Summary
Problems with management oversight and control of DOD's purchase card program led to concerns that similar issues exist for DOD's vendor payments. As a result, this report focuses on the Navy's telecommunication program and whether (1) the Navy has the basic cost and inventory information needed to oversee and manage these purchases and (2) selected Navy sites have adequate control to provide reasonable assurance that goods and services are purchased cost effectively and payments are made only for valid charges.
The Navy did not know how much it spent on telecommunications and did not have detailed cost and inventory data needed to evaluate spending patterns and to leverage its buying power. Obtaining knowledge of current requirements and usage, as well as developing forecasts of future telecommunication needs, would assist Navy's acquisition planning to ensure future needs were met in a more cost-effective manner. At the four case study sites we audited, management oversight of telecommunication purchases did not provide reasonable assurance that requirements were met in the most cost-effective manner. For local and long-distance services, these sites did not follow policies to biennially review and revalidate these requirements. As a result, they paid for services no longer required. Also, the Navy lacks policies to provide assurance that cell phone requirements are met in the most cost-effective manner. Cell phone usage at three sites was not monitored to determine whether plan minutes met users' needs. Consequently, these sites overpaid for cell phone services. Also, none of the sites had adequate controls over review of invoices to provide assurance of payments for only valid charges. These sites failed to detect erroneous charges and potentially improper use of these services. In addition, the Navy lacks specific policies and processes addressing the administration and management of calling cards. Consequently, some sites did not know they owned and were being billed for calling cards. Other sites allowed calling cards to be shared and were unable to determine the legitimacy of the calls, and thus paid for potentially fraudulent or abusive long-distance charges. On one card alone, in a 3-month period, the Navy paid over $17,000. However, because no one was regularly monitoring the activity on this card, the unit was unaware of potentially fraudulent charges. Not until the vendor's fraud unit raised questions about more than $11,000 in charges incurred during the first 6 days of July 2003 was the card suspended.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Paula M. Rascona
Government Accountability Office: Financial Management and Assurance
(202) 512-9505
Recommendations for Executive Action
Recommendation: The Secretary of the Navy should direct the Chief of Naval Operations (CNO) to ensure that existing policies are enforced. Specifically, the CNO should ensure that the Navy develops and maintains a comprehensive inventory of the Navy's base telecommunication equipment and services.
Agency Affected: Department of Defense: Department of the Navy
Status: In process
Comments: Navy reported initiating a data call to inventory its base communication systems and services and plans to evaluate commercially available solutions for invoice and inventory management. However, Navy has not yet provided GAO with documentation of the completed inventory for verification.
Recommendation: The Secretary of the Navy should direct the CNO to ensure that existing policies are enforced. Specifically, the CNO should ensure that the Navy supports DISA efforts to track acquisitions of telecommunication services throughout DOD, actual costs of those services, and trends in usage (that is, the volume and types of traffic that networks carry).
Agency Affected: Department of Defense: Department of the Navy
Status: In process
Comments: Navy has reported on plans to establish procedures for the review and validation of telecommunication services and reconciliation of invoices. The Navy also plans to develop requirements and plans for a system to identify and manage the inventory and usage of telecommunication system and services, investigate commercially available solutions for invoice management, and ensure that centralized enterprise contracts provide cost and usage trend data. However, Navy has not yet provided GAO with documentation of the completion of planned actions in this area for verification.
Recommendation: The Secretary of the Navy should direct the CNO to establish comprehensive policies and guidance governing the purchase and use of cell phone services, which should include (1) the use of prenegotiated or centrally negotiated rates and (2) periodic assessment of cell phone usage to determine if plan packages provide the most cost-effective means to satisfy the Navy's usage requirements.
Agency Affected: Department of Defense: Department of the Navy
Status: Implemented
Comments: On March 7, 2005, the Navy issued the Department of the Navy Acquisition Policy on Mobile Phone and Data Equipment and Services. This policy memo states that only the Navy's centralized contracts shall be used to obtain wireless services. On September 2, 2005 the Navy issued the Department of the Navy Policy for Issuance, Use and Managment of Government-provided Mobile Phone, Data Equipment and Services, and Calling Cards. This policy memo provides guidance governing the issuance, use and management of government-provided mobile phones, data equipment and services, and calling cards--including required periodic assessments of cell phone usage to determine if the plan packages provide the most cost-effective means to satisfy the Navy's usage requirements.
Recommendation: The Secretary of the Navy should direct the CNO to establish comprehensive policies and guidance governing the purchase and use of calling card services, which should include policies about accountability, the proper review of invoices, and the prohibition of sharing of calling cards.
Agency Affected: Department of Defense: Department of the Navy
Status: Implemented
Comments: On September 2, 2005 the Navy issued the Department of the Navy Policy for Issuance, Use and Managment of Government-provided Mobile Phone, Data Equipment and Services, and Calling Cards. This policy memo provides guidance governing the issuance, use and management of government-provided mobile phones, data equipment and services, and calling cards--including guidance on accountability, the proper review of invoices, and the prohibition of sharing calling cards.
