Investigators fault Indian Health Service on equipment losses

Agency says $6 million in items vanished due to mismanagement

Posted: Tuesday, August 05, 2008

ANCHORAGE - The watchdog agency of Congress has concluded that about $6 million worth of equipment has vanished somewhere between the Indian Health Service and the Alaska Native Tribal Health Consortium.

The Government Accountability Office said the missing equipment is the result of "gross mismanagement" by the federal agency charged with providing health services to Alaska Natives.

Agency officials disagree. They contend investigators overvalued property and exaggerated claims. According to the IHS, inadequate paperwork in some cases led auditors to conclude items had been lost or stolen, when they had been given to Native groups.

The report focused on items that included heavy equipment, generators, trailers, tractors and all-terrain vehicles.

The report was sparked by a whistle-blower, who called a federal fraud hot line in June 2007 and reported millions of dollars in lost property in Alaska and other states.

The audit concluded the caller was right.

"From 1999 through 2005, IHS did not follow required procedures to document the transfer of property from IHS to the Alaska Native Tribal Health Consortium, resulting in an unsuccessful 5-year attempt by IHS to reconcile the inventory," the report said.

"Without proper documentation, it is impossible to determine what happened with the property, which is why we consider it to be lost or stolen."

The report titled "IHS Mismanagement Led to Millions of Dollars in Lost or Stolen Property," was released in June.

The report said an analysis of IHS reports from 2004 to 2007 identified more than 5,000 lost or stolen items nationwide, worth about $15.8 million. About 36 percent of 3,155 pieces of information technology equipment on the books at IHS headquarters was lost, stolen or unaccounted for, investigators said.

In one case, IHS staff held a "yard sale" of 17 computers and other property worth $16,660 in Nevada between June and July 2005.

Robert McSwain, head of the health service since April, last week defended the agency before the Senate Indian Affairs Committee and said it is updating its policies and investigating the missing items.

"Overall, we think that GAO continues to include many inaccuracies and misinterpretations in the report," agency spokesman Thomas Sweeney said in an interview. "The so-called lost or stolen ATVs and heavy equipment that were used to build facilities (in Alaska), those were transferred to tribal organizations."

Equipment in Alaska was barged or flown in to help construct medical facilities. The cost of cost of transporting it out outweighed the remaining life expectancy, he said, so it was often transferred to tribal organizations.

The Alaska Native Tribal Health Consortium, an organization that provides health care, water, sanitation and other services statewide, was not accused of mismanagement.

"We did accept about $7 million in property from the Indian Health Service and that was to enable us to continue program services," said Joaqlin Estus, consortium spokeswoman. "We can account for the $7 million that came to us."

The accountability office based the dollar amount of the unaccounted-for equipment on the new purchase price of the items.

"They're counting all of this as brand new," Sweeney said. "Is a 10-year-old car still worth the original purchase price?"

Accountability office investigators, however, were not swayed by that argument.

"Although (U.S. Health and Human Service's) comments state that these items were old and had little remaining useful value, IHS continues to purchase new property to replace old, necessary items - in which case it is likely that replacement costs are as much (or more) than acquisition cost," the report said.

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