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DoD OIG Newsletter - November 2019

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Newsletter

 

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.

                                                                                                            

UPCOMING REPORTS

 

Significant reports expected to be issued within the next 30 days include:

 

Audit of the National Maintenance Strategy Contract in Afghanistan
This audit determines whether the Army developed contract requirements for the National Maintenance Strategy–Ground Vehicle Systems to meet vehicle maintenance and sustainment needs for the Afghan National Defense and Security Forces (ANDSF).  The National Maintenance Strategy Contract provides training to ANDSF in vehicle maintenance, sustainment, and supply chain management.  In addition, the contract provides training to ANDSF on the software systems used to track vehicle inventory, maintenance, work orders, and vehicle supplies and parts.

 

Joint Enterprise Defense Infrastructure (JEDI) Cloud Procurement Investigation
This review examines the award of the JEDI contract, whether any DoD officials engaged in ethical misconduct related to the contract, and whether any alleged ethical misconduct affected the integrity of the procurement process.

 

Audit of the DoD Supply Chain Risk Management Program for Nuclear Command, Control, and Communications Systems 
This audit determines whether the DoD’s supply chain risk management program mitigated the risk that adversaries could infiltrate the DoD supply chain and sabotage, maliciously introduce an unwanted function, or otherwise compromise the design or integrity of the critical hardware, software, and firmware of the critical networks or systems that compose the Nuclear Command and Control System.

 

Independent Auditor’s Report on the DoD Agency‑Wide Basic Financial Statements
This audit determines whether the DoD Agency-Wide Basic Financial Statements as of September 30, 2019, and September 30, 2018, taken as a whole, were presented fairly, in all material respects, and in conformity with accounting principles generally accepted in the United States.  The DoD OIG is the principal auditor for the DoD Agency-Wide Basic Financial Statements.  This is the second full financial statement audit of the DoD.  The report will be published in the DoD Agency Financial Report, which is normally issued in mid-November.

 

Audit of DoD Compliance With the Digital Accountability and Transparency Act of 2014
This audit determines the completeness, timeliness, quality, and accuracy of the first quarter FY 2019 funding data and detail-level financial data, such as contract or grant data, submitted by the DoD for publication on USAspending.gov.  The audit also assesses the DoD’s implementation and use of the Government-wide financial data standards established by the Office of Management and Budget and the U.S. Department of Treasury.  The Digital Accountability and Transparency Act seeks to improve the quality of data submitted to USASpending.gov by holding Federal agencies accountable for the completeness and accuracy of the data submitted.

 

Audit of U.S. Army Corps of Engineers Compliance With the Digital Accountability and Transparency Act of 2014 
This audit determines the completeness, timeliness, quality, and accuracy of the first quarter FY 2019 funding data and detail-level financial data, such as contract or grant data submitted by the U.S. Army Corps of Engineers for publication on USAspending.gov.  The audit also assesses Federal agency implementation and use of the Government-wide financial data standards established by the Office of Management and Budget and the Department of Treasury.  The Digital Accountability and Transparency Act improves the quality of data submitted to USASpending.gov by holding Federal agencies accountable for the completeness and accuracy of the data submitted.

 

Audit of Army Brigade Combat Team Readiness
This audit determines whether the Army has identified and addressed brigade combat team readiness challenges. The brigade combat team serves as the Army’s primary combat force.

 

Audit of the Management of Non-Major Defense Acquisition Category 2 and 3 Programs
This audit determines whether Army, Navy, and Air Force acquisition officials appropriately identified Acquisition Category (ACAT) 2 and 3 programs and monitored whether program cost and schedules aligned with their respective acquisition category designation.  DoD acquisition programs are classified into the ACAT level depending on estimated program costs and the type of acquisition.  ACAT 2 programs are major systems estimated to cost between $185 and $480 million for research, development, test, and evaluation (RDT&E), or between $835 million and $2.8 billion for procurement.  ACAT 3 programs are those programs that fall below the ACAT 2 minimum thresholds for RDT&E and procurement.

