Social Security Administration:

Policies and Procedures Were in Place over MMA Spending, but Some Instances of Noncompliance Occurred

GAO-07-986: Published: Aug 31, 2007. Publicly Released: Oct 1, 2007.

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The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) created a voluntary outpatient prescription drug benefit as part of the Medicare program, and appropriated up to $500 million for the Social Security Administration (SSA) to fund the start-up administrative costs in meeting its responsibilities to implement MMA. SSA was given a great deal of discretion in how to use the funds and the act provided little detail on how the funds were to be spent. You asked us to review SSA's costs for implementing MMA to determine (1) how the MMA funds were expended, (2) what procedures SSA has in place over the use of those funds, and (3) how SSA complied with those procedures related to contractor and vendor payments.

SSA spent the $500 million in MMA funds from December 2003 through January 2006 to implement activities outlined in MMA. The majority of costs paid with MMA funds consisted of personnel-related expenses, contractors, and indirect costs. More than half of the funds were spent on payroll for staff hours used on MMA activities in SSA headquarters and field offices. Once the $500 million was spent, SSA began to use its general appropriation to fund the remaining costs of implementing MMA activities. SSA used its cost analysis system to track the total costs of its implementation of MMA activities. As of February 20, 2007, SSA had completed implementation of 16 of the 22 tasks for the six provisions under the act. SSA had agencywide policies and procedures in place for its cost tracking and allocation, asset accountability, and invoice review processes. It also established specific guidance to assign and better allocate SSA's costs in implementing MMA. There were some instances though where SSA did not comply with these policies and procedures. SSA did not effectively communicate the specific MMA-related guidance to all affected staff. SSA subsequently identified and corrected at least $4.6 million of costs that initially were incorrectly allocated to MMA, but had not corrected approximately $313,000 misallocated credit card purchase transactions. In addition, GAO found instances where accountable assets purchased with MMA funds, such as electronic and computer equipment, were not being properly tracked by SSA in accordance with its policies and instances where purchase card transactions were not properly supported. Although purchase card transactions and accountable asset purchases represented a small percentage of total MMA costs, proper approval and support for these types of transactions is essential to reduce the risk of improper payments.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Social Security Administration (SSA) agreed with our recommendation to provide more specific instructions in future guidance. SSA officials have informed us they have taken action to establish sufficient dissemination methods for acquisition related guidance, including issuing Acquisition Alerts and email distribution lists. In response to our request for documentation of these dissemination methods, in March 2016, SSA provided GAO with copies of (1) a recent acquisition alert posted on the Office of Acquisition and Grants' (OAG) website; (2) an example of a list of reminders recently distributed and posted on an internal OAG website; (3) a copy of a recent acquisition policy announcement posted to the OAG's internal website; (4) a list of topics discussed at a regular bi-monthly forum meeting with contracting staff and a quarterly forum meeting with Contracting Officer's Representatives (COR). The presentations at the bi-monthly and quarterly forums are posted to internal SSA websites. SSA has established several procedures to ensure that information and procedures are distributed to all relevant offices and staff in order to track program costs. We believe SSA's actions address our recommendation.

    Recommendation: To enhance SSA's (1) ability to track the costs of program activities including MMA administrative costs, (2) controls over its review and approval processes for purchase card payments, and (3) tracking of its accountable assets, the Commissioner of Social Security should establish procedures to ensure better dissemination of policies and procedures to all relevant offices and staff.

    Agency Affected: Social Security Administration

  2. Status: Closed - Not Implemented

    Comments: SSA disagreed with this recommendation in commenting on our draft report and had not reported taking any corrective actions. In March 2016, a request for a status update on this recommendation was sent to SSA. The SSA audit liaison replied stating that SSA continued to disagree with the recommendation and has no plans to take any corrective action in response to the recommendation. Therefore, we are closing this recommendation as not implemented.

    Recommendation: To enhance SSA's (1) ability to track the costs of program activities including MMA administrative costs, (2) controls over its review and approval processes for purchase card payments, and (3) tracking of its accountable assets, the Commissioner of Social Security should establish additional detailed procedures for a purchase card supporting documentation review and approval process to help ensure that purchase card payments are properly supported, allowable, and allocated.

    Agency Affected: Social Security Administration

  3. Status: Closed - Implemented

    Comments: On May 12, 2008, SSA issued Acquisition Alert 08-07, Fiscal Year 2008 Micro-Purchase Reminders, to address GAO's recommendation. Acquisition Alert 08-07, which is available on SSA's Office of Acquisitions and Grants intranet page, reinforces SSA's policies and procedures for micro-purchases and the purchase of accountable assets and provides a link to SSA's Accountable Sensitive and Personal Property Reporting Requirements policy document. The Acquisition Alert identifies responsibility for informing the local property management or custodial office when new items are purchased and also identifies those items that are subject to inventory and bar coding requirements.

    Recommendation: To enhance SSA's (1) ability to track the costs of program activities including MMA administrative costs, (2) controls over its review and approval processes for purchase card payments, and (3) tracking of its accountable assets, the Commissioner of Social Security should reinforce existing policies and procedures for the purchase of accountable assets to ensure that accountable assets are bar coded, recorded in SSA's asset inventory system, and inventoried periodically.

    Agency Affected: Social Security Administration

 

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