June 4, 2018 —
The DoD OIG newsletter summarizes the reports and investigations released by the Department of Defense Office of Inspector General in the previous month and those we anticipate releasing in the coming month. I encourage you to read these reports and to access our website, which lists reports and investigations by year, subject, and DoD component. You'll also find our project announcements and additional news releases highlighting investigations conducted by the Defense Criminal Investigative Service. Thank you for subscribing to our newsletter.
Significant reports expected to be issued within the next 30 days include:
Acquisition of the Navy’s Mine Countermeasure Mission Package
This audit determines whether the Navy’s development of a mine countermeasures mission package, which allows the littoral combat ship to detect and neutralize or avoid mine, has met initial operational capability requirements. The littoral combat ship is a Navy ship intended to be reconfigurable to enable the ship to counter submarine, surface, and mine threats and assure maritime access for joint forces.
The Fort Bliss Hospital Replacement Military Construction Project
This audit determines how the DoD managed the Fort Bliss Replacement construction project. This audit was conducted in response to a requirement in the National Defense Authorization Act for Fiscal Year 2018, section 2823, “Report on Design Errors and Omissions Related to the Fort Bliss Hospital Replacement Project.” The Fort Bliss Hospital Replacement at Fort Bliss, Texas, is an ongoing construction project that will replace the existing William Beaumont Army Medical Center.
DoD Cybersecurity Weaknesses as Reported in Reports Issued From July 1, 2016, Through June 30, 2017
This audit summarizes cybersecurity weaknesses identified in unclassified reports issued by the DoD audit community and the Government Accountability Office between July 1, 2017, and June 30, 2018.
Audit of Procurement Quantities of the AH-64E Apache New Build and Remanufacture Helicopter Programs
This audit determines whether the Army justified the procurement quantities for the AH-64E Apache New Build and Remanufacture Helicopter Programs. The AH-64E Apache is an Army two-pilot, four-blade, attack and reconnaissance helicopter. The new build program produces an AH-64E with all new parts, while the remanufacturing program upgrades an existing AH-64D to the AH-64E model.
Audit of Defense Logistics Agency Energy Savings Performance Contracts
This audit determines whether the Defense Logistics Agency maintained competition in soliciting and awarding Energy Savings Performance Contracts (ESPCs). ESPCs provide a way for the private sector to finance Federal government energy-savings projects. Through an ESPC, an energy services contractor designs, finances, acquires, installs, and maintains energy-saving equipment and systems for a Federal agency.
DoDs Organizational Changes to the Past Conflict Personnel Accounting Community
This evaluation determines whether the DoD has implemented previous DoD Office of Inspector General (OIG) recommendations and Secretary of Defense directed organizational changes to the past conflict personnel accounting community. In 2014, the Deputy Secretary of Defense for Policy presented the Secretary of Defense with nine recommendations for reorganizing the accounting community, and the DoD OIG published a report containing an additional 21 recommendations. In response, the Secretary of Defense directed the formation of the Defense Prisoner of War/Missing in Action Accounting Agency, consolidating personnel accounting resources, research, and operations into a single entity within the DoD.
Operations and Management of the Military Cemeteries: Gravesite Accountability and the Reliability of Information Technology Systems Used to Schedule and Document Burials at Arlington National Cemetery
This evaluation determines the effectiveness of gravesite accountability at the Arlington National Cemetery, including the reliability of information technology systems used to schedule burials and accurately document and account for buried remains.
Recently issued Reports of Interest (to view report, if available, please click on title)
Department of Defense Office of Inspector General FY 2018-FY 2022 Strategic Plan
The DoD OIG Strategic Plan defines the mission, vision, values, strategic goals, and objectives that support the critically important mission of the DoD OIG. The Plan is a high-level guide that serves as a blueprint for the DoD OIG in the execution of its mission to detect and deter fraud, waste, and abuse in DoD programs and operations; promote the economy, efficiency, and effectiveness of the DoD; and help ensure ethical conduct throughout the DoD.
