United States Government Accountability Office

GAO Testimony 

Before the Committee on the Judiciary, 

U.S. Senate

FEDERAL BUREAU OF 

INVESTIGATION 

Weak Controls over Trilogy 

Project Led to Payment of 

Questionable Contractor 

Costs and Missing Assets 

Statement of Linda M. Calbom, Director 

Financial Management and Assurance 

For Release on Delivery

Expected at 9:30 a.m. EDT

Tuesday, May 2, 2006 

 

GAO-06-698T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 2, 2006

FEDERAL BUREAU OF INVESTIGATION

Weak Controls over Trilogy Project Led to 

Payment of Questionable Contractor 

Costs and Missing Assets 

Highlights of GAO-06-698T, a testimony 

before the Committee on the Judiciary, 

U.S. Senate 

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 Recommends

GAO’s related report (GAO-06-306)

makes 27 recommendations to help

improve (1) FBI’s and the General 

Services Administration’s (GSA) 

controls over their invoice review 

and approval processes and to 

address questionable billing issues

and (2) FBI’s accountability for 

assets. FBI concurred with GAO’s

recommendations. GSA accepted

the recommendations but 

expressed concern with some of 

the findings and one

recommendation. GAO reaffirms its 

position on all of its findings and 

recommendations. 

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. The table below 

summarizes questionable contractor costs and missing assets that GAO 

identified. 

Questionable Costs and Missing Assets

Dollars in thousands

Issues identified Amount

First-class travel $20.0

Excessive air travel costs 49.8

Excess overtime charges 400.0

Potential overcharging of labor rates 2,100.0

Inadequately supported subcontractor labor costs 1,957.9

Inadequately supported other direct costs 5,508.3

Duplicate payment of subcontractor labor invoice 26.3

Total questionable costs $10,062.3

1,205 pieces of missing equipment $7,607.1

Source: GAO.

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. 

www.gao.gov/cgi-bin/getrpt?GAO-06-698T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Linda M. 

Calbom at (202) 512-9508 or 

calboml@gao.gov. 
Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to discuss the results of our audit of the 

Federal Bureau of Investigation’s (FBI) internal controls over contract 

payments related to the Trilogy project and safeguarding assets purchased

with Trilogy funds. Our recently issued report,1

 developed at the request of 

this committee, identifies weaknesses in FBI’s ability to establish and 

implement controls that reasonably ensure, among other things, that 

goods and services billed were actually received and that the amounts 

billed were appropriate. Further, our report also discusses how FBI failed 

to establish controls to maintain accountability over equipment purchased 

for the Trilogy project. These weaknesses resulted in payment of millions 

of dollars in questionable contractor costs and missing assets. It is 

imperative that FBI correct these weaknesses in order to avoid similar 

outcomes for its Sentinel and other information technology (IT) projects. 

Before I get into our audit findings, let me first provide some brief 

background on the Trilogy project. For several years, FBI’s IT systems 

were considered archaic and inadequate for efficiently and effectively 

investigating criminal and other cases. Initiated in mid-2001, Trilogy—

FBI’s largest IT upgrade to date—was intended to modernize FBI’s IT 

infrastructure and systems and provide needed applications to help FBI 

agents, analysts, and others do their jobs. The Trilogy project consisted of 

two primary efforts—upgrades to FBI’s IT infrastructure2

 and development 

of an investigative application system to more efficiently access case files, 

which became known as the Virtual Case File (VCF) system. FBI entered 

into an interagency agreement with the General Services Administration 

(GSA), which served as the contracting agency to acquire the services of 

two primary contractors to carry out the Trilogy project. DynCorp—now 

Computer Services Corporation (CSC)—was responsible for the IT 

infrastructure upgrade, while Science Applications International 

Corporation (SAIC) was responsible for development of the VCF system. 

In addition, FBI contracted with Mitretek to assist in the administration 

and oversight of the project. 

 1

 GAO, Federal Bureau of Investigation: Weak Controls over Trilogy Project Led to 

Payment of Questionable Contractor Costs and Missing Assets, GAO-06-306 (Washington,

D.C.: Feb. 28, 2006). 

