Audit Report 3-19: Audit of SBA Oversight of the Due Diligence Contractor for Asset Sales 3 & 4
On March 31, 2003, the OIG issued Audit Report 3-19, Audit of SBA Oversight of the Due Diligence Contractor for Asset Sales 3 & 4. The OIG found that SBA’s oversight of the contractor was not sufficient to preclude acceptance and payment of unauthorized invoices.
The OIG found that the SBA paid $2.2 million in excess of written contract terms for “drive-by” appraisals for Asset Sale 3 and over $23,000 for duplicate or upgraded third party reports for Asset Sale 4. This occurred because the Contracting Officer significantly modified the terms of the contract through oral agreement and the SBA did not closely scrutinize invoices and supporting documentation. The OIG recommended that the SBA seek recovery of the $2,181,125 overpayment from the contractor and ensure that all future contract changes are made using properly signed, written contract modification.