oversight

Energy Management: DOE Controls Over Contractors' Use of FTS Are Inadequate

Published by the Government Accountability Office on 1990-07-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   kport, to the Cl&man, Sutxomrnittc~ct     .
GAO                on ‘I‘ctlecorn~unic;Itions and Finance,
                   Conmittee on Energy and Commerce,
                   House of’ Representatives
.-.--
J II I y I !)!)O
                   ENERGY
                   MANAGEMENT
                   DOE Controls Over
                   Contractors’ Use of
                   FTS Are Inadequate


                                                 142021
    P
i


                   United States
wGAO               General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community,           and
                   Economic Development            Division

                   B-2366 11

                   July 17, 1990

                   The Honorable Edward J. Markey
                   Chairman, Subcommittee on Telecommunications
                     and Finance
                   Committee on Energy and Commerce
                   House of Representatives

                   Dear Mr. Chairman:

                   This report responds to your March 1, 1989, request that we examine
                   the Department of Energy’s (DOE) controls over contractors’ use of the
                   Federal Telecommunications System (FTS).Over 90 percent of the FTS
                   lines at facilities in DOE’S operations offices are used by contractor
                   employees, and these offices spent about $16 million on FTS long dis-
                   tance calls in fiscal year 1989. You asked us to examine (1) the ade-
                   quacy of DOE’S FTSpolicies and procedures, (2) the effectiveness of DOE’S
                   management and oversight of FTSusage by contractors, and (3) the ade-
                   quacy of DOE’S efforts to investigate allegations of misuse or abuse by
                   contractors.


                   DOE’sbasic policies on FI’Susage place the responsibility on supervisors
Results in Brief   for preventing misuse of FTSlines assigned to their units. However, DOE’S
                   procedures for supervisors are not specific enough to ensure that con-
                   tractors’ use of FTSis limited to official purposes. Furthermore, DOE, in
                   most instances, does not provide supervisors with any information on
                   FTScalls made by employees.

                   According to DOE telecommunications officials, DOE cannot provide spe-
                   cific information to supervisors about FTScalls or develop procedures to
                   determine if FTScalls are for official purposes until it has established a
                   Privacy Act (5 USC. 562a) system of records designed to prevent the
                   misuse of information collected about individuals.1 Records of telephone
                   calls used to control costs and to determine accountability are subject to
                   the Privacy Act because such call-information must be linked to the indi-
                   vidual responsible for the call to determine whether the call was made
                   for official purposes. DOE proposed a system of records in 1987. On May


                   ‘A system of records is any group of records under the control of an agency from which information
                   is retrieved by a person’s name or by any number, symbol, or other identifier assigned to that indi-
                   vidual. Such a system is designed to safeguard an individual’s privacy by preventing the misuse of
                   federal records and by allowing individuals to review their records.



                   Page 1                                                     GAO/RCED-!WlM        Energy Management
             B-286511




             9,1990, DOE'S Office of General Counsel approved the system of records
             for public notice and comment in the Federal Register.

             DOE'S oversight is not adequate to determine whether FTS is misused by
             contractors. Although DOE'S procedures provide for periodic appraisals
             of the telecommunications programs at the operations offices by head-
             quarters staff, in the past these appraisals have not included an evalua-
             tion and review of the uses of FTS.Furthermore, reviews carried out by
             WE operations office officials have not assessed whether contractors’
             use of FTSis restricted to official purposes. Finally, since DOE was gener-
             ally unable to provide examples of alleged or actual misuse of FTS,we
             could not evaluate the adequacy of DOE'S efforts to investigate possible
             contractors’ abuse.


             DOE owns an extensive network of facilities and laboratories, which are
Background   operated by firms and universities (operating contractors) under fully
             reimbursable, cost-type contracts (i.e., contractors receive full reim-
             bursement from DOE for all costs incurred). As permitted by the General
             Services Administration (GSA) rules, DOE has authorized these operating
             contractors to use ITS, the primary long-distance telephone service for
             the government, to carry out the government functions specified in their
             contracts. GSA is in the process of replacing the existing FTS with FT3
             2000, which will provide video, enhanced data, and electronic mail ser-
             vices not now available under FTS. Although the services and informa-
             tion provided to DOE under FTS 2000 will be different, DOE'S
             responsibility for establishing policies and procedures to control its use
             will not change.

