News | Aug. 4, 2020

DoD OIG Newsletter - August 2020

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 Air Force Remotely Piloted Aircraft Remotely Piloted Aircraft Operations and Maintenance Contract
This audit determines whether the Air Force's oversight and management of the Remotely Piloted Aircraft Operations and Maintenance contract ensured that the contractor complied with the contract for maintenance procedures and performance requirements.

Audit of U.S. Special Operations-Peculiar Equipment Operational Test and Evaluation Requirements Validation
This audit determines whether the 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 unique to U.S. Special Operations units and defined as equipment, material, supplies, and services required for special operations missions for which there is no Military Service common requirement.  Special Operations-Peculiar Equipment may contain diverse variations of equipment to meet the program’s stated mission. 

Followup Audit of the Implemented Recommendations of Naval Station Great Lakes Fire Station
This followup audit determines whether Navy officials corrected deficiencies identified in Report No. DODIG-2012-132, “Project Planning Resulted in Outstanding Building Deficiencies and Decreased Functionality of the Main Fire Station at Naval Station Great Lakes,” September 14, 2012, and determine whether Navy Region Mid-Atlantic established oversight procedures to ensure that firefighters have access to safe and compliant facilities. 

Audit of Management of Pharmaceutical Inventories in Support of the Overseas Contingency Operations
This audit determines whether the Military Services properly stored, tracked, and safeguarded pharmaceuticals at their overseas locations supporting overseas contingency operations.

Audit of the Supply Chain Management for a U.S. Nuclear Delivery System
This audit determines whether the Navy implemented supply chain risk management for the sea-based Trident II Strategic Weapons System in accordance with DoD requirements.  This report is classified. 

Audit of Security Assistance Program Assets
This audit determines whether DoD Components recovered their costs from foreign customers for executing security assistance programs and distinguished component assets from those of the security assistance program.  The Arms Export Control Act and the Foreign Assistance Act authorize the U.S. Government to provide security assistance to foreign customers in the form of defense articles, military education and training, and other defense‐related services.  The DoD charges administrative fees to foreign customers on the articles and services provided to cover the DoD’s related overhead costs. 

Evaluation of Mental Health Access to Care in the Department of Defense
This evaluation determines whether the DoD met outpatient mental health access to care standards for active duty service members and their families, in accordance with Federal requirements and applicable DoD policies.

Evaluation of Department of Defense Enhanced End-Use Monitoring of Equipment Transferred to the Government of Ukraine
This evaluation determines whether the DoD's transfer of military equipment requiring enhanced end-use monitoring to the government of Ukraine—including Javelin anti-armor missiles, Javelin Command Launch Units, and night-vision devices—was in accordance with the law and DoD guidance.  This evaluation also determines whether Ukraine's security and accountability of U.S.-provided military equipment requiring enhanced end-use monitoring met the criteria prescribed by law, DoD regulation, and the end-use monitoring agreements with the government of Ukraine.

Evaluation of Air Refueling Support to the U.S. Strategic Command's Nuclear Deterrence Mission
This evaluation determines whether the Air Force has mission capable aircraft and aircrew to meet U.S. Strategic Command's Operation Global Citadel air refueling requirements.  This evaluation focuses on the KC-135 aircraft nuclear mission readiness, associated aircrew nuclear mission readiness, and the required installation support to meet operations order requirements.  This report is classified.

Followup Evaluation of Report No. DODIG-2014-083, “Insufficient Infrastructure Support to the Fixed Submarine Broadcast system”

This evaluation determines whether the Navy adequately implemented recommendations of the 2014 report to ensure that the infrastructure, maintenance, modernization, and management of the Fixed Submarine Broadcast System is sufficient to perform required functions.  This report is classified.

