DOD overcharged by . . . itself.

by bvernia | October 30th, 2009

In a case more typical of an audit of an outside DOD contract, DOD’s IG issued a report on October 9 detailing its investigation of a whistleblower’s allegations that the Defense Technical Information Center violated the Economy Act and augmented its budget by overcharging other DOD components for reimbursable services. The IG substantiated this allegation, and partially substantiated another that DTIC failed to report technology purchases.

Regarding the central allegation of mischarging DOD customers, the IG reported:

The allegation was substantiated. We determined that DTIC violated the Economy Act and augmented its budget. DTIC improperly charged indirect costs (overhead) for the goods and services it provided to DOD organizations and other customers in FY 2007 and FY 2008. Furthermore, DTIC collected fees in excess of its actual costs and did not return the surpluses to its customers for FY 2007 and FY 2008. Specifically, DTIC:

  1. improperly established a reimbursable fee rate,
  2. did not return surplus reimbursable fees collected to its customers at fiscal
  3. improperly charged reimbursable fees to DOD organizations, and
  4. did not properly use the reimbursable fees collected.

These conditions occurred because DTIC management did not establish a systematic process for accumulating actual indirect costs (overhead) incurred by its IACs.

The IG cleared the agency, however, of failing to report its ill-gotten gains in the budgeting process.

What’s the Economy Act? Codified at 31 USC § 1535, it governs agreements between agencies for the purchase of goods or services.

One Response to “DOD overcharged by . . . itself.”

  1. I was in the Government and it is rare that the whistle blower is accorded the recognition warranted for having the courage to come forward and risk retribution. This article is silent on the whistle blower involvement. Does the report go into this?

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