Semiannual Report to the Congress October , 2017 to March 31, 2018
This report summarizes the work of the DoD OIG from October 1, 2017 to March 31, 2018. This report highlights the OIG accomplishments over the past six months. The DoD OIG continues to be a good investment for American taxpayers in support of our mission to provide independent, relevant, and timely oversight of the Department of Defense. During this period, the DoD OIG achieved $988.7 Million "return on investment" from Investigative Receivables & Recoveries ($529.9 Million), Identified Questioned Costs ($240 Million), Achieved Monetary Benefits ($7.8 Million), and Funds Put to Better Use ($211 Million).
Additionally, the DoD OIG issued 88 audit, inspection, or evaluation reports; the Defense Criminal Investigative Service closed 465 cases addressing allegations of procurement fraud, public corruption, product substitution, health care fraud, illegal transfer of technology, and cyber-crimes; and DoD OIG completed 28 administrative investigations.
U.S. Strategic Command Facility Construction Project
This audit examined the construction of the U.S. Strategic Command replacement facility. This audit was conducted in response to a requirement in theNational Defense Authorization Act for Fiscal Year 2018. The audit determined that U.S. Army Corps of Engineers Omaha District personnel experienced multiple delays and cost increases to the U.S. Strategic Command replacement facility at Offutt Air Force Base, Nebraska. As of February 2018, project costs had increased 9.4 percent, or $53.1 million, from the originally programmed amount of $564 million to $617.1 million, and construction completion had been delayed by 29 months. The delays and cost increases occurred because of lack of expert involvement in the requirements development, contract modifications, a fire, floods, mold, and challenges related to the execution of contract modifications. DoD is in the process of implementing initiatives to help prevent further schedule delays and cost increases on this project.
(U) Air Force’s F-15 Eagle Passive/Active Warning Survivability System
This audit determined that Eagle Passive/Active Warning and Survivability System (EPAWSS) program officials updated the test and evaluation master plan to respond to concerns raised by Air Force and DoD test officials and developed an EPAWSS design that can meet capability requirements. Furthermore, in September 2016, the Air Force fully funded the EPAWSS program to satisfy an urgent need for modernized F-15 electronic warfare capabilities. However, in February 2017, the Deputy Chief of Staff of the Air Force, Strategic Plans and Requirements, cancelled the upgrade of 196 F-15 aircraft with EPAWSS, and removed procurement funds, which resulted in a 47 percent decrease of the total EPAWSS production quantity. As a result, Air Force officials do not know the full impact to other aircraft missions within and across the portfolios and Services, without Joint Requirements Oversight Council revalidation of the decrease of F-15C EPAWSS production quantities.
Lead Inspector General for Operation Freedom's Sentinel | Quarterly Report to the United States Congress | January 1, 2018 – March 31, 2018
This is the 12th Lead Inspector General quarterly report covering the period January 1, 2018 through March 31, 2018. This quarterly report describes the activities of the U.S. government in support of Operation Freedom Sentinel, as well as the work of the DoD, the Department of State, and the United States Agency for International Development in Afghanistan. Specifically, the report details the level of control over territories in Afghanistan, the declining number of Afghan forces, humanitarian efforts, and challenges related to the elections. The report also described oversight work conducted by the Lead IG agencies this quarter. During this quarter, the Lead IG agencies and their partner agencies completed 12 OFS-related audits and evaluations regarding U.S. direct funding to Afghanistan; train, advise, and assist efforts; embassy and facilities inspections; contract administration; and Overseas Contingency Operation financing. As of March 31, 2018, Lead IG agencies and their oversight partners had 35 ongoing and 28 planned oversight projects for Operation Freedom Sentinel.