Evaluation of the U.S. Military Support of Security Operations at the U.S. Southern Border
This evaluation determines whether the use of DoD Title 10 personnel to support Department of Homeland Security (DHS) southern border security operations was authorized by Federal law and DoD policies, and whether the DoD’s support of DHS southern border security operations complied with applicable Federal laws and DoD policies.  This evaluation also determines whether DoD Title 10 personnel supporting the DHS were provided adequate training, consistent with Federal laws and DoD policies on the Standing Rules for the Use of Force; on the potential reaction to contact with civilians or migrants; and whether the use of DoD funds for DoD Title 10 support to DHS southern border security operations complied with applicable Federal laws and DoD policies.

 

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

Compendium of Open Office of Inspector General Recommendations to the Department of Defense
The 2020 Compendium identifies 1,602 recommendations made by the DoD OIG that remained open as of March 31, 2020.  Of the 1,602 open recommendations, DoD management has agreed to take corrective action on 1,446 recommendations. Included in that total are 51 open recommendations from DoD OIG reports with potential monetary benefits of $6.5 billion.  While the overall number of open recommendations has remained relatively steady, the number of aged recommendations has increased dramatically.  Since the previous year’s Compendium, the number of recommendations that are at least five years old has increased by 113 percent.  The Compendium also highlights 35 open recommendations that the DoD OIG believes warrant priority attention based on the potential for the recommendations to improve the effectiveness of DoD operations, impact health and safety, or provide cost savings to the taxpayer. The 2020 Compendium also includes a chapter that discusses the findings and recommendations that resulted from the DoD-wide financial statement audit, as well as the process that the DoD OIG and independent public accounting firms will use to follow up on those recommendations.  As discussed in the Compendium, the DoD has provided supporting documentation that led to the closure of over 2,200 recommendations since the Compendium’s original issuance in 2017.  However, 936 recommendations reported in previous Compendiums remain open.

Followup Evaluation of Report DODIG-2016-078, Evaluation of the Department of Defense’s Biological Select Agents and Toxins Biosafety and Biosecurity Program Implementation
This followup evaluation determined that the Office of the Undersecretary of Defense for Acquisition and Sustainment and the Secretary of the Army, as the DoD Executive Agent for the DoD Biological Select Agents and Toxins (BSAT) Biosafety and Biosecurity Programs, implemented actions that met the intent of 9 of the 13 recommendations from Report No. DODIG-2016-078, “Evaluation of DoD Biological Safety and Security Implementation,” April 27, 2016.  However, 4 of the 13 recommendations from the previous report had not been fully implemented.  The Office of the Undersecretary of Defense for Acquisition and Sustainment did not issue policy requiring all DoD BSAT‑registered laboratories to implement an internal technical and scientific peer review function that addresses both biosafety and biosecurity.  In addition, the Executive Agent did not conduct standardized oversight of the BSAT‑registered laboratories, or track all internal and external inspection results. Moreover, the Army Inspector General did not develop and implement training for BSAT laboratory inspectors and subject matter expert inspection team members.  As a result, incomplete and inconsistent oversight of the DoD BSAT Biosafety and Biosecurity Programs remains an issue, which increases the risk of exposing DoD BSAT laboratories, personnel, and the public to the hazards associated with BSAT.

Lead Inspector General for East Africa And North And West Africa Counterterrorism Operations I Quarterly Report to the United States Congress January 1, 2020 through March 31, 2020
This Lead Inspector General (IG) quarterly report for the East Africa Counterterrorism Operation and the North and West Africa Counterterrorism Operation—to degrade al Qaeda and ISIS affiliates, and other terrorist groups, in designated regions of Africa—summarizes the quarter’s key events and describes completed, ongoing, and planned Lead IG and partner agency oversight work related to East, North and West Africa Counterterrorism Operations.  This report discusses U.S. Africa Command’s increased airstrikes in Somalia, enabling the African Union and Somali forces to retake a southern town from al Shabaab. Despite these efforts, U.S. Africa Command told the DoD OIG that al Shabaab “remains adaptive, resilient, and capable of attacking Western and partner interests in Somalia and East Africa.”

