March 6, 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:
Follow-up Audit: The Defense Enrollment Eligibility Reporting System Security Posture
This audit determines whether the Defense Manpower Data Center (DMDC) implemented corrective actions to remediate physical and cybersecurity weaknesses identified in Report No. DODIG-2012-090, “Improvements Needed to Strengthen the Defense Enrollment Eligibility Reporting System Security Posture.” DMDC is responsible for managing, maintaining, and securing the Defense Eligibility Enrollment Reporting System, which serves as a centralized DoD data repository containing personnel and medical data for Uniformed Service members and retirees and their family members, DoD civilians, and DoD contractors.
Effectiveness of Logical and Physical Access Controls Over Ballistic Missile Defense System Information
This audit determines whether contractors implemented security controls and processes to protect DoD classified and unclassified ballistic missile defense system information from internal and external threats. The Ballistic Missile Defense System is designed to destroy hostile missiles and their warheads before reaching their intended target.
TRICARE North Region Payments for Autism-Related Services
This audit determines whether the DoD appropriately paid for autism services in the TRICARE North Region. As part of the TRICARE program, the Defense Health Agency established the DoD Comprehensive Autism Care Demonstration to combine all TRICARE-covered Applied Behavior Analysis (ABA) services and to provide TRICARE reimbursement for ABA and related services to TRICARE eligible beneficiaries diagnosed with Autism Spectrum Disorder.
U.S. Air Force F-22 Raptor Modernization
This audit determines whether the U.S. Air Force is effectively managing its modernization of the F-22 Raptor fleet. The F-22 Raptor is a fighter aircraft that incorporates stealth capability in the performance of air-to-air and air-to-ground missions, and which allows the pilot to track, identify, shoot, and kill air-to-air threats before being detected.
Audit of the U.S. Army Budget Process for Civilian Pay
This audit determines whether the U.S. Army adequately supported and justified the civilian Full-Time Equivalents and pay requirements contained in the Army’s FY 2017 budget estimate submission. Full-Time Equivalents are the number of working hours that represent one work year for one employee working full-time.
Technology Readiness of the Navy’s Next Generation Jammer Program
This evaluation determines whether the Navy adequately planned and performed a technology readiness assessment of the critical technologies for the Next Generation Jammer program. The Next Generation Jammer is an external, aircraft-mounted tactical jamming system intended to disrupt enemy air defenses and communications networks. A technology readiness assessment is a systematic assessment of the critical technologies to be incorporated into a weapons system.
External Peer Review on the Defense Finance and Accounting Service Internal Review Organization
This review determines whether the Defense Finance and Accounting Service (DFAS) Internal Review organization’s system of quality control for the period that ended June 30, 2017, provided reasonable assurance of conformance to government auditing standards. The DFAS Internal Review is responsible for establishing and maintaining a system of quality control that is designed to provide DFAS with reasonable assurance that the organization and its personnel comply with professional auditing standards and applicable legal and regulatory requirements.
The DoD Voting Assistance Programs for Calendar Year 2017
This evaluation determines whether the Military Services’ voting assistance programs were effective and compliant with relevant laws and regulations. Additionally, this evaluation determines if DoD agencies are complying with requirements to produce written voting-related policies for their overseas uniformed and civilian personnel.
Recently issued Reports of Interest (to view report, if available, please click on title)
Follow-up Audit: Transfer of Service Treatment Records to the Department of Veterans Affairs
This audit determined that the DoD had implemented some corrective actions to address deficiencies identified in DoD OIG Report No. DODIG-2014-097, “Audit of the Transfer of DoD Service Treatment Records to the Department of Veterans Affairs.” Specifically, the USD(P&R) revised DoD Instruction 6040.45 to clarify procedures to ensure complete Service Treatment Records (STRs) are transferred to the Department of Veterans Affairs (VA) in a timely manner. In addition, the Army and Navy also reviewed their processes to transfer STRs to the VA to identify and resolve inefficiencies that delayed STR processing. As a result of their reviews, the Army and Navy improved their timeliness in transferring STRs to the VA. However, we also determined that a significant number of STRs still were not transferred to the VA in a timely manner, which could delay the VA in approving benefit claims for service members. An STR is a chronological record of all essential medical, dental, and mental health care received by service members during their military careers.
Financial Management and Contract Award and Administration for the Armed Forces Retirement Home
This audit determined that DoD and Armed Forces Retirement Home (AFRH) officials did not conduct effective financial management of the AFRH. Specifically, DoD and AFRH officials allowed the AFRH Trust Fund to substantially decline from $186.5 million in FY 2010 to $54.7 million in FY 2016 without identifying more reliable revenue sources. Based on its FY 2016 Long Range Financial Plan, the AFRH forecasted that the AFRH Trust Fund will have a negative balance by FY 2019 without supplemental funding. As a result, the AFRH is unable to financially sustain its day-to-day operations and meet its mission of taking care of the veterans without annual appropriated funds. According to AFRH officials, for the near future, the AFRH will need annual transfers of at least $20 million from the U.S. Treasury to meet its yearly operating expenses and to increase the AFRH Trust Fund balance for its long-term financial obligations.
