Department Of Defense Audit Report - Laboratory Support Services for Environmental Testing - Appendix A: Scope and Methodology

Scope

Audit Scope: A universe of Government and commercial laboratories used by DoD organizations and the annual dollar amounts spent for environmental tests could not be determined. We judgmentally selected 100 DoD organizations including Government laboratories, military installations, and Defense Logistics Agency organizations and sent questionnaires to those organizations to determine the Government and commercial laboratories used and the amount expended for environmental tests. Of the 100 organizations receiving questionnaires, 72 responded. During FYs 1993 through 1995, the 72 DoD organizations contracted with 402 commercial laboratories and 41 Government laboratories to perform environmental tests at a cost of $3.7 billion and $30.5 million, respectively.

Audit Sample: We judgmentally selected 18 of the 100 DoD organizations to review the administration of environmental testing contracts and evaluate the quality assurance procedures used by these organizations. We reviewed 110 contracts, valued at $27.1 million, with commercial laboratories (see table on the next page).

Audit Period, Standards, and Locations: We performed this economy and efficiency audit from September 1995 through September 1996, in accordance with auditing standards issued by the Comptroller General of the United States, as implemented by the Inspector General, DoD. We included tests of management controls considered necessary. Appendix G lists the organizations we visited or contacted.

Limitations to Audit Scope: We were unable to review the testing costs on restoration contracts because the costs were not identified on the contracts. Testing was a small portion of the overall restoration contracts and the DoD organizations that we reviewed did not track testing costs or require contractors to include detailed testing costs on invoices.

^*These organizations used restoration contracts.

Methodology

Laboratory Support Services: We interviewed contracting personnel and environmental managers at DoD organizations and reviewed the contracting instruments that were used to procure testing services from commercial laboratories from FYs 1993 through 1995. -The contracting instruments included indefinite-delivery contract, blanket purchase agreements, and purchase orders. We also reviewed contractor price lists, invoices, chain-of-custody documents, test results, and the procedures used to analyze test results. In addition, we reviewed whether the commercial laboratories used by the 18 DoD organizations from FYs 1993 through 1995 were debarred or suspended.

Use of Computer-Processed Data: We did not rely on computer-processed data to determine the contractor or Government laboratory capabilities and costs.

Management Control Program

DoD Directive 5010.38, “Internal Management Control Program,” April 14, 1987, requires DoD organizations to implement a comprehensive system of management controls that provide reasonable assurance that programs are operating as intended and to evaluate the adequacy of the controls.

Scope of Review of Management Control Program: We reviewed the adequacy of management controls over the contract administration of environmental testing contracts and the quality of test results received from commercial laboratories. The adequacy of management’s self-evaluation was not assessed.

Adequacy of Management Controls: The audit identified material management control weaknesses as defined by DoD Directive 5010.38. Management controls were not adequate to effectively administer contracts and ensure the quality of environmental test results. These material management control weaknesses will be corrected by the recently established Laboratory and Testing Work Group addressing developing standardized quality assurance procedures; establishing adequate procedures to administer contractor performance; and establishing procedures for inclusion of adequate Government remedy clauses in environmental testing contracts. A copy of the report will be provided to the senior official responsible for management controls at the Deputy Under Secretary of Defense (Environmental Security).

Directive 5010 38 has been revised as “Management Control Program,” August 26, 1996. The audit was performed under the April 1987 version of the directive.

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