[Audit Report on Administration of the Uniform Supply Contract, National Park Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-I-319

Title: Audit Report on Administration of the Uniform Supply Contract,
       National Park Service

   
  Date:  April 17, 2000
  
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  U.S. Department of the Interior
  Office of Inspector General
  
  
  
  EXECUTIVE SUMMARY
  
  Administration of the Uniform Supply Contract,
  National Park Service
  Report No.  00-I-319  
  April 2000
  
  BACKGROUND
  
  The National Park Service (NPS), under a requirements contract, obtains uniforms and
  related items for its employees and for employees of the U.S. Fish and Wildlife Service
  (FWS) and the U.S. Army Corps of Engineers.  The contract (No. 1443CX001-94-012),
  which NPS awarded to R & R Uniforms, Inc., of Nashville, Tennessee, had a term not to
  exceed 5 years, with the exercise of annual renewal options.  The final renewal period
  ended on September 30, 1999.  However, because NPS did not complete actions to award
  a new contract by October 1, 1999, it extended the contract to June 30, 2000.  From the
  inception of the contract through September 30, 1999, the three Federal agencies
  obligated funds of $32.8 million, and NPS modified the contract 77 times.
  
  NPS park superintendents determine which employees are required to wear uniforms, and 
  employees  who  are  authorized  to wear uniforms  are given  an annual  uniform 
  allowance.  NPS policy on the uniform program is contained in NPS-43, "Servicewide
  Uniform Program Guideline," which states that uniform coordinators and program
  coordinators at the parks are to (1) provide programmatic guidance on matters such as
  uniform types and (2) monitor the administration of the uniform contract.  The policy also
  describes procedures for placing orders and for monitoring the receipt of uniforms.  NPS
  allows employees to purchase items from the contractor with their own funds when the
  employees have exhausted their individual allowances.  Records of each employee's
  annual uniform allowance are maintained by the contractor.  
  
  OBJECTIVE
  
  The objective of the  audit, which NPS requested, was to determine whether
  improvements were needed in the manner in which NPS contracted for uniforms for NPS,
  FWS, and Corps employees.
       
  RESULTS IN BRIEF
  
  We determined that NPS needed to improve its controls over the administration of the
  employee uniform contract.  Office of Management and Budget Circular No. A-123,
  "Management Accountability and Control," requires agencies to establish management
  controls to assist program and financial managers in achieving results and safeguarding
  the integrity of their programs.  Although NPS guidance describes the duties of personnel
  who are responsible for the uniform program, NPS had not provided sufficient
  management oversight to ensure that the uniform contract was properly administered. 
  Specifically, for 48 of the 63 months that the contract and one extension were in effect,
  NPS had no permanently assigned manager to oversee the administration of the contract. 
  Also, NPS had not established (1) a process that provided reasonable assurance that
  invoices (billings from the contractor) were accurate before payments were made, (2)
  sufficient controls over the recording of financial activities associated with the contract,
  or (3) limitations on its liability for compensating the contractor for discontinued stock. 
  Further, NPS did not implement controls to ensure that employees purchased only a
  reasonable amount of necessary uniform items.  As a result, NPS had little assurance that
  all contract payments were made for items that employees ordered and received in good
  condition and that uniform purchases were mission related.  NPS also did not have
  reliable information on the status of contract funding and assumed a liability for the
  purchase of excess or discontinued uniform items.
                                                               
  We also identified other contract/contractor performance areas in which improvements or
  corrective actions may be needed, such as the issuance of unnecessary reports and
  noncompliance with the interagency agreements governing the relationship between NPS,
  FWS, and the Corps.  
  
  RECOMMENDATIONS
  
  We recommended that NPS appoint a permanent manager for the uniform program who
  has clearly defined duties and responsibilities and that NPS establish controls to ensure
  that sufficient amounts of funds are obligated to pay for employees' authorized uniform
  allowances.  
  
