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.
Compendium of Open Office of Inspector General Recommendations to the Department of Defense
This report contains summary information regarding open DoD OIG recommendations issued to the DoD. An open recommendation is a recommendation that was made in a previously issued DoD OIG report for which corrective actions have not been completed. The Compendium details 1,558 recommendations made by the DoD OIG that remain open as of March 31, 2018. DoD management agreed to take corrective action on 1,456 of the 1,558 recommendations. The remaining 102 open recommendations are considered unresolved, which means management has not agreed to implement the recommendation or has not proposed actions to address them. Of the 1,558 open recommendations, 33 of them have potential monetary benefits of $2.3 billion if DoD management implements report recommendations. The Compendium identifies 56 recommendations that have been open for at least 5 years. In addition, the Compendium highlights the top 25 open recommendations that warrant priority attention. The DoD OIG believes these recommendations, if implemented, will provide the greatest benefit to the DoD based on the potential to improve the effectiveness of DoD operations and achieve cost savings.
Report of Investigation: Rick A. Uribe Brigadier General U.S. Marine Corps
The DOD OIG investigated allegations that Brigadier General Uribe, while serving as the Deputy Commanding General for Operations-Baghdad, and Director, Combined Joint Operations Center, Baghdad, Combined Joint Forces Land Component Command, Iraq, between May 2016 and June 2017, permitted his officer aide-de-camp to perform activities other than those required in the performance of official duties. The DoD OIG also investigated allegations that Brigadier General Uribe violated Marine Corps personnel weigh-in requirements during the deployment, that he solicited and accepted gifts from employees who received less pay than himself, and that he wore unauthorized awards. The DoD OIG substantiated that Brigadier General Uribe permitted his officer aide-de-camp to perform activities other than those required in the performance of official duties, and that he solicited and accepted gifts from employees who received less pay than himself. The DoD IG did not substantiate the remaining allegations.
Acquisition of the Navy’s Mine Countermeasure Mission Package
This audit determined that the Navy declared initial operational capability for the three mine countermeasure mission package systems prior to demonstrating that the systems were effective and suitable for their intended operational uses. The mine countermeasure mission package provides detection, classification, and neutralization of mine threats. As a result of the initial operational capability declaration, the Navy delivered units that had known performance problems to the fleet for use aboard the littoral combat ship and other platforms. 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 audit concluded that, if the Navy proceeds as planned, it could spend money on mine countermeasure packages that are not fully capable of performing mine detection and neutralization missions. This could result in degraded mission performance, additional cost overruns to correct deficiencies in existing systems, and the need to deliver additional capabilities to meet the requirements.
DoD Management of the Enhanced Army Global Logistics Enterprise Maintenance Contract in Afghanistan
This audit determined that Army Contracting Command‑Afghanistan did not monitor contractor performance of certain critical requirements or monitor contractor costs for the Enhanced Army Global Logistics Enterprise–Afghanistan (EAGLE‑AFG) task order to ensure that vehicles and weapons were maintained in accordance with contract requirements. For example, contracting officer representatives did not determine actual contractor performance for specific critical requirements, such as maintenance turnaround time, and Army Contracting Command‑Afghanistan did not develop alternate methods for contracting officer representatives to verify contractor performance, such as gathering customer feedback. As a result, the Army does not have reasonable assurance that the EAGLE‑AFG contractor complied with certain critical requirements of the contract. In addition, without consistent contractor oversight, contracting officers could not accurately rate the contractor’s performance and assess potential reductions of fees payable to the contractor for noncompliance with contract requirements. Furthermore, the Army does not have reasonable assurance that costs billed, valued at $77.8 million, were allowable under the terms of the contract.
Command Cyber Readiness Inspections at Air Force Squadrons
This audit determined whether the Air Force components corrected deficiencies identified during Command Cyber Readiness Inspections in accordance with U.S. Cyber Command guidance and whether the Air Force used Command Cyber Readiness Inspections Command Cyber Readiness Inspections results to identify systemic deficiencies and improve Component‐wide cybersecurity. Because of the sensitivity of the information in this audit report, this report is designated as For Official Use Only.
