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DoD OIG Newsletter - December 2020

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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:

 

Evaluation of Department of Defense Processes to Counter Radio Controlled Improvised Explosive Devices

This evaluation determines whether DoD Components have developed and implemented processes to warn U.S and Coalition Forces about the threat of new radio-controlled improvised explosive devices.  This report is classified.

 

External Peer Review of the Defense Finance and Accounting Service Internal Review Audit Function

The objective of this review is to determine, for the three year period ending June 30, 2020, whether the quality control program for the Defense Finance and Accounting Service Internal Review audit organization was 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. 

 

External Peer Review of the Defense Contract Audit Agency

The objective of this review is to determine, for the period ending June 30, 2019, whether the quality control program for the Defense Contract Audit Agency was designed and complied with to provide reasonable assurance that the Defense Contract Audit Agency and its personnel, performed and reported in conformity with applicable professional standards.

 

Evaluation of the U.S. Combatant Commands’ Responses to the Coronavirus Disease–2019 Pandemic U.S. Central Command

This evaluation determines how Geographic Combatant Commands (excluding U.S. Northern Command) and their component commands, executed their pandemic response plans.  The evaluation also focuses on challenges with implementing the response plans and the impact the coronavirus disease–2019 pandemic had on operations.  This report focuses on U.S. Central Command and is the third report in a series of reports on the Combatant Commands.

 

Audit of Cybersecurity Requirements for Department of Defense Weapons Systems in the Operation and Support Phase of the Acquisition Process

This audit determines whether DoD Components took action to update cybersecurity requirements for weapon systems in the Operations and Supports phase of the acquisition lifecycle, based on publicly acknowledged or known cybersecurity threats and intelligence-based cybersecurity threats.  This report is classified.

 

Summary of Reports and Testimonies Regarding Department of Defense Cybersecurity Issued From July 1, 2019 through June 30, 2020

This report summarizes unclassified and classified reports and testimonies regarding DoD cybersecurity and identifies trends and open DoD cybersecurity-related recommendations issued by the DoD OIG, Government Accountability Office, and other DoD oversight organizations between July 1, 2019, and June 30, 2020.                                           

Audit of Cybersecurity Controls Over the Air Force Satellite Control Network

This audit determines whether the U.S. Space Force implemented cybersecurity controls to protect the Air Force Satellite Control Network against potential threats.  This report is classified.

 

Audit of the Department of Defense’s Compliance With the Berry Amendment

This audit determines whether the Military Services and the Defense Logistics Agency complied with the Berry Amendment for DoD procurements and acquisitions when purchasing materials and supplies.  The Berry Amendment promotes the purchase of goods manufactured in the United States by directing how the DoD can use funds to purchase items such as fabrics, food, and hand tools.  The Berry Amendment applies to end items and components for purchases over the simplified acquisition threshold of $250,000.

 

Audit of the Department of Defense’s Implementation of Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act

This audit assesses the DoD’s implementation of section 3610 as authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including whether contracting officers properly authorized and reimbursed contractor costs.  Section 3610, “Federal Contractor Authority,” of the CARES Act, authorized agencies to reimburse contractors for any paid leave, including sick leave, they provide to keep their employees or subcontractor employees in a “ready state.”  This includes protecting the life and safety of Government and contractor personnel. 

 

Followup Audit on Corrective Actions Taken by the Army to Implement Prior Recommendations Addressing the Joint Light Tactical Vehicle

This followup audit determines whether the Joint Program Office Joint Light Tactical Vehicle implemented recommendations from Report No. DODIG-2018-113, “Army and Marine Corps Joint Light Tactical Vehicle,” May 2, 2018, and whether the implemented actions corrected the problems identified.  Additionally, this followup audit determines whether the Military Services adequately supported the need for increased Joint Light Tactical Vehicle quantities.  This report is Controlled Unclassified Information.

