HELENA – The Montana Department of Military Affairs does a poor job of managing the federal money it receives and couldn’t even accurately report the number of active contracts it had with vendors, according to a pair of new audits.
The agency said it was moving quickly to fix the problems, and pointed out that while the audit found issues with procedure there were no findings that money was misused.
The audit findings show that the agency spent about $19 million in federal grant money over the past three years and did not monitor subcontractors for compliance. The legislative auditors found so many issues with the way contracts were handled that they promised to revisit the issue and could appear in the main audit of state government.
“Despite having millions of dollars’ worth of contracts, the department does not know how many contracts in which it is currently engaged,” the auditors wrote.
Montana National Guard Brig. Gen. John Walsh said he was disappointed in the results and is taking the issue seriously, promising changes to correct all of the problems. In all cases, the agency agreed with the auditors’ recommendations.
“The auditors will help us strengthen our programs to ensure we don’t have any fraud, waste or abuse or misuse of the taxpayer dollars,” Walsh said.
Walsh said there was a lot of turnover in the civilian side of the agency which led to the problems. Among the many changes being made, he said, were better systems to train new employees and better automation of the controls.
Auditors said the agency does not have a system to track the contracts and their status, nor does have a way to maintain proof that contractors are insured. In one case the agency didn’t find proof that any services had been provided for $23,000 paid to one contractor, a contract the Department of Military Affairs subsequently terminated.
Another notable finding showed the Disaster and Emergency Services Division mangers broke with contracting rules in choosing the highest bidder on a contract without sufficient reason for doing so according to the advertised requirements. The contract for $22,500 to develop the state’s disaster and emergency plan went to Spartan Consulting of Helena, in a move the auditors said calls into question whether the agency can even charge the money to the federal grant program it intended to use for payment.
In addition, the agency did not monitor the federal stimulus spending to make sure contractors were paying prevailing wages. And the Disaster and Emergency Service Divisions was wrongly paying some employees with federal money even though the employees work on state programs.
The agency also mishandled federal Department of Homeland Security money. The agency didn’t award money fast enough, and didn’t award as much of it to local governments as was required, the audit found.
Walsh said that he was aware that in some cases the Homeland Security money was not being disbursed within 45 days as required because of a heavy work load in the grant program. He instructed the employees to take their time and do it right, even if that meant going past deadline.
Walsh, in his presentation to the legislative audit committee, told them new people are being hired to run the contracts.
“I am confident that within the next six to 12 months we will have all the recommendations implemented,” Walsh said. “We have identified problems. We have taken corrective action where we think the problems lie.”
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