DoD Oversight of Logistics Civil Augmentation Program in Afghanistan Invoice Review and Payment
This audit determined that Army Contracting Command and Defense Contract Audit Agency officials did not adequately monitor all 128 vouchers submitted under the Logistics Civil Augmentation Program (LOGCAP) IV contract in Afghanistan from 2015 to 2017 for questionable and potentially unallowable costs. LOGCAP is an Army program which uses contractors to provide logistical and sustainment services to deployed forces, such as dining and laundry facilities, housing, and transportation. In addition, the Army Contracting Command-Afghanistan did not monitor contractor performance and did not have reasonable assurance that the contractor performed all 28 main LOGCAP IV services in Afghanistan. As a result, the Army paid all 128 LOGCAP vouchers submitted from 2015 to 2017, valued at $2.4 billion, with little or no examination of the supporting documentation. Of the $2.4 billion billed, at least $536 million were on vouchers that were supported by questionable documentation.
Department of Navy Qualified Recycling Programs
This audit determined that the Navy did not provide adequate oversight of at 10 Qualified Recycling Programs (QRPs). A QRP is a program that collects and sells eligible scrap materials, including paper, cardboard, plastics, scrap metal and glass. Navy headquarters personnel did not review QRP financial records, and did not perform oversight to ensure QRP managers were following QRP guidance, such as segregating incompatible duties to decrease the risk of fraud or error, or depositing checks in a timely fashion. As a result of the lack of oversight by the QRP managers, the Navy cannot accurately assess whether its QRPs are operating in the most efficient and effective manner.
DoD FY 2017 Compliance with Improper Payments Elimination and Recovery Act Requirements
This audit determined that the DoD did not comply with four of the six “Improper Payments Elimination and Recovery Act of 2010” requirements. Improper payments include payments made to ineligible recipients, duplicate payments, payments for goods and services not received, and payments for ineligible goods or services. Specifically, the DoD did not publish information in the Payment Integrity section of the FY 2017 Agency Financial Report; publish statistically valid improper payment estimates for four programs; publish all required elements for the program corrective actions; and meet its annual reduction target for four programs.
The Trans-Africa Airlift Support Contract
This audit determined that U.S. Africa Command did not conduct a service requirements review board (SSRB) to develop, analyze, review, and validate the Trans-Africa Airlift Support Contract requirements prior to U.S. Transportation Command (USTRANSCOM) awarding the $900 million contract. The Trans-Africa Support Contract provides airlift services in the U.S. Africa Command area of responsibility. Additionally, USTRANSCOM did not ensure that U.S. Africa Command completed a SSRB. USTRANSCOM officials assumed the Trans-Africa Airlift Support Contract requirements were validated since funds were distributed and a performance work statement was provided. As a result, the performance work statement for the Trans-Africa Airlift Support Contract included requirements for intelligence that were not clear and some medical services that may unnecessarily increase costs.
System Review Report on the Missile Defense Agency Internal Review Office
This system review determined that the Missile Defense Agency Internal Review Office’s system of quality control for the year that ended September 30, 2017, provided reasonable assurance of conformance to government auditing standards. The DoD OIG therefore issued a peer review opinion of pass. Additionally, the DoD OIG issued a Letter of Comment that provided findings and recommendations that were not significant enough to affect the overall pass opinion.
Hotline Allegation of a Safety Violation at Blue Grass Chemical Agent-Destruction Pilot Plant
This evaluation, conducted in response to a Hotline allegation, determined that the Program Executive Office for Assembled Chemical Weapons Alternatives correctly defined the Explosive Destruction Technology (EDT) facility hazardous area at the Blue Grass Chemical Agent-Destruction Pilot Plant in Richmond, Kentucky. The EDT facility is a building used to destroy chemical weapons. As a result, the Hotline allegation was not substantiated.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)
Orange County Electronics Distributor Charged with Selling Counterfeit Integrated Circuits with Military and Commercial Uses
On May 1, 2018, Rogelio Vasquez, owner of PRB Logistics, was arrested on federal charges alleging he sold counterfeit integrated circuits, some of which could have been used in military applications. According to the indictment, Vasquez acquired old, used, and/or discarded integrated circuits from Chinese suppliers that had been repainted and remarked with counterfeit logos. The devices were further remarked with altered date codes, lot codes, or countries of origin to deceive customers and end users into thinking the integrated circuits were new. Vasquez then sold the counterfeit electronics as new parts made by manufacturers such as Xilinx, Analog Devices, and Intel. The indictment charged Vasquez with nine counts of wire fraud, 20 counts of trafficking in counterfeit goods, and one count of trafficking in counterfeit military goods. This is a joint investigation with the Defense Criminal Investigative Service, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the National Reconnaissance Office of Inspector General.