2

 The IT infrastructure portion of Trilogy consisted of two parts: (1) upgrades to FBI’s

computer hardware and software and (2) upgrades to FBI’s communication network. 

Page 1 GAO-06-698T 
Although the original scheduled completion date for the overall Trilogy 

project was June 2004, after September 11, 2001, FBI instituted an 

accelerated deployment plan. The targeted completion date for the portion 

of Trilogy related to FBI’s IT infrastructure was accelerated from May 2004 

to July 2002. However, after several delays the upgrade was completed in 

April 2004, only a month before the “pre-accelerated” due date. 

While the scheduled completion date for the VCF system was originally 

June 2004, the due date for the first VCF deliverable was accelerated to 

December 2003. However, in July 2004, the VCF portion of the Trilogy 

project was scaled back after the completion of the first phase of the 

project was determined to be infeasible and cost prohibitive as originally 

envisioned. The scaled back VCF effort was recast as a pilot that ended in

March 2005, and was to be used by FBI to help develop requirements for a 

successor information management system initiative, referred to as 

Sentinel. The overall cost of the Trilogy project, originally estimated at 

approximately $380 million, ultimately escalated to approximately 

$537 million. 

The Department of Justice Office of Inspector General has reported on 

numerous issues that contributed to the cost increases and delays, 

including poorly defined and slowly evolving design requirements, 

contracting weaknesses, unrealistic task scheduling, and lack of 

management continuity and oversight for tracking and overseeing costs 

effectively.3

 We also earlier reported on weaknesses in FBI’s IT systems 

development and management capabilities, including contractor 

oversight.4

 Because of these issues, you asked us to audit the costs of the 

Trilogy project, the majority of which represented the purchase of goods 

and services from contractors. Our objectives were to determine whether 

(1) FBI’s internal controls provided reasonable assurance that payment of

unallowable contractor costs would not be made or would be detected in 

the normal course of business,5

 (2) FBI’s payments to contractors were 

 3

 Department of Justice, Office of the Inspector General, The Federal Bureau of 

Investigation’s Management of the Trilogy Information Technology Modernization 

Project, Report No. 05-07 (Washington, D.C.: February 2005).

4

 See for example, GAO, Information Technology: FBI Is Building Management 

Capabilities Essential to Successful Systems Deployments, but Challenges Remain, 

GAO-05-1014T (Washington, D.C.: Sept. 14, 2005). 

5

 Unallowable costs are contractor costs that are not allowed under a term or condition of 

the contract or pursuant to applicable regulations. 

Page 2 GAO-06-698T 
properly supported as a valid use of government funds, and (3) FBI 

maintained proper accountability for assets purchased with Trilogy 

project funds. 

We performed our work in accordance with generally accepted 

government auditing standards in Washington, D.C., and at two FBI field 

sites and various other GSA and contractor locations in Virginia. The 

complete scope and methodology of our review is discussed in appendix II

of our report.6

Today, I will summarize the results of our work with respect to 

(1) weaknesses in FBI’s internal controls that made it highly vulnerable to

payment of unallowable or questionable contractor costs with Trilogy 

funds, (2) certain payments for questionable contractor costs that we 

identified, and (3) FBI’s inadequate accountability for assets purchased 

with Trilogy project funds. 

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. This occurred in part because responsibility for the 

review and approval of invoices was not clearly defined or documented. In 

addition, contractor invoices frequently lacked detailed information 

required by the contracts and other additional information that would be 

needed to facilitate an adequate review process. Despite this, invoices 

were paid without requesting additional supporting documentation 

necessary to determine the validity of the charges. These weaknesses in 

the review and approval process made FBI highly vulnerable to payment 

of unallowable or questionable contractor costs. 