 

Lead Inspector General Report for Operation Freedom’s Sentinel Quarterly Report to the United States Congress, July 1, 2019 through September 30, 2019
This report discusses the U.S. counterterrorism mission against al Qaeda, ISIS-Khorasan, and their affiliates in Afghanistan and the U.S. military participation in the NATO-led Resolute Support mission.  It also describes ongoing and planned Lead Inspector General and partner agency oversight work.

 

Lead Inspector General Report for Operation Pacific Eagle-Philippines Quarterly Report to the United States Congress, July 1, 2019 through September 30, 2019
This report discusses activities to support the Philippine government in its effort to counter ISIS affiliates and other violent extremist organization in the Philippines, and describes ongoing and planned Lead Inspector General and partner agency oversight work.

 

Lead Inspector General Report for Operation Inherent Resolve Quarterly Report to the United States Congress, July 1, 2019 through September 30, 2019
This report discusses activities related to the efforts to defeat the Islamic State of Iraq and Syria (ISIS) and set the conditions for follow-on operations to increase regional stability, and describes ongoing and planned Lead Inspector General and partner agency oversight work.

 

 

Evaluation of Defense Contract Management Agency Actions on Defense Contract Audit Agency Reports Issued With A Disclaimer Of Opinion 
This evaluation determines whether the actions that DoD contracting officers took in response to Defense Contract Audit Agency audit reports complied with the Federal Acquisition Regulation (FAR), DoD Instructions, and agency policy when the reports do not provide an opinion (disclaimed) with regard to the financial position or condition in question.  DCAA disclaims an opinion when it is unable to perform all audit procedures necessary to obtain sufficient appropriate evidence and conclude whether potential noncompliances are significant. 

 

Evaluation of the V-22 Engine Air Particle Separators  
This evaluation determines whether the Naval Air Systems Command V-22 Joint Program Office developed an Engine Air Particle Separator (EAPS) to protect the V-22 engine while operating in desert environments.  The EAPS is an aircraft component positioned in front of the engine of the V-22 aircraft that creates a powerful vacuum force to remove soil from the air before it enters the engine. 

 

Evaluation of the Integrated Enterprise Ground Service Environment
This evaluation determines whether the Air Force Space Command developed a plan to implement the Enterprise Ground Services, which is the prototype phase of the Air Force Satellite Control Network and consists of hardware, an operational system, and software applications.  The Enterprise Ground Service will conduct command and control of satellites in support of DoD operations.     

 

Evaluation of the Algorithmic Warfare Cross-Functional Team
This evaluation determines whether the Algorithmic Warfare Cross-Functional Team (Project Maven) developed adequate internal controls to oversee the integration of artificial intelligence into intelligence collection platforms to improve the processing, exploitation, and dissemination of intelligence.

 

Recently Issued Reports of Interest (to view report, if available, please click on title)

 

Fiscal Year 2020 Top DoD Management Challenges
The Top DoD Management Challenges document summarizes what the DoD OIG annually identifies as the most significant management challenges facing the DoD for FY 2020 and beyond.  Each Inspector General is required by law to prepare this annual statement summarizing what the IG considers the “most serious management and performance challenges facing the agency.”  The Top DoD Management Challenges document must also be included in the DoD’s annual financial report.  Many of the challenges are persistent, long-standing challenges facing the DoD.  However, this year the DoD OIG added two new management challenges.  One focuses on the welfare and well-being of service members and their families. The second new challenge focuses on the security supply chain management.  Both of these new challenges are critical issues that contribute to the readiness of DoD to performs its important mission.

 

DoD OIG’s Fiscal Year 2020 Oversight Plan
The Oversight Plan describes the specific oversight projects the DoD OIG intends to conduct in FY 2020, and how those projects are related to the top management challenges facing the DoD.  The Oversight Plan and Top DoD Management Challenges documents are related.  The Oversight Plan is organized by management challenge.  Each chapter provides a summary of a particular challenge, followed by an inventory of the ongoing and planned oversight projects that directly align to that challenge.  The Oversight Plan assists the DoD OIG in fulfilling its mission to detect and deter waste, fraud, and abuse in DoD programs and operations; improve the efficency and effectiveness of the DoD; and help ensure ethical conduct throughout the DoD.