Followup Audit: Application Level General Controls for the Defense Cash Accountability System
This audit determined that the Defense Finance and Accounting Service implemented corrective actions for the recommendations in a prior DoD OIG report, Report No. DODIG-2017-015, “Application Level General Controls for the Defense Cash Accountability System Need Improvement.” The Defense Finance and Accounting Service, Business Enterprise Information Services (BEIS) Office personnel implemented corrective actions that improved the design and operating effectiveness of several key application level general controls. These included security management, access controls, configuration management, and contingency planning. Additionally, BEIS personnel made control design improvements in access and configuration management controls. However, BEIS personnel have not yet verified that access and configuration management controls are operating as intended. As a result, selected controls were operating effectively and 15 of 20 prior recommendations are closed. In addition, BEIS personnel did not have confirmation that access and configuration management controls were operating as intended, and the Defense Cash Accountability System remains vulnerable to inappropriate user access and critical system discrepancies.
Defense Logistics Agency Award and Administration of Energy Savings Performance Contracts
This audit determined that Defense Logistics Agency (DLA)-Energy contracting officials and base-level Department of Public Works officials did not document the validation of contractor-claimed energy savings in 2 of 52 measurement and verification reports that supported a total of $0.9 million in contract payments. In addition, DLA-Energy contracting officials and base public works officials did not resolve a disagreement regarding whether the contractor sufficiently supported $1.8 million in contractor-claimed energy. As a result, three performance-phase Energy Savings Performance Contracts (ESPC) projects included $2.7 million in questionable contract payments that did not fully comply with Federal ESPC statutory requirements. The ESPC is a contract type through which an energy services contractor designs, finances, acquires, installs, and maintains energy‑saving equipment and systems for a Federal agency. ESPCs allow Federal agencies to procure energy savings and facility improvements with no upfront capital costs or special appropriations from Congress.
Management of Army Equipment in Kuwait and Qatar
This audit determined that the Army did not ensure contractor personnel properly maintained the prescribed maintenance schedules for Army Prepositioned Stock-5 (APS-5) vehicles and weapon systems stored in Kuwait and Qatar. The APS program is part of the Army’s strategy to maintain combat–ready material in strategic locations worldwide. APS-5 is Army prepositioned stock 5 located in Southwest Asia. This audit also determined that the Army Field Support Battalion–Kuwait property accountability officer did not conduct a 100 percent inventory at transition between accountability officers, or assume responsibility for losses, shortages, and inaccurate accountability of APS-5 equipment. As a result, the Army does not have assurance that contract personnel are performing the requirements of the contract to maintain vehicles and weapon systems. Furthermore, the Army does not have assurance that it properly accounted for the $5.1 billion of APS-5 equipment stored in Kuwait.
DoD’s Organizational Changes to the Past Conflict Personnel Accounting Community
This evaluation determined that the DoD and Defense POW/MIA Accounting Agency (DPAA) has made significant progress in implementing prior recommendations from the DoD OIG and from the Under Secretary of Defense for Policy. The DPAA mission involves the effort to account for missing DoD personnel from past conflicts, coupled with providing family members the available information concerning the loss, incident, and recovery work to provide the current status of missing personnel. This evaluation determined that the DoD issued updated guidance about disinterring unknowns for the purpose of identification, and that DPAA developed new policies and procedures for case management, agency-wide performance assessments, and partnership arrangements with private organizations. The DoD OIG also identified areas for improvement related to the DPAA mission, structure, resource allocation, and operational control and priorities, resulting in six new recommendations.