Insufficient Invoice 

Review and Approval 

Process Increased 

FBI’s Vulnerability to 

Payment of 

Unallowable 

Contractor Costs 

While the invoice review and approval process differed for each 

contractor and type of invoice charge, in general the process carried out 

by the review team lacked key procedures to reasonably ensure that goods 

and services billed were actually received by FBI or that the amounts 

billed and paid were for allowable costs. For example, the review team did 

not have a systematic process for verifying that the individuals listed on 

labor invoices actually worked the number of hours billed or that the job 

 6 GAO-06-306. 

Page 3 GAO-06-698T 
classification and related billing rates were appropriate. Further, there was 

no documented assessment of whether overall hours billed for a particular 

activity were in line with expectations. In addition, the review team paid 

contractor invoices for subcontractor labor charges without any attempt 

to assess the validity of the charges. The GSA official responsible for 

paying the invoices stated that the review team relied on the contractors to 

properly bill for costs related to subcontractors and to validate the 

subcontractor invoices. However, the review team had no process in place 

to assess whether the contractors were properly validating their 

subcontractor labor charges or to assess the allowability of those charges. 

The insufficient invoice review and approval process was at least in part 

the result of a lack of clarity in the interagency agreement between FBI 

and GSA as well as in FBI’s oversight contract with Mitretek. We have 

identified the management of interagency contracting as a high-risk area,

in part because it is not always clear with whom the responsibility lies for

critical management functions in the interagency contracting process, 

including contract oversight.7

 For example, the terms and conditions of the 

interagency agreement with GSA only vaguely described GSA’s role in 

contract administration. In particular, the agreement did not specify the 

invoice review and approval steps to be performed or who would perform 

them. Likewise, the Mitretek contract provided a general description of 

Mitretek’s oversight duties, but did not specifically mention its 

responsibilities related to the invoice review and approval process. 

Additionally, the lack of clarity in roles and responsibilities was evident in

our interviews with the review team, where each party indicated that 

another party was responsible for a more detailed review. 

The failure to establish an effective review process was compounded by 

the fact that not all invoices provided the type of detailed information 

required by the contracts and other information that would be needed to

validate the invoice charges. For example: 

• CSC labor invoices did not include information related to individual labor 

rates or indicate which overhead rates were applicable to each 

employee—information needed to verify mathematical accuracy and to 

determine that the components of the labor charges were valid. 

• CSC invoices provided a summary of travel charges by category (e.g., 

airfare and lodging), but did not provide required information related to an

 7

 GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

Page 4 GAO-06-698T 
individual traveler’s trip costs. The travel invoices also did not provide 

cost detail by travel authorization number. Therefore, there was no way to 

determine that the trips billed were approved in advance or that costs 

incurred were proper and reasonable based on the location and length of

travel. 

• CSC and SAIC invoices for the other direct costs (ODC) provided a 

summary of charges by category (e.g., shipping and office supplies); 

however, CSC did not provide required cost detail by transaction. In some 

cases, the category of charges was not even identified. For example, as 

shown in figure 1, on the ODC invoice, a category entitled “Other Direct 

Costs” made up $1.907 million of the $1.951 million invoice current billing 

total. No additional information was provided on the invoice to explain 

what made up these costs. 

Page 5 GAO-06-698T 
Figure 1: Example of CSC ODC Invoice 

Page 6 GAO-06-698T 
Even though contractor invoices, particularly those from CSC, frequently 

lacked key information needed for reviewing charges, we found through

inquiries with the review team and the contractors that invoices were 

generally paid without requesting additional supporting documentation. 

We further found that invoices for equipment did not individually identify

each asset being billed by bar code, serial number, or some other identifier 

that would allow verification of assets billed to assets received. This 

severely impeded FBI’s ability to determine whether it had actually 

received the assets included on invoices and to subsequently track 

individual accountable assets on an item-by-item basis. 

Because of the lack of fundamental internal controls over the process used 

to pay Trilogy invoices, FBI was highly vulnerable to payment of 

unallowable contractor charges. In order to assess the effect of these 

vulnerabilities, we used forensic auditing techniques to select certain 

contractor costs for review. 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.

Some Payments Made 

to Contractors Were 

for Questionable

Costs 

First-class Travel and 

Other Excessive Airfare 

Costs 

During our review of CSC’s supporting documentation for selected travel 

charges, we found 19 first-class airline tickets costing a total of $20,025.

The CSC contract called for travel to be reimbursed to the extent 

allowable under the Joint Travel Regulations, which state that travelers 

must use basic economy or coach class unless the use of first-class travel 

is properly authorized and justified. Because the documentation provided 

by CSC for these first-class tickets we identified did not contain the 

required authorizations or justifications, we consider the cost of this travel 

in excess of coach-class fares as potentially unallowable.8

 8

 The determination of unallowable costs is made by the contracting agency. Therefore, 

until such determination is made, we have categorized these costs as potentially 

unallowable. 

