DoD OIG Newsletter - March 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 Security Controls Over the Department of Defense’s Global Command and Control System–Joint Information Technology System 

This audit determines whether DoD Combatant Commands and Military Services have implemented effective physical and logical security controls for the Global Command and Control System-Joint (GCCS-J) to protect DoD data and information technology assets.  The GCCS-J is a system that provides DoD military commanders secure and reliable information on the operational environment, including air, land, maritime, space, and cyberspace.  Additionally, the GCCS-J allows users to plan movement of troops and equipment across theaters of operation and build operations for enhanced combat situational awareness.  This report is classified.


Followup Audit on Corrective Actions Taken by Department of Defense Components in Response to Department of Defense Cyber Red Team-Identified Vulnerabilities and Additional Challenges Facing Department of Defense Cyber Red Team Missions 

This audit determines whether DoD Cyber Red Teams and DoD Components took actions to correct problems identified in a prior DoD OIG report, Report No. DODIG-2013-035, “Better Reporting and Certification Processes Can Improve Red Teams’ Effectiveness,” December 21, 2012.  The audit also determines whether DoD Cyber Red Teams supported operational testing and combatant command exercises to identify network vulnerabilities, threats, and other security weaknesses, and whether corrective actions were taken to address DoD Cyber Red Team findings.  DoD Cyber Red Teams are independent, multidisciplinary groups of personnel certified, accredited, and authorized to identify vulnerabilities and weaknesses affecting DoD systems, networks, and missions by portraying the tactics, techniques, and procedures of adversaries.  This report is classified.


Summary of Reports Issued and Testimonies Made Regarding Department of Defense Cybersecurity From July 1, 2018, Through June 30, 2019 

This audit summarizes unclassified and classified cybersecurity reports and testimonies from the DoD OIG, the DoD oversight community, and the Government Accountability Office 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 the open DoD OIG recommendations related to DoD cybersecurity.


Audit of the Army's Oversight of the Base Operations Support Services Contract for Camp Taji, Iraq

This audit determines whether Combined Joint Task Force–Operation Inherent Resolve and the Army ensured that a contractor provided Camp Taji, Iraq, base life support services according to contract requirements.  The Camp Taji base life support services contract includes services such as base security, billeting, lodging, meals, potable water, emergency response, fire response and prevention, hazardous material storage, and electric power generation.   


Audit of the Department of Defense’s Ground Transportation and Secure Hold of Arms, Ammunition, and Explosives in the United States 

This audit determines whether the DoD protected arms, ammunition, and explosives transported in the United States by commercial ground carriers in accordance with the Defense Transportation Regulation.  To transport arms, ammunition, and explosives in the United States, the DoD relies on commercial trucking, rail, and small package couriers. 


Evaluation of DoD Voting Assistance Programs for Calendar Year 2019
This evaluation, which is statutorily required, reviews the effectiveness of voting assistance programs, and the level of compliance during the preceding calendar year with the voting assistance programs of the Army, Navy, Air Force, and Marine Corps.  The evaluation also reviews the voting assistance programs of the Office of the Secretary of Defense and the Joint Chiefs of Staff. 


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


Audit of Contract Costs for Hurricane Recovery Efforts at Navy Installations 

This audit determined that contracting officials with Naval Facilities Engineering Command Southeast (NAVFAC SE) did not control costs when awarding and administering the Global Contingency Construction-Multiple Award Contract (GCC-MAC) task order issued to recover Naval Air Station Key West after Hurricane Irma.  The audit also determined that NAVFAC Mid-Atlantic (MIDLANT) contracting officials did not control costs when evaluating the prime contractor’s proposal and negotiating task order modifications.  As a result, NAVFAC SE may have incorrectly paid profit to the prime contractor.  Without a cost proposal or documentation of NAVFAC SE’s determination of fair and reasonable prices for the initial $9.3 million of the $35.9 million hurricane recovery, the DoD OIG could not verify that NAVFAC SE contracting officials obtained fair and reasonable prices.  Furthermore, the procedures that NAVFAC SE used may have created an illegal cost-plus-percentage-of-cost contracting system that did not incentivize the contractor to complete the contract efficiently or effectively.  Finally, NAVFAC MIDLANT contracting officials paid excessive prices, which caused the Government to pay the prime contractor excess profit.


