The NCUA failed to follow basic rules in contracting for goods and services, leaving the agency vulnerable to fraud and abuse, the department’s Office of Inspector General said in an audit of agency activities between Jan. 1, 2011 and June 30, 2016.
“We found that the depth and scope of the issues we identified are a symptom of a long-standing agency culture that seemingly valued expeditiousness and flexibility over following established policies and procedures,” the IG said in its review.
It continued, “The agency’s culture favored an expeditious and flexible procurement process and lacked enforcement of policies and procedures, which resulted in an environment with the potential for waste, fraud, and abuse.”
The IG noted that the NCUA concurred with the results of the audit and has begun taking actions to improve its review of contracts.
“NCUA considers an effective control framework for procurements activities to be a critical component of our acquisition program,” the NCUA said in a memo attached to the report. “We will continue to build on the progress we have made over the last two years, and implement procedures to monitor our progress.
And the IG reported “Executive management has made several positive changes that we believe should improve the culture, as well as the effectiveness, of the procurement controls and processes. Beginning with staffing changes within OCFO, we have observed a new tone at the top that should have a positive influence going forward.”
The IG reported that the NCUA has initiated more detailed procurement training and has received an exemption from hiring freeze requirements to enable the agency to hire additional procurement personnel.
Included in the IG report are findings that:
- There was a general lack of accountability among staff responsible for ensuring that agency procurement policies were found. This resulted in staff failing to follow those procedures. The IG audit noted, however that all management and all but one staff employee involved in the agency procurement program prior to 2015 have been replaced.
- In March 2012, the NCUA’s Office of Small Credit Initiatives awarded a sole-source contract to a vendor even though nine other companies could have performed the same services.
- The Office of Human resources requested that agency officials sign a $996,000 hotel contract for its 2018 National Conference. Agency procurement officials questioned the location and reported that $330,000 could be saved if the location were changed. That recommendation was ignored and the original contract was signed.
- NCUA did not have a procurement debarment and suspension program—a development that could have resulted in ineligible companies being awarded agency contracts.
- The agency simply extended 15 contracts totaling $761,960, giving them “sole-source” exemptions. The agency said that there was an urgent need for the extension, but the IG found that poor planning and weak contract monitoring caused the urgency.
- Agency contracting officials kept contract files in a multi-purpose room in unlocked cabinets and failed to track them when they were removed from the office.
- A lack of documentation in 48 of the 49 contracts the IG examined resulted the in IG being unable to determine if reviews for such issues as disadvantaged businesses/Minority- and Women-Owned Business were conducted.
- The agency did not have a sufficient number of staff members dedicated to procurement. As a result, the agency was unable to ensure that proper contracting requirements were followed.
