Martin W. Cohen Billings for Subsidiary Services Under Contract 0760- 93-0179-002

(Audit Report No. 98-048, May 26, 1998)

The Office of Inspector General (OIG) has completed an audit of fees and expenses that Martin W. Cohen (MWC) billed to the Resolution Trust Corporation (RTC) and the Federal Deposit Insurance Corporation (FDIC) for accounting and management consulting services. The audit objectives were to determine whether MWC' billings were reasonable, adequately supported, and in compliance with the contract terms and conditions.

For the accounting and management consulting services it performed from April 1, 1995, through December 31, 1996, MWC billed hourly fees and travel costs totaling $5,728,518. Generally, SMAS's billings for these services were reasonable, adequately supported, and within the terms and conditions of its agreement. However, of the $5,728,518 in total billings, the OIG identified $12,990 that appeared questionable.

None.

On April 28, 1998, the Regional Manager, Division of Administration, Southwest Service Center, provided a written response to a draft of this report. The Regional Manager disagreed with the OIG finding and recommendation. He stated that "The agreement between the FDIC and MWC does not contain mandatory work hours, nor any limitation on where work may be performed." The Regional Manager also said it was reasonable to expect a contractor to work following hotel check-in, early in the morning to prepare for the purpose of the trip, or following arrival at the employee's residence. Further, the Regional Manager stated that the OIG did not present evidence that clearly shows that the contractor charged productive work during actual travel time and, therefore, FDIC has no basis for a claim. In addition, the Regional Manager's response included supplementary information from MWC that supported $378 in questioned costs and affirmed the contractor's position that there were no restrictions on where work was performed.

We acknowledge that the agreement did not establish mandatory work hours or limitations on where work may be performed, and that MWC employees could have incurred productive hours before or after periods of travel. We are, therefore, making no recommendations in this report.