBI. These costs included payments  for first-class travel and other excessive airfare costs, incorrect billings for  overtime hours worked, potentially overcharged labor rates, and other  questionable costs. Given FBI’s poor control environment over invoice  payments and the fact that we reviewed only selected FBI payments to  Trilogy contractors, other questionable costs may have been paid that  have not been identified. Major Lapses in Accountability Resulted in Millions of Dollars of Missing Trilogy Equipment

Our audit also disclosed that FBI did not adequately maintain  accountability for equipment purchased for the Trilogy project. Consequently, we found that FBI could not locate over 1,200 assets  purchased with Trilogy funds, which we valued at approximately   $7.6 million. These weaknesses resulted in the  payment of millions of dollars of questionable contractor costs, which may  have unnecessarily increased the overall cost of the project. Unless FBI  strengthens its controls over contractor payments, its ability to properly  control the costs of future projects involving contractors, including its new  Sentinel project, will be seriously compromised. Further, weaknesses in  FBI’s controls over the equipment acquired for Trilogy resulted in millions  of dollars in missing equipment and call into question FBI’s ability to  adequately safeguard its equipment, as well as confidential and sensitive  information that could be accessed through that equipment from  unauthorized use. It also includes 12  recommendations to help improve FBI’s accountability for assets. FBI also  provided additional information related to Trilogy assets we identified as  missing.
Why GAO Did This Study

The Trilogy project--initiated in 2001--is the Federal Bureau of Investigation's (FBI) largest information technology (IT) upgrade to date. While ultimately successful in providing updated IT infrastructure and systems, Trilogy was not a success with regard to upgrading FBI's investigative applications. Further, the project was plagued with missed milestones and escalating costs, which eventually totaled nearly $537 million. This testimony focuses on (1) the internal controls over payments to contractors, (2) payments of questionable contractor costs, and (3) FBI's accountability for assets purchased with Trilogy project funds.

What GAO Found

FBI's review and approval process for Trilogy contractor invoices, which included a review role for GSA as contracting agency, did not provide an adequate basis for verifying that goods and services billed were actually received and that the amounts billed were appropriate, leaving FBI highly vulnerable to payments of unallowable costs. This vulnerability is demonstrated by FBI's payment of about $10.1 million in questionable contractor costs we identified using data mining, document analysis, and other forensic auditing techniques. These costs included first-class travel and other excessive airfare costs, incorrect charges for overtime hours, potentially overcharged labor rates, and charges for which the contractors could not provide adequate supporting documentation to substantiate the costs purportedly incurred. FBI also failed to establish controls to maintain accountability over equipment purchased for the Trilogy project. These control lapses resulted in more than 1,200 missing pieces of equipment valued at approximately $7.6 million that GAO identified as part of its review. Given the poor control environment and the fact that GAO reviewed only selected FBI payments to Trilogy contractors, other questionable contractor costs may have been paid that have not been identified. If these control weaknesses go uncorrected, future contracts, including those related to Sentinel--FBI's new electronic information management system initiative--will be greatly exposed to improper payments. In addition, the lack of accountability for Trilogy equipment calls into question FBI's ability to adequately safeguard its existing assets as well as those it may acquire in the future.