Oct. 1, 2020 —
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:
Audit of the Solicitation, Award, and Administration of Washington Headquarters Services Contract and Task Orders for the Office of Small Business Programs
This audit determines whether the Washington Headquarters Services Acquisition Directorate solicited, awarded, and administered task orders issued under a program development and support contract for the Office of Small Business Programs in accordance with the Federal Acquisition Regulation, the Defense Federal Acquisition Regulation Supplement, and Washington Headquarters Services policies.
Audit of the Excess Department of Defense Property Issued Through the Law Enforcement Support Office Program
This audit determines whether the DoD provided excess personal property to law enforcement agencies in accordance with the guidance that implements the Law Enforcement Support Office Program. Through this program, law enforcement agencies receive excess DoD property such as night vision devices, armored vehicles, firearms, helmets, and other equipment and tools.
Audit of the Department of Defense Process for Developing Foreign Military Sales Agreements
This audit determines whether the DoD coordinated foreign partner requirements for defense articles and services with the Defense Security Cooperation Agency, Military Departments, and other organizations, and whether the metrics used by these components maximized the results of the Foreign Military Sales agreement development process.
Evaluation of the U.S. Combatant Commands’ Responses to the Coronavirus Disease–2019 Pandemic
This evaluation determines how Geographic Combatant Commands (excluding U.S. Northern Command) and their component commands, executed their pandemic response plans. The evaluation also seeks to identify the challenges with implementing the response plans and the impact the coronavirus disease–2019 pandemic had on operations.
Evaluation of Department of Defense Medical Treatment Facility Challenges During the Coronavirus Disease-2019 Pandemic
This evaluation determines the challenges and needs of personnel working at DoD medical treatment facilities while responding to the coronavirus disease–2019 pandemic.
Recently issued Reports of Interest (to view report, if available, please click on title)
Special Report: Controls Implemented by the Defense Health Agency to Control Costs for TRICARE Coronavirus Disease-2019 Pandemic Related Services
This special report determined that Defense Health Agency (DHA) managed care support contractors planned and took actions to control health care claims payments related to the coronavirus disease–2019 (COVID-19) pandemic. The DHA managed care support contractors also implemented initiatives to identify potential fraud schemes for COVID-19 and maintained open communication lines. These efforts enabled consistent efforts among all stakeholders to ensure TRICARE beneficiaries and providers received the same information on DHA policies and procedures for health care and claims processing. Through these actions, the DHA reduced the risk of providers exploiting the pandemic for personal gain and potentially prevented improper payments. In addition, these actions provided greater flexibility for providers and beneficiaries, which helped beneficiaries receive the care they needed.
Audit of the F-35 Program Office’s Beyond Economical Repair Process for Parts
This audit determined that the F-35 Program Office did not implement a beyond economical repair process that ensured the decisions to either replace or repair damaged parts were the most economical decisions. From October 2001 through December 2019, F-35 Program Officials had not implemented a beyond economical repair process that identified the replacement cost for repairable parts, established a threshold for use in determining whether it was economical to repair a part, or required DoD approval for replacing damaged parts that the contractor determined could not be economically repaired. As a result, from January 2016 through June 2019, the prime contractor reported that it disposed of at least 688 parts, categorized as beyond economical repair—valued at $34.5 million—without DoD oversight or approval. Moreover, as of February 2020, the F-35 Program Office had more than 500 parts waiting for a DoD official to approve the contractor’s determination that replacing the damaged part is the most economical decision—contributing to the reduction of available spare parts and delaying the final repair or replace decision, which negatively affects readiness.
Evaluation of Medical Protocols and Deaths of Recruits in the Department of Defense
This evaluation was conducted in response to the National Defense Authorization Act for Fiscal Year 2020 that directed the DoD OIG to conduct “an assessment of the deaths of recruits at facilities under the jurisdiction of the Secretaries of the Military Departments, and the effectiveness of the current medical protocols on the training bases.” The DoD OIG obtained and reviewed documents related to the recruit deaths from the Office of the Armed Forces Medical Examiner and the Military Services, including death certificates, electronic medical records, and command and medical investigations and reviews. Additionally, the DoD OIG reviewed the Services current medical protocols at the training bases, and conducted 117 interviews and group sensing sessions at six recruit training centers with military personnel, medical health officials, and other training support staff.
Audit of Screening and Quarantine Procedures for Personnel Entering Al Udeid Air Base, Qatar
This audit determined that the 379th Air Expeditionary Wing Security and Support Squadrons developed screening and quarantine procedures for personnel entering Al Udeid Air Base, Qatar in accordance with applicable guidance in response to the coronavirus disease–2019 pandemic. The squadrons implemented most procedures; however, improvements are needed. Based on our observations, Security and Support Squadron personnel checked the temperature of all personnel entering Al Udeid Air Base and implemented all screening procedures for incoming air terminal passengers. Additionally, in nearly every instance Security Squadron personnel wore required facemasks and gloves. However, when conducting screening at the North Gate, Security Squadron personnel did not consistently check travel passes that were required for base re-entry, or require that personnel wear facemasks if more than one passenger was in the vehicle. If screening procedures are not consistently applied to all personnel entering AUAB, there is a risk that U.S. military, civilian, and contractor personnel may contract and spread COVID-19. If a surge in COVID-19 cases develops, ongoing operations and exercises in Qatar and the U.S. Central Command area of responsibility could be canceled, postponed, or impacted by staffing shortages caused by rapid increases in infected personnel.