Audit of the Department of Defense’s Accountability of Counter-Islamic State of Iraq and Syria Train and Equip Fund Equipment Designated for Syria 

This audit determined that Special Operations Joint Task Force–Operation Inherent Resolve (SOJTF-OIR) did not account for the budgeted $715.8 million of Counter-Islamic State of Iraq and Syria Train and Equip Fund equipment designated for Syria (CTEF-S) for FYs 2017 and 2018 from procurement through divestment in accordance with applicable guidance.  Furthermore, SOJTF-OIR and 1st Theater Sustainment Command personnel left thousands of CTEF-S weapons and sensitive equipment items vulnerable to loss or theft.  Without accurate accountability records, such as inventory records and hand receipts, SOJTF-OIR personnel could order equipment that SOJTF-OIR already has in stock, risking unnecessary spending of CTEF-S funds and further overcrowding the Kuwait warehouse, resulting in equipment being stored outside.  Furthermore, without consistent inventories and proper security for CTEF-S equipment, 1st Theater Sustainment Command could not determine whether items were lost or stolen, which could delay the initiation of an investigation.


Audit of Department of Defense Service-Disabled Veteran-Owned Small Business Contract Awards 

This audit determined that DoD contracting activities awarded service-disabled veteran-owned small business (SDVOSB) contracts to ineligible contractors and did not implement procedures to ensure compliance with SDVOSB subcontracting requirements after awarding the contract.  DoD contracting personnel also did not verify compliance with the SDVOSB subcontracting requirements for 6 contracts awarded to 3 contractors, valued at $164.7 million.  As a result, the DoD OIG determined that the DoD awarded $876.8 million in contracts to contractors that are not eligible for the SDVOSB set-aside program; therefore, the DoD OIG considers the $876.8 million as questioned costs.  Without additional controls in place, DoD contracting activities will continue to award SDVOSB contracts to ineligible contractors and DoD agencies may be overstating the amounts reported for SDVOSB participation.


Evaluation of Combined Joint Task Force - Operation Inherent Resolve's Military Information Support Operation

This evaluation determined that U.S. forces in Iraq planned and executed military information support operations in accordance with joint doctrine and coordinated these operations with Coalition forces, the government of Iraq, and the U.S. Embassy–Baghdad.  However, after the physical defeat of the Islamic State of Iraq and Syria caliphate in May 2019, U.S. forces and the U.S. Embassy–Baghdad did not initiate the required coordination to transition messaging responsibility from the DoD to the U.S. Embassy–Baghdad.  As a result, without a coordinated transition of these messaging efforts, there is an increased risk that the United States will not be able to influence attitudes, beliefs, and behaviors in the Iraqi information environment following Operation Inherent Resolve.  Additionally, the lack of coordination between the DoD’s and the Department of State’s information activities following Operation Inherent Resolve could produce inconsistent U.S. messaging in Iraq. 


Evaluation of DoD Law Enforcement Organization Submissions of Criminal History Information to the Federal Bureau of Investigation

This evaluation determined that, with some exceptions, DoD law enforcement organizations made the required submissions of fingerprints, final disposition reports, DNA samples, sex offender information, and Gun Control Act information to the Federal Bureau of Investigation for entry into its criminal history databases.  The evaluation also determined that, with the exception of the Navy Security Forces, DoD law enforcement organizations implemented new policies, processes, training, and management oversight procedures, such as supervisory reviews, and DoD OIG compliance inspections, to address previous deficiencies and ensure that the DoD collects and submits criminal history information to the applicable Federal Bureau of Investigation databases as required. 


