Report: Feds wasted $69 million on border fence

Orange County Register
December 6, 2011
by Cincy Carcamo

Border officials wasted $69 million of taxpayer money after they bought more steel than they needed to build the fence along United States and Mexico border, according to a report by the Office of Inspector General for the Department of Homeland Security.

Customs and Border Protection completed nearly 299 miles of fencing at a cost of $1.2 billion after The Secure Fence Act of 2006 required the agency to put up a fence in areas along the southwest border in California, Texas, New Mexico and Arizona, according to the report released on Monday. The work was done beginning in 2006 and through the time of the federal audit, which ended in April, the report said.

However, the same report states that the agency purchased 27,557 tons – about $44 million worth – of extra steel it didn't need. The agency also incurred millions of dollars in extra storage costs because it failed to move the remaining steel to a government facility for more than two years after the original storage contract expired, the report said.

The agency purchased its steel based on an estimate before legally acquiring land or meeting international treaty obligations, the audit discovered. In March 2008, The agency instructed the prime contractor to purchase approximately 145,000 tons of steel before finalizing fence designs. The agency ended up paying for $9.8 million in additional storage costs.

Customs and Border Protection officials took issue with some of the report's findings, which they say were not supported by the documentation.

The agency was faced with strict time constraints and was urgently trying to get the program started and needed to obtain large quantities of steel, CBP officials said in a rebuttal in the auditor report.

"As a result, the selection of the subcontractor with a proven record to deliver the required large quantities of steel under tight time constraints was made in accordance to the "best value" criterion instead of a "lowest cost." CBP considers that the contractor made a valid management decision," according to the CBP rebuttal.

While the federal auditors said they recognized the constraints placed on the agency by The Secure Fence Act of 2006, they maintained that if the agency had legally acquired the land and met international treaty obligations before it purchased the steel, it would have reduced the cost to purchase and store the steel.

The audit – which took place between October 2010 and April – also details what officials described as the following mistakes:

The agency lacked effective contract oversight during the project and ended up paying invoices late and didn't reconcile invoices to receiving documents
Officials didn't perform a thorough review of the contractor's selection of a higher-priced subcontractor and failed to document the reasons for its approval of the subcontractor.

In September 2009, agency officials purchased 34 tons of steel for $23,000, even though it had significant quantities of the same steel already in storage.
The report stated that the combination of missteps resulted "in additional expenditures of about $69 million that could have been put to better use."

In response to the audit, CBP officials said they issued an alert to all their contractors, letting them know that they need to perform adequate subcontract reviews and provide appropriate data.

CBP ended up moving the remaining steel inventory to a government-owned site in Texas in late March, the audit report stated. The remaining structural steel is now being used for maintenance and some new construction work.

http://www.ocregister.com/news/steel-330219-agency-report.html