Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) Systems and Services Directorate's activities from June 1988 through January 1991, focusing on whether the Directorate: (1) had adequate internal controls; (2) followed proper contracting procedures; (3) appropriately managed certain information technology contracts; and (4) needed specifically identified training contracts.

GAO found that: (1) the Systems and Services Directorate lacked internal controls to ensure compliance with applicable laws and that all assets were safeguarded against waste, loss, or theft; (2) the Directorate lacked separation of duties in authorizing, processing, recording, and reviewing transactions, since the former director was involved in all phases of contract award and management; (3) after reorganization, the new director acted only as an authorizing official and the Directorate no longer supervised contract administration; (4) in 1991, the new director eliminated the contingency fund because it lacked budgetary accountability; (5) the new director terminated one contract and referred one contract for criminal investigation because two DOD contractors lost government property due to improper inventory accounting; (6) the Directorate did not follow proper contracting procedures or document the need for certain equipment or services; (7) the new director terminated two contracts after determining there was no need for them; (8) the Directorate's poor contract management resulted in the acceptance of inadequate products and payments for services that were not received or were unnecessary; and (9) the new director discontinued malfunctioning systems, implemented new contract management procedures, and terminated three unnecessary training contracts.