IG: $6 Billion in Misplaced Contracts Puts State Dept. at Risk

Friday, 04 Apr 2014 02:17 PM

By Drew MacKenzie

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The State Department has lost track of around $6 billion in contracts and has exposed itself to potential fraud due to shoddy paperwork, a new report by the Inspector General has revealed.

The review said that the misplaced or lost money puts "significant financial risk and demonstrates a lack of internal control over the Department’s contact actions," The Washington Free Beacon reported.

The Inspector General’s report, which was issued on March 20 and released this week, warns that the potential losses, which occurred partly during Hillary Clinton's time as secretary of state, "could expose the department to substantial financial losses."

The report says the "failure to maintain contract files adequately 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 review said that faulty record-keeping of contracts for services or materials for outside vendors of the department caused most of the losses.

There have been several examples of missing paperwork over the years, or what the report called "repeated examples of poor contract file administration."

For example, 33 contracts for the U.S. Mission in Iraq were missing out of 115 cases. These absent contracts totaled $2.1 billion of the unaccounted for funds.

Furthermore, of the 82 remaining contracts, 48 of them were incomplete by internal standards, accounting for another $2.1 billion of the missing contracting funds.

Also, an audit of the State Department’s Bureau of African Affairs discovered that officials “were unable to provide complete contract administration files for any of the eight contracts that were reviewed,” said the report, noting that the missing files in that case accounted for another $34.8 million.

There also was a case in which the spouse of a contractor employee had not properly filled a contract, resulting in $52 million being unaccounted for.

Free Beacon reported that in a March 28 response to the IG report, the State Department vowed to make sure that in future contracts are completed properly filed.

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