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. 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 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. 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 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. 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. 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. 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. 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, 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. 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 Agency 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.