DoD OIG Newsletter January 2018




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 U.S. Army Budget Process for Civilian Pay.  This audit determines whether the Army adequately supported and justified the civilian Full-Time Equivalents (FTEs) and pay requirements contained in the Army’s FY 2017 budget estimate submission

Evaluation of the Pentagon Force Protection Agency.  This evaluation determines whether the Pentagon Force Protection Agency’s (PFPA) law enforcement programs complied with DoD and PFPA policies for closed criminal and administrative case files, and in its weapons and evidence management.


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


Marine Corps Assault Amphibious Vehicle Survivability Upgrade.  This audit determined that the advanced amphibious assault program increased the Assault Amphibious Vehicle’s (AAV) ability to protect occupants from serious injuries during attacks.  However, the survivability upgrade did not meet program requirements regarding costs, the ability of all infantry members to exit the vehicle from the rear, and reliability.  As a result, program officials began initial production on the vehicle before ensuring necessary requirements were sufficiently met.  Moreover, the AAV survivability upgrade may require future modifications and additional funds if the troop commander cannot safely exit the rear of the vehicle, and the program office cannot improve the AAV’s reliability and functionality.   


U.S. Central and U.S. Africa Commands’ Oversight of Counternarcotics Activities.  This audit determined that U.S. Central Command and U.S. Africa Command did not provide effective oversight of counternarcotics activities, which include evidence collection training and border outpost construction, to help partner nations disrupt the transport and transfer of illegal drugs.  The audit found that U.S. Central Command and U.S. Africa Command did not maintain reliable data for the completion status and funding of counternarcotics training, equipping, and construction activities.  


The Army Demilitarization Program.  This audit determined that the Army properly reused operating material and supplies assets, safeguarded assets in the demilitarization stockpile, and appropriately disposed of assets when no longer needed.  However, the Army materially misstated the disposal liability on the fiscal year 2016 Army General Fund Financial Statements and did not provide decision makers adequate information concerning the funding requirements to dispose of the demilitarization stockpile.


Naval Facilities Engineering Command Administration of Selected Energy Savings Performance Contracts.  This audit determined that Naval Facilities Engineering Command (NAVFAC) officials did not properly administer seven Energy Savings Performance Contracts (ESPC) valued at $822.7 million.  Specifically, for two ongoing ESPC projects, NAVFAC officials did not validate the contractor-claimed energy savings and did not perform higher-level reviews of base-level validation reports.  Additionally, Naval Facilities Engineering Command  contracting officials did not tailor quality assurance surveillance plans; describe how to validate contractor-submitted energy-savings reports; and oversee contractor maintenance, repair, and replacement of energy conservation measures.  As a result, the two ongoing performance-phased Energy Savings Performance Contracts projects reviewed include $22 million in questionable contract payments that do not fully comply with the U.S. Code requirements to verify the contractor-claimed savings. 

Army Oversight of Logistics Civil Augmentation Program Government-Furnished Property in Afghanistan.  This audit determined that the Army Sustainment Command did not include at least 26,993 items provided to the Logistics Civil Augmentation Program (LOGCAP) IV contractors in the Army’s accountable records.  As a result, at least $99.9 million in government-furnished property that was provided to LOGCAP contactors in Afghanistan, was at increased risk of being lost, stolen, or unaccounted for without Army detection.  LOGCAP is an Army program using contractors to provide logistical and

sustainment services, such as dining and laundry facilities, housing, construction, transportation, and facilities maintenance, to deployed forces.


U.S. Military-Occupied Facilities Evaluation – Al Udeid Air Base, Qatar.  This evaluation determined that indoor air quality, electrical systems, fire protection systems, and inactive fuel systems at Al Udeid Air Base in Qatar were not being maintained in accordance with DoD health and safety policies and standards.  The evaluation identified a total of 253 deficiencies that could affect the health, safety, and well-being of DoD personnel: 13 related to indoor air quality; 105 related to electrical systems; 49 related to fire protection systems; and 86 related to inactive fuel systems. These deficiencies resulted from moisture intrusion into facilities, the acceptance of new construction that did not comply with DoD health and safety policies and standards, and inadequate facility maintenance


Evaluation of the Evolved Expendable Launch Vehicle Program Quality Management System.  This evaluation determined that the DoD Evolved Expendable Launch Vehicle (EELV) prime contractors (United Launch Alliance (ULA) and Space Exploration Technologies), and the ULA major subcontractor (Aerojet Rocketdyn) did not perform adequate quality assurance management of the EELV program.  Our determination was based on the 181 nonconformities with aerospace standards.  The nonconformities included ungrounded workstations, untested wrist straps, missing Electrostatic Sensitive Devise (ESD) protective covers, non‑ESD approved containers and materials, and uncontrolled humidity levels.  Inadequate ESD controls and a lack of mitigation could result in the premature failure of electronic components in the EELV system.  The nonconformities also included the presence of foreign objects, such as loose bolts, nuts, tape, foil, tie wraps, and animal feces, which could cause damage to EELV hardware.  Inadequate control of foreign object debris significantly increases the risk of damage to EELV hardware, which can lead to costly rework and schedule impact.