 

Audit of Dual-Status Commanders for Use in Defense Support of Civil Authorities Missions

This audit determines whether DoD Components nominated, certified, and appointed dual-status commanders for Defense Support of Civil Authorities missions in accordance with legal authorities and DoD policies in response to the coronavirus disease–2019 pandemic.

 

Audit of Infectious Disease Medical Treatment Capabilities at Al Udeid Air Base

This audit determines whether Al Udeid Air Base had the capability to treat patients who contracted coronavirus disease–2019 and isolated or quarantined suspected infected service members, civilians, and contractors.

 

Special Report: Weaknesses in the Retrograde Process for Equipment from Afghanistan

This special report highlights weaknesses identified in previous DoD OIG reports on the retrograde process for equipment in Afghanistan to assist responsible U.S. military, civilian, and contractor personnel in Afghanistan with the ongoing retrograde of military equipment.

 

 

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

Independent Auditor's Report on the Department of Defense FY 2020 and FY 2019 Basic Financial Statements

On November 16, 2020, the DoD published the DoD FY 2020 Agency Financial Report which includes the FY 2020 and FY 2019 Agency-Wide Basic Financial Statements.  This year, the DoD Office of Inspector General (DoD OIG) issued a disclaimer of opinion on the DoD’s FY 2020 and FY 2019 Agency-Wide Basic Financial Statements.  DoD OIG and IPA auditors completed over 500 virtual visits to DoD locations, and assessed over 36,000 documents and over 76,000 sample items for the audits of the DoD and its components.  The audits of the 24 DoD components resulted in 6 unmodified opinions, 1 qualified opinion, and 13 disclaimers of opinion.  In addition, auditors identified 26 material weaknesses, 4 significant deficiencies, and 7 instances of non-compliance with laws.  The DoD OIG plans to issue a product in January that will summarize, in terms that are understandable to non‑auditors, the purpose, findings, and potential benefits of the DoD’s financial statement.  This report will also discuss progress on the Secretary of Defense’s eight audit priority areas and provide the DoD OIG’s perspective on what the DoD should do to continue its progress towards stronger financial management and clean audit opinions.

 

Semiannual Report to the Congress| April 1, 2020 through September 30, 2020

The DoD OIG continues to be a good investment for American taxpayers.  This semiannual report summarizes the significant work performed by the DoD OIG and demonstrates the DoD OIG’s commitment to performing impactful oversight that improves DoD programs and operations.  As discussed in this report, the DoD OIG issued some important oversight products that address the coronavirus disease – 2019 (COVID-19) pandemic response, access to mental health care, acquisition and contracting, health and safety in military family housing, and other important areas of DoD operations.  In total, for fiscal year 2020, the DoD OIG returned more than $7 dollars for every dollar invested in support of its mission to provide independent, relevant, and timely oversight of the DoD. 

 

FY 2021 Top DoD Management Challenges

The Top DoD Management Challenges document identifies the top management and performance challenges impacting the DoD for FY 2021 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.”  This report provides Congress and the DoD’s civilian and military leaders an independent assessment of the management and performance challenges confronting the DoD.   Each chapter discusses a different management challenge and its impact on the DoD, the DoD’s progress in addressing the challenge, and related DoD OIG oversight work.  The challenges are not listed in order of priority, importance, or magnitude.  Rather, each challenge is critical to ensuring that the DoD meets its mission to provide combat ready forces to defend the United States. 

 

FY 2021 Oversight Plan

The Oversight Plan describes the specific oversight projects the DoD OIG intends to conduct in FY 2021, and how those projects are related to the top management challenges facing the DoD.  The Top DoD Management Challenges and Oversight Plan are complimentary documents— the Oversight Plan is organized by management challenge.  Each chapter of the Oversight Plan provides a summary of a particular challenge, followed by an inventory of the ongoing and planned DoD OIG oversight projects that directly align to that challenge. 