Page 7 GAO-06-698T 
Also during our review of travel charges, we noted several instances of 

unusually expensive coach-class tickets, which we also considered to be 

questionable. Upon further inquiry with several airlines, we determined 

that most of these were for “full fare” coach-class tickets. We noted that 

the airlines used most often by the contractors indicated that it is possible 

to obtain a free upgrade to first class with the purchase of the more 

expensive full-fare coach ticket. In fact, we found that in some instances, 

the current price of a full-fare coach ticket was higher than the current 

price of a first-class ticket. We noted 62 full-fare coach tickets billed by 

CSC for $85,336. In contrast, we estimated that basic coach-class fares 

would have cost $41,978. SAIC and Mitretek also billed FBI for excessive 

airfare costs, but to a lesser degree. In total, we identified 75 unusually 

expensive tickets costing $100,847, which exceeded our estimate of basic 

coach-class fares by approximately $49,848. Table 1 provides examples of 

the first-class and excessive airfare travel costs we identified.

Page 8 GAO-06-698T 
Table 1: Examples of First-class and Excessive Airfare Travel Costs 

Contractor Itinerary Ticket class

Actual cost 

of ticket

Estimated cost of 

basic coachclass ticketa

Percentage that 

full-fare coach

exceeded basic 

coach cost

CSC Chicago, IL to Pittsburgh, PA and back First-class $926 $197 370

Mitretek Washington, DC to Phoenix, AZ and 

back 

First-class 

upgradeb

2,051 480 327

CSC One-way from Los Angeles, CA to 

Philadelphia, PA 

Full fare 1,253 307 308

CSC One-way from Las Vegas, NV to 

Washington, DC

Full fare 1,171 304 285

CSC One-way from San Francisco, CA to 

Cleveland, OH

Full fare 1,049 290 262

Mitretek Washington, DC to Portland, OR and 

back 

First-class 

upgradeb

1,850 643 188

CSC One-way from San Diego, CA to 

Baltimore, MD

Full fare 1,128 413 173

CSC Wichita, KS to Washington, DC and 

back 

First-class 1,984 732 171

CSC Atlanta, GA to Los Angeles, CA and 

back 

Full fare 2,121 851 149

SAIC Denver, CO to Washington, DC and 

back 

Not determinablec1,570 1,037 51

Source: GAO analysis of supporting documentation provided by contractors. 

a

Because historical costs for coach-class tickets were not available, we estimated the costs of coachclass tickets based on an average of current prices for a similar itinerary purchased 3 days in 

advance (which was the average based on the trips we reviewed) and adjusted for inflation applicable 

to airfare. 

b

The fare basis code for this ticket indicated that a first-class upgrade was obtained. We could not 

verify whether this ticket was purchased as a full-fare coach or some other class of travel that 

exceeded the basic coach-class fares. 

c

We could not determine the airfare class of the ticket purchased because the supporting 

documentation provided did not include the fare basis code. 

Excess Overtime Charges Our review also showed that FBI may have paid SAIC for incorrectly billed 

overtime charges. The task order for SAIC work stated that the 

government would not object to SAIC employees working hours in excess 

of 40 per week if necessary. In March 2003, SAIC implemented a policy 

that FBI agreed to, which decreased the amount of hours that would be 

billed to FBI. This policy stated that contractor staff would be 

compensated for hours worked that exceeded 90 hours in a 2-week pay 

period, and established a ceiling of 120 hours per pay period. We found, 

Page 9 GAO-06-698T 
however, that SAIC employees frequently charged for all hours worked 

beyond 80 in a pay period and noted some instances where employees 

charged hours beyond the 120-hour ceiling. The costs of these hours were 

billed to and paid by FBI. SAIC management acknowledged that billings 

were not consistent with the March 2003 policy and indicated that it would 

research the issue further to determine whether corrections are 

necessary.9

 Based on our review of the labor charges, FBI may have

overpaid for more than 4,000 hours. Using average, fully burdened labor 

rates for employees who billed incorrectly, we estimated that FBI may 

have overpaid these overtime costs by as much as $400,000.

