FDIC to address payments to IT contractor per OIG recommendations

Recommendations for, among other things, recovering at least $47,500 in information technology (IT) support costs termed “not adequately supported” or “unallowable” were made in recent Office of Inspector General (OIG) report to the Federal Deposit Insurance Corp. (FDIC).

The FDIC OIG report on payments to Pragmatics Inc., after redactions, was announced Dec. 10 online.

The report, released Dec. 10 with some portions redacted, notes the agency plans to complete corrective actions in 2019.

The report addresses the FDIC’s payments to Pragmatics, Inc., for IT work done under contract.

Payments to Pragmatics, Inc.

FDIC relies extensively on contractors to maintain its portfolio of IT applications, the OIG reported, which support mission-critical functions, such as the supervision of insured financial institutions and the resolution of failed financial institutions.  Between May 2013 and March 2018, the FDIC spent nearly $192 million on IT application support services. As of March 1, 2018, the FDIC had awarded seven task orders to Pragmatics, Inc. for such services, valued at $18.5 million.

The report says an audit of payments to the firm was conducted in response to a complaint received through the OIG Hotline. The complainant alleged that an employee working for a subcontractor of Pragmatics, Inc. billed the FDIC for labor hours that the employee did not actually work and that Pragmatics and one of its subcontractors may have inappropriately billed contractor employee labor hours.

On review, the OIG questioned costs of about $47,500 (about 10% of the labor charges reviewed). Of that, $7,500 was unsupported because the employees who billed the hours did not access the FDIC’s network or facilities on the days they charged the hours, and the nature of the work required access to the FDIC’s network. The remaining amount was unallowable because the work was performed off site (away from FDIC facilities), the report says, when the contract indicated all work should be done at FDIC facilities “absent a site visit and approval by the FDIC to perform the work at an alternate location.”

The report also faults FDIC for not having documented a 2013 site visit, including whether the agency had approved Pragmatics personnel to work at the off-site location; and for not identifying the place of performance for services ordered. It makes seven recommendations for recovering the $47,500 and reviewing other payments to Pragmatics (and seeking other recoveries if warranted), documenting results of a previous site visit, and ensuring all contracts for IT application support services identify the place of performance. The report says FDIC expects to complete actions addressing all seven recommendations by March 29, 2019.

FDIC OIG Audit Report – Payments to Pragmatics Inc.

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