 

Lead Inspector General for East Africa and North and West Africa Counterterrorism Operations | Quarterly Report to the United States Congress July 1, 2020 through September 30, 2020

This is the final Lead Inspector General (Lead IG) quarterly report for the East Africa Counterterrorism Operation and the North and West Africa Counterterrorism Operation. However, the DoD, Department of State, and U.S. Agency for International Development Offices of Inspector General will continue to conduct oversight of U.S. Government operations in these regions under their individual statutory authorities.  This report discusses continued attacks in Somalia by al-Shabaab during the quarter.  In addition, this report discusses the U.S. Government’s need to effectively leverage and coordinate the diplomatic, humanitarian, and development capabilities of multiple agencies to address the underlying drivers of extremism, including poor governance, humanitarian crises, and lack of economic opportunity.

 

Lead Inspector General for Operation Freedom’s Sentinel | Quarterly Report to the United States Congress July 1, 2020 through September 30, 2020

This Lead IG quarterly report for Operation Freedom’s Sentinel—the U.S. counterterrorism mission against al Qaeda, Islamic State of Iraq and Syria (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 planned Lead IG and partner agency oversight work related to Operation Freedom’s Sentinel.  The report also discusses the United States’ conditions-based withdrawal of military and non-diplomatic civilian personnel from Afghanistan, one of its commitments under the U.S.-Taliban agreement signed on February 29.  In addition, this report discusses stalled Afghan Peace Negotiations and increased Taliban attacks against Afghan forces, leading to high levels of violence that could threaten the peace agreement.

 

Lead Inspector for General Operation Inherent Resolve | Quarterly Report to the United States Congress July 1, 2020 through September 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 ISIS’ low-level insurgency in Iraq and Syria, operating mainly in rural areas and targeting mainly security forces with small arms and improvised explosive devises.  In addition, this report discusses the political uncertainty in Iraq and Syria as well as Iranian, Russian, and Syrian regime activities that continued to threaten the ability of Coalition and partner forces to maintain counterterrorism pressure against ISIS during the quarter.

 

Audit of the Accuracy of the Improper Payment Estimates Reported for Mechanization of Contract Administration Services

This audit determined that Defense Finance and Accounting Service (DFAS) personnel did not accurately identify and report improper payments from the Mechanization of Contract Administration Services (MOCAS) system for the first two quarters of the improper payment reporting period.  The MOCAS system is an integrated disbursing system that maintains contract management and contract payment information, which pays more complex DoD contracts, including high-dollar contracts, multi-year contracts, contracts with multiple deliverables, contracts with foreign currency, or contracts for foreign military sales.  The MOCAS Post-Pay Review team did not use an adequate post-pay review process to identify improper payments within MOCAS.  Therefore, the MOCAS Post-Pay review team did not identify improper payments for the reporting period; however, DFAS personnel identified 302 improper payments, totaling $136 million of MOCAS transactions for the reporting period in the DFAS Contract Debt System, including $25.8 million incorrectly deemed proper by the MOCAS Post-Pay Review team.  Furthermore, DFAS-Columbus personnel identified 464 payments, totaling $56.5 million, as underpayments, but did not report them as improper payments.  As a result of DFAS personnel’s inaccurate reporting of MOCAS improper payments, the DoD cannot rely on the improper payment estimate produced from MOCAS payments for the first two quarters of the FY 2020 reporting period. 

 

Audit of Naval Aviation Safety Related to Physiological Episodes or Events

This audit determined that the Navy has taken actions to improve safety and reduce physiological events (PEs) for the eight aircraft reviewed—the Goshawk, Legacy Hornets (F/A‑18 Models A‑D), Super Hornets (F/A‑18 Models E and F), and the Growler.  The Navy performed research, training, maintenance, upgrades, and testing with the goal of improving safety and reducing PEs, including implementing 189 recommendations from Root Cause Corrective Action teams, and continued action to implement an additional 250 recommendations.  Although the Navy had not achieved a complete or consistent reduction in PEs for all eight aircraft reviewed, it had achieved consistent year‑to‑year reductions from FYs 2017 through 2020 in the PE rate per 100,000 flight hours for two of the aircraft reviewed.  For five aircraft the Navy achieved a reduction in the PE rate in FY 2020 when compared to FY 2017, and for the remaining aircraft, the Navy had no PEs from FYs 2017 through 2020.