DoD’s Response to Patient Safety Elements of the Military Health System Review.  This evaluation determined that the DoD adequately responded to the patient safety elements in the 2014 Military Health System (MHS) Review.  However, some of the MHS improvement actions were still not complete as of October 2017, and the MHS scored worse on staffing in a 2016 survey when compared to results from the same survey done in 2011.  The evaluation also determined that DoD lacks a fatigue risk management policy for MHS staff and that the DoD risked compromising patient safety by not developing an appropriate culture for managing fatigue and other staffing risks.


Progress of U.S. and Coalition Efforts to Train, Advise, and Assist the Afghan Air Force.  This evaluation determined that the U.S. and Coalition efforts to train, advise, and assist the Afghan Air Force have resulted in notable accomplishments in three broad areas: A‑29 aircraft mission performance, night vision capability, and air-ground integration between the Afghan Air Force and Afghan National Army.  However, we determined that the Train, Advise, Assist, Command Air cannot track the Afghan Air Force’s progress, because it did not define the intended end state and related metrics for determining the capabilities and capacities of the Afghan Air Force.  Additionally, without focused development, the Afghan Air Force may lack the desired skills, capabilities, or capacities necessary to independently support the Afghan National Defense and Security Forces and sustain these operations. 


Armed Forces Retirement Home Healthcare Services This evaluation determined that the Armed Forces Retirement Home (AFRH) medical staff generally provided healthcare services that met national healthcare standards and the quality-of-life needs of its residents.  However, AFRH medical administrators did not effectively implement all facility-level controls to identify deficiencies in healthcare practices, such as documenting medication and treatment administration; documenting infection-control rounds; and recording temperatures for refrigerators where resident medications were stored.  AFRH Wellness Centers did not have adequate accountability of controlled substances when transported, handled, and stored by Wellness Center personnel, nor did they have controls to ensure that access to medication-storage areas was limited to authorized personnel.     


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


Florida Pharmacy and Owner Agreed to Pay $170,000 to Resolve Allegations of Fraudulent Claims to TRICARE for Compounded Medications.  On November 30, 2017, Express Plus Pharmacy, LLC, and its owner, Antonio Primo, agreed to pay $170,000 to resolve allegations that they violated the False Claims Act by submitting fraudulent claims to TRICARE for compounded medications such as pain creams.  Allegedly, from January 2015 through May 2015, Express Plus Pharmacy knowingly submitted claims to TRICARE for compounded medications that were not reimbursable because they were not issued pursuant to valid physician-patient relationships.  Specifically, the prescriptions were issued after brief phone calls with patients that violated applicable law on telemedicine, were medically unnecessary, or were tainted by kickbacks to marketers.


Explo Co-Owner Pleaded Guilty to Conspiracy and False Statement Charges. On December 14, 2017, David Alan Smith, the co-owner of Explo Systems Inc., pleaded guilty to criminal conspiracy and false statements concerning the storage of munitions at Camp Minden that led to an explosion.  Explo’s business operations involve the demilitarization of military munitions and the subsequent resale of the recovered explosive materials for mining operations.  On March 24, 2010, the Army awarded Explo a $2.9 million contract to dispose of 450,000 155 mm artillery-propelling charges.  On March 6, 2012, the Army amended the contract to dispose of 1,350,000 charges for $8.6 million.  The contract required Explo to properly store and dispose of the demilitarized charges, and to document sales by completing, with the purchaser, an End User Certificate (EUC) to certify compliance with Federal laws. Smith conspired with others to submit false EUCs to the Army to obtain money to which he was not entitled, and to defraud the United States by impeding Federal, state, and local authorities from monitoring the operations at Explo’s Camp Minden facility.  On October 15, 2012, an explosion occurred at a munitions storage igloo on Camp Minden.  The igloo contained 124,190 pounds of smokeless powder, which ignited a nearby box van trailer containing 42,240 pounds of demilitarized charges.  This was a joint investigation with the Federal Bureau of Investigation, the U.S. Army Criminal Investigation Command, the Environmental Protection Agency Criminal Investigation Division, and the Louisiana State Police-Emergency Service Unit.


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


Audit of the Military Sealift Command’s Maintenance of prepositioning Ships.  The objective of this audit is to determine whether the Military Sealift Command ensured that prepositioning ships received required maintenance.

Audit of the Philippines Operations Support Contract.  The objective of this audit is to determine whether U.S. Pacific Command and subordinate commands developed, reviewed, and validated requirements for the Philippines-Operations Support Contract to ensure the adequate provision of services, such as commercial telephones, security, airfield facilities, utilities, custodial, and motor pool operations.


Audit of Follow-up of Delinquent Medical Service Account Audits.  The objective of this audit is to determine whether DoD agencies implemented actions to correct problems identified in prior DoD OIG reports related to the collection of outstanding balances of medical service accounts.