 

Whistleblower Reprisal Report of Investigation:  Valiant Integrated Service, Limited Liability Company, U.S. Embassy, Baghdad, Iraq 
This investigation determined that Valiant Integrated Services, LLC, reprised against one of its employee, in violation of section 2409, title 10, United States Code, as implemented by the Defense Federal Acquisition Regulation Supplement, Subpart 203.9, “Whistleblower Protections for Contractor Employees.”  The DoD OIG substantiated the allegation that Valiant Integrated Services attempted to transfer the employee from the U.S. Embassy in Baghdad, Iraq, to Basra, Iraq, and then discharged that employee in reprisal for the employee’s protected disclosures to various individuals who had oversight responsibility for the contact between Valiant Integrated Services, LLC, and the Department of the Army.

 

Audit of the DoD’s Use of Additive Manufacturing for Sustainment Parts  
This audit examined the DoD use of additive manufacturing to obtain sustainment parts.  Additive manufacturing creates an object by adding layers of material from

three-dimensional data—unlike traditional, or subtractive, manufacturing processes in which the product is created by cutting away material (such as plastics, metals, or ceramics) from a larger piece.  These actions could improve warfighter readiness by reducing lead and repair times from years to days for some hard-to-procure parts that can be produced through additive manufacturing.  The audit determined that the DoD could expand the use of additive manufacturing by standardizing the data elements captured for additive manufacturing parts to ensure consistency in production, implementing a method for sharing additive manufacturing parts data, identifying the staffing and funding necessary to accomplish DoD’s additive manufacturing initiatives, and increasing the DoD’s awareness of  additive manufacturing capabilities, specifically officials in the acquisition, contracting, and logistics communities.  In addition, the DoD could save money by eliminating duplicative additive manufacturing efforts, using additive manufacturing for low-quantity and high-cost parts that are hard to obtain, and using additive manufacturing to replace a single part rather than an entire component.

 

Quality Control Review of the KPMG LLP FY 2017 Single Audit of the Johns Hopkins University DODIG-2020-002
This quality control review determined that KPMG generally complied with auditing standards and Uniform Guidance requirements when performing the FY 2017 single audit of Johns Hopkins.  However, the DoD OIG identified deficiencies in documentation that must be corrected in future audits.   

 

 

DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)

 

Federal Health Care Fraud Takedown in Northeastern United States Resulted in 54 Defendants Charged and Convicted  
On September 26, 2019, the Department of Justice (DOJ) announced a coordinated health care fraud enforcement action across seven Federal districts in the Northeastern United States, involving more than $800 million in losses and the distribution of over 3.25 million pills of opioids in clinics and doctors' offices.  The enforcement action included new charges against and convictions by guilty plea for 54 defendants, including 15 doctors or medical professionals, for their roles in submitting nearly $800 million in fraudulent claims made to Federal payers, and 24 defendants who were charged for their roles in diverting opioids.  Doctors, marketing executives, pharmacists, and the owners and operators of a genetic testing laboratory have been charged with, or have pleaded guilty to, a range of criminal conduct, including criminally prescribing highly addictive opioid pills to patients without a medical need, paying kickbacks, and other fraud related to unnecessary genetic testing and other crimes that victimize Federal health care programs.  This was a joint investigation with the Internal Revenue Service–Criminal Investigation, the Defense Criminal Investigative Service (DCIS), the Food and Drug Administration OIG, the Medicaid Fraud Control Unit, and other Federal and state law enforcement agencies. 

