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:
Evaluation of Regional Centers for Security Studies
This evaluation determines whether the DoD Regional Centers for Security Studies complied with regulations relating to the vetting of foreign faculty, use of nondisclosure agreements, official travel, and payment of fees for guest lecturers (honoraria). The Centers provide international venues for bilateral and multilateral research, communication, exchange of ideas, and training involving military and civilian participants.
Summary Evaluation on External Peer Reviews at the Department of Defense Audit Organizations
This evaluation identifies and summarizes systemic deficiencies reported during the most recent cycle of peer reviews of DoD audit organizations and determines whether improvements were made since the previous summary evaluation report was issued. This evaluation covers the most recent cycle of peer review reports on DoD audit organizations issued from April 4, 2017, through January 15, 2020.
Audit of the Governance and Protection of Department of Defense Artificial Intelligence Data and Technology
This audit determines the DoD’s progress in setting direction, establishing standards, and prioritizing investments for artificial intelligence, and whether DoD Components have implemented security mechanisms to protect artificial intelligence data and technologies from internal and external cyber threats.
Audit of the Department of Defense's Processes to Identify and Clear Munitions and Explosives During Construction on Guam
This audit determines whether DoD personnel implemented safety standards and quality assurance controls for addressing munitions and explosives of concern during military construction projects on Guam, and whether DoD personnel properly managed related safety concerns and readiness according to military standards and risk-management instructions. Munitions and explosives of concern are unexploded ordnance, discarded military munitions, and munitions constituents present in concentrations high enough to pose an explosive hazard.
Summary of Reports Issued and Testimonies Made Regarding Department of Defense Cybersecurity From July 1, 2018, Through June 30, 2019
This audit summarizes the results of unclassified and classified cybersecurity reports and testimonies from the Department of Defense Office of Inspector General (DoD OIG), the DoD oversight community, and the Government Accountability Office that were issued between July 1, 2018, and June 30, 2019. The audit also identifies cybersecurity risk areas for DoD management to address based on the five functions of the National Institute of Standards and Technology Cybersecurity Framework and identifies open recommendations related to DoD cybersecurity.
Followup Audit on Recommendations Related to Military Housing
This followup audit determines whether the DoD corrected deficiencies previously identified in various prior DoD OIG evaluation reports related to policies and instructions, preventative maintenance, and environmental health and safety in selected prior military housing projects.
Audit of Labor Qualifications for Defense Health Agency Information Technology and Telecommunications Contracts
This audit determines whether contractor employees met the labor qualifications for Defense Health Agency information technology and telecommunications contracts.
Audit of Mobile Medical Teams Supporting Contingency Operations in the U.S. Africa Command and U.S. Indo-Pacific Command Areas of Responsibility
This audit determines whether the Defense Health Agency and the Military Departments provided effective training to mobile medical teams to improve trauma care before deploying to the U.S. Indo-Pacific Command and U.S. Africa Command areas of responsibility. Mobile medical teams are small, mobile groups of medical personnel (10 or less) operating at the tactical level, or at the intra-theater level, within the combatant command area of responsibility.
Audit of Commercial Item and Fair and Reasonable Pricing Determinations for Ammonium Perchlorate
This audit determines whether DoD subcontractors properly evaluated the commercial item determination and whether DoD contracting officers properly evaluated fair and reasonable pricing determinations for ammonium perchlorate.
Special Report: Best Practices and Lessons Learned for Department of Defense Contracting Officials in the Pandemic Environment
This special report identifies best practices and lessons learned from past DoD emergency response efforts that DoD officials should consider implementing to minimize opportunities for fraud, waste, and abuse in awarding and overseeing the large amount of contracts needed to respond to the coronavirus disease-2019 pandemic.
Recently issued Reports of Interest (to view report, if available, please click on title)
Evaluation of the DoD’s Management of Health and Safety Hazards in Government-Owned and Government-Controlled Military Family Housing
This evaluation determined that the DoD’s management of health and safety hazards in Government-owned and Government-controlled military family housing needs improvement. The evaluation identified systemic deficiencies in the management of lead-based paint, asbestos-containing material, and radon at the eight military installations visited. In addition, there were instances where installation officials did not properly manage other health and safety hazards, such as fire safety or drinking water quality. As a result, the potential exists for similar deficiencies in the management of health and safety hazards in Government-owned and Government-controlled military family housing worldwide, which puts the health and safety of Service members and their families at risk.
