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DoD OIG Newsletter - November 2020

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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 Cybersecurity Requirements for Department of Defense Weapons Systems in the Operation and Support Phase of the Acquisition Process
This audit determines whether DoD Components initially defined and continuously updated cybersecurity requirements based on known and intelligence-based cybersecurity risks throughout the DoD weapon systems acquisition process.

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 that the DoD OIG, Government Accountability Office, and other DoD oversight organizations issued between July 1, 2019, and June 30, 2020.  It also identifies cybersecurity trends and open DoD cybersecurity-related recommendations issued by the DoD OIG, Government Accountability Office, and other DoD oversight organization.

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 Amendment applies to end items and components for purchases over the simplified acquisition threshold of $250,000. 

Audit of Naval Aviation Safety Related to Physiological Episodes or Events
This audit determines the extent the Navy performed research, training, maintenance, upgrades, and testing on fixed‐wing aircraft to improve safety and reduce the occurrence of physiological events.

Audit of the Accuracy of the Improper Payment Estimates Reported for Mechanization of Contract Administration Services
This audit determines whether the Defense Finance and Accounting Service accurately identified and reported improper payments from payments processed through the Mechanization of Contract Administration Services system.  The Mechanization of Contract Administration Services 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.

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 outbreak of 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 isolate or quarantine suspected infected service members, civilians, and contractors.

Special Report: Weaknesses in the Retrograde Process for Equipment from Afghanistan
This special report highlights weaknesses in the retrograde process for equipment in Afghanistan, identified in previous DoD OIG reports, to assist U.S. military, civilian, and contractor personnel in Afghanistan responsible for the retrograde of military equipment.

Evaluation of the Army’s Tactical Signals Intelligence Payload Program
This evaluation determines whether the Army's development and deployment of the Tactical Signals Intelligence Payload for unmanned aerial systems met the intelligence requirements of the Army's operational units.

 

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

Audit of the Solicitation, Award, and Administration of Washington Headquarters Services Contract and Task Orders for the Office of Small Business Programs
This audit determined that Washington Headquarters Services Acquisition Directorate contracting officials solicited and justified the award of contract HQ0034‑14‑D‑0026, task orders 1 and 3, in support of the Office of Small Business Programs, according to the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement policy.  However, Washington Headquarters Services Acquisition Directorate contracting officials and Office of Small Business Programs officials did not establish clear and complete performance requirements and measurable performance standards.  Additionally, they did not clearly establish security requirements for information technology and contractor personnel before awarding the task orders, nor did they properly administer the task orders.  As a result, the DoD may not have received all services in accordance with contract requirements.  Moreover, the DoD had increased security risks associated with uncleared (unauthorized) contractor personnel and unsecured web portals, and Government contracting officials will not have complete past performance histories of contractor performance before awarding future contracts or exercising option periods.

Audit of the Department of Defense Process for Developing Foreign Military Sales Agreements
This audit determined that although the DoD coordinated foreign partner requirements with the Defense Security Cooperation Agency (DSCA), Military Departments, and other organizations, the Military Department Implementing Agencies exceeded the DSCA’s processing standards for timely development of Foreign Military Sales agreements for 70 cases reviewed.  Military Department Implementing Agencies did not accurately record receipt of foreign partner Letters of Request in the Defense Security Assistance Management System (DSAMS).  In addition, agencies did not comply with DSCA policy on establishing case initialization in DSAMS within 10 days of receipt of the Letter of Request or evaluate the Letter of Request to ensure it met basic Letter of Request requirements within 20 days of receipt.  As a result, the DSAMS data that the DSCA used to measure timelines for developing agreements were inaccurate because the actual processing times for developing agreements exceeded those reflected in DSAMS.  Specifically, the actual processing times for developing FMS agreements exceeded those reflected in DSAMS.  The DSCA needs accurate and well-maintained data to effectively monitor the Implementing Agencies’ performance in developing timely agreements and to improve transparency for all stakeholders.  In addition, the DSCA uses DSAMS data to prepare congressionally mandated reports on the timeliness of Foreign Military Sales case processing, and inaccurate DSAMS data negatively impacts the integrity of those reports.

