Customs and Border Protection has paid Boeing cost invoices for the now-canceled SBInet program without sufficient knowledge, alleges the Government Accountability Office in a May 25 report.

The Homeland Security Department announced SBInet's cancellation in January; it was an effort to blanket U.S. borders with a networked chain of radars, cameras, and heat and motion detectors, allowing border patrol agents to work from a common operational picture. As of January 2011, CBP told GAO auditors that it has paid prime contractor Boeing (NYSE: BA) $780 million since receiving the contract in September 2006 and has obligated the company an additional $80 million.

Under the SBInet contract, Boeing submits cost-based and fixed price invoices; the GAO report does not state how much of the $860 million paid or obligated to Boeing is one contract type or another.

Whatever their amount, the GAO audit says that Boeing cost-invoices lacked detail. Costs were lumped together without being broken down into individual elements. For example, one invoice for direct labor between Sept. 12 and Sept. 25, 2008 charged $1.5 million without detailing the hours worked or the labor rate category.

The report says that CBP made a decision not to rely on invoices for oversight mechanism and rely on other methods, such as close-out audits to ensure accountability. Close out audits, the report notes, might not occur until years after a contract has been completed and are therefore a "less effective" oversight mechanism. Further, CBP has yet to request any close-out audits, the report adds.

In DHS's official response--signed by Jim Crumpacker, director of the GAO/OIG liaison office--says it hasn't only relied on close-out audits, however. It's been withholding 10 percent of Boeing's "fee" (which is what the federal government is often inclined to call "profit") as an offset against the appearance of an unallowable cost and has relied on monthly cost reports submitted separately from invoices to gain a picture of labor and other costs.

"When situations have arisen where interim payment requests are questioned or rejected, additional information is requested of the contractor," Crumpacker added.

For more:
- download the report, GAO-11-68 (.pdf)

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