  AUDITEE COMMENTS AND OFFICE OF INSPECTOR GENERAL
  EVALUATION
  
  NPS concurred with the report's two recommendations and agreed to take the
  recommended corrective actions.  We have asked NPS to provide additional information
  on one of the recommendations, and we consider the other recommendation resolved but
  not implemented.
     C-IN-NPS-002-99-R
  
  
  
  
  April 17, 2000
  
  
  AUDIT REPORT 
  
  Memorandum
  
  To:  Assistant Secretary for Fish and Wildlife and Parks 
  
  From:  Roger La Rouche
  Acting Assistant Inspector General for Audits
                                                               
  Subject:  Audit Report on Administration of the Uniform Supply Contract, National Park
  Service (No. 00-I-319)
  
  INTRODUCTION
  
  This report presents the results of our review of the National Park Service's (NPS)
  administration of the requirements contract with R & R Uniforms, Inc.   Under this
  contract, NPS purchased uniforms and related items for its employees and for employees
  of the U.S. Fish and Wildlife Service (FWS) and the U.S. Army Corps of Engineers.  The
  objective of the audit, which NPS requested, was to determine whether improvements
  were needed in the manner in which NPS contracted for uniforms for NPS, FWS, and
  Corps  employees.
          
  BACKGROUND
  
  R & R Uniforms, Inc. of Nashville, Tennessee, a subsidiary of Horace Small Apparel
  Company, has supplied uniforms to NPS for 18 years.  The company recently was
  acquired by VF Workwear, Inc.  NPS awarded Contract No. 1443CX0001-94-012 to R &
  R Uniforms on June 20, 1994.  This contract had a term not to exceed 5 years, with the
  exercise of annual renewal options.  The final renewal period ended on September 30,
  1999.  Because NPS had not completed actions to award a new contract by October 1,
  1999, it extended the contract to June 30, 2000.  
  
  From inception of the contract through September 30, 1999, NPS, FWS, and the Corps
  obligated  funds of $32.8 million,  and NPS modified the contract 77 times.  The total
  amount of funds obligated by the three Federal agencies from contract issuance through
  September 30, 1999, and the average number of personnel who had uniform allowances
  during this period are as follows:   
           
                                          
NPS park superintendents determine which employees are required to wear uniforms, and
for authorized employees, NPS provides an annual uniform allowance.   NPS policy on
the uniform program is contained in NPS-43, "Servicewide Uniform Program Guideline,"
which states that uniform coordinators and program coordinators at the parks are to (1)
provide programmatic guidance on subjects such as the types of uniforms and employee
personal appearance and conduct and (2) monitor the administration of the uniform
contract.  The policy also describes procedures for placing orders and for monitoring the
receipt of uniforms.  NPS allows employees to purchase items from the contractor when
the employees have exhausted their individual allowances.  Employees pay for such
purchases with their own funds, and these transactions do not impact the contract or
affect the authorized funding level of the contract. Records of each employee's annual
uniform allowance, including accounting information on items ordered and shipped, are
maintained by the contractor.
                              
SCOPE OF AUDIT 
                              
We performed our audit from August to November 1999 at the Nashville offices of R &
R Uniforms and at NPS headquarters in Washington, D.C.; at NPS's Harpers Ferry
Center and Harpers Ferry National Historic Park in Harpers Ferry, West Virginia; at 
Antietam National Battlefield in Sharpsburg, Maryland; and at Grand Canyon National
Park in Arizona.  We also visited the contracting officers' technical representatives of
FWS and the Corps.  These representatives were located in Arlington, Virginia, and
Washington, D.C., respectively. Although our audit focused mainly on NPS's uniform
program, we visited FWS's Bosque del Apache National Wildlife Refuge in Socorro,
New Mexico, and its uniform coordinator in Albuquerque, New Mexico.  At the sites
visited, we reviewed procedures for ordering, shipping, receiving, and accounting for
orders of uniforms and related items.  To obtain information on the financial activity
related to funding the uniform contract and contractor payments, we visited NPS's
Accounting Operations Center in Reston, Virginia.  We also reviewed contract and
accounting data for fiscal years 1995 through 1999 and NPS policy as set forth in NPS-
43.  Because neither NPS nor FWS maintained centralized records on orders placed or
received, we performed limited testing to determine whether (1) employee orders for
which payments were made were for items that employees received in good condition and
(2) employee orders were placed for appropriate and necessary uniforms and related items. 
                              
