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At the request of Job Corps, the OIG audited the Detroit and Humphrey Centers operated by the Vinnell Corporation. Each has experienced a recent cost overrun. The primary objective of each audit was to determine if costs claimed for Center operations were allowable in accordance with Federal cost principles, and the secondary objective was to determine the reason for the cost overruns. Overall, we found that reported expenses were allowable, however we did find material weakness regarding untimely and inaccurate reporting of monthly expenses.
Detroit Center expenses of $6.6 million claimed by Vinnell for the period February 1999 through January 2000 were determined to be allowable. However, Vinnell did not report expenses of $1,003,487 on a timely basis and incurred a 2-year cost overrun of $1,460,382 for the period ended January 31, 2000. This occurred because Vinnell operated two Detroit-area sites without a corresponding budget increase for the second site, and accumulated expenses for this site in a separate account until it became aware that these expenses were not reported to Job Corps. (OA report No. 02-01-204-03-370, issued March 23, 2001)
Humphrey Center expenses of $5.9 million claimed by Vinnell for the period June 1999 through May 2000 were also determined to be allowable. The OIG confirmed the contractor experienced difficulty in attracting new employees and the net cost overrun of $86,683 was caused by increased salary levels offered to attract qualified new employees. The OIG also detected a significant understatement of reported payroll expenses for the month of January 2000 which was detected by Vinnell and corrected in the April 2000 report to Job Corps. (OA report No. 02-01-205-03-370, issued March 23, 2001)
Vinnell concurred with our findings and stated that controls have been implemented to ensure costs will be reported in a timely and accurately manner.
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