Subject: [NEXTEL-1] GAO Investigation Finds Navy Circumvented Rules To Pay $24,482.00 Nextel Bill

From: [email-masked]
Date: Thu, 29 May 2003 10:54:07 -0400

GAO Investigation Finds Navy Circumvented Rules To Pay
$24,482.00 Nextel Bill

Looks like even the Navy has charge card issues:
And you thought your Wife (or husband) was bad.

Here is the kicker- $25.00 per minute for airtime???

"For the 3 months of
activity we audited, we found that three of the five
phones had either no
voice activity or very little. For example, one of
these cell phones had only
2 minutes of calls during a month that we audited. This
is the equivalent of
the government paying $25 per minute for airtime".
================================================
United States General Accounting Office
Testimony

Before the Subcommittee on Government Efficiency,
Financial Management and Intergovernmental Relations,
Committee on Government Reform, House of
Representatives

For Release on Delivery
Expected at 10 a.m.
Wednesday, March 13, 2002

PURCHASE CARDS
Continued Control
Weaknesses Leave Two
Navy Units Vulnerable to
Fraud and Abuse

Statement of Gregory D. Kutz
Director, Financial Management and Assurance

<SNIP>

Our analysis of the population of fiscal year 2001
SPAWAR Systems Center
and NPWC transactions identified a substantial number
of potential split
purchases. To determine whether these were, in fact,
split purchases, we
obtained and analyzed the supporting documentation for
30 potential split
purchases at SPAWAR Systems Center and 20 potential
split purchases at
NPWC. We found that in many instances, cardholders made
multiple
purchases from the same vendor within a few minutes or
a few hours for
items such as computers, computer-related equipment,
cell phone services,
and small contracts that involved the same, sequential,
or nearly sequential
purchase order and vendor invoice numbers. Based on our
analyses, we
concluded that 13 of the 30 SPAWAR Systems Center and
10 of the 20
NPWC purchases that we examined were split into two or
more
transactions to avoid micropurchase thresholds. Table 7
provides several
examples of cardholder purchases that we believe
represent split
purchases intended to circumvent the $2,500
micropurchase limit or other
cardholder single transaction limit.

<SNIP>

Page 41 GAO-02-506T

In the large case we audited, we identified a $24,000
monthly bill for about
200 Nextel cell phones and related services that were
acquired to provide a
voice communication system for coordination and control
among various
groups during a demonstration and test of a military
wide area relay
network. The Nextel phones were selected for evaluation
as an alternative
not for their standard cellular phone-to-phone
capability, but for their
“group-talk” feature, which provides a wireless
“walkie-talkie” like
capability for preprogrammed work groups. One of the
key control failures
with this cell phone procurement was related to SPAWAR
Systems Center’s
handing out cell phones to project team members and
government
contractors without keeping an inventory of who had
each cell phone.

Contractors that used these government cell phones told
us that SPAWAR
Systems Center officials brought a box of 60 or 70 cell
phones to a meeting
and handed them out to contractors that were part of
the team. The
contractors told us that SPAWAR Systems Center provided
them with no
instructions on proper use of the cell phone. The
approximately 200 cell
phones were not physically controlled and SPAWAR
Systems Center did
not have a list of who had the cell phones. Based on
further investigation,
we found that these contractors were using the cell
phones to call friends
and family and to conduct other personal business.
Based on our review of
the bills for this Nextel account—which totaled about
$74,000 during fiscal
year 2001—we estimated that about $9,200 was spent on
long distance and
other local telephone calls, which was not the primary
intended purpose of
these cell phones.

In addition to the Nextel contract, we also identified
cell phone contracts
with large monthly fees for phones that were either
used infrequently or
not at all. For example, we audited one account with
five cell phones. The
service for each phone included 500 minutes of airtime,
and the basic
service cost of each cell phone was $50 a month. For
the 3 months of
activity we audited, we found that three of the five
phones had either no
voice activity or very little. For example, one of
these cell phones had only
2 minutes of calls during a month that we audited. This
is the equivalent of
the government paying $25 per minute for airtime.

Table 7: Examples of Potential SPAWAR Systems Center
and Navy Public Works Center San Diego Split Purchases

Navy unit - SPAWAR

Vendor - Nextel Wireless

Date  - 7/17/2001

Charge - 10 charges

Items purchased -Cell phone service

Cost of - $24,482.00

Indicator of split purchase
 10 separate charges of about
$2,500 each to pay July monthly bill
--------------------------------------------------------------------------

Nextel was also part of a $74,936.00 bill which GAO
called the Nature of transaction:

* Abusive
* Uneconomical procurement, physical control, and usage
of services

And  it

* Questionable

You just can't make this stuff up...................

http://www.gao.gov/new.items/d02506t.pdf
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