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ACF Used Contractor Personnel To Perform Inherently Governmental Functions and Paid Millions in Potentially Unallowable Costs

Issued on  | Posted on  | Report number: A-12-22-10000

Why OIG Did This Audit

  • In Federal FY 2021, there was an influx of unaccompanied alien children at the U.S. southern border. As a result, the Administration for Children and Families’ (ACF’s) Office of Refugee Resettlement, which manages the Unaccompanied Alien Children Program, identified a need to increase the number of shelter beds and related services in its provider network. ACF awarded a $301,747 sole source contract to Deloitte Consulting, LLP (Deloitte) to provide professional support services to address the influx of children and through subsequent modifications of the contract, increased the value of the award to $19.4 million.
  • We are conducting a series of audits that focus on contracting for shelter and related services for unaccompanied alien children. This report addresses whether ACF awarded and monitored the Deloitte contract in accordance with Federal requirements and HHS policies and procedures.

What OIG Found

ACF did not award and monitor the Deloitte contract in accordance with Federal requirements and HHS policies and procedures:

  • ACF did not solicit and receive offers from two or more offerors as required by the Federal Acquisition Regulation (FAR), potentially denying the Federal Government an opportunity to receive higher quality, lower cost services from another vendor.
  • ACF administered the contract in a manner that created the appearance of an employer-employee relationship with Deloitte staff. ACF also allowed Deloitte and its subcontractors to perform inherently governmental functions.
  • ACF did not review and approve invoices in accordance with the FAR or the terms of the contract. As a result, ACF paid Deloitte approximately $5 million for potentially unallowable costs and may have violated the Antideficiency Act by paying $1.5 million for services outside the periods of performance.
  • ACF did not provide written consent for Deloitte to use subcontractors.

What OIG Recommends

We made six recommendations, including that ACF update its policies and procedures and provide training related to awarding and monitoring of contracts, review potentially unallowable costs, and review and correct any potential Antideficiency Act violations. The full recommendations are in the report.

ACF concurred with five of our recommendations, partially concurred with one recommendation, and detailed the steps it has taken and plans to take in response to our recommendations.

25-A-12-051.01 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families update its policies and procedures for awarding contracts for other than full and open competition in emergency situations to incorporate FAR requirements for time-and-materials contracts.

25-A-12-051.02 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families provide training to program officials and contracting staff as appropriate that covers requirements for administering nonpersonal services contracts for professional support services; specifying that contracts must not be used for the performance of inherently governmental functions; providing written consent for the use of subcontractors; reviewing and approving invoices; and maintaining documentation to support costs for services performed.

25-A-12-051.03 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families update its policies and procedures for receipt and oversight of deliverables and to incorporate Federal requirements related to the: (1) review, approval, and monitoring of invoices and (2) use of CLINs to properly account for and pay contractor expenditures.

25-A-12-051.04 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families review potentially unallowable costs and obtain supporting documentation or take appropriate action to recoup from Deloitte any improperly paid amounts for $2,022,468 for invoices that did not identify CLINs to track expenses; $1,362,621 in overtime charges; $1,226,649 of labor charges for invoices that did not include specific dates when each employee performed work; $244,174 in nonlabor costs that were not supported by receipts; and $112,945 of unsupported subcontractor charges.

25-A-12-051.05 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families review and correct potential Antideficiency Act violations by deobligating and obligating funds to appropriate CLINs used and report an Antideficiency Act violation if the violation cannot be corrected.

25-A-12-051.06 to ACF - Open Unimplemented
Update expected on 08/25/2025
We recommend that the Administration for Children and Families develop and implement policies and procedures requiring contracts to include FAR clauses related to overtime requirements in contracts and for tracking and verifying that all contractor staff (including subcontractors) assigned to work on a contract complete required trainings before performing any work under the contract (or within the allowed time).

View in Recommendation Tracker

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