The U.S. Navy’s Oversight and Administration of the Base Support Contracts in Bahrain
This audit determined that the Navy did not provide effective oversight of base support contracts in Bahrain. Specifically, contracting officer’s representatives (CORs) relied on performance assessment representatives – who were foreign national direct hires at Naval Support Activity‑Bahrain and foreign national contractors at Isa Air Base – to execute all quality assurance oversight of the contractors. However, the CORs did not ensure the performance assessment representatives oversaw all contract requirements, or possessed the knowledge and experience to oversee their respective annexes. In addition, the Navy did not have assurance that the $161.5 million spent on base support resulted in adequately performed or contractually compliant services and the CORs may not have obtained sufficient evidence to evaluate contractor performance.
Defense Commissary Agency’s Purchases of Fresh Produce for Japan and South Korea
This audit determined that under the Defense Commissary Agency’s (DeCA) local purchase process for fresh produce in Japan and South Korea, fresh produce contracts were more cost effective than the previous DeCA-funded transportation contract for fresh produce. Under the current contract, the contractor paid to transport fresh produce to Japan and South Korea. Under the previous contract, DeCA paid $114.6 million from FY 2013 through FY 2015 to transport fresh produce to the same locations. In addition, DeCA fresh produce customers rated the quality of fresh produce sold at the commissary to be worse than the quality of fresh produce sold at local markets in Japan and South Korea. While DeCA saved an average of $38 million annually since 2016 by not subsidizing transportation costs for fresh produce shipped to Japan and South Korea it did not meet the intent of the local purchase process, which is to supply quality produce at prices comparable to prices under the previous contract that subsidized transportation costs.
Evaluation of the Pentagon Force Protection Agency’s Critical Law Enforcement Program Compliance
This evaluation determined that the Pentagon Force Protection Agency (PFPA) did not complete criminal investigations as required by DoD and agency policy and did not manage its evidence program as required by agency policy. Specifically, 100 percent of the 45 closed criminal investigations we evaluated had deficiencies. We also determined that PFPA did not fully investigate two sexual assault allegations out of the 45 criminal investigations. In addition, we determined that PFPA did manage its weapons program as required by DoD and agency policy.
The DoD’s Response to the Quality of Care Elements in the 2014 Military Health System Review
This evaluation determined that the DoD adequately responded to the quality of care elements in the DoD’s 2014 Military Health System Review and that the DoD has improved the quality of patient care in the DoD health care facilities identified as needing improvement. In addition, the evaluation found that the Military Health System completed 22 action plans that it put in place to address quality of care elements in the 2014 review, but still needed to finish four others. All medical treatment facilities identified in the 2014 review as needing improvement in certain areas – the National Perinatal Information Center quality of care, National Surgical Quality Improvement Program morbidity, or Primary Care Manage Continuity measures – had improved and met or exceeded standards by the end of 2016.
The Army’s Tactical Explosive Detection Dog Disposition Process from 2011 to 2014
This evaluation found that the Army did not allot sufficient time to dispose of Tactical Explosive Detection Dogs (TEDDs) when the program ended, nor did it initiate planning for TEDD disposition from the start of the program. In addition, the evaluation found that the Army did not use the DoD Working Dog Management System, as required by the Joint Military Working Dog Instruction and Army Regulation. As a result, the Army did not ensure accuracy in the tracking of some TEDDs through final disposition. The evaluation also found that the Secretary of the Air Force did not provide sufficient management and oversight of the Army’s plan and process to dispose of its TEDDs. For the purpose of this report, “disposition,” or disposing of Military Working Dogs, includes conversion for continued military service, transfer to law-enforcement or other government agencies, adoptions to former handlers and persons capable of humanely caring for the dogs, or euthanasia.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view release, if available, please click on title)
Pennsylvania Firearms Dealer Sentenced to 100 Months Imprisonment
On February 5, 2018, Vahan Kelerchian, a Federal firearms licensee, was sentenced to 100 months in prison followed by one year of supervised release, and was ordered to pay a $100,000 fine and $28,200 in restitution for his role in the acquisition of machine guns and restricted laser aiming sights. Kelerchian conspired with Joseph Kumstar and Ronald Slusser, sworn law enforcement officers, formerly of the Lake County Police Department, to purchase 71 fully automatic machine guns manufactured after 1986 that can only be acquired by law enforcement agencies, and 74 laser aiming sights that were restricted by the Food and Drug Administration for law enforcement and military use only. They acquired the machine guns in the name of the Lake County Sheriff’s Department by using law enforcement letterhead to falsely represent that the machine guns would be used by the sheriff’s department. Previously, Kumstar was sentenced to 57 months, and Slusser was sentenced to 70 months for their involvement in this scheme. This was a joint investigation with the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Federal Bureau of Investigation; the U.S. Food and Drug Administration, Office of Criminal Investigations; and the Internal Revenue Service, Criminal Investigation Division.