We conducted our audit in accordance with the "Government Auditing Standards," issued
by the Comptroller General of the United States.  Accordingly, we included such tests of
records and other auditing procedures that were considered necessary under the
circumstances.  As part of the audit, we reviewed the internal controls to the extent we
considered necessary to accomplish our audit objective, including a review of NPS's May
1998 interim report "Controls Over Costs for Uniforms in the National Park Service,"
which described inadequacies in financial controls over the uniform program.  In
evaluating internal controls, we found weaknesses in NPS's separation of duties, data
integrity, and use of program funding.  Our recommendations, if implemented, should
improve the internal controls in these areas.  We also reviewed the Departmental Report
on Accountability for fiscal year 1998, which includes information required by the
Federal Managers' Financial Integrity Act, and the Assistant Secretary for Fish and
Wildlife and Parks annual assurance statement on management controls for fiscal year
1998.  We determined that there were no reported weaknesses directly related to the
objective and scope of this audit.
                              
PRIOR AUDIT COVERAGE
                              
During the past 5 years, the Office of Inspector General (OIG) has not issued any reports
on NPS's uniform program.  However, in February 1997, the General Accounting Office
issued the report "Land Management Agencies Information on Selected Administrative
Policies and Practices" (No. GAO/RCED-97-40).  The report compared policies and
practices among four land management agencies (NPS, FWS, the Bureau of Land
Management, and the U.S. Forest Service) for selected administrative activities, including
providing uniforms.  The report did not contain any conclusions or recommendations.
                              
RESULTS OF AUDIT 
  
  We determined that NPS needed to improve its controls over the administration of the
  employee uniform contract. Office of Management and Budget Circular No. A-123,
  "Management Accountability and Control," requires agencies to establish management
  controls to assist program and financial managers in achieving results and safeguarding
  the integrity of their programs.  Although NPS guidance describes the duties of personnel
  who are responsible for the uniform program, NPS had not provided sufficient
  management oversight to ensure that the uniform contract was properly administered. 
  Specifically, for 48 of the 63 months that the contract and one extension were in effect,
  NPS had no permanently assigned manager to oversee the administration of the contract. 
  Also, NPS had not established (1) a process that provided reasonable assurance that
  invoices (billings from the contractor) were accurate before payments were made, (2)
  sufficient controls over the recording of financial activities associated with the contract,
  or (3) limitations on its liability for compensating the contractor for discontinued stock. 
  In addition, NPS did not implement controls to ensure that employees purchased only a
  reasonable amount of necessary uniform items.  As a result, NPS had little assurance that
  all contract payments were made for items that employees ordered and received in good
  condition and that uniform purchases were mission related.  NPS also did not have
  reliable information on the status of contract funding and assumed a liability for the
  purchase of excess or discontinued uniform items.
  
  In requesting an audit of the administration of the uniform contract, NPS said that it
  sought information on "the contractual relationship between the NPS and R & R
  Uniforms, in such a way that it serves as a learning experience for both organizations." 
  For most of the contract's performance period, however, NPS had no program manager to
  oversee its uniform program or contractor performance, and NPS relied on the contractor
  to supply uniforms and related items and to properly bill for these items.  Specifically,
  during 48 of the 63 months from June 1994 through September 1999, NPS had no
  dedicated manager assigned to the uniform program (a manager was assigned to the
  uniform program from June 1997 to September 1998 and another employee served as a
  temporary uniform program manager for the 4 months from June through September
  1999).
  
  Payment Process Controls
  
  We found that NPS had not established administrative controls to ensure that  invoices
  submitted by the contractor were accurate before payments were made.  The Code of
  Federal Regulations (48 CFR 42.302 (a)(12)) requires the contract administrative officer
  to "review and approve or disapprove the contractor's requests for payments," and NPS
  requires its contracting officer's technical representative to receive, analyze, verify, and
  certify that contractor invoices are proper.  We found, however, that NPS did not verify
  the accuracy of contractor billings but instead made payments based on invoices
  submitted twice monthly by R & R Uniforms.  NPS's contracting officer said that unless
  she received notification from personnel in the field that the invoices were not accurate,
  she approved invoices for payment without independently verifying that the employees
  had ordered or received the items.  The field offices, however, could not and did not
  question the propriety of the billings because they did not receive the invoices and
  therefore had no information on the amounts billed or on the uniform items ordered or
  received.
  
