[Evaluation Report on the Acquisition of Selected Furniture at the Division of Engineering, U.S. Fish and Wildlife Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 99-I-907

Title: Evaluation Report on the Acquisition of Selected Furniture
       at the Division of Engineering, U.S. Fish and Wildlife
       Service

Report No: 99-I-907

Title:        Acquisition of Selected Furniture at the Division of Engineering, USFWS

Date:          September 1999


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I-IN-FWS-006-98-D

EVALUATION REPORT
  
  Memorandum
  
  To:   Director, U.S. Fish and Wildlife Service
  
  From: Robert J. Williams
        Assistant Inspector General for Audits
  
             Subject:   Evaluation Report on the Acquisition of Selected Furniture at the Division of
             Engineering, U.S. Fish and Wildlife Service (No. 99-I-907)
  
                           INTRODUCTION
  
  This report presents the results of our limited evaluation of the acquisition of selected
  furniture at the Division of Engineering, U.S. Fish and Wildlife Service.  The evaluation was
  initiated based on information we received that the Service had purchased furniture
  unnecessarily and contrary to Federal requirements.  The objective of the evaluation was to
  determine whether the Division complied with applicable policy, procedures, and regulations
  in acquiring the selected furniture. 
  
  SCOPE OF EVALUATION
  
  The evaluation was completed in February 1999 at the Division of Engineering in Lakewood,
  Colorado.  As part of the evaluation, we conducted interviews with Division officials to
  obtain information concerning past and current acquisition functions and activities and
  reviewed the available procurement documentation regarding the selected furniture acquired
  by the Division. 
  
  The evaluation was conducted in accordance with the "Quality Standards for Inspections,"
  issued by the President's Council on Integrity and Efficiency, and accordingly included such
  tests and evaluation procedures that were considered necessary to accomplish the objective.
  We also reviewed the Departmental Report on Accountability for fiscal year 1998, which
  includes information required by the Federal Managers' Financial Integrity Act of 1982, and
  the Service's annual assurance statement on management controls for fiscal year 1998 and
  determined that no material weaknesses were reported in these documents which directly
  related to the objective and scope of our evaluation.  As part of our review, we evaluated the
  system of internal controls to the extent that they related to the objective and scope of the
  evaluation.  The internal control weaknesses identified are discussed in the Results of
  Evaluation section of this report.  Our recommendation, if implemented, should improve
  controls designed to ensure that office furniture is purchased in accordance with Federal
  regulations.
  
  PRIOR AUDIT COVERAGE
  
  Neither the Office of Inspector General nor the General Accounting Office has issued any
  reports during the past 5 years concerning the acquisition of furniture at the Division of
  Engineering.
  
                      RESULTS OF EVALUATION
  
  We determined that the Division of Engineering, U.S. Fish and Wildlife Service, did not
  fully comply with applicable Federal requirements in purchasing $220,204 of office
  furniture.  The Code of Federal Regulations (41 CFR 101-25.104) requires each executive
  agency to determine whether the furniture requirements of the agency can be met through the
  use of "already owned" items before new furniture or office machines are acquired and to
  fully document the justification for the acquisition of new furniture in the agency's files. 
  However, the Division did not include a written justification with the purchase orders or
  other acquisition documents for the purchase of the office furniture reviewed. 
  
  The Division of Engineering purchased the office furniture, including 51 workstations,
  60 chairs, furniture installation and office layout, and design services, for $220,204.  The
  Division Chief said that the decision to buy new furniture was based on the needs of the
  office which existed at the time of purchase.  Specifically, the Chief stated that the replaced
  furniture was about 25 years old and that the new furniture was purchased for 50 staff
  members when the staffing level was more than 60 staff members.  The Chief also stated that
  the new furniture would add "a professional appearance to the engineering office [since] the
  existing furniture was excessively old."  Based on our review, we found that Federal
  regulations require a justification for the purchase of furniture, and the regulations also
  identify circumstances where furniture should not be purchased.  Specifically, the Code of
  Federal Regulations (41 CFR 101-25.104) states:
  
            Each executive agency shall make a determination as to whether the
       requirements of the agency can be met through the utilization of already
       owned items prior to the acquisition of new furniture or office machines. The
       acquisition of new items shall be limited to those requirements which are
       considered absolutely essential and shall not include upgrading to improve
       appearance, office decor, or status, or to satisfy the desire for the latest design
       or more expensive lines.  Generally acquisition of additional furniture or
       office machines from any source will be . . .  limited to the least expensive
       lines which will meet the requirement . . . and the justification for the action
       shall be fully documented in the agency file . . . .
  