             DoE'S FTS long-distance cost in fiscal year 1989 was about $24 million.
             About $16 million (or 66 percent) was incurred by facilities at WE'S
             eight operations offices where most-or about 96 percent-of the FTS
             lines are assigned to contractor employees.

             While GSA provides overall direction and management of ITS and bills
             federal agencies for its use, individual federal agencies, such as DOE, are
             responsible for establishing administrative controls to ensure that the
             FTSis used for official purposes.”


             ‘According to GSA regulations (41 CFR 201-38.007), official purposes include emergency calls and
             personal calls that an agency determines are necessary in the interest of the government, for
             example, a call of a personal nature that could not have reasonably been made at another time.



             Page 2                                                   GAO/RCED-90-184 Energy Management
                      R-296611




                      The Privacy Act (5 USC. 562a) and the Freedom of Information Act (5
                      U.S.C. 652) are applicable to the treatment of information concerning
                      telephone calls. The Privacy Act requires agencies to institute specific
                      control procedures to protect government records about individuals
                      from unauthorized access and unintentional disclosure. The Freedom of
                      Information Act provides the basic authority and the procedures
                      through which the public may obtain records in the government’s
                      possession.

                      In a previous report we recognized that an inherent conflict exists
                      between the disclosure and protection of personal information that leads
                      to a certain tension in the application of existing law to telephone
                      records.” Specifically, a record may be subject to the Privacy Act and yet
                      disclosed under the Freedom of Information Act. The report recom-
                      mended that the Director, Office of Management and Budget (OMB), the
                      agency with oversight responsibility for the Privacy Act, review the
                      extent to which telephone records should be protected from disclosure
                      and the circumstances under which they should be released. The report
                      also recommended that the Director, with the assistance of GSA and the
                      Department of Justice, explore various alternatives and, if appropriate,
                      propose legislation or issue clarifying guidance for the treatment of tele-
                      phone records. According to an OMB official, no action has been taken or
                      is planned on the recommendations.


                      DOE policies make supervisors (including the supervisors employed by
DOE Lacks Effective   its contractors) responsible for preventing misuse of the ~“rslines
Controls Over         assigned to their units. DOE has not developed procedures, however, to
Contractors’ Use of   guide the supervisors in carrying out this function or provided informa-
                      tion about the calls made over their FTSlines that could be used to eval-
FTS                   uate whether the calls were appropriate. DOE has continued to rely on
                      supervisors to control FTSuse even though a 1985 DOE Office of the
                      Inspector General (OIG) report found widespread abuse of m by DOE and
                      contractor employees4 According to DOE telecommunications officials,
                      DOE cannot develop more effective controls over FTSuse until it estab-
                      lishes a Privacy Act system of records for its detailed information on FTS
                      calls.


                      “Telecommunications Privacy: GSA’s Planned FI’S 2000 Telephone Record Controls Appear Reason-
                      -able (GAO/Mm896_ - ,Dec.23,1988).
                      4Review of Abuse of Long Distance Telephone Service (FTS) in the Department of Enera (DOE/IG-
                      0217, Mar. 22, 1986).



                      Page 3                                                 GAO/RCED-9@184 Energy Management
                            E-226611




                            Since 1986 DOE has not examined controls over FTSuse and could not tell
                            us whether there is abuse of FTS.


DOE Policies and            Two DOE orders assign responsibility to supervisors for ensuring that FE
Procedures Do Not Provide   calls are for official purposes. One order specifies the authorized use of
                            government telephone services while the other is concerned with tele-
Guidance for Controlling    communication policies in general.
the Use of FTS
                            The order on the authorized use of telephone services states that DOE'S
                            overall policy is that FTSis to be used to conduct official business, and
                            that FI%represents resources and should be managed as any other
                            resource. The order lists the types of calls DOE has authorized as official
                            use of government-provided telephone services. For example, DOE
                            employees traveling for more than 1 night on government business can
                            use FTSto make brief calls home.