Lead Inspector General Operation Inherent Resolve Quarterly Report to the United States Congress April 1, 2020 through June 30, 2020
This Lead Inspector General quarterly report for Operation Inherent Resolve, the overseas contingency operation to combat the Islamic State of Iraq and Syria (ISIS), summarizes the quarter’s key events and describes completed, ongoing, and planned Lead IG and partner agency oversight work related to Operation Inherent Resolve.  The report also discusses a surge of attacks conducted by ISIS during Ramadan. ISIS exploited restrictions placed on security forces due to the coronavirus disease– 2019 pandemic, which according to the Combined Joint Task Force prohibited them from conducting more attacks on ISIS. However, CJTF-OIR said that ISIS did not maintain the surge in attacks and assessed that due to its inability to sustain a higher level of activity as well as other factors, ISIS is not resurging.

Audit of Core Inventory Management System Implementation
This audit determined that while Combined Security Transition Command–Afghanistan’s (CSTC-A) implementation of Core Inventory Management System (CoreIMS) has improved the accountability of weapons and vehicles at the Afghan National Defense and Security Forces (ANDSF) national warehouses, it has not led to full accountability at the ANDSF local sites.  The CoreIMS is used by the ANDSF to manage equipment provided by the DoD to support the Afghan government.  The system provides accountability of equipment and assists in shipping, receiving, and inventory for warehouse operations.  Specifically, the ANDSF did not use CoreIMS at 78 of its 191 (41 percent) local sites.  As a result of the ANDSF’s inability to consistently use CoreIMS, CSTC-A will not be able to assist the ANDSF in identifying instances of weapon and vehicle theft, plan for future equipment requirements, or reduce duplicate issuance of weapons and vehicles.  Additionally, CSTC‑A continues to expend resources on implementing CoreIMS without a strategy for sites that do not have the capability to implement CoreIMS.  Therefore, the ANDSF will continue to rely on CSTC‑A to train, advise, and assist the ANDSF in improving logistics capabilities.

Audit of the Department of Defense's Sustainment, Restoration, and Modernization of Military Medical Treatment Facilities
This audit determined that Defense Health Agency Facilities Enterprise personnel will need to develop and implement procedures to address issues at military medical treatment facilities after assuming responsibility for the sustainment, restoration, and modernization of them.  Facility management personnel for the military medical treatment facilities at the six installations sampled reported more than 760 unfunded requirements with an estimated value of $552 million as of September 17, 2019.  In addition, the audit discovered unfunded requirements at four installations that could cause death or major property damage if not addressed, and additional unfunded requirements at three installations that could cause moderate property damage and severe injury over time if not addressed.  Delays in addressing more than $552 million of unfunded requirements for 60 military medical treatment facilities on the six installations reviewed could worsen the overall condition, readiness, use, functionality, and services provided.  In addition, the Defense Health Agency will need to address $14.8 billion in unfunded requirements that were reported as of September 2019, for the more than 576 hospitals and clinics and 87 dental facilities worldwide.  Furthermore, unless facilities data quality is improved, the Defense Health Agency may rely on less than accurate information related to future maintenance requirements when planning for short-term and long-term sustainment, restoration, and modernization requirements.

SPECIAL REPORT: Lessons Learned for Department of Defense Acquisition Officials During Acquisition Reform
This special report provides lessons learned identified in audit reports related to the DoD acquisition process.  From 2014 through April 2020, the DoD Office of Inspector General conducted 36 audits related to acquisitions.  These reports identified common weaknesses related to developing and meeting performance requirements, funding of acquisition programs, determining procurement quantity, and testing and evaluation.  Officials in the Office of the Under Secretary of Defense for Acquisition and Sustainment are institutionalizing the last few years of congressional acquisition reforms and updating defense acquisition guidance to improve process effectiveness and implement the adaptive acquisition framework.  However, DoD acquisition reform is still a work in progress. Some acquisition reform policies remain to be published, while not enough time has passed to evaluate the implementation of new policies.  Unless acquisition officials commit to fundamental acquisition principles, the DoD will continue to experience acquisition challenges that will inhibit its ability to execute the National Defense Strategy.   