Questionable Labor Rates We also found that CSC/DynCorp may have charged labor rates that 

exceeded ceiling rates that GSA asserts were established pursuant to a 

DynCorp task order. In short, GSA and CSC disagree on whether ceiling 

rates for a CSC/DynCorp subcontractor, DynCorp Information Systems 

(DynIS), were ever established. When DynCorp entered into the 

contractual agreement with GSA, it agreed to ceiling rates for various 

labor categories and agreed to negotiate subcontractor ceiling rates 

separately for each task order. The May 2001 DynCorp task order award 

document stated that ceilings were in place on all DynIS labor category

and indirect rates, subject to negotiation pending the results of a Defense 

Contract Audit Agency10 audit. GSA officials told us they believed that 

DynIS labor category rates in DynCorp’s Trilogy proposal represented 

established ceilings, and that they negotiated DynIS labor category ceiling 

rates with DynCorp. However, CSC stated that it never negotiated labor 

category ceiling rates with GSA. 

Based on our review of DynCorp’s labor invoices, we noted that several of

DynIS’s rates charged exceeded the labor rates that GSA contended were 

ceiling rates. For example, CSC/DynCorp billed over 14,000 hours for work 

performed by senior IT analysts during 2001 on the Trilogy project based

on an average hourly rate of $106.14. However, if ceiling rates were 

 9

 SAIC officials indicated that in June 2003 a waiver of the 10 hours of uncompensated time

associated with the overtime policy was implemented for select teams. However, SAIC 

could not provide us information on which teams, tasks, or employees the waiver applied 

to or the length of time the waiver covered. Therefore, we were not able to consider this 

waiver in our analysis. 

10 DCAA is responsible for performing all contract audits for the Department of Defense.

They also provide contract audit services to other government agencies when hired to do 

so.

Page 10 GAO-06-698T 
established, the DynCorp proposal indicated that the Trilogy project 

would be charged a maximum of $68.73 per hour for a senior IT analyst 

working in the field or $96.24 per hour for a senior IT analyst working at 

headquarters during 2001. If ceiling rates were established, we estimated 

that FBI overpaid CSC/DynCorp by approximately $2.1 million for DynIS 

labor costs. 

Other Questionable Costs We also identified about $7.5 million in other payments to contractors that 

were for questionable costs. In most cases, these costs were not supported 

by sufficient documentation to enable an objective third party to 

determine if each payment was a valid use of government funds. For 

example, CSC did not provide us adequate supporting documentation for 

almost $2 million of subcontractor labor charges and about $5.5 million of 

ODC charges we selected to review.

Because $4.7 million of these inadequately supported ODC costs were for 

training charges from one subcontractor, CACI Inc. – Federal (CACI), we 

subsequently requested supporting documentation from the subcontractor

for selected charges for training costs totaling about $3.5 million. We 

found that CACI could not adequately support charges to FBI totaling 

almost $3 million that CACI paid to one event planning company (another 

subcontractor). CACI stated that supporting documentation was not 

applicable because its agreement with the event planner was “fixed 

priced.” However, CACI’s assertion was not supported by the terms of the 

purchase order and related statement of work that specifically required 

documentation to support costs claimed by the event planner and to 

charge only for services rendered. 

CSC was also unable to provide us adequate supporting documentation for 

$762,262 in equipment disposal costs billed by two subcontractors. The 

documentation provided consisted of a spreadsheet that summarized costs 

of the subcontractors, but did not include receipts or other support to 

prove that these costs were actually incurred. 

Our review of SAIC’s subcontractor labor charges found that FBI was 

billed twice for the same subcontractor invoice totaling $26,335. SAIC 

officials agreed that they double billed and stated that they would make a 

correction. 

Page 11 GAO-06-698T 
Our audit also disclosed that FBI did not adequately maintain

accountability for equipment purchased for the Trilogy project. FBI relied 

extensively on contractors to account for Trilogy assets while they were 

being purchased, warehoused, and installed. However, FBI did not 

establish controls to verify the accuracy and completeness of contractor 

records it was relying on. Moreover, once FBI took possession of the 

Trilogy equipment, it did not establish adequate physical control over the 

assets. Consequently, we found that FBI could not locate over 1,200 assets 

purchased with Trilogy funds, which we valued at approximately 

$7.6 million. Because of the significant weaknesses we identified in FBI’s 

property controls, the actual amount of missing equipment could be even

higher. 