Evaluation of Department of Defense Medical Treatment Facility Challenges During the Coronavirus Disease-2019 Pandemic
The evaluation determined that respondents at 54 Military Treatment Facilities identified challenges with personnel, supplies, testing capabilities, information technology, guidance, and lines of authority.  The DoD OIG recommended that the Under Secretary of Defense for Personnel and Readiness, in conjunction with the Assistant Secretary of Defense for Health Affairs and Secretaries of the Military Departments, establish a working group to address the challenges encountered by MTF personnel during the COVID-19 pandemic that the DoD OIG identified.  The Under Secretary of Defense for Personnel and Readiness agreed with the recommendation, stating that the Assistant Secretary of Defense for Health Affairs has already established a formal MHS COVID-19 After–Action Review, comprised of representatives from across the MHS, which they would use to address and respond to the DoD OIG report findings.

Audit of Excess Property Issued Through the Department of Defense Law Enforcement Support Program 
This audit determined that the Defense Logistics Agency (DLA) Law Enforcement Support Office (LESO) established controls, such as establishing Memorandums of Agreements with State Coordinators, conducting compliance reviews on each state, and suspending or terminating states or Law Enforcement Agencies (LEAs) for non-compliance.  In addition, the audit determined that the DLA LESO provided excess DoD property to LEAs that enhanced their capabilities to perform law enforcement activities according to Federal law.  “However, 14 of the 15 LEAs that the DoD OIG reviewed obtained controlled and uncontrolled LESO property, such as firearms and tools, that they subsequently were not using to support law enforcement activities.”  As a result of inadequate oversight, the DLA LESO has enabled LEAs to receive more property than they can use, which negatively impacts other Federal and state LEAs and the DoD.  LESO property obtained by LEAs in excess of their requirements could result in other Federal or state LEAs spending funds to procure property that could have been obtained through the LESO Program, or not obtaining the needed property.  In addition, when a LEA obtains LESO property in excess of its law enforcement requirements, it reduces the proceeds the DoD receives from the sale of excess property, which could be used to support DoD requirements.

 

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

Former Blue Bell Creameries President Charged In Connection With 2015 Ice Cream Listeria Contamination
On October 21, 2020, a grand jury in Austin, Texas, charged the former president of ice cream manufacturer Blue Bell Creameries L.P. with wire fraud and conspiracy in connection with an alleged scheme to cover up the company's sales of ice cream contaminated with Listeria, a dangerous pathogen.  Paul Kruse was charged with seven counts of wire fraud and conspiracy to commit wire fraud.  According to the indictment, Texas state officials notified Blue Bell in February 2015 that two ice cream products from one of the company’s factories tested positive for Listeria. Kruse allegedly orchestrated a scheme to deceive Blue Bell customers, including the DoD, by directing employees to remove potentially contaminated products from store freezers without notification about the reason for the withdrawal.  This investigation was conducted by the Defense Criminal Investigative Service (DCIS) and the Food and Drug Administration's Office of Criminal Investigations.

Former Department Head at Walter Reed National Military Medical Center Pleads Guilty to Federal Charges for Accepting Gratuities
On October 20, 2020, in Greenbelt, Maryland, David Laufer pleaded guilty to acceptance of gratuities by a public official.  According to Laufer’s plea agreement, from 2009 until 2019, Laufer worked as the chief of the Prosthetics and Orthotics Department at Walter Reed National Military Medical Center, and used his position to steer Blanket Purchase Agreements to an unnamed company in exchange for illicit monetary benefits.  In addition, Laufer manipulated the Blanket Purchase Agreement award process to undermine this company’s competition, knowing this would result in a greater cost to the Government.  From 2011 to 2019, this scheme resulted in more than $25 million being paid to the company.  This was a joint investigation with DCIS, the Department of Health and Human Services-OIG, the Federal Bureau of Investigation (FBI), the Department of Veterans Affairs-OIG, U.S. Army Criminal Investigation Command (CID), the Office of Personnel Management-OIG, the Defense Contract Audit Agency, and the DoD Cyber Crimes Center Defense Cyber Forensics Laboratory.