 

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

 

Marine Corps Reserve Official Charged With Conspiracy to Commit Bribery for Facilitating Over $1,900,000 in Defense Contracts

On November 2, 2020, the U.S. Attorney’s Office in New Orleans, Louisiana, charged Erik Martin with conspiracy to commit bribery.  Martin faces up to 5 years imprisonment if convicted, followed by 3 years of supervised release, a $250,000 fine, and a mandatory special assessment of $100.  According to court records, in 2019, Martin was a civilian employee of the United States Marine Corps Marine Forces Reserve Distribution Management Office.  Martin allegedly conspired with an unnamed senior national account manager at an unnamed bus brokerage company based in Atlanta, Georgia, to direct transportation contracts to businesses associated with this co-conspirator in exchange for bribes.  The conspiracy resulted in at least $1.9 million in transportation contracts being corruptly awarded to companies associated with Martin’s co-conspirator, while Martin accepted $250,000 in bribes.  This was a joint investigation with the Defense Criminal Investigative Service (DCIS), the Naval Criminal Investigative Service (NCIS), and the United States Secret Service.

 

Oregon Military Department Employee Sentenced to Federal Prison for Role in Government Contracting Fraud

On November 2, 2020, Dominic Caputo, a former civilian program manager for the Oregon National Guard's Oregon Sustainment Maintenance Site, was sentenced to Federal prison for making false statements in representing the operational status of military equipment and billing for $6 million in repairs that were never done.  Caputo was sentenced to one year and a day in Federal prison and three years of supervised release after pleading guilty to one count of making a false and fraudulent writing.  In 2014, Caputo billed the Army's Communications-Electronics Command (CECOM) more than $675,000 for the repair and rebuilding of diesel engines, despite the work not been performed.  More than 60 engines had already been repaired and billed to CECOM in prior fiscal years.  Caputo directed Government employees to remove and replace original serial numbers and identifying plates from the engines to conceal the duplicate billing.  Caputo also submitted a fraudulent work order to CECOM, falsely indicating that the repair work on an engine had been performed.  This was a joint investigation with DCIS, the Federal Bureau of Investigation (FBI), U.S. Army Criminal Investigation Command (CID), and the General Services Administration Office of Inspector General (OIG).

 

Jury Convicts Doctor of Scheme to Perform Unnecessary Surgeries on Women

On November 9, 2020, a Federal jury in Norfolk, Virginia, convicted Dr. Javaid Perwaiz, an obstetrician-gynecologist, on 52 counts related to his scheme to bill private and Governmental insurers millions of dollars for irreversible hysterectomies and other surgeries and procedures that were not medically necessary for his patients.  In many instances, Perwaiz told his patients that they needed the surgeries to avoid cancer and induced them to agree to the surgeries.  The evidence also demonstrated that Perwaiz falsified records for his obstetric patients so that he could induce their labor early to ensure he would be able to conduct and be reimbursed for the deliveries.  Perwaiz also violated the 30-day waiting period Medicaid requires for elective sterilizations by submitting backdated forms to make it appear as if he had complied with the waiting period.  Finally, Perwaiz billed for thousands of dollars in diagnostic procedures that he falsely claimed he performed at his office.  Perwaiz faces a maximum penalty of 465 years in prison.  He is scheduled for sentencing on March 31, 2021.  This was a joint investigation with DCIS, the FBI, and the Department of Health and Human Services OIG.