Evaluation of DoD Hotline Complaint Regarding Defense Contract Management Agency-Baltimore’s Actions on Audit Findings Reported by Defense Contract Audit Agency
This evaluation substantiated a Hotline allegation that a Defense Contract Management Agency contracting officer at the Baltimore field office did not take appropriate action on a Defense Contract Audit Agency report finding that identified $1.1 million in questioned contract costs. Specifically, the contracting officer may have reimbursed up to $1.1 million in proposed indirect costs to the DoD contractor that did not comply with Federal law requirements. Additionally, the contracting officer did not document sufficient rationale for not upholding the Defense Contract Audit Agency’s findings, or seek legal advice on the action as required by the Defense Contract Management Agency.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)
United States Reaches $1.53 Million Dollar Settlement with Defense Contractor to Resolve Contract Claim
On July 6, 2018, the Department of Justice (DOJ) announced that CACI Technologies, LLC (CACI) has agreed to pay the United States $1,531,928 to settle an allegation that it violated contract requirements on a National Security Agency (NSA) contract. CACI is an information technology company that develops, integrates, and maintains technological solutions across a range of markets, including intelligence systems, communication, cyber-security, logistics and material readiness, and other services for government and commercial customers. As part of the contract, NSA required that CACI provide the resources and services of skilled professionals and technical personnel necessary to meet the responsibilities specified in, or required by, delivery orders and technical task orders issued under the contract. The United States alleged that between January 2010 and June 2014, certain CACI employees who provided services under the delivery orders issued under the contract did not meet all the qualifications described in the contract. This is a joint investigation by the Defense Criminal Investigative Service and NSA Office of Inspector General.
Electrical Engineer Found Guilty for Intending to Convert Trade Secrets from Defense Contractor
On July 9, 2018, Federal jury in Hartford, Connecticut found Jared Dylan Sparks guilty of several counts related to the theft, uploading and transmission of trade secrets, for his participation in a scheme to convert trade secrets belonging to a defense contractor. The trade secrets in question relate to an innovative naval prototype developed for the Office of Naval Research. According to evidence admitted at trial, Sparks worked as an electrical engineer for DoD Contactor LBI Inc. (LBI), a company that has designed and built unmanned underwater vehicles. The National Oceanic and Atmospheric Administration uses the unmanned underwater vehicles to gather weather data. During his employment with LBI, Sparks collaborated with Charles River Analytics (CRA), a company that developed software to be integrated into LBI’s unmanned underwater vehicles. CRA eventually hired Sparks. Before he left LBI, Sparks surreptitiously uploaded thousands of LBI files to his personal account with Dropbox, a cloud-based file-storage application. The files included LBI’s accounting and engineering files as well as photographs related to designs and renderings used to fabricate and manufacture LBI’s unmanned underwater vehicles and buoys. This is a joint investigation by the Defense Criminal Investigative Service and the Federal Bureau of Investigation, with assistance from the DoD’s Computer Forensic Laboratory.
Business Owner and Former Government Contracting Officer Representative Plead Guilty to Conspiracy and Bribery
On July 13, 2018, the DOJ announced that Jerry Vertefeuille and Christopher Carter had pleaded guilty to conspiracy and bribery of a public official. Vertefeuille also pleaded guilty to obtaining and disclosing procurement information. According to court documents, Vertefeuille was a Federal government contracting officer representative for a maintenance group at Eglin Air Force Base. His duties included overseeing maintenance work and initially approving purchases and invoices. From 2007 through 2014, Vertefeuille helped Carter, the owner of TCC Services, Unlimited, LLC (TCC), win a paint booth maintenance contract and multiple contract renewals. Vertefeuille received kickbacks in exchange for approving Carter’s fraudulent invoices and recommending the renewal of TCC’s contract. This was a joint investigation by the Defense Criminal Investigative Service, the U.S. Air Force Office of Special Investigations, and the Air Force Audit Agency.
U.S. Settles Dispute with Transportation Company Over Contracted Afghanistan Security Services
On July 13, 2018, the DOJ announced that Liberty Global Logistics LLC (LGL) paid the United States $294,800 to settle claims that it had violated its contract with the U.S. Transportation Command (USTRANSCOM) by falsely billing the United States for convoy security services. USTRANSCOM contracted with LGL for the transportation of U.S. military cargo from the United States to various military outposts in Afghanistan. The contract required LGL to comply with Afghanistan law, which mandates the purchase of extra security services for cargo convoys moving along certain trucking routes within Afghanistan. The Afghan Public Protection Force (APPF) was supposed to provide the required extra security service. The Government reimbursed LGL for a portion of these security costs. USTRANSCOM later discovered that on 20 occasions in 2016 and 13 occasions in 2017, certain LGL shipments moved without APPF security services, in violation of the contract. Because of the investigation, LGL implemented a strengthened internal compliance program to monitor, identify and prevent inaccurate billings. The company agreed to maintain that strengthened program as part of the settlement agreement. This was a joint investigation by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Office of the Special Inspector General for Afghanistan Reconstruction.