Radiation Control Technician Supervisors Sentenced for Falsifying Former Hunter’s Point Naval Shipyard Clean- Up Records
On May 2, 2018, a case against Stephen C. Rolfe and Justin E. Hubbard was unsealed in the Northern District of California. On January 24, 2018 and May 2, 2018, Rolfe and Hubbard were each sentenced to eight months in prison for falsifying documents. In 2017, Rolfe and Hubbard pleaded guilty to falsifying documents. Hubbard and Rolfe were government contractors performing nuclear remediation work at the former Hunter’s Point Naval Shipyard located in the Bayview District of San Francisco. Contractors at the site were expected to take soil from certain marked sampling locations, referred to as survey units. Then contractors were supposed to bag, label, and send the samples to a laboratory for analysis to determine, among other things, whether they contained certain radionuclides above an acceptable level. If a laboratory analysis determined a collected sample to contain a higher-than-allowable level of radionuclides of concern, then additional remediation of the survey area was conducted until all samples passed laboratory analysis. Hubbard and Rolfe admitted that, rather than take samples from the intended survey units undergoing analysis, they participated in the substitution of dirt that was “clean” (containing acceptable levels of radionuclides) taken from other areas within the former naval base. This was a joint investigation with the Defense Criminal Investigative Service, the U.S. Nuclear Regulatory Commission Office of Investigations and the Environmental Protection Agency.
Southern District Of Georgia Announces Results of Recent Criminal and Civil Procurement Fraud Prosecutions
On May 4, 2018, the U.S. Attorney’s office in the Southern District of Georgia announced a series of procurement fraud prosecutions. Over the past several months, the investigative efforts of several agencies lead to 5 guilty pleas and 12 civil settlements on several procurement fraud investigations. These prosecutions and civil settlements stemmed from a wide variety of fraudulent conduct, including bribery of public officials, illegal kickbacks, illegal arrangements between large contracting companies and certified small or 8(a) businesses acting as “front” companies, and billing for services not rendered. The five individuals who have pled guilty are awaiting sentencing. The total financial recovery for the United States thus far has exceeded $7.4 million. Several of these investigations remain ongoing. The joint strike force that led to these convictions and settlements included agents, investigators, and auditors from the Department of Justice, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigation Command, the Naval Criminal Investigative Service, and the Small Business Administration Office of Inspector General.
Former Army Official Sentenced To Six Years in Federal Prison For Bribery Scheme Involving Contracts At Aberdeen Proving Ground
On May 11, 2018, John Kays was sentenced to six years in federal prison, for accepting bribes of $800,000 related to contracts with the Army. Additionally, orders were issued for forfeiture in the amount of $631,705, and restitution of $886,519. Kays' wife Danielle Kays and Matthew Barrow were also charged in the scheme and have pled guilty. Danielle Kays is presently serving an 18-month prison sentence. Barrow is awaiting sentencing. According to court documents, John Kays, Danielle Kays, and Barrow graduated from West Point together. The Kays held leadership positions as civilian employees with the Army. Barrow formed a company called MJ-6. John Kays admitted that he steered Communications-Electronics Command subcontracts to MJ-6 in exchange for money. Danielle Kays has also admitted to using her official position to benefit Barrow and MJ-6. Specifically, the Kays used their official positions to add MJ–6 to the Army’s list of acceptable subcontractors and to steer potential employees for government contractors to work for MJ-6. The Kays also approved MJ-6 employees to work on various Task Orders and approved the pay rates, status reports, and travel reimbursements for MJ-6 employees. Total contracts steered to MJ-6 by the Kays exceeded $21 million. This is a joint investigation with the Defense Criminal Investigative Service, the U.S. Army Criminal Investigation Command and the Federal Bureau of Investigation.
