IHS, an operating division of HHS, is responsible for providing health services to federally recognized tribes of American Indians and Alaska natives. In 2007, IHS provided health services to approximately 1.9 million American Indians and Alaska natives from more than 562 federally recognized tribes. As an operating division of HHS, IHS is included in the agency’s consolidated financial statement and has not been audited independently since 2002. IHS is divided into 12 regions and operates 163 service units throughout the country. Service units may contain one or more health facilities, including hospitals, health centers, village clinics, health stations, and school health centers. There are 114 IHS-operated health facilities and 565 tribally operated health facilities. The IHS budget appropriation in 2007 was $3.2 billion, approximately 54 percent of which was administered by tribes through various contracts and compacts with the federal government. We substantiated the allegation of gross mismanagement of property at IHS. Specifically, we found that thousands of computers and other property, worth millions of dollars, have been lost or stolen. We analyzed IHS reports for headquarters and the 12 regions from the last 4 fiscal years which identified over 5,000 property items, worth about $15.8 million, that were lost or stolen from IHS headquarters and field offices throughout the country. The number and dollar value of this missing property is likely much higher because IHS did not conduct full inventories of accountable property for all of its locations and did not provide us with all inventory documents as requested. Despite IHS attempts to obstruct our investigation, our full physical inventory at headquarters and our random sample of property at seven field locations identified millions of dollars of missing property. We also found that IHS has made wasteful purchases over the past few years. For example, IHS has bought computer equipment that is currently unused in its original box and has issued IT equipment to its employees that duplicate the equipment already provided to them. Our analysis of Report of Survey records from IHS headquarters and field offices shows that from fiscal year 2004 through fiscal year 2007, IHS property managers identified over 5,000 lost or stolen property items worth about $15.8 million. Although we did receive some documentation from IHS, the number and dollar value of items that have been lost or stolen since 2004 is likely much higher for the following reasons. First, IHS does not consistently document lost or stolen property items. For example, 9 of the 12 IHS regional offices did not even perform a physical inventory in fiscal year 2007. Second, for each year since fiscal year 2004, an average of 5 of the 12 regions did not provide us with all of the reports used to document missing property since fiscal year 2004, as we requested. The following cases provide information on five of the egregious examples of lost and stolen property we identified. In each case, IHS has not held any staff accountable for the missing items. In some of the cases, IHS did not even perform an investigation to try and locate the missing items or determine what actions should be taken. IHS staff held a “yard sale” of 17 computers and other property worth $16,660 in Schurz, Nevada, between June and July 2005. According to an IHS property manager, the equipment was advertised to the public via fliers indicating that excess federal property was to be given away for free. To date, IHS has not completed the investigation or held any IHS personnel responsible and, according to a 2006 report, intends to writeoff the missing equipment. According to the Phoenix area property manager, the 17 computers identified as missing were transferred from a youth patient center and could contain sensitive youth patient information because the computers were never “cleaned” before being transferred to the Schurz service unit. We are referring this potential release of patient data to the HHS OIG for further investigation. From 1999 through 2005, IHS did not follow required procedures to document the transfer of property from IHS to the Alaska Native Tribal Health Consortium, resulting in an unsuccessful 5-year attempt by IHS to reconcile the inventory. Our analysis of IHS documentation revealed that about $6 million of this property—including all-terrain vehicles, generators, van trailers, tractors, and other heavy equipment—was lost or stolen. In April 2007, a desktop computer containing a database of uranium miner names, social security numbers, and medical histories was stolen from an IHS hospital in New Mexico. According to an HHS report, IHS attempted to notify the 849 miners whose personal information was compromised, but IHS did not issue a press release to inform the public of the compromised data. In addition to this incident, the IHS Finance department recently reported a missing Personal Digital Assistant (PDA) in March 2008 when they requested a replacement. The PDA contained medical information and names of patients at a Tucson Area Hospital. According to the IHS IT official, the device contained no password