                            The second order requires the heads of DOE units to provide efficient and
                            effective management of telecommunications services and facilities and
                            to ensure that contractors manage telecommunications services in accor-
                            dance with DOE policies and procedures. It also specifies that DOE head-
                            quarters telecommunications officials appraise field locations’
                            telecommunications programs every three years and prepare a report on
                            the findings. The appraisals are to ensure that adequate internal con-
                            trols are in place and to promote measures for the avoidance of waste,
                            fraud, and abuse.

                            Neither order specifies the procedures that supervisors should follow to
                            carry out their responsibilities for ensuring that the m lines assigned to
                            their units are not misused. Since in most offices the supervisors are not
                            given any information about their units’ FTScalls, their only option is to
                            observe the employees.


Prior OIG Audit Revealed    DOE'S OIG reported on the use of FE long distance service by DOE and
Widespread Misuse of FTS    contractor employees in 1986. At that time DOE was also relying on
                            supervisors to control the use of FTK The OIG report concluded that (1)
Due to the Lack of DOE      about 30 percent of DOE’s FTSlong-distance calls nationwide were for
Procedures                  unofficial purposes, (2) annually, $8 million was spent on unofficial FTS
                            calls, and (3) a cost of about $6 million was incurred annually by DOE for
            w               work time spent on unauthorized long-distance FI%calls. The OIG recom-
                            mended that DOE consider, among other things, additional recording and



                            Page 4                                      GAO/RCED-B@l&I Energy Management
                       accounting procedures to (1) track FTScalls, (2) examine the manage-
                       ment of FTSlines, and (3) develop methods to curtail abuse.

                       DOEagreed to take corrective actions that included reemphasizing its
                       policy on the use of FTSfor official business by sending memoranda to
                       all employees and by distributing detailed information on FTScalls to the
                       operations offices. However, DOE did not (1) implement any procedures
                       to identify and analyze FTscalls for possible unofficial uses, (2) expand
                       its policy that makes supervisors responsible for controlling the use of
                       FTS,or (3) distribute call-detail reports to the operations offices about
                       ~7%calls. DOE headquarters telecommunications officials pointed out that
                       although the call-detail reports were not routinely sent to the operations
                       offices, they informed the operations offices that they could get the
                       reports if they requested them.


DOE Needsa System of   DOE telecommunications officials told us that they have not issued more

Recordsto Implement    specific guidance or information about how to control the use of FTS
                       because they do not have a DOE-wide system of records for telephone
More Effective FTS     call data. The officials believe that they cannot use the telephone
Controls               records that contain information about FTScalls to determine individual
                       accountability for unofficial telephone calls until they comply with the
                       Privacy Act system-of-records provision.

                       DOE’S  Office of Computer Services and Telecommunications Management
                       submitted a DOE-wide system-of-records proposal in July 1987 to DOE’S
                       Office of General Counsel.” As part of DOE’S internal review process, the
                       Office of General Counsel must review and approve the proposal before
                       it can be published in the Federal Register for public comment. Publica-
                       tion in the Federal Register is required to provide public notice of the
                       type of information being accumulated about individuals and the ways
                       such information will be used.

                       In a May 9, 1990, memorandum to DOE’S Acting Associate Director for
                       Administration, Information and Facilities Management, DOE’S General
                       Counsel gave his approval for the system of records to be published in
                       the Federal Register. He stated that he had no legal objections to the
                       proposed telephone system of records and that DOE has a legitimate right
                       to curb telephone abuse by employees.

                       ‘In April 1990, the Office of Computer Services and Telecommunications Management was reorga-
                       nized, and its functions are now handled by two newly created offices: the Office of Information
                       Resources Management Policy, Plans, and Oversight, and the Office of Information Technology, Ser-
                       vices, and Operations.



                       Page 6                                                   GAO/RCED-90-1&Q Energy Management
                             According to DOE’SOffice of General Counsel officials, the reasons for
                             the delay in the Office’s approval were concern over employees’ privacy
                             and over the release of information about telephone usage under the
                             Freedom of Information Act once the system of records is published.
                             Because telephone records subject to the Privacy Act are not collectively
                             protected from disclosure under the Freedom of Information Act, DOE
                             could not refuse to release a record under the Freedom of Information
                             Act unless it falls under one of the exemptions provided by the act.
                             Examples of exempt records include those that would breach national
                             defense or foreign policy, or whose disclosure would constitute a clearly
                             unwarranted invasion of personal privacy.