  In our opinion, NPS and the other agencies (which also did not certify that billed items
  were ordered or received) are at risk that payments may be made to the contractor for
  uniforms and related items that employees did not order, receive, or receive in good
  condition.  However, based on our limited testing, we found no indication that payments
  had been made for items that were not ordered or received in unacceptable condition. 
  Specifically, we reviewed uniform orders placed during fiscal years 1998 and 1999 by
  eight NPS employees with uniform allowances to determine whether the contractor's
  system for reporting uniform orders was reliable.  Based on site visits and interviews, we
  determined that for the eight employees, the amounts billed by the contractor and paid by
  NPS were for uniform items that had been ordered and received in good condition.
  
  According to NPS officials, NPS plans to develop an automated system to capture data
  that will be used to verify contractor invoices.  We consider this action unnecessary
  because such a system would duplicate information currently available from the
  contractor and the use of such a system would not provide better data for NPS to verify
  invoiced amounts.  Instead, we believe that NPS should ensure that billed amounts are
  accurate by implementing administrative procedures such as sampling transactions on a
  periodic basis to verify that billed items have been ordered and received by employees in
  good condition.
  
  Accounting and Contracting Controls
  
  We also found that NPS did not have sufficient controls over financial activities related to
  the uniform contract.  For example, the amount of obligated funds recorded in NPS's
  financial system differed from the amount of funds authorized on contract modification
  documents, contract modifications contained inaccurate financial data, uniform orders
  were placed for amounts that exceeded the amount of funds obligated by contract
  documents, and fiscal year 1999 funds were obligated by NPS for uniform items paid by
  the Corps.  Because NPS did not maintain reliable data, it had little assurance that
  sufficient funds were available for uniform orders or that funds were used effectively.
  
  Accounting Errors.  We found that NPS made errors in recording funding actions 
  related to the uniform contract as follows:
  
  - NPS issued a contract modification to obligate fiscal year 1996 funding of $371,100 for
  FWS uniforms but recorded an obligation of only $171,100 in its financial system for this
  transaction.  According to NPS, the obligation was recorded inaccurately because NPS's
  Accounting Operations Center, which incorrectly assumed that a previously recorded
  obligation for $200,000 was erroneous, did not enter $200,000 of the modification's
  funding into its financial system in an effort to offset the error.
  
  - NPS's Accounting Operations Center did not record two transactions in NPS's financial
  system.  These two transactions were obligations of $78,536 and $95,161 for fiscal years
  1996 and 1997, respectively, which were authorized under two contract modifications
  that funded Corps uniforms.  Operations Center personnel said that they did not enter the
  amounts into the financial system because there were no funds available from the Corps 
  to cover the modifications.  We found, however, that there were funds available for at
  least the 1996 modification.
  
  - In a separate transaction, NPS obligated funding of $27,662 for fiscal year 1997 Corps
  uniform orders, thereby duplicating a previously recorded obligation.
  
  - Accounting entries to obligate fiscal year 1995 funds for Corps uniforms differed by
  $2,549 from the amounts obligated in five contract modifications.  Accounting
  Operations Center staff could not explain why the financial system contained inaccurate
  data.
  
  Contract Modification Errors.  We also found that NPS issued contract modifications
  that contained inaccurate information as follows:
  
  - A contract modification was issued that obligated fiscal year 1997 funds of  $313,601
  more than the amount authorized by the Corps to pay for its uniforms.  The error occurred
  because the contracting officer made a mathematical error in computing the amount
  needed to fund two uniform purchase requests.  Although NPS's Accounting Operations
  Center and the Corps detected the error, a contract modification was not issued to correct
  the error. 
  
  - A contract modification was issued to fund uniform orders that had been financed under
  prior funding actions.  Specifically, NPS issued a contract modification that obligated 
  funds of $221,052 in fiscal year 1999 to finance FWS uniform orders that had been
  financed with previously obligated funds.
  
  -  A contract modification was prepared that overstated the amount of Corps funds
  available for obligation in fiscal year 1997 by $6,774.  
  
  - At the end of fiscal years 1995 and 1996, NPS executed contract modifications to close
  out contract financial activities for these 2 fiscal years.  However, NPS did not accurately
  determine the amount of  funds needed and retained obligated funds of almost $150,000
  in excess of amounts needed to meet its expenses for fiscal years 1995 and 1996.  At the
  time we completed our fieldwork, NPS had not deobligated the funds for fiscal years
  1995 and 1996 that were no longer needed.  Therefore, these funds were not available for
  other operating needs.
  
