This report is "For Official Use Only". This audit was the result of a hotline complaint regarding improper use of Federal Supply Schedule (FSS) for total quality management (TQM) services. The audit objective was to determine whether delivery orders complied with acquisition regulations.
o The Navy inappropriately used the FSS to noncompetitively award $3.5 million in delivery orders for TQM resulting in sole source orders being issued without the required justification and approval. As a result, the Navy may not have realized the cost reductions normally associated with competitive procurements.
o The Naval Sea Systems Command did not establish an effective acquisition plan for activity-based costing services. As a result, they did not obtain savings normally achieved through consolidation of requirements and competitive award process.
o Officials at three shipyards inappropriately certified invoices for payment. As a result, payments to the contractor were not in accordance with contract authorization.