Weaknesses in the USACE Defense Base Act Insurance Program Led to as Much as $58.5 Million in Refunds Not Returned to the U.S. Government and Other Problems
Abstract
The Defense Base Act (DBA) of 1941, as amended, requires federal government prime contractors and subcontractors to provide workers' compensation insurance for their employees who work overseas. DBA insurance carriers provide disability and medical benefits to employees for work-related injuries and death benefits to eligible survivors for work-related deaths. The U.S. government reimburses contractors for the cost of their DBA premiums. As of December 2010, the number of DBA cases for Afghanistan totaled 10,600. Since 2005, the U.S. Army Corps of Engineers (USACE) has contracted with Continental Insurance Company (CNA) to serve as the single DBA provider for all USACE contracts. In 2008, U.S. Central Command Joint Theater Support Contracting Command (C-JTSCC) contracts were added to the USACE DBA program. CNA has collected approximately $225 million in premiums for these contracts. SIGAR initiated this audit to (1) determine the extent to which DBA premium rates were set at appropriate levels, (2) assess USACE and C-JTSCC's internal controls for ensuring that prime contractors and subcontractors obtain insurance in compliance with the DBA, and (3) evaluate the process for billing and reimbursing contractors for their DBA costs. We conducted our work in Washington, D.C.; Winchester, VA; Chicago, IL; and Kabul and Kandahar, Afghanistan from February 2011 through July 2011, in accordance with generally accepted government auditing standards.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 28, 2011
- Accession Number
- ADA549488
Entities
Organizations
- Special Inspector General for Afghanistan Reconstruction