Anchorage Daily News

About $6 million worth of equipment, including tractor-trailers, has vanished somewhere between the Indian Health Service and the Alaska Native Tribal Health Consortium, the result of "gross mismanagement" of the federal agency charged with providing health services to Natives.

That's one conclusion of a recent report from the Government Accountability Office, the investigative arm of the U.S. Congress that examines the use of public funds.

Heavy equipment. Generators. Trailers. Tractors. All-terrain vehicles. Gone, according to the report.

The health service, however, disputes the findings, saying the property is overvalued in the report and the claims are exaggerated. The service says that in some cases it was simply a matter of inadequate paperwork that led auditors to conclude the items had been lost or stolen, when in fact they had been given to Native groups.

The service's procedures were put under the microscope after a whistle-blower 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 says.

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

REPORT BLASTS AGENCY

The report, bluntly titled "IHS Mismanagement Led to Millions of Dollars in Lost or Stolen Property," was released in June and chronicles what the accountability office said were pervasive inadequacies in managing health service property.

Among the other findings:

• 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.

• 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, faced the Senate Indian Affairs Committee Thursday to defend his agency, which, he said, 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."

The equipment in Alaska was barged or flown up to help construct medical facilities, and by the time it had been used the cost of transporting it out outweighed the remaining life expectancy, he said. So it was often transferred to tribal organizations, namely the Alaska Native Tribal Health Consortium, he said.

The consortium, which was not accused of mismanagement, is an organization that provides health care, water, sanitation and other services statewide. It also runs the Alaska Native Medical Center on Tudor Road in Anchorage.

"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, spokeswoman for the consortium. "We can account for the $7 million that came to us."

VALUE QUESTIONED

The accountability office based the dollar amount of the unaccounted-for equipment on the new purchase price of the items, and Sweeney said that doesn't add up.

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

Sweeney said the health service, which operates in 36 states, also has no plans to replace the equipment because it is no longer needed in those locations.

Accountability office investigators, however, are not convinced.

"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 says.

"Furthermore, analysis of IHS's response raises concerns about the nature of disposal for these items, including vehicles and machinery, which could cause environmental hazards as a result of abandonment."

The report concludes that the health service did not take proper steps to protect its property, including conducting annual inventories, using proper transfer procedures, or recording certain property in a database.

Sweeney conceded the health service has some problems with its property management and agrees with a number of the report's recommendations.

Find James Halpin online at adn.com/contact/jhalpin or call him at 257-4589.

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