Evaluation of Weather Support Capabilities for the MQ-9 Reaper

This evaluation determined that between FY 2010 and FY 2016, the Air Force spent $17.7 million in overseas contingency operations funding to develop enhanced weather support capabilities for the MQ-9 Reaper unmanned aircraft system.  Weather support capabilities provide near-real time weather conditions and observations, which can enhance forecasting, pilot situational awareness, mission planning and execution, and command and control of the unmanned aircraft system.  This evaluation determined that the Air Force never validated the requirement for the capabilities, which were later determined to not be needed, and the capabilities were never delivered.  This occurred because the Air Force did not follow the normal acquisition process to develop and deliver this capability.  Instead, the Air Force used Overseas Contingency Operations (OCO) funds to develop a requirement that should have been funded with research and development, test and evaluation funds.  In addition, because this development effort was funded with OCO funding, when OCO funding levels were reduced, the Air Force stopped funding the development effort.   As a result, the Air Force wasted $17.7 million in OCO funding developing a capability that was not needed and never delivered.


Lead Inspector General for East Africa and North and West Africa Counterterrorism Operations Report to the United States Congress, October 1, 2019 through December 31, 2019

This Lead 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 is the first unclassified Lead IG quarterly report for counterterrorism operations in East, North and West Africa.  This report discusses the persistent terrorist threat in Africa, the threat of al Shabaab to export terrorism beyond the region and to the United States, and the growing security challenges presented by Russia and China on the continent.


Lead Inspector General for Operation Freedom’s Sentinel Quarterly Report to the United States Congress, October 1, 2019 through December 31, 2019

This Lead IG 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 peace negotiations with the Taliban, and  pressure from the coalition and Afghan forces on ISIS-K, Russia’s actions affecting Operation Freedom’s Sentinel.


Lead Inspector General for Operation Pacific Eagle - Philippines Quarterly Report to the United States Congress, October 1, 2019 through December 31, 2019

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 terrorist attacks carried out by the Islamic State of Iraq and Syria-East Asia against civilians and combat engagement with the Armed Forces of the Philippines resulting in the displacement of nearly 50,000 civilians.


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


 Texas Man Sentenced in South Florida to Ten Years in Federal Prison for his Role in Tricare and Medicare Fraud Scheme  

On February 3, 2020, Senthil Kumar Ramamurthy, of Texas, was sentenced to 121 months confinement for his role in a scheme that defrauded Tricare and Medicare out of more than $9.6 million.  Ramamurthy and his co-conspirators tricked beneficiaries into having the Federal health care programs pay for medically unnecessary compounded prescription medicines and genetic cancer tests.  Starting in 2014, Ramamurthy and his co-conspirators targeted Tricare for about 10 months by deceiving their way onto U.S. military bases and convincing Tricare beneficiaries to signup for compounded prescription medications that the beneficiaries did not need.  To encourage beneficiaries to signup, Ramamurthy and his co-conspirators falsely told the beneficiaries that the pharmacies would custom-design their medications or that the medications were free.  In fact, the medications were not custom-designed and the patients had co-payments.  Compounding pharmacies paid Ramamurthy and his co-conspirators millions of dollars in kickbacks in exchange for sending the pharmacies expensive prescription orders.  In mid-2015, Tricare scaled back its reimbursements for compounded medications so Ramamurthy and his co-conspirators turned to Medicare.  They paid doctors to refer Medicare beneficiaries to a lab in Georgia for cancer genetic screening testing, even though the doctors had never examined the beneficiaries.  As with the compounded medications, the cancer genetic screening tests were not medically necessary.  Additional co-conspirators of Ramamurthy have pleaded guilty to Federal criminal charges arising out of the fraud scheme and are scheduled to be sentenced.  This is a joint investigation with the Defense Criminal Investigative Service (DCIS) and the Health and Human Services Office of Inspector General (HHS-OIG).