Audit of Purchases of Ammonium Perchlorate Through Subcontracts With a Single Department of Defense-Approved Domestic Supplier
This audit determined that ATK Launch Systems Incorporated and Aerojet Rocketdyne, first-tier rocket motor subcontractors, followed procedures and properly determined that ammonium perchlorate, grade 1 was a commercial item.  Additionally, the Army and Navy contracting officers appropriately relied on the subcontractors’ price analysis to determine that proposed AP1 prices were fair and reasonable according to the Federal Acquisition Regulation.  Relying on previous prices alone presents a risk of paying excessive prices to a single supplier if the previous prices have not been substantiated through competition.

Quality Control Review of the Tate & Tryon Fiscal Year 2016 Single Audit of the American Society for Engineering Education
This quality control review determined that the Tate & Tryon auditors did not comply with auditing standards in performing the FY 2016 single audit of the American Society for Engineering Education.  Tate & Tryon auditors did not perform sufficient procedures to form a conclusion on the American Society for Engineering Education’s compliance with the Program Income, Eligibility, and Allowable Cost compliance requirements; document the basis for determining which compliance requirements were not direct and material to the major programs being audited; and report audit findings consistent with the audit documentation.  Moreover, additional information identified that the American Society for Engineering Education did not comply with the Program Income compliance requirement on one major program because it did not use the income generated by the program to reduce the allowable expenses before requesting reimbursement from the Government.   As a result, additional audit procedures need to be performed before Federal agencies can rely on the FY 2016 American Society for Engineering Education single audit report.

 

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

Acting Manhattan U.S. Attorney Announces $678 Million Settlement of Fraud Lawsuit Against Novartis Pharmaceuticals Corporation for Operating Sham Speaker Programs
On July 1, 2020, the Department of Justice (DOJ) announced that the United States settled a civil fraud lawsuit against Novartis Pharmaceuticals Corporation (Novartis), alleging that Novartis violated the federal False Claims Act and the Anti-Kickback Statute by providing doctors with cash payments and other expensive enticements in exchange for them to prescribe Novartis cardiovascular and diabetes drugs, which are reimbursed by Federal healthcare programs, including TRICARE.  The Government alleged that Novartis organized tens of thousands of sham educational events at high-end restaurants and other venues, paid exorbitant speaker fees to doctors who gave no meaningful presentations, and provided expensive meals and alcohol to doctor attendees and their guests.  When those doctors prescribed Novartis’s cardiovascular and diabetes drugs, federal healthcare programs paid hundreds of millions of dollars in reimbursements for prescriptions for drugs that patients did not need.  As part of the settlement, Novartis will pay the Government and various states a total of $678 million.  At the time of settlement, Novartis also entered into a corporate integrity agreement with the Health and Human Services Office of Inspector General (HHS-OIG) that will significantly curtail the company’s ability to conduct speaker programs going forward, and will dramatically reduce the amount of money that Novartis may spend on such programs.  Under the five-year corporate integrity agreement, Novartis speaker programs are only permitted under limited circumstances and must be conducted in a virtual format such as a webinar.  The corporate integrity agreement also requires multi-faceted monitoring of Novartis’s operations and obligates company executives and Board members to certify compliance annually with the terms of the corporate integrity agreement.  The strict limitations on speaker programs imposed by the corporate integrity agreement are also incorporated into the settlement.  The settlement provides procedures for the Government to raise violations of these requirements with the district court.  This was a joint investigation with the Federal Bureau of Investigation (FBI), HHS-OIG, and the Defense Criminal Investigative Service (DCIS). 