                             In the May 9,1990, memorandum, the General Counsel noted his con-
                             cerns about protection of the privacy interests of individuals and sug-
                             gested that the Acting Associate Director for Administration assure
                             employees that their privacy will be protected to the greatest extent
                             possible. He also emphasized keeping only an essential minimum of
                             records as the most effective protection against incursions into personal
                             privacy.

                             DOEtelecommunications officials said that the system of records will be
                             a tool to control use of telephone systems. They also said that as FTS
                             2000 is implemented, telephone call records will be provided directly to
                             the field directors for administration who are responsible for the over-
                             sight of telephone systems. However, they do not expect that DOEwill
                             establish DOE-wide procedures on how telephone records should be used
                             to control FTSuse. Instead, they said DOEwill probably leave it up to
                             field offices to decide whether and how to use the records.


DOE’s Oversight Activities   As specified in the DOEtelecommunications order, DOEheadquarters offi-
Do Not Address               cials appraise field locations telecommunications programs every 3
                             years. None of the three WE headquarters appraisals of telecommunica-
Appropriateness of FTS       tions programs at its operations offices done between August 1986 and
Use                          July 1989 analyzed the adequacy of controls over the contractors’ use of
                             FTS.The appraisals generally concentrated on the adequacy of equip-
                             ment acquisition and utilization and staffing. In addition, while telecom-
                             munications services such as FTSare an element of the operations
                             offices’ reviews of contractors, according to officials at six of the eight
                             DOEoperations offices, no attempt is made to determine if FTScalls are
                             restricted to official business.




                             Page 6                                     GAO/RCED-90-184 Energy Management
            ?
        *
,,.I’



                                E236611




                                DOE headquarters telecommunications officials told us that the periodic
                                appraisals do evaluate the controls over FTS use in that they examine
                                cost control procedures that are in place, such as restricting or blocking
                                long-distance access to horoscope and sports numbers. They admitted,
                                however, that they do not examine the adequacy of field offices’ efforts
                                to ensure that calls made using FIX were for official purposes.

                                Furthermore, DOE telecommunications officials at seven of the eight
                                operations offices told us that they did not have information on specific
                                instances of ETSabuse and generally were not aware of any misuse of
                                FIS. In addition, OIG officials in DOE headquarters could not identify any
                                investigations that involved FIYJuse during the last 4 or 5 years. As they
                                pointed out, the investigative staffs are small and concentrate on the
                                bigger dollar programs, such as procurement.


                                     could devise a cost effective method for reviewing FTStelephone
        Cost Effective          DOE
                                calls and for following up on possible unofficial calls. Even though DOE
        Program Could Be        has not established department-wide procedures for reviewing and ana-
        Developed to Improve    lyzing FTStelephone records, contractors in two of DOE’S operations
                                offices use telephone records to determine if FTScalls are made for offi-
        DOE Oversight of F’TS   cial purposes. Officials in these two offices reported that these proce-
                                dures seem to be effective in controlling FTSuse and in reducing FTS
                                costs, Most DOE facilities have the technical capability to collect the data
                                needed to institute similar programs.

                                While it may be costly and burdensome to require contractors to verify
                                all FTScalls, sampling procedures could be used to develop a cost-effec-
                                tive verification process. Criteria for selecting calls for follow-up based
                                on frequency or length of the calls, for example, could be used to elimi-
                                nate the shorter, lower-cost calls that make up the bulk of FTSusage.
                                Follow-up effort could then be limited to a small number of longer calls
                                having a greater financial impact. For example, our analysis of GSA’S
                                sample of 310,867 FTScalls made from DOE’s field offices in October 1988
                                showed that over 70 percent of these calls lasted less than 5 minutes,
                                while less than 1 percent lasted 60 minutes or longer.(;

                                Contractors who operate telephone systems at two DOE operations
                                offices are already using FI’Srecords to control FTSuse even though                             DOE



                                “The sampling error associated with these estimates is negligible due to the large sample size-over
                                310,000 calls.