  According to Division procurement officials and the Division Chief, written justifications
  were not available in the procurement files for the purchase of the office furniture because
  the contracting officer, at the time of the purchase, was not aware of the requirement to
  prepare a justification for furniture acquisitions.  The Division Chief also stated that he was
  authorized to make the furniture purchases and that his decision was "reasonable considering
  the circumstances at the time."  He further stated that his approval was verbally given to the
  contracting officer, who placed the order for the office furniture. 
  
  When we informed the Division Chief of the Code's requirement, the Chief stated that he
  was "sure" that there was a justification for the furniture purchase in the administrative files
  but that these files had been destroyed after a 2-year holding period in accordance with the
  National Archives and Records Administration's General Records Schedule 3.  However,
  General Records Schedule 3 requires that "routine procurement files" (that is, contract;
  requisition; and purchase order, including correspondence and related papers pertaining to
  award, administration, receipt, inspection, and payment) maintained for transactions of more
  than $25,000 be held for 6 years and 3 months after the final payment.  As such, since the
  office furniture totaled $220,204, any justification, including the determination that the
  requirement could not be met with already owned items, and the other procurement records
  prepared for the purchases should have been retained in the Division's files until fiscal year
  2000. 
  
  Recommendation
  
  We recommend that the Director, U.S. Fish and Wildlife Service, ensure that Service
  officials are aware of acquisition requirements which provide assurance that purchases of
  office furniture are fully documented by written justifications and that these justifications are
  retained for the appropriate time period.
  
  U.S. Fish and Wildlife Service Response and Office of Inspector General
  Reply
  
  In the September 2, 1999, response (Appendix 1) to our draft report from the Acting Director
  of the U.S. Fish and Wildlife Service, the Service concurred with the recommendation. 
  Based on the response, we consider the recommendation resolved but not implemented. 
  Accordingly, the recommendation will be referred to the Assistant Secretary for Policy,
  Management and Budget for tracking of implementation. 
  
  Additional Comments on Evaluation Report
  
  In its response, the Service provided comments regarding the documentation requirements
  of the contracting officer.  The Service referred to Subpart 8.1 of the Federal Acquisition
  Regulation.  Specifically, Subpart 8.102, "Policy," states:
  
            When it is practicable to do so, agencies shall use excess personal property
       as the first source of supply in fulfilling their requirements and those of their
       cost-reimbursement contractors. Accordingly, agencies shall ensure that all
       personnel make positive efforts to satisfy agency requirements by obtaining
       and using excess personal property (including that suitable for adaptation or
       substitution) before initiating contracting action.
  
  The Service stated that the Federal Acquisition Regulation "is the primary source of
  regulation and guidance for all Government contracting officers" and that Subpart 8.102
  "does not contain a requirement for any specific file documentation." The response further
  stated, "Although this [the Federal Acquisition Regulation] differs somewhat from the
  regulation at 41 CFR 101, such differences are not unusual in Federal acquisition practice."
  
  The Federal Property Management Regulations contained in the Code of Federal Regulations
  (41 CFR 101-25.104) require that, prior to an acquisition of new furniture, the agency "make
  a determination as to whether the requirements of the agency can be met through the
  utilization of already owned items."  The Code further states that if the requirement cannot
  be met, the justification for the acquisition action "shall be fully documented in the agency
  file."  However, the Code does not specify either the procurement or the property file.  We
  suggest that the Service document the determination in the procurement file, since
  Subpart 8.102 of the Federal Acquisition Regulation does state that agencies "shall ensure
  that all personnel make positive efforts to satisfy agency requirements by obtaining and using
  excess personal property" before initiating contracting actions. However, we believe that the
  Service's proposed corrective action to "follow all applicable requirements prescribed by the
  FAR [Federal Acquisition Regulation] and the Code of Federal Regulations" should resolve
  any ambiguities that exist between the Federal requirements.
  
  Since the report's recommendation is considered resolved, no further response to the Office
  of Inspector General is required (see Appendix 2). 
  
  Section 5(a) of the Inspector General Act (Public Law 95-452, as amended) requires the
  Office of Inspector General to list this report in its semiannual report to the Congress.
  
  We appreciate the assistance of Service personnel in the conduct of our evaluation.                                                            APPENDIX 2
  
  
  
            STATUS OF EVALUATION REPORT RECOMMENDATION
  
  
                   Finding/Recommendation
                         Reference
                                                             
                           Status
                                                             
                      Action Required
     
  
                                1
     
  Resolved; not
  implemented.   
  No further response to the Office
  of Inspector General is required. 
  The recommendation will be
  referred to the Assistant Secretary
  for Policy, Management and
  Budget for tracking of
  implementation.