Audit of Military Department Management of Undefinitized Contract Actions
This audit determined that Military Department contracting officers generally followed requirements when obligating funds for the 116 undefinitized contract actions (UCAs) reviewed, valued at $10.9 billion. However, some contracting officers did not fully comply with requirements for adjusting profit or definitizing UCAs. In addition, some contractors took up to 542 days from award of the contract to provide qualifying proposals for the 116 UCAs reviewed and did not report accurate or complete information for 402 contract actions, valued at $12.8 billion, or to Defense Pricing and Contracting for 17 UCAs, valued at $2.1 billion. As a result, the DoD assumed more contract risk and potentially paid $4.6 million more profit than necessary for 12 UCAs. Moreover, the Defense Pricing and Contracting Principal Director and Congress were not aware of the DoD’s use and management of 17 UCAs, valued at $2.1 billion, that were not reported to Defense Pricing and Contracting.
Lead Inspector General for Operation Pacific Eagle-Philippines Quarterly Report to the United States Congress, January 1, 2020 through March 31, 2020
This Lead Inspector General (Lead IG) quarterly report for Operation Pacific Eagle- Philippines, the overseas contingency operation to support the Armed Forces of the Philippines’ fight against the Islamic State of Iraq and Syria (ISIS) affiliates and other terrorist organizations, summarizes the quarter’s key events and describes completed, ongoing, and planned Lead IG and partner agency oversight work related to Operation Pacific Eagle-Philippines. In addition, the report discusses the Armed Forces of the Philippines (AFP)—prior to the coronavirus disease-2019— engaging in minor clashes with ISIS-East Asia (EA) in the southern Philippines. A week-long AFP offensive resulted in the deaths of at least 14 ISIS-EA militants and 4 AFP soldiers. In a follow-on assault against a nearby ISIS-EA camp, AFP troops seized firearms, ammunition, and improvised explosive devices.
Lead Inspector General for Operation Freedom’s Sentinel Quarterly Report to the United States Congress, January 1, 2020 through March 31, 2020
This Lead Inspector General quarterly report for Operation Freedom’s Sentinel— the U.S. counterterrorism mission against al Qaeda, ISIS–Khorasan, and their affiliates in Afghanistan and the NATO-led Resolute Support mission to train, advise and assist the Afghan security forces—summarizes the quarter’s key events and describes completed, ongoing, and planed Lead IG and partner agency oversight work related to Operation Freedom’s Sentinel. This report discusses the U.S. and Taliban agreement signed on February 29 as a first step toward ending the conflict; however, a number of events occurred that raised questions over whether the peace process would take place. Taliban violence continued at high levels, even during a negotiated weeklong reduction in violence that led to the agreement’s signing.
Lead Inspector General for Operation Inherent Resolve Quarterly Report to the United States Congress, January 1, 2020 through March 31, 2020
This Lead Inspector General quarterly report for Operation Inherent Resolve (OIR)— the overseas contingency operation to combat the ISIS— summarizes the quarter’s key events and describes completed, ongoing, and planned Lead IG and partner agency oversight work related to OIR. In addition, the report discusses Combined Joint Task Force-OIR reports that the OIR mission and partner forces face “significant risk” from ISIS prisoners and supporters residing in camps for internally displaced persons. The Combined Joint Task Force -OIR said that the Syrian Democratic Forces face continued difficulty guarding detention facilities and ISIS-affiliated camp residents continue to facilitate ISIS activities.
Semiannual Report to the Congress October 1, 2019 through March 31, 2020
The DoD OIG released its Semiannual Report to the Congress covering the reporting period of October 1, 2019, through March 31, 2020. The report summarizes the significant work performed by the DoD OIG, including the Top DoD Management Challenges document and Oversight Plan, which identifies the most significant management challenges facing the DoD and how the DoD OIG will conduct oversight in challenge areas for FY 2020 and beyond. The report also provides various statistical accomplishments of the DoD OIG during the reporting period. The DoD OIG completed 226 criminal investigations, some conducted jointly with other law enforcement organizations, resulting in 176 arrests, 166 criminal charges, 133 criminal convictions, $638.7 million in civil judgments and settlements, and $571.7 million in criminal fines, penalties, and restitution ordered. In addition, the DoD OIG oversaw 274 senior official, reprisal, and restriction investigations completed by the Military Service and Defense agency OIGs. These accomplishments are among the many examples of the DoD OIG’s important work included in the report.