Evaluation of the Air Force’s Certification of Space Launch Vehicles
This evaluation determined that Air Force Space and Missile Systems Center officials generally complied with the New Entrant Certification Guide and Space and Missile Center Operating Instruction when certifying the capabilities of SpaceX and its Falcon family of launch vehicles. Additionally, in preparation for future launch vehicle contract competitions, Space and Missile Center officials generally complied with the New Entrant Certification Guide to accomplish the design validation assessments of three potential launch vehicle providers’ new entrant launch vehicles that were still in development.
Evaluation of the Department of Defense and Department of Defense Education Activity Responses to Incidents of Serious Juvenile-on-Juvenile Misconduct on Military Installations
This evaluation determined that between January 1, 2015 and December 31, 2017, Department of Defense Education Activity (DoDEA) administrators did not report 600 serious misconduct incidents that could have been characterized as juvenile-on-juvenile misconduct incidents to DoDEA headquarters, installation commanders, or law enforcement. This occurred because DoDEA policy provided DoDEA administrators the discretion to determine which incidents could be reported to DoDEA headquarters, installation commanders, and law enforcement. As a result, DoDEA headquarters personnel were unaware of at least 522 juvenile-on-juvenile incidents, installation commanders could not hold juvenile offenders accountable, and law enforcement could not conduct investigations of serious juvenile-on-juvenile misconduct incidents.
Investigative Summary: Substantiated Findings of Military Whistleblower Reprisal and Restriction against a Member of the Army National Guard
The DoD OIG’s Whistleblower Reprisal Investigations Directorate completed two associated Title 10 United States Code § 1034 (protected communications and prohibition of retaliatory personnel actions) cases containing allegations of reprisal and restriction against two separate Army National Guard majors. The reprisal investigation substantiated that one major reprised against an Army National Guard second lieutenant for making protected communications to his chain of command. The associated restriction investigation substantiated that a different Army National Guard major attempted to restrict the second lieutenant from communicating with the Inspector General. The DoD OIG provided the final reports of investigation to the Secretary of the Army. Corrective action is pending.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)
Falmouth Man Charged with Fraud, Theft, and Impersonating a Federal Officer
On September 18, 2020, a Federal grand jury indicted Joshua Cory Frances from Falmouth, Maine for Federal program fraud, wire fraud, false personation, and theft of Government benefits. According to the indictment and a criminal complaint, Frances impersonated a Department of Homeland Security (DHS) law enforcement official and fraudulently obtained over $700,000 of excess equipment from the DoD. In addition, Frances converted two large boats and two outboard engines for his own use, embezzled almost $21,000 from his employer, evaded more than $3,000 in state excise taxes, and stole $9,630 in Supplemental Nutrition Assistance Program benefits. This was a joint investigation with DHS-OIG, the Defense Criminal Investigative Service (DCIS), the Federal Bureau of Investigation (FBI), the Office of the Maine Attorney General, the Maine Department of the Secretary of State’s Bureau of Motor Vehicles, the Maine Department of Health and Human Services, and the Falmouth and Brunswick, Maine Police Departments.
Former Business Executive Sentenced to Prison for $4 Million Bribery Scheme Involving DoD Contracts for Wounded Military Veterans
On September 16, 2020, Brodie Thomson was sentenced to 42 months in prison for his role in a $4 million bribery and fraud scheme related to a number of DoD contracts to provide support services for the recovery and rehabilitation of wounded military veterans. Thomson, former executive for an Arlington company (Company A) solicited commercial bribes and kickbacks from an Oregon-based company (Company B), in exchange for influencing Company A to give favorable treatment to Company B in connection with the award of certain DoD subcontracts related to services to wounded veterans. This was a joint investigation with DCIS, the Naval Criminal Investigative Service, and the U.S. Army Criminal Investigation Command (CID).
Acting Manhattan U.S. Attorney Announces $11.5 Million Settlement with Biotech Testing Company for Fraudulent Billing and Kickback Practices
On September 22, 2020, Bio-Reference Laboratories, Inc. (BRL), a New Jersey-based biotechnology company that provides molecular and diagnostic tests, agreed to an $11.5 million settlement of a False Claims Act case with the U. S Attorney’s Office for the Southern District of New York. The settlement resolved claims that BRL fraudulently billed Federal health care programs for testing conducted on hospital inpatients that should have been billed to the hospitals instead, and that BRL knowingly donated the cost of electronic medical records software to physicians' offices throughout the country in violation of the False Claims Act and the Federal Anti-Kickback Statute. Under the settlement, BRL will pay $11,500,960 to the United States to resolve the fraudulent billing and kickback claims. This was a joint investigation with the Health and Human Services (HHS) OIG and DCIS.