                                Page 7                                                      GAO/RCED-90-184 Energy Management
has not developed department-wide procedures for using them. The con-
tractors who operate the telephone systems at facilities in the Chicago
and Nevada Operations Offices develop and distribute reports on FTS
long-distance usage for managers to review. This approach implements
some of the procedures described in GSA’S FTSguidance in a May 1987
bulletin encouraging agencies to review and analyze detailed telephone
records of actual calls and to follow up on questionable calls.

According to telecommunications officials in the Nevada Operations
Office, a telecommunications contractor prepares monthly lists of FTS
calls made to non-ms numbers and of calls lasting more than 60 minutes.
The lists are distributed to managers who are responsible for verifying
the appropriateness of the calls on the list for their unit. Similarly, con-
tractors at facilities reporting to the Chicago Operations Office provide
managers with information on calls lasting more than 30 minutes and of
telephone numbers called more than 20 times during the month. Man-
agers are to identify questionable calls for follow-up.

Officials at these two operations offices told us that FTScosts have
decreased since the contractors started providing this information to the
unit managers. For example, according to a telecommunications official
in the Chicago Operations Office, the annual cost of FTSat one small
facility decreased from $135,000 to $12,000 after the review process
was initiated. Similarly, a telecommunications official in the Nevada
Operations Office told us that ms costs for facilities in that office
decreased by $400,000. The official also said that the amount of the
decrease due to the review of FTS usage cannot be determined because of
a switch from use of some FTSlines in the office to cheaper wide-area
telecommunications service lines, known as WATS lines.

DOE officials at these operations offices said that they allowed the con-
tractors to implement these systems because’ the call-detail reports do
not identify individuals; thus, they do not believe the reports are cov-
ered by the Privacy Act. DOE headquarters’ telecommunications officials
were unaware of this activity, which conflicts with their interpretation
of Privacy Act requirements. They said that they were not sure what, if
any, action would be taken and pointed out that while headquarters
issues policies and guidance, it does not directly control how the opera-
tions offices carry out those policies.

Most DOE locations already have the technical capability to gather data
on FTStelephone calls, which could be used in similar analyses. A few
DOE facilities-the Richland Operations Office and seven facilities


Page 8                                      GAO/RCED-96184 Energy Management
                  reporting to other operations offices- will not be able to collect such
                  data until their telephone equipment is upgraded. During our review, we
                  noted that Richland was in the process of acquiring a new telephone
                  system that will collect information about the telephone calls made.


                  DOErelies on supervisors to control FTSuse by contractors but has
Conclusions       neither established procedures and guidelines for supervisors’ control of
                  FIB nor provided information on ITS calls. Also, DOEevaluations have not
                  focused on controls over F?Suse. Therefore, DOElacks assurance that FK~
                  is used for official business only and that unnecessary costs are not
                  incurred.

                  In our view, a program based on an analysis of a sample of FTStelephone
                  calls for follow-up could improve DOEcontrols over FTSuse. That such a
                  method can succeed has been demonstrated by the contractor-estab-
                  lished programs in two of DOE’Soperations offices that have resulted in a
                  decrease in the volume of FTScalls and a reduction in costs.

                  DOEdeserves credit for taking an initial step toward establishing such a
                  program by approving for comment in the Federal Register a system of
                  records to comply with Privacy Act requirements. However, DOEhas no
                  plans to establish procedures on how the information that will be avail-
                  able under the system of records should be used to review and control
                  FTSuse, nor is it clear how DOEwill monitor the procedures established
                  by field locations.


                  To ensure that contractors are using FTSonly for official purposes, we
Recommendations   recommend that the Secretary of Energy direct the Assistant Secretary
                  for Management and Administration to establish an FTScall-control pro-
                  gram which includes

                  appropriate DOE-wide procedures and management controls, for both
                  users and supervisory personnel, on the use of FIS as well as the finan-
                  cial and disciplinary consequences of abuse and
                  specific procedures for monitoring and reporting to management on the
                  effectiveness of the FTScall-control program.




                  Page 9                                    GAO/RCED9@1f34 Energy Management
              R-236511




              In performing this review, we examined applicable laws and regulations,
Scopeand      DOE'S telecommunications policies and procedures, prior reports on FIX,
Methodology   and information on FB long-distance usage. We also discussed DOE'S poli-
              cies, procedures, and oversight with officials at DOE headquarters and
              eight operations offices, and obtained information on FTS operations
              from GSA and OMB officials. (See appendix I.)

