Over a four-year period, the State Department systematically mismanaged purchases and distribution of gasoline and diesel fuel at dozens of overseas posts, according to the department’s Office of Inspector General.
The OIG found that from 2016 to 2020, 43 overseas missions across geographic regions incurred about $77 million in questionable fuel costs due to insufficient documentation and reviews, improper acceptance procedures and fuel equipment deficiencies. A fourth theme of fuel mismanagement was redacted.
“The prevalence of the deficiencies identified across the 43 OIG reports at multiple overseas posts suggests that the Department may have unidentified vulnerabilities with fuel operations not reviewed by OIG,” it said.
The report, published in March and highlighted in the OIG’s semiannual report to Congress, comes as the U.S. struggles with soaring domestic fuel prices on the heels of an economic recovery and Russia’s invasion of Ukraine. The national average price for a gallon of gasoline reached record levels in the past few months.
“Fuel is an essential, expendable property required for the Department’s overseas operations,” the report said. “Effective fuel management reduces the risk of fuel-related fraud, waste, and financial damage to the Department.”
The most common deficiency that lead to the monetary waste was insufficient documentation and document review of fuel usage and contracts. In one example, records in the U.S. Embassy in Iraq were missing correspondence between contract oversight personnel regarding issues with fuel quality.
“Without this information, Embassy Baghdad staff could not hold the contractor accountable, potentially wasting Government funds on low-quality fuel,” the report said. “Furthermore, OIG’s work has frequently identified deficiencies in the Department’s ability to hold contractors accountable for nonperformance and ensure that work is conducted in accordance with contract requirements
Of the questionable costs the OIG identified, $64 million was attributed to the Baghdad embassy due to embassy staff failing to ensure the fuel adhered to quality standards.
Improper implementation of fuel acceptance procedures at overseas missions was a contributing factor to this monetary waste. The report describes how embassy staff at the Baghdad post failed to require contractors to provide quality reports that would have shown the fuel was noncompliant with government standards.
Uncalibrated or missing fuel tank, pump and flow meters were also recognized by the OIG for contributing to potential excess fuel waste.
“These questioned costs represent the financial consequences for the Department as a result of fuel mismanagement,” the report said. “However, the $77 million in questioned costs do not capture the value of fuel stolen from overseas posts or other forms of fraud.”
The OIG made 156 recommendations over the four year period to State to remediate the mismanagement. The department has implemented 147 of the recommendations as of Sept. 2021 and has begun corrective actions to address the remaining nine.
“Given the deficiencies identified previously, it is not possible to determine the full extent of the financial damage the Department has incurred,” the report concluded. “Lasting changes demand continued attention.”