Major Lapses in 

Accountability 

Resulted in Millions of 

Dollars of Missing 

Trilogy Equipment 

FBI relied on contractors to maintain records related to the purchasing, 

warehousing, and installation of about 62 percent of the equipment 

purchased for the Trilogy project.11 FBI’s primary contractor responsible 

for delivering computer equipment to FBI sites was CSC. FBI officials told 

us they met regularly with CSC and its subcontractors to discuss FBI’s 

equipment needs and a deployment strategy for the delivery of equipment. 

Based on these meetings, CSC instructed its subcontractors to purchase 

equipment, which was subsequently shipped to and put under the control

of those same subcontractors. Once equipment arrived at the 

subcontractors’ warehouses, the subcontractors were responsible for 

affixing bar codes on accountable items—all items valued above $1,000 

and certain others considered sensitive that are required by FBI policy to 

be tracked individually. In addition, FBI directly purchased about 

$19.1 million of equipment for the Trilogy project that was shipped directly

to either CSC or CSC subcontractors. 

When equipment was shipped from a subcontractor warehouse to an FBI 

site, the subcontractor prepared a bill of lading that listed all items 

shipped. However, there was no requirement for FBI officials to verify that

the items were actually received. The subcontractors also prepared a “Site

Acceptance Listing” of equipment that had been installed at each FBI site.

While an FBI official signed this listing, based on our inquiries at two field 

offices, we found the officials may not have always verified the accuracy 

and completeness of these lists. FBI did not prepare its own independent

lists of ordered, purchased, or paid-for assets and did not perform an 

 11 This includes Trilogy equipment purchased by CSC and SAIC and equipment purchased

directly by FBI that was delivered to CSC for the IT infrastructure portion of the project. 

Page 12 GAO-06-698T 
overall reconciliation of total assets ordered and paid for to those 

received. Such a reconciliation would have been made difficult by the fact

that invoices FBI received from CSC did not include item-specific 

information—such as bar codes, serial numbers, or shipping location. 

However, failure to perform such a reconciliation left FBI with no 

assurance that it had received all of the assets it paid for. 

In addition, equipment that was delivered to FBI sites was not entered into

FBI’s Property Management Application (PMA) in a timely manner, 

increasing the risk that assets could be lost or stolen without detection.

We found that 71.6 percent of the CSC-purchased equipment that was 

recorded in PMA, representing 84 percent of the total dollar value, was 

entered more than 30 days after receipt, and nearly 17 percent of the 

equipment, representing 37 percent of the dollar value, was entered more 

than a year after receipt. When assets are not timely recorded in the 

property system, there is no systematic means of identifying where they 

are located or when they are removed, transferred, or disposed of and no

record of their existence when physical inventories are performed. This 

severely limits the effectiveness of the physical inventory in detecting

missing assets and in triggering investigation efforts as to the causes. 

FBI also could not accurately identify all accountable assets because of 

improper controls related to its bar codes—a key tool for maintaining 

accountability and control over individual assets.12 FBI relied on 

contractors to affix the bar codes, yet did not track the bar code numbers 

given to contractors, the bar code numbers they used, or the bar code 

numbers returned. Moreover, FBI provided incorrect instructions to 

contractors, initially directing them to bar code certain types of lower cost 

equipment that did not need to be tracked. FBI’s loss of control over its 

bar codes and failure to timely enter assets into its property tracking 

system seriously hampered its ability to maintain accountability for its 

Trilogy equipment. Accountability for equipment was further undermined 

by FBI’s failure to perform sufficient physical inventory procedures to 

ensure that all assets purchased with Trilogy funds were actually located 

during the physical inventory. 

 12 The use of bar codes involves affixing a machine-readable bar code to a controlled item, 

which can then be scanned and compared to an equipment inventory listing as part of a 

periodic physical inventory. 