Sarasota Pain Doctor and Former Insys Sales Representative Charged in Health Care Fraud Kickback Conspiracy
On September 16, 2020, Steven Chun and Daniel Tondre were charged in Tampa, Florida with identity fraud and conspiring to pay and receive kickbacks in connection with improperly prescribing a fentanyl spray. According to the indictment, Chun, a doctor, owned and operated a pain management medical practice in Sarasota, Florida where he prescribed a large volume of Schedule II opioids, including fentanyl. Tondre was employed as a sales representative for lnsys Therapeutics, Inc., a company that manufactured and sold Subsys, an expensive form of liquid fentanyl designed to be applied under the tongue (sublingual spray), allowing it to rapidly enter the bloodstream. lnsys used a sham public speaking program to conceal and disguise kickbacks and bribes paid to high-prescribing doctors, like Chun, for prescribed fentanyl spray. Chun was paid more than $275,000 in illegal kickbacks and bribes from lnsys in connection with the sham speaker programs. This was a joint investigation with the FBI, HHS OIG, DCIS, and by the Opioid Fraud Abuse and Detection Unit at the U.S. Attorney's Office.
Federal Judge in San Antonio Accepts Guilty Plea and Sentences QuantaDyn Corporation to Pay Millions of Dollars in Fines and Restitution for Bribery and Government Contract Fraud Scheme
On September 15, 2020, at the U.S. District Court House in San Antonio, Texas, the software engineering company QuantaDyn Corporation based in Ashburn, Virginia, pleaded guilty to conspiracy to commit wire fraud. This plea related to a bribery and Government contract fraud scheme that spanned more than a decade and impacted contract awards worth hundreds of millions of dollars. The company agreed to pay a $6.3 million fine and more than $37 million in restitution. In addition, the court assessed a money judgment forfeiture against QuantaDyn for nearly $23 million, as well as forfeiture of seized assets over $7 million. According to the indictment, QuantaDyn paid more than $2.3 million in bribes to a civilian acquisitions employee of the 502 Trainer Development Squadron at Randolph Air Force Base, in Universal, Texas, in exchange for lucrative contracts being steered to QuantaDyn for aircraft and close-air-support training simulators. This was a joint investigation with the General Services Administration OIG, the Internal Revenue Service-Criminal Investigation, DCIS, U.S. Army CID, and Air Force Office of Special Investigations.
ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)
Audit of Department of Defense Selection of Middle-Tier Acquisition Rapid Prototyping and Rapid Fielding Programs
The objective of this audit is to determine whether DoD Component acquisition officials managed programs for the middle-tier acquisition rapid prototyping or rapid fielding in accordance with DoD guidance. Middle-tier acquisition is used to rapidly prototype or rapidly field capabilities within 5 years of the start of an acquisition program.
Audit of Contracts Awarded and Administered by the Defense Media Activity
The objective of this audit is to determine whether Defense Media Activity personnel properly awarded and administered contracts in accordance with Federal law and DoD regulations and guidance.
Followup Evaluation of Report No. DODIG-2019-088, “Evaluation of Department of Defense Efforts to Combat Trafficking in Persons in Kuwait,” June 11, 2019
The objective of this followup evaluation is to determine whether the DoD implemented corrective actions for recommendations made in Report No. DODIG-2019-088, “Evaluation of DoD Efforts to Combat Trafficking in Persons in Kuwait,” June 11, 2019.
Evaluation of the Department of Defense's Mitigation of Foreign Suppliers in the Pharmaceutical Supply Chain
The objective of this evaluation is to determine whether the DoD has mitigated the risks of interruptions to the pharmaceutical supply chain, due to the DoD's reliance on foreign suppliers.
Evaluation of Special Victim Investigation and Prosecution Capability Within the Department of Defense
The objective of this evaluation is to determine whether the Military Services are complying with Federal law and DoD directives concerning Special Victim Investigation and Prosecution responsibilities to victims of covered offenses. Special Victim Investigation and Prosecution responsibilities include training, certifying, and assigning skilled Special Victim Investigation and Prosecution members to cases involving events such as unrestricted sexual assault, unrestricted domestic violence, and child abuse involving grievous bodily harm.
Summary Evaluation on Oversight of the External Peer Review of the Army Audit Agency
The objective of this evaluation is to provide oversight and an opinion on the Naval Audit Service’s peer review of the Army Audit Agency for the 3-year period ended December 31, 2019. The results of the Naval Audit Service’s external peer review of the Army Audit Agency will be combined with the DoD OIG results of the Army Audit Agency’s Special Access Program audits to provide an overall opinion on the Army Audit Agency’s compliance with the Government Auditing Standards.
Summary Evaluation on Oversight of the External Peer Review of the Air Force Audit Agency
The objective of this evaluation is to provide oversight and an opinion on the Army Audit Agency’s peer review of the Air Force Audit Agency for the 3-year period ended December 31, 2019. The results of the Army Audit Agency’s external peer review of the Air Force Audit Agency will be combined with the DoD OIG results of the Air Audit Agency’s Special Access Program audits to provide an overall opinion on Air Force Audit Agency’s compliance with the Government Auditing Standards.