Insulation Contracting Firm and Co-Owner Plead Guilty to Antitrust and Fraud Charges

On February 3, 2020, Langan Insulation LLC and its co-owner pleaded guilty in Bridgeport, Connecticut, for their roles in schemes to rig bids in violation of the antitrust laws and engage in criminal fraud on insulation contracts, bringing the total to five convictions in this ongoing investigation.  From October 2011 until March 2018, Langan Insulation LLC, located in North Haven, Connecticut, and Thomas F. Langan, of East Haven, Connecticut, conspired with other insulation contractors to rig bids and engage in fraud on contracts for installing insulation around pipes and ducts on construction projects at universities, hospitals, and other public and private entities in Connecticut.  The conspirators discussed prices and agreed on bids that inflated prices to their customers by approximately 10 percent.  In order to conceal their actions, the conspirators perpetrated the bid-rigging and fraud schemes using phones for which the registration masked the identity of the users and an encrypted disappearing messaging app.  This is an ongoing investigation with DCIS and the Federal Bureau of Investigation (FBI).


Former Employee of Walter Reed National Military Medical Center Facing Federal Indictment in Maryland

On February 5, 2020, David Laufer, of Pittsburgh, Pennsylvania, formerly of Bethesda, Maryland, had his initial appearance following an indictment on five counts of making false statements.  Laufer worked as the Chief of the Prosthetics and Orthotics Department at Walter Reed National Military Medical Center (Walter Reed), the largest joint military medical center in the United States.  Walter Reed is located in Bethesda and provides medical services, including orthotic and prosthetic services to U.S. service members and their dependents, including wounded soldiers.  Laufer’s job required him to complete annual Confidential Financial Disclosure forms which required him to report: all sources of outside income greater than $200; any business outside the U.S. Government in which Laufer or his spouse was an employee or consultant, whether or not compensated; any agreements or arrangements concerning past, current, and future employment; and travel-related reimbursement or other gifts totaling more than $350 from any one source during the reporting period.  Laufer allegedly failed to report financial benefits he received from an unidentified company (Company B), located in Germantown, Maryland and owned, operated, and controlled by an unidentified person (Person B).  Company B provided prosthetics and orthotics materials to Walter Reed in return for payments from the government.  Allegedly, Person B regularly interacted with Laufer about Company B’s business with Walter Reed.  Further, Laufer falsely told federal agents that he had never received money, gifts, or sporting event tickets from any vendor doing business before the Prosthetics and Orthotics Department when in fact Laufer had received financial benefits, including travel and sporting event tickets, from Person B and Company B.  This case is being investigated by DCIS, HHS-OIG, the Veterans Administration OIG, the U.S. Army Criminal Investigative Command (Army-CID), and the Office of Personnel Management OIG.


Government Contractor Sentenced to 57 Months in Prison for $3.7 Million Procurement Fraud Scheme

On February 10, 2020, a former Government contractor was sentenced to 57 months confinement for his role in carrying out a $3.7 million scheme to defraud at least 35 subcontractors located across the United States.  Chester L. Neal Jr., of Bourbon Oak, Missouri, was sentenced, following his guilty plea on August 19, 2019, to one count of mail fraud.  As part of his guilty plea, Neal admitted he established and controlled several companies through which he bid on and won at least 105 Government contracts to provide goods and services to Federal agencies including the Department of Interior, the Army and the Air Force.  The contracts required Neal to purchase and transport rock, gravel, and other raw materials to military bases and national parks.  After winning these contracts, Neal fraudulently induced subcontractors to perform the required work.  But when Neal was paid by the Government for his subcontractors’ work, he did not pay his subcontractors.  Instead, Neal kept the money and spent it at places like casinos, nightclubs, restaurants and hotels.  In total, between July 2008 and December 2017, Neal defrauded his subcontractors out of approximately $3.7 million.  This case was investigated by DCIS, Army-CID, the Air Force Office of Special Investigations, the Department of Interior OIG, and the FBI.