              Our review was conducted between April 1989 and March 1990 in accor-
              dance with generally accepted government auditing standards. We dis-
              cussed this report with DOE headquarters officials. They generally
              agreed with the facts, and their comments and suggested changes have
              been incorporated where appropriate. However, as requested, we did
              not obtain official agency comments on this report.

              As arranged with your office, unless you publicly announce its contents
              earlier, we plan no further distribution of this report until 30 days from
              the date of this letter. At that time, we will provide copies to the Secre-
              tary of Energy and other interested parties and make copies available to
              others upon request.

              This work was performed under the direction of Victor S. Rezendes,
              Director, Energy Issues, (202) 275-1441. Other major contributors to this
              report are listed in appendix II.

              Sincerely vours,




              J. Dexter Peach
              Assistant Comptroller General




              Page 10                                    GAO/RCED-30-134 Energy Management
Page 11            GAO/RCED-90-184 Energy Management




              ‘.
          0
Contents


Letter
Appendix I
Scopeand
Methodology
Appendix II                                                                                    15
Major Contributors to
This Report




                        Abbreviations

                        DOE        Department of Energy
                        ITS        Federal Telecommunications System
                        GAO        General Accounting Office
                        GSA        General Services Administration
                        OIG        Office of Inspector General
                        OMB        Office of Management and Budget


                        Page 12                                 GAO/RCED-90-184 Energy Management
Page 13   GAO/RCED-90-184 Energy Management
Appendix I

Scopeand Methodology


             We reviewed pertinent laws, GSA regulations, GSA and OMB guidance, and
             DOE’S telecommunications policies and procedures on FE. We also
             examined past GAO and DOE Inspector General reports on FTSand a
             report for the President’s Council on Integrity and Efficiency that
             addressed FTSuse, control, and oversight at federal agencies.’

             We discussed DOE’S policies, procedures, and oversight methods with
             officials of the Office of Computer Services and Telecommunications
             Management, Office of General Counsel, and Office of Inspector General
             at DOE headquarters in Washington, DC. We also reviewed appraisals of
             DOE operations offices’ telecommunications programs and data on the
             volume, frequency, length, and cost of DOE'S FTSlong-distance calls.

             At DOE’S Richland operations office in Richland, Washington, we
             reviewed FTSpolicies, procedures, and records of both the operations
             office and the major contractors. We discussed this information with
             operations office officials such as the Telecommunications Manager and
             head of the Telecommunications Branch. Because the telephone records
             for the Richland office did not show the telephone numbers from which
             the calls were made, as agreed with your office, we did not attempt to
             follow up on Fm calls to determine if they were made for official
             purposes.

             To determine if FTScontrols were different in other locations, we con-
             tacted telecommunications officials at DOE’S other seven operations
             offices-Albuquerque,   Chicago, Idaho, Nevada, Oak Ridge, San Fran-
             cisco, and Savannah River-and obtained information on their FTSpoli-
             cies and procedures and oversight activities.

             We obtained information on GSA’S FTSbilling and allocation process from
             officials of its Information Resources Management Service in Wash-
             ington, DC., and Vienna, Virginia. We also discussed FTSoversight
             problems and the new FTS2000 system with them and obtained an
             explanation of privacy concerns related to telephone-call records from
             an OMB official in Washington, DC.




             ‘Consolidated Report on Federal Telecommunications System (FTS) Utilization, Office of Inspector
             General, General Services Administration, (Washington, D.C.; Mar. 16,1987).



             Page 14                                                  GAO/RCED-90-184 Energy Management
’ Appendix II

 Major Contributor&o This Report


                              Judy A. England-Joseph, Associate Director
 Resources,                   Richard A. Hale, Assistant Director
 Community, and               Carrie M. Stevens, Evaluator-in-Charge
                              Nicholas W. Greifer, Evaluator
 Economic
 Development Division,
 Washington, D.C.
                         Leonard L. Dowd, Regional Assignment        Manager
 Seattle Regional Office John w Sisson ,
                                         SiteSenior




  (303603)                     Page 16                                 GAO/RCED-90-184 Energy Management
l‘t~lq,trollt~   202-275-63241




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singltb addrws.
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