Recommendation: To strengthen the Navy's ability to acquire telecommunication services effectively and efficiently, the Secretary of the Navy should direct the CNO to develop, in coordination with the Navy commands, a strategic management framework for improving the acquisition of telecommunication services. This framework should include provisions for inventorying current and potential users of telecommunication services to determine existing and future requirements.
Agency Affected: Department of Defense: Department of the Navy
Status: In process
Comments: Navy reported on plans to issue a policy that will provide a telecommunications strategic management framework and to develop internal controls over the review and validation of telecommunication requirements and establish a telecommunication strategic vision to guide the migration to future telecommunication requirements. However, Navy has not yet provided GAO with documentation of the completion of planned actions in this area for verification.
Recommendation: To strengthen the Navy's ability to acquire telecommunication services effectively and efficiently, the Secretary of the Navy should direct the CNO to develop, in coordination with the Navy commands, a strategic management framework for improving the acquisition of telecommunication services. This framework should include provisions for identifying and exploiting opportunities to consolidate requirements among Navy commands.
Agency Affected: Department of Defense: Department of the Navy
Status: Implemented
Comments: In a November 29, 2007, policy memorandum, the Deputy CNO directed the consolidation of command requirements for cellular and other telecommunication services. The policy memorandum states that, upon consolidation, the requirements are to be submitted through the command's servicing contract office and procured through nationwide Department of the Navy Multiple Award wireless contracts. In addition, the policy memorandum directs all Navy commands to conduct a cost/benefit analysis to ensure the greatest value at the lowest cost.
Recommendation: To strengthen the Navy's ability to acquire telecommunication services effectively and efficiently, the Secretary of the Navy should direct the CNO to develop, in coordination with the Navy commands, a strategic management framework for improving the acquisition of telecommunication services. This framework should include provisions for adopting, when appropriate, commonly used commercial practices, such as conducting spend analyses and competing and negotiating pricing discounts based on overall Navy volume, to strengthen the Navy's bargaining position in acquiring telecommunication services.
Agency Affected: Department of Defense: Department of the Navy
Status: In process
Comments: Navy reported it has evaluated its processes and policy needs for existing and new telecommunication services in order to develop a strategic management framework for improving the acquisition of telecommunication services. However, Navy has not yet provided GAO with documentation of the completion of planned actions in this area for verification.
Recommendation: To ensure the successful implementation of this strategic management framework and to better leverage Navy buying power, the Secretary of the Navy should direct the CNO to strengthen analysis of telecommunication service requirements, spending, and the capabilities of telecommunication service providers by enhancing core internal technical expertise and information systems.
Agency Affected: Department of Defense: Department of the Navy
Status: In process
Comments: Navy reports it has investigated commercially available solutions for invoice management and evaluate policies procedures and training for the management and use of telecommunication services. However, Navy has not yet provided GAO with documentation of the completion of planned actions in this area for verification.
Recommendation: At the selected units that we audited, the CNO should direct the commanders to provide assurance that existing policies are enforced and fully evaluate the internal controls over the review and revalidation of telecommunication requirements.
Agency Affected: Department of Defense: Department of the Navy: Office of the Chief of Naval Operations
Status: Implemented
Comments: In 2004, the Navy has directed Naval Commands and base communications offices to periodically review, validate, and inventory various telecommunications requirements for compilation into a central database repository. (Naval Message 04-04 051935Z and 01-04 26142Z Aug 04). The required periodic reviews are to be conducted to ensure policies are being enforced, processes are kept current, and users' telecommunications needs are being met.
Recommendation: At the selected units that we audited, the CNO should direct the commanders to provide assurance that existing policies are enforced and fully evaluate the internal controls over the reconciliation of telecommunication invoices with a current inventory of telecommunication equipment and services.
Agency Affected: Department of Defense: Department of the Navy: Office of the Chief of Naval Operations
Status: Implemented
Comments: In 2004, the Navy directed Naval Commands and base communications offices to review long distance call use and institute procedures for control and prompts certification of monthly billing. (Naval Message 04-04 051935Z and 01-04 26142Z Aug 04)
Recommendation: At the selected units that we audited, the CNO should direct the commanders to provide assurance that existing policies are enforced and fully evaluate the internal controls over the distribution and use of calling cards and cancellation of cards that are not properly controlled.
Agency Affected: Department of Defense: Department of the Navy: Office of the Chief of Naval Operations
Status: Implemented
Comments: In 2004, the Navy directed commands and base communications offices to review, validate, and inventory assigned calling cards, and take immediate action to cancel unaccounted for cards. Commands were further directed to assess the need for calling cards and cancel cards that are not required. Base communications offices were directed to audit monthly calling card usage and immediately report anomalies to commands and activities(Naval Message 04-04 051935Z and 01-04 26142Z Aug 04).
