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AUDIT SAYS HILL MAY HAVE WASTED MILLIONS

SHARE AUDIT SAYS HILL MAY HAVE WASTED MILLIONS

Auditors say Hill Air Force Base often strayed from guidelines to decide whether to cancel contracts for tens of millions of dollars worth of back-ordered spare parts.

A year-old Air Force Audit Agency report, obtained through the Freedom of Information Act by the Deseret News, said the base did not keep required logs on $86 million worth of contracts and had incomplete audit trails for decisions on $60 million worth of parts.The audit prompted cancellation of two contracts, saving $249,364. But it said opportunities to save possibly millions more on other contracts had been missed. Hill officials dispute that, saying any materials purchased were used and needed.

But they and the audit say even correct decisions about contract termination often were based on inadequate criteria under Air Force rules.

Also, two other separate audit agency reports - also obtained through the FOIA by the Deseret News - said the base's Ogden Air Logistics Center likely wasted more money on repair contracts and inefficient lodging of visiting personnel.

The Ogden Air Logistics Center at Hill, one of five such centers nationally, is in charge of ensuring adequate support - including repairs, spare parts and trained personnel - for various aircraft and weapons systems. According to audits, the center is supposed to periodically review whether to cancel contracts for on-order spare parts that can take up to three to four years for production and delivery.

The center should determine whether the parts are still needed, and if not, whether contracts could be economically stopped. The Air Force has developed economic models and work sheets to guide those decisions. Workers are supposed to enter codes into computers showing they followed those guidelines and how decisions were reached. But the audit said that on the 26 contracts reviewed for items on order in March, 1988, "54 percent of the assigned codes were inaccurate while 69 percent of the cases reviewed were inadequately documented."

Also, it said, 69 percent "were not properly reviewed by management." And none of the contracts had adequate log books to track decisions. Because of findings during the audit, two contracts that had been cleared to continue instead were canceled at a savings of nearly a quarter-million dollars.

The audit said another $2.2 million contract for flight control computer parts, "which should have been terminated at an approximate savings of $1.5 million, was continued." And another "contract valued at $1.4 million (for nose struts) was not terminated, which resulted in the purchase of unneeded assets."

Also, three contracts "valued at $6.1 million were retained without proper justification" after Hill workers entered codes saying they had used the Air Force's economic model to support their decision but in fact had not. Decisions about another $3 million contract also had been made improperly without using the economic model.

Hill contract managers, interviewed in a conference call, said the right decision had been made anyway on the latter two sets of contracts, but auditors simply had been critical of them for not using the economic model as part of their justification.

They also said any materials purchased in contracts in question were used or sold to foreign governments, and it would be incorrect to say that millions had been wasted because of not following guidelines.

A written statement from Hill also said, "The audit resulted in updated procedures, a revised math model and additional training to assure future terminations are processed according to current policy."

Another audit said a $100.8 million Hill budget for some contracted maintenance and repair likely was up to $7.6 million too high, and "created conditions for potential overnegotiation of repair requirements for some items by at least $1.1 million."

A Hill statement said, however, that Air Force Logistics Command Headquarters made a later budget reduction to compensate.

A third audit said the logistics center was not effectively using on-base quarters prior to placing visiting personnel in nearby motels or hotels.

Better use of on-base quarters - such as not holding reservations all night, or ensuring whether visiting teams of soldiers must room together as often requested - could save $104,400 annually, the audit said.

It also said inaccurate occupancy rates, underutilized spaces, incorrect resident records and inadequate controls over assignment priorities cost the government $196,800 annually. Hill said steps to overcome those problems have been put in place.