Oklahoma Orthopedic Company and Physicians Agree to Pay $670,000 to Settle Allegations of False Claims to Medicare, Medicaid, and Tricare
On July 13, 2018, the DOJ announced that R.J. Langerman, Jr., Daniel J. Jones, Mehdi Adham, Derek West, Brian Levings, Shane Hume, Brad Reddick, and Kristopher Avant agreed to pay $670,000 to settle civil claims stemming from allegations that they submitted false claims to Medicare, Medicaid, and TRICARE. Cruse, Langerman, Jones, Adham, West, Levings, Hume, Reddick, and Avant are physicians who practiced medicine at and held ownership in Southwest Orthopaedic. The United States alleged that from January 1, 2012, through September 22, 2016, Southwest Orthopaedic and these physicians individuals caused false claims to be submitted to Medicare, Medicaid, and TRICARE for unnecessary medical procedures and for services that were not provided. In order to resolve these allegations, Southwest Orthopaedic and the physicians agreed to pay $670,000. This was a joint investigation by the Defense Criminal Investigative Service, U.S. Air Force Office of Special Investigations, and the Air Force Audit Agency.
Former Pharmacy Buyer Charged with Making False Statements Regarding Payments Received from New England Compounding Center and Ameridose
On July 18, 2018, Claudio T. Pontorier, a former pharmacy buyer at a Boston hospital, was charged in a Boston Federal court for making false statements to Federal agents in connection with receiving $355,000 from the now defunct New England Compounding Center (NECC) and Ameridose. As alleged in court documents, from December 2006 to October 2012 Pontoriero was a pharmacy technician at a Boston hospital and was responsible for purchasing drugs from suppliers for use on hospital patients. During that period, Pontoriero received $5,000 per month from NECC and Ameridose, a drug repackager formerly located in Westboro. In October 2015, during an interview with federal agents as part of the criminal investigation into NECC and Ameridose, Pontoriero falsely claimed that the $5,000 monthly payments were for consulting services and not in exchange for his influence in selecting NECC and Ameridose drugs for purchase by the hospital. This is a joint investigation by the Defense Criminal Investigative Service, the Federal Bureau of Investigation, the Food and Drug Administration, Office of Criminal Investigations, the U.S. Department of Veterans Affairs, Office of Inspector General, and the U.S. Postal Inspection Service.
Bergen County Man Admits Using Personal Information Stolen From U.S. Service Members To File Phony Tax Returns
On July 20, 2018, Shope Oluwo pleaded guilty in Trenton Federal Court to generating phony tax refunds using personally identifying information stolen from current and former members of the U.S. Army. Shope Oluwo pleaded guilty to conspiracy to commit wire fraud, access device fraud, and aggravated identity theft. From January through February 2016, Oluwo conspired with others to use stolen information to create fake military identification cards and fraudulent W-2 forms bearing the victims’ names. Oluwo provided the phony cards and W-2 forms to Sutherland, who posed as the victims and filed phony returns with a tax preparation company. Afterwards, Sutherland received debit cards from the tax preparation company that contained the ill-gotten refunds. Sutherland previously pleaded guilty to his role in the scheme and awaits sentencing. This is a joint investigation by the Defense Criminal Investigative Service, the U.S. Postal Inspection Service, and the Internal Revenue Service Criminal Investigative division.
ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)
Audit of the U.S. Transportation Command Oversight of the National Defense Reserve Fleet
The objective of this audit is to determine whether the U.S. Transportation Command performed oversight to support activation requirements for the National Defense Reserve Fleet. The National Defense Reserve Fleet is a reserve of vessels for national defense and national emergencies, which helps to maintain DoD readiness by providing rapid activation and deployment of military equipment.
Audit of Global Command and Control System-Joint Security Controls
The objective of this audit is to determine whether DoD Combatant Commands and Military Services implemented physical and logical security controls for the Global Command and Control System-Joint (GCCS-J) to protect DoD data and information technology assets. The GCCS-J provides DoD provides military commanders secure and reliable information on the operational environment including air, land, maritime, space, and cyberspace. Additionally, the GCCS-J allows users to plan movement of troops and equipment across theaters of operation and build operations for enhanced combat situational awareness.