Defense Contractor Agreed to Pay Over $500,000 to Settle False Claims Act Allegations Relating to Charging Unallowable Costs on Army Contract
On February 6, 2018, Integral Consulting Services, Inc. (ICS) agreed to pay $505,838 to settle allegations that it submitted false claims to the United States by inflating certain indirect cost rates in connection with work performed on an Army contract. From May 2012 through June 2014, ICS allegedly charged unallowable costs and expenses not incurred during the performance of Government contracts in the General and Administration indirect cost pool that was spread amongst ICS’s various Government contracts. The inclusion of such costs had the effect of inflating the claims paid by the Army to ICS. This investigation was initiated as a result of a civil lawsuit filed under the qui tam provisions of the False Claims Act. This was a joint investigation with the Army Criminal Investigation Command.
Tampa Resident Convicted for Involvement with TRICARE Health Care Fraud Scheme
On February 5, 2018, Monty Ray Grow was convicted on 18 criminal counts including conspiracy to commit health care fraud, conspiracy to pay and receive health care kickbacks, unlawful receipt of health care kickbacks, and money laundering. From 2014 through 2015, Grow participated in a scheme to defraud the TRICARE program by enticing TRICARE beneficiaries to order expensive drugs that they did not need. Grow then paid telemedicine companies, whose doctors ratified those prescriptions, without examining a single patient. TRICARE paid the bill for these expensive drugs and the pharmacy split 50 percent of the profits with Grow. As a result, Grow received nearly $20 million in kickbacks from a Broward County pharmacy. At least eight additional co-conspirators have pleaded guilty to charges arising out of Grow’s fraud scheme, and have collectively remitted property back to the United States valued at $3.3 million. This was a joint investigation with Army Criminal Investigation Command and the U.S. Food and Drug Administration, Office of Criminal Investigations.
Federal Jury Finds Scientist Guilty of Defrauding NASA, Navy, and Missile Defense Agency
On February 12, 2018, Akbar Fard was found guilty of wire fraud. Fard defrauded the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs of the National Aeronautics and Space Administration (NASA), the Missile Defense Agency, and the Navy out of approximately $2.1 million. The SBIR and STTR programs support scientific excellence and technological innovation through the investment of Federal research funds. Fard converted Government monies intended to support SBIR/STTR research for personal gain. This was a joint investigation with the NASA Office of Inspector General and the Naval Criminal Investigative Service.
ANNOUNCED PROJECTS (to view announcement letter, if available, please click on the title)
Evaluation of the United States Air Force Academy’s Response to Incidents of Sexual Assault and Victim Care
In response to Congressional inquiries, the DoD OIG will evaluate the United States Air Force Academy’s (USAFA’s) Sexual Assault Prevention and Response (SAPR) Program. The objective of this evaluation is to determine whether the USAFA, USAFA SAPR Office, and the Air Force Office of Special Investigations (AFOSI) responded to, supported, and provided victim care to cadet victims of sexual assault as required by DoD, Air Force, USAFA, and AFOSI policies and procedures. Specifically, the evaluation will review the USAFA SAPR Office’s support of USAFA cadet victims of sexual assault, the AFOSI’s responses to and investigations of sexual assaults of USAFA cadets, USAFA mental health support and services (to include mental health separations) provided to USAFA cadet victims of sexual assault, and USAFA leadership’s support of USAFA cadet victims of sexual assault.
External Peer Review of the National Guard Bureau Internal Review Office
The objective of this review is to determine whether the National Guard Bureau Internal Review Office’s system of quality control was suitably designed, and whether the audit organization is complying with its quality control system and applicable professional audit standards.
Audit of DoD’s Management of its Software Applications Portfolio
The objective of this audit is to determine whether DoD Components are analyzing their software application portfolio and eliminating duplicative and obsolete applications.
Audit of Army Brigade Combat Team Readiness
The objective of this audit is to determine whether the U.S. Army has identified and addressed Brigade Combat Team Readiness challenges. The brigade combat team serves as the Army's primary combat force and provides warfighting capabilities.
Audit of Distribution of Critical Munitions in Support of the Republic of Korea
The objective of this audit is to determine whether the U.S. Pacific Command and U.S. Forces Korea have a distribution network to receive and deliver critical munitions in support of operation plan requirements for Korea.
Audit of DoD Voluntary Education Programs
The objective of this audit is to determine whether U.S. military installations have controls in place for DoD Voluntary Education programs to prevent improper recruiting of service members by for-profit educational institutions.