Audit of the Department of Defense’s Compliance in Fiscal Year 2019 With Improper Payments Elimination and Recovery Act Requirements
This audit determined that the DoD did not fully comply with the Improper Payments Elimination and Recovery Act requirements. The DoD complied with four of the six Improper Payments Elimination and Recovery Act requirements. However, the DoD did not meet its FY 2019 reduction targets for the Military Pay, Civilian Pay, and Military Health Benefits programs. When improper payment estimates are unreliable, DoD leadership and Congress cannot accurately determine whether the DoD has the necessary resources and appropriate measures in place to reduce its improper payments.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)
Testing Laboratory Agrees To Pay Up To $43 Million To Resolve Allegations Of Medically Unnecessary Tests
On April 27, 2020, Genova Diagnostics Inc., a clinical laboratory services company based in Asheville, North Carolina, agreed to pay up to $43 million to resolve allegations that it violated the False Claims Act, including claims that it billed for medically unnecessary lab tests. Genova improperly submitted claims to Medicare, TRICARE, and the Federal employee health program for lab test profiles; engaged in improper billing techniques; and paid compensation to three phlebotomy vendors that violated the physician self-referral prohibition (commonly known as the Stark Law). Genova has agreed to pay approximately $17 million, through the surrender of claim funds held in suspension by Medicare and TRICARE, including up to an additional $26 million if certain financial contingencies occur within the next five years, for a total potential payment of up to $43 million. This was a joint investigation by the Department of Justice Civil Division; the Department of Health and Human Services, Office of Counsel to the Inspector General and Office of Investigations; the Defense Criminal Investigations Service (DCIS); the Defense Health Agency Office of General Counsel; and the Office of Personnel Management Office of the Inspector General (OIG), with assistance from the North Carolina Department of Justice.
Blue Bell Creameries Agrees to Plead Guilty and Pay $19.35 Million for Ice Cream Listeria Contamination - Former Company President Charged
On May 1, 2020, Texas-based ice cream manufacturer Blue Bell Creameries LP agreed to plead guilty to charges it shipped contaminated products linked to a 2015 listeriosis outbreak. Paul Kruse, the company's former president was charged in connection with a scheme to cover up the incident. In a plea agreement filed with a criminal information in Federal court in Austin, Texas, Blue Bell agreed to plead guilty to two misdemeanor counts of distributing adulterated ice cream products and pay a criminal fine and forfeiture of $17.25 million. Blue Bell also agreed to pay an additional $2.1 million to resolve civil False Claims Act allegations regarding ice cream products manufactured under unsanitary conditions that were later sold to Federal facilities. The total $19.35 million in fines, forfeiture, and civil settlement payments constitutes the second largest amount paid in resolution of a food safety matter. This was a joint investigation by the Food and Drug Administration’s Office of Criminal Investigations and the DCIS.
Central New York Construction Companies and Others to Pay Nearly $4.5 Million to Resolve Allegations of Fraud Involving Contracting Opportunities Meant for Disabled Veterans
On May 4, 2020, Northland Associates, Inc. (Northland), its president James Tyler, the Diverse Construction Group, LLC (Diverse), and their bonding agent, Rose & Kiernan, Inc., agreed to pay the United States $4,470,000 to resolve allegations that they fraudulently exploited contracting opportunities reserved for veteran-owned small businesses and small businesses operating in historically underutilized business zones. Northland, Diverse, and Tyler orchestrated a scheme to secure Government set-aside contracts for Diverse and subcontracts for Diverse's undisclosed affiliate, Northland. Diverse was 51 % owned by a service-disabled veteran and 49% owned by senior Northland officials. Northland exerted influence over Diverse in various ways, including by maintaining a "bid calendar'' with deadlines for upcoming Northland and Diverse contracting opportunities, staffing Diverse with former Northland employees, and funneling Diverse subcontracts to Northland for fulfilment. Northland also handled various administrative duties for Diverse, including its accounting, expediting, estimating, purchasing, contracting, and clerical work. When the Small Business Administration questioned the parties' affiliation in 2009, Tyler and Diverse's 51% owner submitted sworn declarations that misrepresented the relationship between the two companies. Afterwards, Diverse funneled more than $1 million to Northland through a Northland subsidiary to hide the parties' affiliation. Northland, Diverse, and Tyler admitted that their conduct violated Federal regulations designed to encourage contract awards to service-disabled veteran-owned small businesses and small businesses operating in underutilized business zones. As part of the settlement agreements, Northland will pay $2,125,000, Tyler will pay $2,125,000, Diverse will pay $100,000, and Rose & Kiernan has paid $120,000 in fines. This was a joint investigation by the Small Business Administration OIG, Veterans Affairs (VA) OIG, DCIS, Department of Transportation OIG, and the Army Criminal Investigation Command.