Owner of Harris Therapy, Inc. Convicted On Healthcare Fraud Charges
On May 10, 2018, a federal jury in the District of Hawaii found Sheila Harris, owner and operator of Harris Therapy, Inc. (Harris Therapy), guilty of wire fraud, aggravated identity theft, and false statements involving healthcare for her role in submitting false claims and documents to TRICARE. According to information presented in court, Harris submitted false claims and documents to TRICARE for payment for speech therapy services that were not performed. On the claims, Harris falsified dates of services and the speech therapy provider listed on the claims. Three speech language pathologists who treated patients for Harris Therapy during this timeframe testified at trial that Harris directed them to create false invoices and false therapy notes for dates when no speech therapy treatment took place. Additionally, Harris directed others to alter and falsify therapy notes that were then submitted to TRICARE. The scheme involved over $339,628 of false speech therapy services billed to TRICARE for nonexistent treatment dates. This is a joint investigation with the Defense Criminal Investigative Service and the Federal Bureau of Investigation.
ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)
Re-announcement of the Audit of the Afghan Personnel and Pay System
The objective of this audit is to determine whether the DoD's planning and implementation of the Afghan Personnel and Pay System will accurately track and pay Afghan forces. U.S. Forces–Afghanistan developed and transitioned to the Afghan personnel and pay system, which is a human resources system that will store personnel information, track recruits, record training, and assign qualified personnel into assignments based on force requirements.
DoD Oversight of Bilateral Agreements With the Republic of the Philippines
The objective of this audit is to determine whether the DoD has proper oversight of the logistical support provided through bilateral agreements to the Republic of the Philippines. These bilateral agreements allow the Armed Forces of the Philippines to receive select resources such as munitions and equipment from the U.S. military stock in an accelerated process reserved for allies and close partners of the U.S.
Audit of Aviation Critical Safety Items Entering the DoD Supply Chain
The objective of this audit is to determine whether DoD personnel are properly classifying, procuring, and managing aviation critical safety items. Aviation critical safety items are parts, assemblies, or equipment that are necessary to avoid critical aircraft or weapon system failure, unintended engine shutdown, or risk of injury or death.
Audit of Operational Contract Support Force Development
The objective of this audit is to determine whether DoD components incorporated operation contract support training into force development for military and DoD civilian personnel. Operation contract support is the process of planning for and obtaining supplies, services, and construction from commercial sources in support of joint operations. Training and force development are critical elements of operational contract support.
Summary of DoD Cybersecurity Reports and Testimonies Given from July 1, 2017, Through June 30, 2018
The objective of this audit is to summarize cybersecurity reports issued and testimonies given by the DoD audit community and the Government Accountability Office between July 1, 2017, and June 30, 2018. The report will assess summarize the identified strengths and weakness of DoD cybersecurity, identify any gaps in oversight, provide the status of any open recommendations made in the summarized reports, and identify cybersecurity risk areas that the DoD should address.
Followup Audit: Screening and Access Controls for General Public Tenants Leasing Housing on Military Installations
The objective of this followup audit is to determine whether actions the military departments implemented in response to Report No. DODIG-2016-072, "DoD Needs to Improve Screening and Access Controls for General Public Tenants Leasing Housing on Military Installations," April 1, 2016, has improved controls over the Military Housing Privatization Initiative program's screening and access-related procedures for general public tenants.
Audit of Payments for TRICARE Urgent Care Benefits
The objective of this audit is to determine whether the DoD appropriately paid for beneficiary health care services covered under the urgent care benefit. The urgent care benefit allows covered beneficiaries under the TRICARE program access to urgent care visits without the need for prior-authorization.
Evaluation of Contracting Officer Actions on Penalties Recommended by the Defense Contract Audit Agency
The objective of this evaluation is to determine whether Defense Contract Management Agency contracting officers are appropriately considering the Defense Contract Audit Agency’s penalty recommendations, and assessing or waiving penalties against DoD contractors.