  Uniform Orders in Excess of Authorized Funding Levels.  For fiscal year 1997, NPS
  and FWS employees ordered uniforms and other items in amounts that exceeded
  authorized contract funding as follows:
            
  
  
  
  ________________
  * Excludes amounts paid by employees for purchases that they made in excess of their
authorized
  allowances.
  
  Because FWS had funding available for a 2-year period to pay for uniform orders, it
  could have reduced its deficit by $22,302 by using fiscal year 1996 funding that remained
  available for obligation in fiscal year 1997.
  
  Although NPS and FWS employee uniform orders exceeded the amount of authorized
  funding  by $31,875 and $52,783, respectively, in fiscal year 1997, NPS and FWS were at
  risk of having exceeded authorized funding by even greater amounts.   For example, in
  fiscal year 1997, NPS obligated funds of $4,500,000 for employee uniforms, and FWS
  obligated funds of $1,086,000 for employee uniforms.  Had NPS and FWS employees
  fully used their uniform allowances ($4,826,968 for NPS and $1,395,951 for FWS), 
  these two bureaus would have incurred expenses in excess of authorized funds by
  $326,968 ($4,826,968 minus $4,500,000) and $309,951 ($1,395,951 minus $1,086,000),
  respectively.  Throughout the term of the contract, both bureaus did not obligate sufficient
  funds to cover the authorized amount of employee uniform allowances.
  
  Corps of Engineers Funds.  In fiscal year 1999, the Corps assumed responsibility for
  paying contractor invoices for its employees' uniforms.  However, NPS continued to
  record the obligations in its financial system to reflect NPS's liability to pay for Corps
  uniform orders.  As such, as of September 30, 1999, NPS's financial system had
  obligations of $89,000 recorded for Corps uniform orders.  Because the Corps  made
  direct payments to the contractor, NPS should not have recorded the obligation in its
  financial system.  When we brought this matter to the attention of Accounting Operations
  Center personnel, they removed the obligation from NPS's financial records.
                                  
  Excess Stock and Discontinued Uniform Items
  
  We found that NPS had not taken sufficient actions to limit its liability for the
  contractor's excess stock.  Specifically, NPS did not evaluate the contractor's stocking
  levels annually,  although Section C-2.e.1 of the contract required an evaluation. 
  Consequently, the contractor could be carrying excess quantities of items or discontinued 
  items that NPS would be liable to buy under the contract's cancellation of items clause
  (Section I.1 52.217-2), which provides for contractors to receive payments for canceled
  items.  Also, the contract did not contain a provision that specified the prices to be paid
  for the remaining inventory (that is, cost, full retail, or a fixed amount) of discontinued
  uniform items.  As a result, NPS could incur unnecessary costs if it were required to
  purchase discontinued uniform items.  
  
  Mission-Related Uniform Purchases  
  
  NPS did not implement controls to ensure that employees purchased only a reasonable
  amount of necessary items.  The Servicewide Uniform Program Guideline (Chapter 14-
  1.a.3) states that "employees may purchase only those uniform items included in the
  authorized uniform category," which is detailed in Chapter 7 of the Guideline.  The
  Guideline (Chapter 14-1.b.2 ) further states that "the allowance amount authorized for
  each employee is to be used only [emphasis added] by that employee."  NPS, however,
  had not established a supervisory review process at the park level to ensure the proper use
  of allowance funds and had not requested the contractor to monitor employee orders.  In
  discussions with our audit staff, contractor employees stated that if requested, they could
  administratively control uniform orders to ensure that employees ordered only authorized
  items.  Because NPS had not implemented controls over the type of uniform items
  ordered, employees may have ordered and NPS may have paid for items that were not
  authorized.  Based on our analysis of the contractor's data on NPS uniform orders (about
  457,000 records representing about $14.1 million in net NPS purchases) for the period of
  October 1, 1996, through August 24, 1999 (about 35 months), we found employees who
  may have ordered items that were not needed or that were not used for the performance of
  their official duties as follows:
  
  - We reviewed items ordered by employees who worked in warm weather climates to
  determine whether they purchased cold weather items.  We selected for review
  Everglades National Park in Florida and the U.S.S. Arizona Memorial, Hawaii Volcanoes
  National Park, Haleakala National Park, and Kalaupapa National Historic Park, all of
  which are located in Hawaii.  For the 35-month period, we found that employees at these
  parks purchased 102 Gore-Tex outer shells and 38 insulating liners for the shells; 12
  waist-length parkas; 20 insulated hoods; 130 winter hats, including ski caps and
  balaclavas; 5 insulated coveralls; and 83 pairs of gloves.  We believe that the purchase of
  cold weather clothing by employees who work in warm weather climates indicates that
  the items may not be job related.
  