 

Former Newport News Shipbuilding Inspector Pleaded Guilty to Falsely Certifying Welds 
On October 1, 2019, Joseph Powell of Suffolk, Virginia, pleaded guilty to making a false statement in a matter within the jurisdiction of the United States.  In November 2012, Newport News Shipbuilding (NNS) hired Powell to be a Non-Destructive Test (NDT) Inspector.  As an NDT Inspector, Powell performed weld inspections on vessels such as Virginia-class submarines and aircraft carriers.  In June 2016, NNS initiated an inquiry and investigated various welds that Powell had certified in ERS.  During the investigation, NNS identified additional welds that were not in acceptable condition for inspection, did not contain the required physical markings indicating an inspection had been completed, or did not contain the residue or powder that collects around the job from the inspection equipment.  Numerous NDT weld joints that Powell certified as satisfactory in ERS were reinspected and were determined to be unsatisfactory in the opinion of the personnel who performed the reinspections and required repair by a welder.  Powell pleaded guilty to making false statements and faces a maximum of 5 years in prison when sentenced on January 15, 2020.  This was a joint investigation with the Naval Criminal Investigative Service and DCIS. 

 

Doctor Convicted on 16 Counts of Health Care Fraud, Illegally Dispensing Drugs
On October 11, 2019, Dr. Frank H. Bynes, Jr., of Savannah, Georgia, was found guilty by a Federal jury on 13 counts of unlawfully dispensation of controlled substances and three counts of health care fraud.  Bynes worked at the MBA Community Clinic in Savannah, also known as MBA Diabetic Shoe and Supply Store, and at Georgia Laboratory Diagnostic in Garden City, Georgia, where he wrote prescriptions for massive quantities of narcotics.  Many of the prescriptions were for a well-known drug cocktail of opioids, Alprazolam, and Soma and were provided to many patients, including patients Bynes knew were addicted to controlled substances.  According to evidence introduced at the trial, Bynes prescribed the deadly drug cocktail to Medicare patients more frequently than any other physician in the United States.  In addition, Bynes falsely claimed to have worked for the DOJ and displayed false law enforcement credentials to his patients and others.  Bynes also used his prescribing as a tool to coerce female patients into sexual misconduct.  The evidence also established that Bynes knew multiple patients suffered an overdose, yet Bynes disregarded those warnings and continued to prescribe the drug cocktail.  In addition, Bynes defrauded Medicaid, Medicare, and TRICARE, resulting in fraudulent pharmacy claims in excess of $2 million.  This was a joint investigation with the Drug Enforcement Administration, the HHS OIG, DCIS, and the Georgia Medicaid Control Fraud Unit.

 

Vance AFB Major Pleaded Guilty to Kickbacks Involving Compounding Pharmacies
On October 15, 2019, Romeatrius Moss, a nurse and Air Force major stationed at Vance Air Force Base, Oklahoma, pleaded guilty to criminal health care fraud in which she accepted kickbacks for referring TRICARE beneficiaries to pharmacies furnishing compounded drugs.  Moss solicited and received $73,823 in return for referrals to compounding pharmacies involving TRICARE beneficiaries.  Moss admitted that, while she was employed in the medical unit at Vance Air Force Base, she gave military members pre-printed prescription pads and induced them to ask their doctors for specific compounded drugs.  She also admitted that she sent the prescriptions, or caused them to be sent, to specific pharmacies.  Moss was paid a kickback that was a percentage of the reimbursement the pharmacies received from TRICARE for filling the prescriptions.  This was a joint investigation with DCIS, the FBI, and the Air Force Office of Special Investigations.

 

National Sentenced to Prison for Conspiring to Illegally Export Military- and Space-Grade Technology from the United States to China
On October 16, 2019, a Chinese national, Tao Li, was sentenced to 40 months of confinement, followed by 3 years of supervised release, for conspiring to export military and space-grade technology from the United States to the People’s Republic of China (without a license) in violation of the International Emergency Economic Powers Act.  Between December 2016 and January 2018, Li worked with other individuals in China to purchase radiation-hardened power amplifiers and supervisory circuits and illegally export them from the United States to China.  The electronic components Li sought are capable of withstanding significant levels of radiation and extreme heat, and are primarily used for military and space applications.  Due to the technological capabilities of the electronic components Li sought and the significant contribution that the components could make to a foreign country’s military and space programs, both parts required an export license from the U.S. Department of Commerce’s Bureau of Industry and Security prior to being exported from the United States.  The Department of Commerce does not export these types of electronic components to the People’s Republic of China.  Li used multiple aliases to contact individuals in the United States, including representatives of U.S.-based private companies, to try to obtain the electronic components.  Additionally, Li and his co-conspirators agreed to pay a “risk fee” to illegally export the electronic components to China.  In addition to his request, Li further conspired by wiring money from a bank account in China to a bank account in Arizona.  Li was arrested in September 2018 at Los Angeles International Airport as he attempted to travel from China to Arizona to meet with an undercover agent involved in the investigation.  This was a joint investigation with the Homeland Security Investigations and DCIS.

