Watchdog: State Department can’t fully account for $6B worth of contracts

The State Department has a "serious" problem accounting for how it has spent billions of dollars on contracts all over the world, according to the official watchdog that oversees the sprawling department.

The Office of Inspector General, in a March 20 "management alert" to department leaders, said the department has failed to provide all or some of the files for $6 billion worth of contracts in the last six years.

"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 memo said.

This apparently is not a new or isolated problem. The memo said investigators and auditors have found "repeated examples of poor contract file administration" and have called this one of the department's "major management challenges" for several years.

The alert cited one example where contracting officials could not provide dozens of files for contracts supporting the U.S. Mission in Iraq. The value of the contracts in the missing files? $2.1 billion.

Another audit of the Bureau of African Affairs showed officials were unable to come up with "complete contract administration files" for any of the eight contracts under review. Their value was nearly $35 million.

Auditors ran into the same problem when reviewing $1 billion in contracts in the Bureau of International Narcotics and Law Enforcement Affairs.

"In sum, over the past 6 years, our audit work has uncovered significant contract file management deficiencies in Department contracts/task orders with a total value of more than $6 billion," the letter said.

The cases do not necessarily involve contracts that were fraudulent -- just those where the State Department could not come up with the paperwork. But the same memo also detailed a separate case where an official "falsified" information as part of a $100 million contract. In another case, an official allegedly paid a contractor nearly $800,000 even though the file did not have documents supporting the payment.

The OIG is urging a series of changes to tighten up the department's contract process and record-keeping.

The State Department, in its official response, agreed that "this vulnerability must be addressed." The department agreed to make a series of changes to keep better track of contract files.

Asked about the findings at Friday's press briefing, State Department spokeswoman Marie Harf clarified that the issue isn't that all $6 billion can't be accounted for -- rather, this is about incomplete files for those contracts.

"As highlighted in our response to the OIG, this is an issue of which the department is aware and is taking steps to remedy," she said. "It's not an accounting issue, I think it's more like a bureaucratic issue. But it's not that we've lost $6 billion, basically."