  -  To determine whether employees ordered a reasonable number of items, we compared
  the average number of specific items ordered by all employees with the average number
  of items ordered by the top 5 percent of employees who purchased large quantities of the
  same items.  Based on this comparison, we identified seven items that were ordered in
  relatively large quantities by some employees: ball caps, pants in general, jeans, belts,
  gloves, ski caps, and tie tacks.  For example, on average, employees purchased 2.7 ball
  caps during the 35-month period (with 95 percent of the employees purchasing 14 or
  fewer ball caps).  However, the upper 5 percent of orders for this item were placed by 34
  employees who, on average, purchased 18.8 ball caps during the period, including 1
  employee who purchased 41 ball caps.  The results of our analysis of the seven items are
  as follows:
  
  Items Purchased by NPS Employees 
  From October 1, 1996, Through August 24, 1999
  
  
  

 
  
  -  To determine whether NPS employees may have ordered items for other individuals,
  we reviewed items ordered in different sizes.  For example, during the 35-month period,
  one employee purchased 16 belts that ranged in size from 34 to 46 inches, with some
  orders consisting of belts in a variety of sizes. 
  
  Although there may be justification for ordering these items, we believe that our testing
  indicates that uniform items may have been purchased for other than mission-related
  purposes and essential needs and that NPS should implement controls to ensure that 
  uniform allowances are used appropriately.
  
  Recommendations
  
  We recommend that the Director, NPS:
  
  1.  Appoint a permanent manager for the uniform program who has clearly defined duties
  and responsibilities.  For example, the manager should develop and implement
  procedures to validate orders and receipts prior to paying contractor invoices,  review
  contract modifications prior to issuance of the modifications, approve contractor
  inventory levels, reconcile contract financial information with information in NPS's
  financial system, ensure that funds excess to contract needs are deobligated timely, and
  ensure that only necessary and appropriate uniform items are purchased with Federal
  funds.
    
  2.  Establish controls to ensure that sufficient amounts of funds are obligated to pay for
  employees' authorized uniform allowances.
                                          
  NPS Response and OIG Reply
  
  In the March 9, 2000, response (Appendix 1) to the draft report from the Acting Director,
  NPS, NPS said that it was "in agreement with both recommendations" but did not provide
  all the information needed to resolve the recommendations.  Therefore, we contacted the 
  NPS official who assisted in the preparation of the response to obtain a clarification of
  NPS's planned actions to implement the recommendations.  This official stated that NPS
  planned to appoint a program manager by October 1, 2000 (see the following discussion
  of Recommendation 1), and to issue Director's Order No. 43, which would require park
  superintendents, by October 1, 2000, to provide for the obligation of sufficient funds to
  finance all employee uniform allowances (Recommendation 2).  Based on the
  clarification, we consider Recommendation 2 resolved but not implemented and request
  additional information for Recommendation 1 (see Appendix 2).  Accordingly, the
  unimplemented recommendation will be referred to the Assistant Secretary for Policy,
  Management and Budget for tracking of implementation.
  
  Recommendation 1.  Concurrence.
  
  NPS Response.  In its response, NPS said that it "will include [the recommendation] in
  the new uniform contract." However, NPS officials subsequently stated that a position
  description had been completed for the uniform program manager and that funding for the
  position had been made available.
  
  OIG Reply.  In its response and subsequent discussions, NPS did not state that the
  uniform program manager position description would contain the "clearly defined duties
  and responsibilities" described in our recommendation that are needed to ensure that the
  program has adequate managerial oversight.  Accordingly, we are requesting that NPS
  provide a description of the duties and responsibilities of the uniform program manager.
  
  Additional Comments on Report
  
  NPS provided additional comments on our report.  The comments and our replies to the
  comments are in the paragraphs that follow.
  
  NPS Comment.  NPS said that it would "like to see a more complete acknowledgment of
  the NPS's existing management oversight controls" and referred to its management
  review of the uniform program, for which it issued a May 1998 interim report.
  