 

ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)

 

Audit of the Excess DoD Property Issued Through the Law Enforcement Support Office Program
The objective of this audit is to determine whether the DoD provided its excess personal property to non DoD law enforcement agencies in accordance with law.  DoD excess property is managed through the Defense Logistics Agency (DLA) Disposition Services.  DLA transfers excess DoD property, such as office supplies, small arms and tactical vehicles, to Federal, state, and local Law Enforcement Support Offices through the Law Enforcement Support Office Program.

 

Audit of the Defense Logistics Agency’s Sole Source, Captains of Industry Strategic Support Contracts
The objective of this audit is to determine whether the Defense Logistics Agency's sole-source, Captains of Industry strategic support contracts are achieving intended cost savings, value, and benefits for the DoD.  The Defense Logistics Agency uses Captains of Industry support contracts to provide wholesale supply and logistics support, inventory management, maintenance planning, configuration management, and sustainment engineering associated with specific weapon systems covered by the contracts. 

 

Audit of Coalition Partner Reimbursement of Logistics Civil Augmentation Program Services in Afghanistan 
The objective of this audit is to determine whether the DoD properly calculated, requested, and received reimbursement from Coalition partners in Afghanistan for logistics support, services, and supplies provided under the Logistics Civil Augmentation Program contract.  The DoD uses the Logistics Civil Augmentation Program contract to provide logistics support, sustainment services (such as dining and laundry facilities, housing, and fire prevention), and supplies to U.S. and Coalition partners.

 

Audit of U.S. Special Operations-Peculiar Equipment Operational Test and Evaluation Requirements Validation 
The objective of this audit is to determine whether U.S. Special Operations Command fielded special operations-peculiar equipment that did not meet performance requirements during operational test and evaluation.  Special operations-peculiar equipment is designed and used by special operations forces to perform specialized activities used to carry out missions.

 

Audit of Navy and Air Force Environmental Control System Safety 
The objective of this audit is to determine whether the Departments of the Navy and Air Force tested, upgraded, or performed maintenance on the environmental control systems in fixed-wing aircraft to improve safety and reduce physiological episodes.  The environmental control system is a centralized system that monitors an aircraft’s air supply, thermal control, and cabin pressurization. 

 

External Peer Review of the Defense Logistics Agency (DLA) Audit Organization
The objective of this external peer review is to determine, for the period ending September, 30, 2019, whether the quality control program for the Defense Logistics Agency  (DLA) Audit Organization is designed to provide reasonable assurance that the policies and procedures related to its system of audit quality are suitably designed, operating effectively, and complied with in practice.

 

Evaluation of DoD Voting Assistance Programs for Calendar Year 2019   
The objective for this congressionally-mandated evaluation is to report on the effectiveness during the preceding calendar year of each of the Services’ voting assistance programs, and their compliance with Federal law and Service voting assistance programs.

 

Evaluation of Combatant Command Counter Threat Finance Activities
The objective of this evaluation is to determine whether U.S. Africa Command, U.S. Central Command, U.S. European Command, and U.S. Indo-Pacific Command are planning and executing counter-threat finance activities to affect adversaries’ ability to use global licit and illicit financial networks.

 

Quality Control Review of the Tate & Tryon FY 2016 Single Audit of the American Society for Engineering Education 
The objective of this quality control review is to determine whether the Tate & Tryon FY 2016 single audit of American Society for Engineering Education was conducted in accordance with auditing standards and Federal requirements.