This week the U.S. Department of Labor’s Office of Inspector General released an audit report, “Procurement Violations and Irregularities Occurred in OSHA’s Oversight of a Blanket Purchase Agreement to the Deputy Assistant Secretary for Safety and Health,” (Report Number: 03-09-002-10-001).

In response to a referral from the U.S. Department of Labor’s (DOL) Solicitor concerning possible contracting improprieties, the Office of Inspector General (OIG) conducted a performance audit of a Blanket Purchase Agreement (BPA), and related t the Occupational Safety and Health Administration OSHA and Global Management Systems, Incorporated (GMSI).

The possible contracting improprieties involved using the BPA as a means to fulfill a request from then Assistant Secretary for Occupational Safety and Health, Edwin Foulke, Jr., to procure the services of Randy Kimlin. The report states “Kimlin was not interested in becoming a Federal employee. Consequently, OSHA officials felt the most expeditious way to bring Mr. Kimlin on board was to add him under the BPA with GMSI. Mr. Kimlin was ultimately hired by GMSI's subcontractor, Technical Assistance and Training Corporation (TATC). OSHA officials told us they felt that the arrangement was justifiable because TATC had previously provided OSHA with upper management staff to perform non-administrative work.”

OSHA could not demonstrate it received services for $681,379 invoiced by GMSI for Kimlin’s consulting services from 2006 to 2008. OSHA provided neither evidence of products or deliverables produced by Kimlin or an independent record of the hours he charged. OSHA officials said they did not have any work products from Kimlin. They relied on then Assistant Secretary Foulke to monitor Kimlin’s work. Additionally, there was no record of sign-in/sign-out logs to track the hours Kimlin worked.

To view the report, including the scope, methodology, and full agency response, go to: www.oig.dol.gov/public/reports/oa/2009/03-09-002-10-001

States the audit report: “The OIG found violations and irregularities occurred in the administration of the BPA and the related task orders. The scope of the GMSI BPA did not include consulting services; however, Mr. Kimlin was authorized, through the task orders awarded against the GMSI BPA, to serve as a consultant to the then Assistant Secretary for OSHA. OSHA circumvented Federal and DOL procurement requirements by using the GMSI BPA to obtain consulting services non-competitively from Kimlin, who was requested by then Assistant Secretary Edwin Foulke, Jr.

“Additionally, OSHA did not have proper documentation to approve invoices submitted by GMSI for Mr. Kimlin’s consulting services.

“Finally, OSHA allowed GMSI to invoice more hours than awarded for Kimlin and approved unallowable travel expenses incurred by Kimlin while commuting between his home in South Carolina and Washington, D.C., in violation of the terms of the BPA.

“As a result, OSHA cannot justify procuring Kimlin’s consulting services nor demonstrate that the $681,379 charged for his work was reasonable. Included in the $681,379, were charges of $153,161 for labor hours that exceeded the hours authorized in the task orders and $95,658 for unallowable commuting costs. At the time of our audit, OIG’s Office of Special Investigations was investigating the matter.”

The OIG recommended that that the ddeputy assistant secretary for occupational safety and health: work with OASAM procurement officials to develop an internal policy for obtaining consulting services; recover $681,379 paid to GMSI for Kimlin’s labor and travel costs; and ensure OSHA managers and supervisors do not bypass control procedures for administering contracts.

Deputy Assistant Secretary Shalhoub agreed with the recommendations except for the recovery of payments to the contractor, GMSI, for Kimlin’s labor and travel costs. He believes the disallowance of all costs associated with Kimlin is a broad rejection of the expense related to the work that was provided by Kimlin and is unnecessarily injurious to GMSI. However, the deputy assistant secretary acknowledged that $95,658 in commuting travel expenses for Kimlin was not allowed by terms of the BPA and OSHA will seek recovery of these costs from GMSI. The deputy assistant secretary stated that OSHA defers making a final response on the recommended recovery until the OIG’s Office of Inspections and Special Investigations completes its investigation into this matter. The response did not change the findings and recommendations.

Concerning the recovery from GMSI of $681,379 total costs paid to Kimlin, the Federal Acquisition Regulation (FAR) 31.205-33(f) provides that fees for services rendered are allowable only when supported by evidence of the nature and scope of the services furnished. The FAR is supported by internal control standards for Federal Government that require agencies to document all transactions and other significant events and the documentation be readily available for examination. OSHA was not able to provide products or deliverables produced by Kimlin or independent records to support the labor hours charged.