The U.S. General Accounting Office (GAO) issued an October report on the Centers for the Medicare & Medicaid Services (CMS) saying that “pervasive deficiencies” in CMS contract management internal control increases the risk of improper payments or waste.
According to the GAO’s report, 84.3 percent of fiscal year 2008 contract actions contained at least one instance where a key control was not adequately implemented. In addition, the agency estimated that at least 37.2 percent of fiscal year 2008 contract actions had three or more instances in which a key control was not adequately implemented.
As a follow-up to a 2007 report on certain contracts at CMS by GAO, the agency was asked to identify the extent to which CMS implemented effective control procedures over contract actions and established a strong control environment for contract management.
The report stated that these deficiencies were created from an overall weak control environment as characterized primarily by “inadequate strategic planning for staffing and funding resources.”
Additionally, GAO reported that CMS did not accurately capture data on the nature and extent of its contracting, including that CMS has not set criteria for the use of negative certification. The GAO believes this “hinders CMS’s ability to manage its acquisition function by identifying areas of risk, due to lack of quality assurance procedures over data entry."
Although the GAO made recommendations in 2007 to improve internal control over contracting and payments to contractors, CMS has not substantially addressed seven of the nine recommendations, the GAO reported.
“No action taken” status was assigned to 2007’s recommendations to develop policies for pre-award contract activities and develop guidelines regarding sufficient detail to support contractor invoices along with the negative certification criteria.
“Actions insufficient” status was given to the following recommendations:
- Develop policies regarding cognizant federal agency responsibilities;
- Provide training on the invoice review policies;
- Develop a plan to reduce the backlog of contracts eligible for closeout; and
- Review the questionable payment identified in GAO’s 2007 report.
CMS “completed” the GAO's 2007 recommendations to develop policies that clarify roles and responsibilities during the invoice review process and develop a centralized tracking mechanism for employee training, according to GAO.
GAO used a statistically random sample of 2008 CMS contract actions including contract awards and modifications. The results were projected to the population of 2008 CMS contract actions.