Former Co-Owner and CEO of Pharmacy Pleads Guilty in Prescription Drug Billing Scheme
On May 11, 2020, John Jeremy Adams, of Panama City Beach, Florida entered a guilty plea to 1 count of conspiring to commit health care and mail fraud, 16 counts of health care fraud, 1 count of conspiring to pay kickbacks to a prescriber, and 7 counts of spending the proceeds of health care fraud. According to the plea agreement, Adams agreed to a 10-year sentence. Adams, the former owner and chief executive officer of Northside Pharmacy (doing business as Global Compounding Pharmacy), participated in a scheme to cause the pharmacy he co-owned to bill for medically unnecessary prescription drugs. He paid prescribers to issue prescriptions and directed employees to get medically unnecessary drugs for themselves, family members, and friends; alter prescriptions to add non-prescribed drugs; automatically refill prescriptions regardless of patient need; routinely waive and discount co-pays to induce patients to obtain and retain medically unnecessary drugs; and to bill for drugs without patients' knowledge. The scheme targeted multiple health insurance plans, including the pharmacy's Blue Cross Blue Shield of Alabama plan, as well as plans providing health insurance to the elderly, disabled, and members of the military among others. This was a joint investigation by the Federal Bureau of Investigations, Health and Human Services OIG, DCIS, United States Postal Inspection Service, Internal Revenue Service Criminal Investigations, and the VA-OIG Criminal Investigations Division.
ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)
Evaluation of the Security of Department of Defense Electronic Voting for the Uniformed and Overseas Citizens Absentee Voting Act
The objective of this evaluation is to determine whether DoD electronic voting methods effectively identify, authenticate, record, and safeguard the votes of individuals covered by the Uniformed and Overseas Citizens Absentee Voting Act.
Evaluation of the U.S. Combatant Commands’ Responses to the Coronavirus Disease–2019
The objective of this evaluation is to determine how U.S. Africa Command, U.S. Central Command, U.S. European Command, U.S. Indo-Pacific Command, U.S. Southern Command, and their component commands executed pandemic response plans. The evaluation will also identify implementation challenges to response plans and the operational impact, as a result of the coronavirus disease–2019.
Evaluation of the Navy's Plans and Response to the Coronavirus Disease-2019 Outbreak Onboard Ships
The objective of this evaluation is to determine whether the Navy has implemented policies and procedures to prevent and mitigate the spread of infectious diseases, such as coronavirus disease-2019, on ships and submarines. This evaluation will also determine whether effective prevention measures were implemented across the fleet to prevent the spread of the disease.
Evaluation of DoD Lifetime Buys of Parts Used in Intelligence, Surveillance, and Reconnaissance Systems
The objective of this evaluation is to determine whether DoD Components are complying with DoD policy and guidance when conducting lifetime buys of parts used in intelligences Surveillance and reconnaissance systems and whether the use of lifetime buys reduced DoD supply chain risks.
Evaluation of Defense Logistics Agency Contracts for Ventilators in Response to the Coronavirus Disease-2019 Outbreak
The objective of this evaluation is to determine whether the Defense Logistics Agency adequately contracted to acquire ventilators in response to the coronavirus disease-2019, including how the Defense Logistics Agency identified contract requirements and provided oversight of the time-phased delivery of ventilators.
Audit of Screening and Quarantine Procedures at Al Udeid Air Base
The objective of this audit is to determine whether the Air Force has implemented screening and quarantine procedures for personnel entering Al Udeid Air Base, Qatar in accordance with applicable criteria in response to the coronavirus disease–2019.
Audit of Dual-Status Commanders for Use in Defense Support of Civil Authorities Missions
The objective of this audit is to determine whether DoD Components nominated, certified, and appointed Dual-Status Commanders in accordance with legal authorities and DoD policies for use in Defense Support of Civil Authorities missions in response to the coronavirus disease–2019.
Audit of the Disinfection of DoD Facilities in Response to the Coronavirus Disease–2019
The objective of this audit is to determine whether DoD officials cleaned and disinfected DoD facilities that were occupied by individuals suspected of, or confirmed as being positive for coronavirus disease–2019 in accordance with applicable DoD and Federal requirements.
Audit of Infectious Disease Medical Treatment Capabilities at Al Udeid Air Base
The objective of this audit is to determine whether Al Udeid Air Base, Qatar has the capability to treat coronavirus disease–2019 patients and isolate or quarantine suspected infected service members, civilians, and contractors.
Audit of Contracts for DoD Information Technology Products and Services Pictured by DoD Components in response to the Coronavirus Disease-2019
The objective of this audit is to determine whether DoD Components used supplemental funding, received in response to the coronavirus disease–19, to procure information technology products and services in accordance with applicable DoD and Federal requirements.