Tuesday, December 6, 2011

CBP Paid Too Much For Steel in Border Fence, IG Says

By: Mickey McCarter


 US Customs and Border Protection (CBP) spent more than it should have on steel when building the Southwest border fence ordered by Congress in 2006, the inspector general (IG) of the Department of Homeland Security (DHS) said Monday.

CBP did not manage its acquisition of steel for the fence carefully, thereby spending about $69 million more than it should have on metal for the fence, the DHS IG said in its report, US Customs and Border Protection's Management of the Purchase and Storage of Steel in Support of the Secure Border Initiative. The total cost of steel for initial construction of the border fence was about $310 million since 2008; the total cost of physical barriers along the Southwest border totaled about $1.2 billion in that time.

"Customs and Border Protection completed 299 miles of fence; however, it did not effectively manage the purchase and storage of steel in support of the Secure Border Initiative (SBI)," the IG report stated. "It purchased steel based on an estimate before legally acquiring land or meeting international treaty obligations. In addition, it did not provide effective contract oversight during the project: it paid invoices late, did not reconcile invoices to receiving documents, and did not perform a thorough review of the contractor's selection of a higher-priced subcontractor or document the reasons for its approval of the subcontractor."

Due to the ineffective oversight of steel purchases, CBP bought more steel than it required, paid to store steel that it was not ready to use, paid interest on late payments, and used a subcontractor that did not offer the lowest price, the IG report charged.

The IG office made five specific recommendations to CBP to avoid similar cost overruns in the future. Those recommendations included storing extra steel in cheaper locations, performing an analysis of errors in the previous purchase of steel, improving communications for reconciling invoices, and reminding CBP officers that invoices are due.

Although CBP generally concurred with the recommendations, it disputed the IG report's characterization of its management of the purchase of steel to meet the mandate of the Secure Fence Act of 2006 (Public Law 109-367).

In a written response to the report, CBP emphasized that Congress gave it 18 months to build out the fence, leaving the agency to make some expenditures to speed the construction of the fence. But CBP did not first legally acquire the land it required and did not first meet international treaty obligations with Mexico before purchasing its steel, thus leaving it to sit needlessly, the IG office rebutted.

CBP further corrected its process for paying invoices, thereby avoiding late payments after some initial problems. But the IG office faulted CBP for not providing it with a copy of its corrective action plan for making timely payments.

The border security agency further contended that it drew upon lessons learned and thoroughly tested fencing configurations before purchasing steel. And while it acknowledged purchasing too much steel, CBP vowed that it would make good use of the steel in future construction projects, such as maintenance of the border fence.

In September 2006, CBP awarded a prime contract for the SBI-Network (SBInet) to Boeing Co. of Chicago, Ill. Although the IG report does not name Boeing, it details CBP's task order to the company to procure steel for the border fence. The task order instructed Boeing to manage three contracts for the purchase of steel, mesh, and storage space. To fulfill the order, the prime contractor stored steel in El Paso, Texas, Houston, Texas, and Lynwood, Calif.

The initial task order covered about 299 miles of border fence although CBP eventually contracted for the construction of about 650 miles of fence along the Southwest border.

According to the IG report, CBP did not oversee the prime contractor appropriately and therefore the company spent $44 million in excess steel due to poor management. CBP incurred another $10 million in storage costs by extending an expensive storage lease for two years rather than moving the steel to a cheaper location, the IG report added.

Other excessive costs included the interest on late invoice payments, among other items, the IG report said.



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