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The State Department misplaced and lost some $6 billion due to the improper filing of contracts during the past six years, mainly during the tenure of former Secretary of State Hilary Clinton, according to a newly released Inspector General report.
The $6 billion in unaccounted funds poses a “significant financial risk and demonstrates a lack of internal control over the Department’s contract actions,” according to the report.
The alert, originally sent on March 20 and just released this week, warns that the missing contracting funds “could expose the department to substantial financial losses.”
The report centered on State Department contracts worth “more than $6 billion in which contract files were incomplete or could not be located at all,” according to the alert.
“The failure to maintain contract files adequately creates significant financial risk and demonstrates a lack of internal control over the Department’s contract actions,” the alert states.
The situation “creates conditions conducive to fraud, as corrupt individuals may attempt to conceal evidence of illicit behavior by omitting key documents from the contract file,” the report concluded.
The State Department’s inability to properly file its paperwork is causing most of the losses, according to the report.
The IG “found repeated examples of poor contract file administration” over the years, the report said.
Contracts related to the U.S. war in Iraq, for instance, could not be produced in 33 out of 115 instances, according to the report.
“A recent OIG audit of the closeout process for contracts supporting the U.S. Mission in Iraq revealed that contracting officials were unable to provide 33 of 115 contract files requested in accordance with the audit sampling plan,” the report states.
The value of the 33 “missing files” totaled $2.1 billion, according to the report.
Additionally, 48 of the 82 contract files that were produced “did not contain all of the documentation required by” internal regulations, according to the report.
The 48 “incomplete files” were worth another $2.1 billion, according to the report.
A further audit of the department’s Bureau of African Affairs found that administrators “were unable to provide complete contract administration files for any of the eight contracts that were reviewed.”
These contracts were worth $34.8 million.
The investigation also found instances in which a company owned by the spouse of a contractor employee was not properly documented.
“In the case of work undertaken by OIG’s Office of Investigations, one investigation revealed that a contract file did not contain documentation reflecting that modifications and task orders were awarded to the company owned by the spouse of a contractor employee performing as a Contract Specialist for the contract,” the report states.
The contract in question was worth $52 million.
The report outlines several other instances in which contracts worth great values were mishandled.
“In a number of recent OIG inspections, OIG identified contract file management deficiencies. For example, COR files for a $2.5 million contract lacked status reports and a tally of the funds expended and remaining on the contract,” the report states.
The State Department appeared to agree with the IG’s recommendations in a March 28 response and said that it intends to ensure that contracts are completed properly.