 

Taiwan Individual and International Business Organizations Charged with Criminal Conspiracy to Violate Iranian Sanctions

On November 10, 2020, the U.S. Attorney’s Office in Washington, D.C., charged Chin Hua Huang, Taiwanese business organization DES International, and Bruneian business organization Soltech Industry Co., with participating in a criminal conspiracy to violate U.S. export laws and sanctions against Iran.  The criminal complaint alleges that Huang was a sales agent for both DES and Soltech, and both companies procured goods from the U.S. for the benefit of Iranian government entities and business organizations.  Huang used her position as a sales agent to help an Iranian research center obtain U.S. goods without a license from the U.S. Government.  These goods included cybersecurity software and a power amplifier designed for use in electromechanical devices.  Huang attempted to conceal the U.S. origin of the goods by removing serial number stickers with the phrase "Made in the USA" from packages and by causing the cybersecurity software to be downloaded onto a computer outside of Iran.  If convicted, Huang would face up to 5 years in prison and a fine of up to $250,000, while DES and Soltech would each face a fine of up to $500,000.  This was a joint investigation with DCIS, the FBI, Homeland Security Investigations (HSI), and the Department of Commerce.

 

Judge Sends Two to Federal Prison for Stealing and Selling more than $2.4 Million of Sensitive U.S. Military Equipment from Camp Mabry

On November 19, 2020, a U.S. District Judge in Austin, Texas, sentenced Joseph Mora, a former U.S. Property and Fiscal Office Program Analyst, and Cristal Avila, a former Texas Army National Guardsman, to federal prison for stealing and selling over $2.4 million in sensitive military equipment from the Camp Mabry military installation.  The judge sentenced Mora to three years imprisonment and Avila to two years, calling their crime “the ultimate breach of trust.”  In addition, he ordered that both defendants pay over $2.4 million in restitution, forfeit to the Government cash seized from their bank accounts and an automobile, and serve three years of supervised release after completing their prison terms.  According to court records, from 2016 to 2019, Mora and Avila stole large quantities of government property, including scopes, infrared laser aiming devices, and thermal night vision goggles.  They later sold the stolen goods on eBay and elsewhere.  This was a joint investigation with DCIS, CID, HSI, and the U.S. Postal Inspection Service.

 

 

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

 

Reannouncement of the Evaluation of the National Industrial Security Program Contract Classification System

The objective of this reannounced evaluation is to determine whether DoD components are using the National Industrial Security Program Contract Classification System in accordance with guidance from the Under Secretary of Defense for Intelligence and Security.  The evaluation was originally announced on February 3, 2020.

 

Audit of Active Duty Service Member Alcohol Abuse Screening and Access to Care for Treatment

The objective of this audit is to determine whether the Defense Health Agency and the Military Departments are effectively screening and providing adequate access to care for treatment of alcohol abuse for active duty service members according to DoD guidance.

 

Audit of the Department of Defense’s Compliance With the Federal Information Security Modernization Act of 2014

The objective of this audit is to determine the effectiveness of the DoD’s information security policies, procedures, and practices and provide an annual independent evaluation of the DoD’s implemented information security policies, procedures, controls, and practices in accordance with the Federal Information Security Modernization Act of 2014.

 

Audit of U.S. Army Corps of Engineers Compliance With the Digital Accountability and Transparency Act of 2014

The objective of this audit is to determine whether the U.S. Army Corps of Engineers’ fourth quarter, FY 2020 Digital Accountability and Transparency Act submission complied with the Digital Accountability and Transparency Act.  The audit will assess the completeness, timeliness, quality, and accuracy of the fourth quarter, FY 2020 financial and award data submitted for publication on USAspending.gov; and Federal agency implementation and use of the Government-wide financial data standards established by the Office of Management and Budget and the U.S. Treasury.

 

Audit of the Department of Defense’s Compliance With the Digital Accountability and Transparency Act of 2014

The objective of this audit is to determine whether the DoD fourth quarter, FY 2020 Digital Accountability and Transparency Act submission complied with the Digital Accountability and Transparency Act.  The audit will assess the completeness, timeliness, quality, and accuracy of fourth quarter, FY 2020 financial and award data submitted for publication on USAspending.gov; and Federal agency implementation and use of the Government-wide financial data standards established by the Office of Management and Budget and the U.S. Treasury.