Former Air Force Employee Faces Federal Indictment for Stealing More Than $774,000 in Government Funds
On July 6, 2020, a Federal grand jury indicted Eddie Ray Johnson, Jr., of Brandywine, Maryland, on Federal charges of theft of Government property and money laundering.  According to the indictment, from January 2003 to February 2018, Johnson was a civilian Air Force employee, most recently as a travel coordinator in the Secretary of the Air Force, Office of Legislative Liaison, where he planned congressional travel and reviewed and approved accounting packages submitted by trip escorts, among other duties.  From March 2014 through September 2017, Johnson allegedly used his Government-issued travel credit card to obtain more than $1.1 million in cash advances, at least $774,000 of which he diverted to his own personal use.  Johnson frequently deposited the stolen funds into a non-interest bearing account opened in his name at a bank branch in the Pentagon.  Employees in the Office of Legislative Liaison were instructed to open such accounts to easily deposit and withdraw Government funds for official use without accruing interest.  After depositing the stolen funds, Johnson allegedly wrote checks to himself, which he deposited into his personal bank accounts, as well as expended the money for his personal use.  This is a joint investigation with the Air Force Office of Special Investigations (AFOSI), DCIS, and the Internal Revenue Service-Criminal Investigation.

San Diego, California Man Sentenced to Federal Prison for His Role in Million Dollar Scheme Targeting Thousands of U.S. Service Members and Veterans
On July 9, 2020, Trorice Crawford of San Diego, California, was sentenced to 46 months confinement for his role in an identity-theft and fraud scheme that victimized thousands of U.S. service members and veterans.  Crawford was also ordered to pay $103,700 in restitution and be placed on supervised release for a period of three years after completing his prison term.  On December 5, 2019, Crawford pleaded guilty to one count of conspiracy to launder monetary instruments.  By pleading guilty, Crawford admitted that from May 2017 to July 2019, he conspired with Robert Wayne Boling, Jr. (a U.S. citizen), and others to steal money belonging to U.S. service members and veterans.  Crawford also admitted to recruiting at least 30 individuals who provided their bank account information to receive funds stolen from military affiliated individuals.  On average, each unauthorized transfer from a victim’s accounts ranged from between $8,000 to $13,000.  Crawford kept a percentage of the withdrawn funds for himself and oversaw the transmission of the remaining amounts by means of international money remittance services to Boling and others in the Philippines.  In October 2019, Crawford’s co-defendant Frederick Brown, of Las Vegas, Nevada, pleaded guilty to Federal charges in connection with this scheme.  Brown, a former civilian medical records administrator for the Army at the 65th Medical Brigade, Yongsan Garrison, South Korea, admitted that while logged into the Armed Forces Health Longitudinal Technology Application, he illegally captured on his cell phone personal identifying information of thousands of military members, including names, social security numbers, DoD identification numbers, dates of birth, and contact information.   Access to these detailed records enabled the defendants to steal or attempt to steal millions of dollars from military members’ bank accounts.  The defendants also stole veterans’ benefits payments.  Evidence of the defendants’ scheme was detected earlier this year, advancing the investigation that led to the indictment.  Brown is in Federal custody awaiting sentencing, which is scheduled for September 2020.  This is a DCIS investigation with support from the U.S. Postal Inspection Service, the Army Criminal Investigation Command (Army CID), and the Department of Veterans Benefits Administration’s Benefits Protection and Remediation Division.

Indivior Solutions Pleads Guilty to Felony Charge and Indivior Entities Agree to Pay $600 Million to Resolve Criminal and Civil Investigations as Part of the Department of Justice’s  Largest Opioid Resolution
On July 24, 2020, Indivior Solutions pleaded guilty to a one-count felony information and, with its parent companies Indivior Inc. and Indivior plc, agreed to pay $600 million to resolve criminal and civil liability associated with the marketing of the opioid addiction treatment drug Suboxone.  On June 30, 2020, Indivior plc’s former CEO Shaun Thaxter pleaded guilty to a one-count misdemeanor information related to Indivior’s false and misleading representations to MassHealth.  Under the civil settlement, Indivior Inc. and Indivior plc have agreed to pay a total of $300 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to Government healthcare programs, including TRICARE.  The $300 million settlement amount includes approximately $209.3 million to the Federal government and $90.7 million to states that agree to participate in the agreement.  In addition to the criminal and civil resolutions, Indivior executed a five-year corporate integrity agreement with the HHS-OIG.  The corporate integrity agreement requires that Indivior implement numerous accountability and auditing provisions.  On an annual basis, top executives and the Board of Directors must certify about compliance, Indivior must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits.  DCIS provided investigative assistance in the civil case along with multiple partner agencies, including the HHS-OIG, the Office of Personnel Management OIG, the Department of Veterans Affairs OIG, the Department of Labor OIG, and Program Integrity Office.