California Fraudster Sentenced to Four Years in Federal Prison for International Mail and Wire Fraud Conspiracy

On February 25, 2020, Saul Eady, of Los Angeles, California, was sentenced to four years confinement for conspiracy to commit mail and wire fraud, in connection with a scheme to fraudulently obtain goods using what appeared to be a military e-mail address, but was actually a registered Yahoo e-mail address.  Eady was also ordered to forfeit and to pay restitution in the full amount of the victim’s losses, which was $640,172.  According to Eady’s earlier guilty plea, a co-conspirator established and used what was purported to be a Navy e-mail address, authentic forms, titles, addresses and other means to pose as U.S. Government contracting agents and fraudulently obtain merchandise, including large-screen televisions, specialized communications equipment, cellular telephones, and computers.  Much of the fraud scheme was conducted from outside the United States, including from Nigeria.  Three victim companies—one that provided wireless voice and data services that was headquartered in Washington State; one that was a wholesale audio-video distributor and manufacturer’s representative located in Virginia; and a defense contractor that designed, manufactured, and marketed communications equipment that was headquartered in Maryland—shipped merchandise, without prior payment, to Eady’s East Coast co-conspirators.  Those individuals then shipped the stolen items to Eady and others on the West Coast.  Eady admitted that from November 2016 until February 2017, he assisted in receiving, transporting, and storing the stolen televisions by renting trucks and transporting the stolen televisions to at least three storage locations in the Los Angeles, California area, where Eady and other had rented storage units.  Following the sale of the televisions, Eady was paid in cash for receiving and moving the televisions.  According to Eady’s plea agreement, the organization obtained approximately 2,109 televisions over the course of the scheme, and the number of televisions and loss attributable to Eady is 493 televisions worth at least $1,181,290.80.  Of the nine defendants charged in this case, six have pleaded guilty to their roles in the fraud scheme, including Eady.  This case is being investigated by DCIS, the Department of Homeland Security, Homeland Security Investigations, and the Department of Commerce’s Office of Export Enforcement with assistance from the FBI and the Naval Criminal Investigative Service.



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


Joint Audit of the Department of Defense and Department of Veterans Affairs Efforts to Achieve Electronic Health Record Interoperability 

The objective of this joint audit is to determine the extent to which the actions taken by the DoD and the Department of Veterans Affairs in acquiring and implementing a common, commercial electronic health record system and supporting architecture will achieve interoperability among the Departments and with external health care providers.


Evaluation of U.S. Central Command's Defense of Critical Assets Within its Area of Responsibility Against Missiles and Unmanned Aircraft Systems

The objective of this evaluation is to determine whether U.S. Central Command is prepared to defend critical assets, such as specific capabilities and facilities within its area of responsibility, against missile and unmanned aircraft system threats.


Evaluation of the National Industrial Security Program Contract Classification System

The objective of this 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 whether the Defense Counterintelligence and Security Agency is monitoring contractors' safeguarding of DoD classified information. The National Industrial Security Program Contract Classification System is a centralized repository to collect the security requirements and supporting information for classified contracts.


Evaluation of the Department of Defense's Oversight of Privatized Military Housing Contracts

The objective of this evaluation is to determine whether the DoD is providing effective oversight of privatized military housing contracts.  This evaluation is in response to the National Defense Authorization Act for Fiscal Year 2020, section 3044, “Inspector General Review of Department of Defense Oversight of Privatized Military Housing,” December 20, 2019.  The evaluation will assess the oversight and surveillance of privatized military housing contracts by the DoD contracting officers’ representatives in the military services. 


Audit of the Air Force Remotely Piloted Aircraft Operations and Maintenance Contract 

The objective of this audit is to determine whether the Air Force's oversight and management of the Remotely Piloted Aircraft Operations and Maintenance contract ensured that the contractor complied with contractually required maintenance procedures and performance requirements.  The Air Combat Command Acquisition Management and Integration Center awarded the 7-year contract, valued at $961 million, to URS Federal Services, Inc.  The contract is intended to provide operations and maintenance support to sustain the combat and training capability of the MQ-1 Predator, MQ-9 Reaper, and RQ-4 Global Hawk, as well as operator aircrew support for each aircraft at worldwide locations.