The IG report found that during the two-year period from March 2004 to March 2006, the Missile Defense Agency repeatedly misused and failed to properly manage both outgoing and incoming Military Interdepartmental Purchase Requests.
Such requests are issued by one military service to another service or a civilian federal agency to procure supplies, services or equipment. MIPRs, which can be accepted on a direct citation or on a reimbursable basis, are frequently used when military services have funds that must be committed for a fiscal year for a specific requirement or to support the needs of a critical mission.
Auditors examined 47 MIPRs -- 24 outgoing and 23 incoming -- and found that the Missile Defense Agency did not follow standard regulations to ensure that the interagency funds were properly obligated, expensed or disbursed. The IG also noted that the Defense Finance and Accounting Service did not respond in a timely manner to a request for information and documentation relating to Missile Defense Agency disbursements.
"Adequate internal controls are critical to ensure the proper management of MIPRs," the IG report stated. "The lack of adequate internal controls at MDA over the MIPR process resulted in the violations of public law, and noncompliance with federal, DoD and MDA regulations."
For example, as the agency initiating an interagency request, the Missile Defense Agency was responsible for conducting market research to determine that the same goods or services could not be procured at a lower price or more efficiently from the private sector. But the IG found that agency contracting officials failed to perform market research or to provide evidence of such work in all 24 outgoing requests.
The report also found the agency failed to properly complete all request forms, did not file documents certifying that the orders were in the best interest of the government and could not provide evidence that the official signing a document called DD Form 448 to authorize requests had the authority to administer the funds.
The missile agency's record on the receiving end was little better, auditors found. The service accepted forms without necessary supporting documents, filed MIPRs well after the 30-day window required by law and used some documents for an improper purpose, according to the report.
The IG found that the agency accepted three MIPRs, worth more than $6,000 combined, to grant job performance awards to three employees at other Defense Department agencies. The three workers are now employed at the Missile Defense Agency.
"The costs of awards were not associated to goods or services provided by MDA to the requesting agencies," the report said. "Therefore, we consider that the use of MIPRs for employees' performance awards was inappropriate and the requesting agencies should have paid awards directly to the employees."
The IG recommended that the agency develop standard operating procedures to incorporate Defense Department financial management regulations for processing interagency requests. The agency said it is working on a plan to ensure that all required data and supporting documents are appropriately reviewed before a request is authorized.
The agency disagreed with some of the IG's other findings, however, arguing that it did not have to conduct market research on recurring acquisitions and using MIPRs for employee performance awards was appropriate because the funds were used only to defray the costs of the earned awards, which MDA was asked to pay on behalf of other Defense agencies.
Patricia Sanders, executive director of the Missile Defense Agency, wrote that she "remains concerned … about the factual content and conclusions" of the report, which she contends still "contains matters to which we have objected in prior comments."