Page 13 GAO-06-698T 
Given the serious nature of these control weaknesses, we performed 

additional test work to determine whether all accountable assets 

purchased with Trilogy funds could be accounted for and found that FBI

was unable to locate 1,404 of these assets. These were items such as 

desktop computers, laptops, printers, and servers. In written comments on

a draft of our report, FBI told us that it had accounted for more than 1,000 

of these items. During our agency comment period, FBI stated that it had 

found 237 items we previously identified as missing and provided us 

evidence, not made available during our audit, to sufficiently account for 

199 of these items. We adjusted the missing assets listing in our report to 

reflect 1,205 (1,404 – 199) assets as still missing. FBI later informed us that 

the approximately 800 remaining items noted in its official agency

response included (1) accountable assets not recorded in PMA because 

they were either incorrectly identified as nonaccountable assets or 

mistakenly omitted, (2) defective accountable assets that were never 

recorded in PMA and subsequently replaced, and (3) nonaccountable 

assets or components of accountable assets that were incorrectly bar 

coded. 

We considered these same issues during our audit and attempted to 

determine their impact. For example, as stated in our report, FBI told us 

that components of some nonaccountable assets that were part of a larger 

accountable item may have been mistakenly bar coded. Using FBI 

guidance on accountable property, we determined that 103, or about 11 

percent, of the 926 missing assets purchased by CSC may have represented

nonaccountable components. Because FBI could not provide us with the 

location information, we could not definitively determine whether the 

items were accountable assets. During the course of our audit, FBI was 

not able to provide us with any evidence to support its other statements 

regarding the reasons the assets could not be located. 

While we are encouraged by FBI’s current efforts to account for these 

assets, its ability to definitively determine their existence has been 

compromised by the numerous control weaknesses identified in our 

report. Further, the fact that assets have not been properly accounted for 

to date means that they have been at risk of loss or misappropriation 

without detection since being delivered to FBI—in some cases, for several

years. 

Page 14 GAO-06-698T 
FBI’s Trilogy IT project spanned 4 years and the reported costs exceeded

$500 million. Our review disclosed that there were serious internal control 

weaknesses in the process used by FBI and GSA to approve contractor 

charges related to Trilogy, which made up the majority of the total 

reported project cost. While our review focused specifically on the Trilogy 

program, the significance of the issues identified during our review may 

indicate more systemic contract and financial management problems at 

FBI and GSA, in particular when using cost-reimbursable type contracts 

and interagency contracting vehicles. 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. 

Concluding 

Comments 

Our companion report includes 15 recommendations to help improve 

FBI’s and GSA’s controls over their invoice review and approval processes 

and to address questionable billing issues we identified. It also includes 12 

recommendations to help improve FBI’s accountability for assets. FBI 

concurred with our recommendations and outlined actions under way and 

further planned actions to address the weaknesses we identified. FBI also

provided additional information related to Trilogy assets we identified as 

missing. While GSA accepted our recommendations, it did not believe that

one of them was needed, and described some of the improvements to its 

internal controls and other business process changes already

implemented. GSA also expressed concern with some of our observations

and conclusions related to the invoice review and approval process and 

our analysis of airfare costs. We continue to believe that our report is 

accurate and that all recommendations should be implemented. 

We understand that FBI has outlined actions to implement our 

recommendations. While we are encouraged by these efforts, let me just 

emphasize the importance of continually monitoring the implementation 

of corrective actions to ensure that they are effective in helping to avoid 

the types of control lapses that we identified throughout the Trilogy 

project. Without such vigilant monitoring, Sentinel and other efforts will 

be greatly exposed to similar questionable or inappropriate payments and 

lack of accountability over assets. 

Page 15 GAO-06-698T 
Mr. Chairman and members of the committee, this concludes my prepared 

statement. I would be pleased to answer any questions that you may have.

For more information regarding this testimony, please contact Linda M. 

Calbom at (202) 512-9508 or calboml@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this testimony. Individuals making key contributions to this 

testimony included Steven Haughton (Assistant Director), Ed Brown, 

Marcia Carlsen (Assistant Director), Lisa Crye, and Matt Wood. Numerous 

other individuals contributed to our audit and are listed in our companion 

report. 

Page 16 GAO-06-698T 

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