MEMORANDUM FOR:   RAYMOND UHALDE
                                            Acting Assistant Secretary for
                                                Employment and Training
 

                                           PATRICIA W. LATTIMORE
                                           Assistant Secretary
                                                for Administration and Management
 
                                               / s /
FROM:                             JOHN J. GETEK
                                          Assistant Inspector General
                                               for Audit

SUBJECT:                     WALCOFF & ASSOCIATES, INC.
                                          Final Audit Report No. 18-98-005-03-001

Attached is our report on our audit of the direct costs claimed by Walcoff & Associates, Inc. (Walcoff) under four U.S. Department of Labor (DOL) cost-plus-fixed-fee contracts for the period October 1, 1991 through March 31, 1997. The estimated costs, the fixed-fee, and the amounts subcontracted for the four contracts were:

DOL  Agency	Contract Number	Contract Period	Estimated  Costs	Fixed Fee	Contract  Amount	Amount  Subcontracted
OASAM	J-9-M-1-0090	10/1/91-9/30/92	$ 587,717	$ 44,079	$ 631,796	$ 232,908 (a)
OASAM	J-9-M-2-0029	5/29/92-3/31/96	2,099,662	157,475	2,257,137	1,002,130 (a)
ETA	E-3818-2-00-82-30	5/29/92-9/30/97	1,171,136	80,610	1,251,746	---
ETA	E-3822-2-00-82-30	6/3/92-5/31/97	1,646,996	131,760	1,778,756	166,191 (b)
Total			$5,505,511	$413,924	$5,919,435	$1,401,229

(a) Subcontract with Global Initiatives, Inc.
(b) Subcontract with Ogden Professional Services

Walcoff is a for-profit organization whose award of the four DOL contracts was through the U.S. Small Business Administration "set-aside" program. These contracts were for:

(1) raising the awareness of substance abuse problems in the workplace,
(2) enhancing the Job Corps image, and
(3) helping newly hired Job Corps staff become familiar with their duties and responsibilities.

The objective of this financial audit was to determine whether the costs claimed for reimbursement were reasonable, allocable, and allowable under the Federal Acquisition Regulation (FAR) and the terms and conditions of the contracts.

The scope of this audit did not include a review of the indirect costs claimed because the Department of Defense (the predominant Federal funding agency) is the cognizant agency and the Defense Contract Audit Agency had established Walcoff's indirect cost rates. With regard to Walcoff's direct costs, we tested transactions totaling $1,880,518, or about 50 percent of the $3.8 million in direct costs that Walcoff claimed for reimbursement under the contracts. As part of our audit work, we also reviewed charges made under cost-plus-fixed-fee subcontracts with Global Initiatives, Inc. ($1,235,038) and Ogden Professional Services ($166,191) who assisted Walcoff in providing the services requested by DOL under these contracts.

We found that the costs claimed were properly supported and that Walcoff complied, in all material respects, with the cost principles set forth in the FAR and the terms of the contracts. No response to this report is necessary.

Attachments
 
 

Mr. John J. Getek
Assistant Inspector General
for Audit
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210

 

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards (1994 revision), issued by the Comptroller General of the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the direct costs claimed are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts claimed. An audit also includes assessing the accounting principles used and significant estimates made by manage-ment, as well as evaluating the overall presentation of the costs claimed. We believe that our audit provides a reasonable basis for our opinion.

Compliance with laws and regulations, and contracts applicable to Walcoff is the responsibility of Walcoff management. As part of obtaining reasonable assurance about whether the costs claimed are free of material misstatement, we performed tests of Walcoff's compliance with certain provisions of laws, regulations, and contracts. However, our objective was not to provide an opinion on the overall compliance with such provisions. Accordingly, we do not express such an opinion.