Fort Worth Company Owner Pleads Guilty To Lying to the Department of Defense
On July 16, 2020, Richard Ross Hyde of Fort Worth, Texas, was sentenced to over 4 ½ years of confinement for lying to the DoD about the metal used inside his company’s aircraft parts.  Hyde, the owner of Vista Manufacturing Company, pleaded guilty in August 2019 to making a false claim against the United States.  As part of his plea, Hyde admitted that he invoiced the Navy for aircraft components which the DoD later discovered were constructed from a different metal than the one his company said it would use.  On Aug. 18, 2014, Vista Manufacturing submitted a bid to the Government to provide critical parts for a Naval Air Warfare Center aircraft.  In the bid, the company included a diagram noting measurements, specifications, and descriptions of the materials required for production, notably, aluminum alloy 2024.  Six days later, the Government accepted Vista’s bid, and Hyde began seeking out manufacturers for the 22 wiper back retainers included in the bid.  He found a company that offered to manufacture the parts with a different aluminum alloy, 6061.  Despite the fact that Vista’s contract with the Navy required them to use aluminum alloy 2024, Mr. Hyde admitted he accepted the offer, and allowed the part to be manufactured with aluminum alloy 6061.  Mr. Hyde admitted that on January 21, 2015, he had the completed parts made with the 6061 alloy delivered to a Defense Logistics Agency distribution facility.  He then invoiced the Defense Financing and Accounting Services for $12,897 and received the full payment.  A subsequent examination of the parts he delivered revealed that the metal used to manufacture the wiper back retainers did not match the diagram on Vista’s bid; testing revealed that Mr. Hyde’s company had substituted the 6061 alloy for the 2024 alloy, rendering his bid as false.  This was a joint investigation with DCIS, FBI, Army CID, AFOSI, the Naval Criminal Investigative Service, and the Defense Contract Management Agency.

 

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

External Peer Review of the Defense Finance and Accounting Service Internal Review Audit Organization
The objective of this review is to determine for the period ending June 30, 2020, whether the quality control program for the Defense Finance and Accounting Service Internal Review audit organization is designed to provide reasonable assurance that the policies and procedures related to the system of audit quality are suitably designed, operating effectively, and complied with in practice.

Quality Control Review of the BDO FY 2019 Single Audit of the Henry M. Jackson Foundation for the Advancement of Military Medicine
The objective of this review is to determine whether the BDO USA, LLP, FY 2019 single audit of Henry M. Jackson Foundation for the Advancement of Military Medicine was performed in accordance with Federal requirements and applicable auditing standards.  The single audit is required by Title 2 Code of Federal Regulations Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.”  

Evaluation of Traumatic Brain Injury Screening in the U.S. Central Command Area of Responsibility
The objective of this evaluation is to determine whether U.S. Central Command screened, documented, and tracked DoD service members suspected of sustaining a Traumatic Brain Injury to determine whether a return to duty status for current operations was acceptable or evacuation and additional care was required.

Evaluation of the Armed Forces Retirement Home Response to the Coronavirus Disease–2019 Pandemic
The objective of this evaluation is to determine whether the Armed Forces Retirement Home protected the residents, staff, and medical professionals from coronavirus disease–2019 exposure in accordance with the Centers for Disease Control and Prevention, state, and local health and safety guidance.

Audit of Coalition Partner Reimbursements for Air Transportation Services in Afghanistan
The objective of this audit is to determine whether the DoD sought full reimbursement for air transportation services provided to Coalition partners in Afghanistan in accordance with DoD policy and international agreements.