  OIG Reply.  Although NPS's interim management report recognized the need for a full-
  time uniform program manager, NPS had not remedied the weaknesses discussed in its
  report by the time we completed our review (November 1999).  Therefore, we concluded
  that NPS did not have sufficient internal controls over its employee uniform program.  
  
  NPS Comment.   NPS said that it differed with us "only in methods" for validating
  orders and receipts prior to paying contractor invoices.  NPS said that its method,
  development of "an automated system using independent data sets from existing systems
  to audit contract activities," would be "more cost-effective and requires less staff time"
  than our recommended procedure (random invoice verifications).
                                          
  OIG Reply.  In our report, we said that we did not consider NPS's planned automated
  system to be necessary to verify that contractor-submitted invoices were accurate.  The
  automated system discussed in our report was one that was described by NPS officials as
  having employee uniform allowance data comparable to the data maintained by the
  contractor.  Based on our risk assessment of the contractor's system and procedures, we
  found a very low risk of material errors, either intentional or unintentional, in the
  contractor's automated system and therefore concluded that there was no need for NPS to
  develop a redundant system. We do, however, have no objection to NPS developing an
  automated system with the capability to assist NPS in performing contractor invoice
  verifications if the system and the process are more efficient and less costly than our
  recommended procedure.
                
  Other Matters
    
  During the audit, we identified other contract/contractor performance areas in which
  improvements or corrective actions may be needed as follows:
  
  - The contractor was storing about $21,000 of discontinued items that had been purchased
  by NPS.  We suggest that NPS instruct the contractor on the disposition of these items.
  
  - One report required by the contract, the Quarterly Status report, consisted of more than
  30,000 pages (in total) annually, which is distributed by the contractor in hard copy form
  to the three agencies at about 1,000 locations.  Each location receives only the data for its
  assigned employees.  We found that, in general, the agencies obtained slight benefit from
  the report, which provided insufficient information to verify or evaluate the propriety of
  uniform orders.  Because the agencies could obtain needed information on employee
  uniform allowances on request from the contractor, we believe that routine issuance of
  the report should be discontinued and that alternative methods, such as automated
  reporting, should be developed to provide required contract data.
  
  - The contract had not been modified to show that beginning with fiscal year 1999,  the
  Corps paid the contractor directly for its purchases. We suggest that NPS modify the
  contract to reflect existing payment practices.
  
  - The process for ordering and receiving uniforms was highly paper intensive and
  inefficient.  For example, at the contractor's offices, we searched 29 boxes of records at
  two separate locations to obtain information on the uniform orders placed by eight NPS
  employees.  We believe that an automated ordering process (apart from the database on
  employee uniform allowances, which is maintained by the contractor) would provide a
  more efficient system for documenting order placements, shipping, and receipt. 
  According to NPS's acting program manager, NPS plans to automate the uniform
  ordering process and develop a Web site for the uniform catalog, which will enable
  employees to place uniform orders electronically. 
  
  - FWS and Corps participation in the contract was governed by interagency agreements
  with NPS.  In some cases, agencies did not comply with provisions of the agreements. 
  For example, NPS had not provided required accounting information to FWS and the
  Corps on their respective contract funding.  Also, FWS and the Corps did not  provide
  advance funding to NPS for uniform costs despite such a requirement.  We believe that
  the contract should be modified to reflect existing practices or that NPS should take
  actions to ensure that its partners comply with the terms of the agreements.
  
  - NPS did not charge or receive reimbursement from the other agencies for its costs of
  administering the contract.  We suggest that NPS determine its costs of administering the
  contract on behalf of  FWS and the Corps and, if appropriate, charge these agencies for
  their share of the contract's administrative expenses.
  
  - The contract requires the contractor to fill at least 95 percent of agency uniform orders
  within 10 working days of receipt of those orders and to fill all nonstandard size orders
  within 45 working days.  The contract, however, does not specify the penalties for
  noncompliance.  We suggest that NPS monitor the timeliness of contract performance
  and include a penalty provision for noncompliance in the new contract.
  
  In accordance with the Departmental Manual (360 DM 5.3), we are requesting a written
  response to this report by May 31, 2000.  The response should include the information
  requested in Appendix 2.
  
  Section 5(a) of the Inspector General Act (5 U.S.C. app. 3) requires the Office of
  Inspector General to list this report in its semiannual report to the Congress.  In addition,
  the Office of Inspector General provides audit reports to the Congress.   APPENDIX 2