Audit of DoD Joint Bases
The objective of this audit is to assess the DoD Joint Basing Program, including whether Military Service Components met the terms outlined in the joint base memorandums of agreement and whether processes are in place to report and address joint base related concerns. The Joint Basing Program is DoD’s effort to optimize the delivery of installation support across the Services by combining different Military Service installations to generate cost savings and achieve efficiencies. Joint bases consist of a supporting component (provider of installation support services on a joint base) and supported components.
Audit of DoD Management of Medical Claims Through the Third Party Collection Program
The objective of this audit is to determine whether the DoD is maximizing the collection of medical claims within the Third Party Collection Program. The Third Party Collection Program is a congressionally mandated program that authorizes military treatment facilities to recover the cost of providing health care services to covered DoD beneficiaries from third party payers, such as other health insurance policies covering medical, dental, or pharmacy that a covered beneficiary may have through their employer or private insurance company.
Audit of the B61-12 Tail Kit Assembly Program
The objective of this audit is to determine whether the Air Force is developing the B61-12 Tail Kit Assembly within cost, schedule, and performance requirements. The B61-12 Tail kit Assembly is a component that will be added to the B61 bomb. The Tail kit replaces the existing parachute delivery system on the B61 and will provide the capability to guide the B61 bomb after it is released from the aircraft.
Audit of the National Maintenance Strategy Contract in Afghanistan
The objective of this audit is to determine whether the Army developed the National Maintenance Strategy-Ground Vehicle Systems contract requirements to meet Afghan National Defense and Security Forces' vehicle maintenance and sustainment needs. The Afghan National Defense and Security Forces consist of the Afghan National Army and the Afghan Police. The National Maintenance Strategy Contract provides vehicle maintenance, supply chain management and warehouse management across Afghanistan to Afghan National Defense and Security Forces.
Summary Audit of Systemic Weaknesses in Cost of War Reports
The objective of this audit is to summarize systemic weaknesses in DoD’s accounting for costs associated with ongoing contingencies identified in Cost of War audit reports issued between 2016 and 2018.
Audit of the Security Controls Over the Air Force Satellite Control Network
The objective of this audit is to determine whether the Air Force Space Command implemented security controls to protect the Air Force Satellite Control Network against potential cyber attacks. The Air Force Satellite Control Network is a global system providing command, control, and communications for space vehicles.
Audit of the Protection of DoD Information Maintained on Contractor Systems and Networks
The objective of this audit is to determine whether DoD contractors have security controls in place to protect the DoD controlled unclassified information maintained on their systems and networks from internal and external cyber threats. Controlled unclassified information is information, created or possessed on behalf of the government, which requires safeguarding or controls consistent with applicable law, regulations, and government-wide polices, but is not classified information.
Audit of European Contingency Air Operation Sets
The objective of this audit is to determine whether U.S. European Command and United States Air Forces in Europe and Air Forces Africa have developed and implemented a schedule for procuring and fielding European Contingency Air Operations Sets. European Contingency Air Operations Sets are modular, small-scale bases and runways. The deployable sets include facilities, equipment, vehicle kits, and expeditionary medical support kits.
Evaluation of the Department of Defense and DoD Education Activity Response to Incidents of Serious Student Misconduct on Military Installations
The objective of this evaluation is to determine whether the DoD and the DoD Education Activity is adequately responding to incidents of serious student misconduct including sexual assault and sexual harassment. The evaluation will also evaluate the DoD and the DoD Education Activity’s referrals to DoD law enforcement organizations, as well as referrals to military and civilian child advocacy and health services.
Evaluation of Contracting Officer Actions on Defense Contract Audit Agency Reports that Disclaim an Opinion
The objective of this evaluation is to determine whether DoD contracting officer actions complied with applicable acquisition regulations in response Defense Contract Audit Agency (DCAA) reports that disclaim an opinion on a contractor's proposal. DCAA disclaims an opinion when the DCAA auditor is unable to obtain sufficient documentation support on a contractor's proposal.