The Defense Department Inspector General's Office is calling for better oversight of the contractor in charge of shipping troops' privately owned vehicles to and from overseas, citing problems such as overpayments to the contractor and unacceptable storage conditions leading to vehicle damage.

IG auditors visited five vehicle processing centers and two storage facilities operated by the contractor, International Auto Logistics, and found that at one of the storage facilities, in Chester, S.C., water damaged at least one vehicle. The IG found the contractor wasn't storing the vehicles in compliance with contract requirements.

After the IG notified U.S. Transportation Command officials, the contractor took corrective action. Among other things, IAL worked with the service member to have the damaged vehicle repainted, and professionally cleaned and detailed 456 affected POVs. The contractor also was required to fix plumbing leaks and provide a clean and dry environment for all stored vehicles.

Auditors also found that Surface Deployment and Distribution Command officials made $162 million in "potentially improper payments" to the contractor, according to the IG report. That includes up to $5 million related to the late delivery of 27,283 vehicles in 2014. The government can hold the contractor accountable when the delivery is late. SDDC is the TRANSCOM command with oversight of the POV program.

The IG audited the vehicle shipment process from December 2014 to October 2015 at the request of Sens. Dick Durbin, D-Ill., and Thad Cochran, R-Miss. The senators and other lawmakers had received numerous complaints from service members whose vehicles were delivered weeks or months late in summer 2014. In May 2014, IAL took over shipping of troops' vehicles. By August 2014, U.S. Transportation Command assumed oversight of the contract from Surface Deploymenet and Distribution Command and set up a team of experts to address widespread problems and closely monitor the situation.

While the IG report commended U.S. Transportation Command for handling the problems, auditors noted those measures were temporary, and the command didn't initially implement adequate controls to ensure proper oversight.

"Without effective oversight, USTRANSOM will not have sufficient information to assure transportation and storage services received are consistent with contract quality requirements and performed in a timely manner," according to the IG report.

During summer 2014, the on-time delivery of vehicles was far below the contract's 98 percent requirement, auditors said, "and never exceeded 70 percent."

But they noted there were improvements by summer 2015, when the percentage of vehicles delivered on time increased to 97 percent for the week ending Aug. 3.

IAL has received an additional option period beyond the term of the contract, which ends in February. The option will run from March through September, said SDDC spokesman Fred Rice.

The teams TRANSCOM put together were "temporary and unique means" to handle concerns about the contractor's performance, but "are not a substitute for the established contract oversight process," auditors stated.

Although performance has generally improved, TRANSCOM contract staff and SDDC management personnel didn't properly implement controls to ensure contract oversight and address all performance concerns, the IG auditors found.

TRANSCOM responded to the auditors' concerns about some initial, temporary deviations from procedures, stating that these were necessary and proper "in the face of intense performance challenges." Ultimately, TRANSCOM's policies "led to improved contract oversight and contractor performance," officials said.

"The contractor has, and will continue to be held accountable for performance failures," stated a response signed by Army Lt. Gen. Stephen Lyons, deputy commander of TRANSCOM.

He noted that the new contract saved the government $54 million in the first year.

TRANSCOM and SDDC are taking other steps recommended by the IG to improve oversight. For example, the contracting officer representatives have been required to document unacceptable contractor performance.

SDDC is conducting a review to determine whether payments were improper. That review should be completed by Feb. 28, officials noted in their response. Last May, IAL corrected its improper invoice format.

In addition, the contracting officer is recouping the overpayments made for vehicles that were delivered late.

Regarding the leaking storage facility, auditors reported that the contracting officer's representative had sent repeated emails and photographs to report the leaking roof, but the contracting officer didn't take action to correct the problems until the IG contacted TRANSCOM 10 months after the initial notification. In their response to the IG, TRANSCOM officials disputed the accuracy of that finding, noting officials had provided the IG with detailed records "that directly contradict this finding."