or data encryption. This was in violation of federal policy and increased the risk that sensitive information could be disclosed to unauthorized individuals. Both of these cases have already been reported to HHS by the IHS Office of Information Technology. In September 2006, IHS property staff in Tucson attempted to write off over $275,000 worth of property, including Jaws of Life equipment valued at $21,000. The acting area director in Tucson refused to approve the write-off because of the egregious nature of the property loss. However, no investigation has been conducted to date. According to an IHS June 2006 report, a $4,000 Apple Powerbook laptop was stolen from an employee’s vehicle in the Navajo area. Despite the lack of authorization, the employee took the laptop for use during off-duty hours—in violation of IHS policy. Because the employee violated IHS policy, IHS’s initial determination, with which the employee agreed, was that the employee was responsible for the loss and therefore should reimburse the federal government for the value of the stolen computer. However, the IHS approving official reversed the initial determination decision stating that the employee had since resigned and the loss was due to theft. To substantiate the whistleblower’s allegation of missing IT equipment, we performed our own full inventory of IT equipment at IHS headquarters. Our results were consistent with what the whistleblower claimed. Specifically, of the 3,155 pieces of IT equipment recorded in the records for IHS headquarters, we determined that about 1,140 items (or about 36 percent) were lost, stolen, or unaccounted for. These items, valued at around $2 million, included computers, computer servers, video projectors, and digital cameras. According to IHS records, 64 of the items we identified as missing during our physical inventory were “new” in April 2007. Furthermore, we found that some of the missing computers were assigned to the IHS human resources division. These computers likely contained sensitive employee data including names and Social Security numbers protected under the Privacy Act of 1974. We are referring these cases where there was a potential release of sensitive data including employee social security numbers to the HHS OIG for further investigation. During our investigation of the whistleblower’s complaint, IHS made a concerted effort to obstruct our work. IHS officials made misrepresentations and fabricated documents to impede our work. Specifically, The IHS Director responsible for property claimed that IHS was able to find about 800 of the missing items from the whistleblower’s complaint. However, based on our physical inventory testing at headquarters, we found that this statement was a misrepresentation and that only some of these items have been found. An IHS property specialist attempted to provide documentation confirming that 571 missing items were properly disposed of by IHS. However, we found that the documentation he provided was not dated and contained no signatures. When we questioned the official about these discrepancies, he admitted that he fabricated the documents. We are referring this individual to the HHS OIG for further investigation. According to IHS policy, receiving reports are always signed by an authorized employee. As part of our inventory, we requested receiving reports for three recent purchase orders. For one purchase order, IHS was not able to provide us with any receiving reports. For the other two purchase orders, IHS provided us with receiving reports that were not properly completed; e.g., the reports were not signed by the person who received the property and did not contain the date that the property was received. When we questioned these discrepancies, IHS sent us “new” receiving reports for the three purchase orders, but all of them contained questionable dates and signatures. For example, figure 1 shows the fabricated receiving report for a shipment of new scanners delivered to IHS. ? As shown in figure 1, there is almost a 3-month gap between the date the equipment was received in September and the date that the receiving report was completed and signed in December—-even though the document should have been signed upon receipt. In fact, the new receiving report IHS provided was signed on the same date we requested it, strongly suggesting that IHS fabricated these documents in order to obstruct our investigation. Further, after testing one of the other two fabricated receiving reports, we found that 10 brand new desktop computers worth almost $12,000 could not be located even though the receiving report indicated that they were “received” in July 2007. We selected a random sample of IT equipment inventory at seven IHS field offices to determine whether the lack of accountability for inventory was confined to headquarters or occurred elsewhere within the agency. Similar to our finding at IHS headquarters, our sample results also indicate that a substantial number of pieces of IT equipment were lost, stolen, or unaccounted for. Specifically, we estimate that for the seven locations, about 1,200 equipment items, with a value of $2.6 million were lost or stolen.