In our opinion, the accompanying financial statement (Exhibit B) presents fairly, in all material respects, the acceptable costs claimed for the period October 1, 1991 through March 31, 1997, in accordance with the aforementioned criteria. The results of our audit disclosed no instances of noncompliance required to be reported under Government Auditing Standards.
 
 

 
This report is intended for the information of DOL and Walcoff management and should not be used for any other purpose. This restriction, however, is not intended to limit the distribution of this report which, when issued, is a matter of public record.

We held an entrance conference with Walcoff officials on April 28, 1997, and the last day of our field work was August 15, 1997.
 

    / s /
Myint & Buntua, CPAs
Falls Church, Virginia
August 15 , 1997
Attachments - 2

J-9-M-1-0090 Workshop and Conference Design and Management a Cost-Plus-Fixed-Fee-Contract (dated September 30, 1991). Walcoff (1) designed and conducted pre-conference issue identification and development workshops dealing with substance abuse in the workplace, (2) developed regional workshops, and (3) designed and supported a 3-day conference in Washington, DC during the Summer of 1992. The contract was for one year. Global Initiatives, Inc., the primary subcontractor, was responsible for the technical aspects of this effort and Walcoff was primarily responsible for the logistical support.

J-9-M-2-0029 National Communications Initiative a Cost-Plus-Fixed-Fee-Contract (dated May 29, 1992). Walcoff (a) wrote, edited, and produced materials to raise the awareness of small business establishments of substance abuse problems in the workplace, (b) motivated such establishments to implement substance abuse programs in their work sites, and (c) prepared advertisements and designed a conference for disseminating substance abuse related materials. This contract was for a base year (May 29, 1992 to March 31, 1993) and two option years. Both option years were exercised, along with certain extensions, through March 31, 1996, at no additional cost to the Government. Global Initiatives, Inc., the primary subcontractor, was responsible for the technical aspects of this effort and Walcoff was primarily responsible for the logistical support.

E-3818-2-00-82-30 National Job Corps Recruitment Campaign a Cost-Plus-Fixed-Fee Contract (dated May 28, 1992). Walcoff (1) conducted an analysis of the Job Corps recruitment campaign, its products and results, (2) provided technical assistance to selected Job Corps regional offices to enhance the effect of the campaign in those regions, and (3) developed a 5-year plan and approach for Job Corps public relations. This contract was for a base year (May 29, 1992 to March 31, 1993) and four option years. All four option years were exercised.

E-3822-2-00-82-30 Video Presentation Technical and Logistical Support a Cost-Plus-Fixed-Fee Contract (dated June 3, 1992). Walcoff developed twelve video presentations. Four of the presentations were to help the newly hired residential advisors, recreation staff, and the counselors become familiar with their duties and job responsibilities. The other eight videos were to help ensure that the Job Corps' curriculum addressed the three-part foundation of skills and the five "competencies" outlined by the Secretary's Commission on Achieving Necessary Skills. This contract was for a base year (June 3, 1992 to May 31, 1993) and four option years. All four option years were exercised.

DOL Contract No: J-9-M-1-0090 J-9-M-2-0029 E-3818-2-00-82-30 E-3822-2-00-82-30           Total

Direct Costs:

     Labor                 $ 96,232.20    $400,190.03      $320,242.39            $357,388.77          $1,174,053.39

Other Direct Costs   97,124.96         94,783.27        137,316.57              445,526.80                774,751.60

           Subtotal        193,357.16       494,973.30        457,558.96             802,915.57              1,948,804.99

Subcontractors &
Consultants             233,239.74    1,112,911.53        136,593.69             361,291.46             1,844,036.42

Conference
Patricipants                --                       13,463.47                  --                            --                             13,463.47

Media "Buys"             --                               --                148,665.10                    --                           148,665.10

          Subtotal         233,239.74     1,126,375.00       285,258.79             361,291.46              2,006,164.99

Total Direct
      Costs               $ 426,596.90 $1,621,348.30      $742,817.75        $1,164,207.03           $3,954,969.98