Operations Manager Indicted in Scheme to Sell Counterfeit Clothing to the U.S. Military
On October 1, 2020, in Providence, Rhode Island, Terry Roe, an operations manager of a North Dakota-based company that sells clothing to the U.S. military, was indicted by a Federal grand jury for his alleged role in a conspiracy that sold more than $20 million of counterfeit goods to military and Government purchasers.  It is alleged that Roe conspired with others working at his direction to arrange for these counterfeit goods to be sold and delivered to the U.S. military, and other Government and law enforcement agencies.  Roe and his associates falsely represented to the U.S. military and its suppliers that the counterfeit goods were manufactured in the United States as required.  This was a joint investigation involving DCIS, General Services Administration-OIG, U.S. Army CID, U.S. Air Force Office of Special Investigations, Homeland Security Investigations, and Customs and Border Protection.

Suburban Chicago Businessman Charged With Illegally Exporting Arms to Ukraine
On October 9, 2020, in Chicago, Illinois, Glenn Stepul was indicted on Federal charges for illegally exporting gun parts and other defense articles from the United States to a company in Ukraine.  According to the indictment, Stepul, owner of a business that distributed horizontal directional drilling equipment, conspired with Ukrainian residents to violate the Arms Export Control Act by exporting pistol slides and stainless steel gun barrels from the U.S. to Ukraine without obtaining the required authorization from the Department of State.  Stepul and his co-conspirators also conspired to violate the International Emergency Economic Powers Act by exporting rifle scopes and night-vision cameras from the U.S. to Ukraine without authorization from the Department of Commerce.  The charges allege that Stepul commingled and concealed some of the export-controlled items inside shipments of drilling equipment sent to Ukraine.  Stepul also faces additional export-control, smuggling, and false statement charges.  This was a joint investigation involving DCIS, the FBI, HSI, and the Department of Commerce (DOC)-Bureau of Industry and Security.

California Fraudster Sentenced to Three Years in Federal Prison for International Mail and Wire Fraud Conspiracy
On October 14, 2020, in Greenbelt, Maryland, a U.S. District Judge sentenced Saulina Helen Eady to three years in Federal prison, followed by three years of supervised release, for conspiracy to commit mail and wire fraud.  This sentence was in connection with a fraudulent scheme to obtain goods using what appeared to be a Navy e-mail address, but was actually a registered personal e-mail address.  Eady was also ordered to pay restitution in the full amount of one of the victim's losses, which totaled over $640,000.  According to the plea agreement, Eady and her co-conspirator used the fake Navy e-mail address, forms, titles, and addresses to pose as a U.S. Government contracting agent to fraudulently obtain merchandise, including large-screen televisions, specialized communications equipment, cellular telephones, and computers.  Those items were then shipped to Eady and others on the West Coast, who would sell the stolen goods and keep the proceeds.  This was a joint investigation involving DCIS, HSI, FBI, the Naval Criminal Investigative Service, and the DOC Office of Export Enforcement.

 

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

Evaluation of the Office of Net Assessment
The objective of this evaluation is to determine the extent to which the Office of Net Assessment has developed and implemented policies and procedures to conduct its assessment mission in accordance with DoD Directive 5111.11 “Director of Net Assessment.”

Review of DoD’s Implementation of Executive Order 13950, Combating Race and Sex Stereotyping, September 22, 2020
The objective of this review is to assess the DoD’s implementation of Executive Order 13950, “Combating Race and Sex Stereotyping,” September 22, 2020.

Audit of Navy and Marine Corps Actions to Address Corrosion on F/A-18C-G Aircraft
The objective of this audit is to determine whether Navy and Marine Corps officials performed required inspections and maintenance to identify and address corrosion in F/A-18C-G aircraft and implemented, or planned to implement, technical directives to address corrosion on F/A-18C-G aircraft in according to DoD requirements.

Audit of the Department of Defense Exceptional Family Member Program in the U.S. Indo-Pacific Command
The objective of this audit is to determine whether the DoD provided military families with special needs assignment coordination and family support services through the Exceptional Family Member Program at overseas military installations within the U.S. Indo-Pacific Command area of responsibility in accordance with laws and DoD regulations.

Audit of the Department of Defense Coronavirus Aid, Relief, and Economic Security Act Awards to Increase the Defense Industrial Base Manufacturing Capacity
The objective of this audit is to determine whether the DoD awarded Coronavirus Aid, Relief, and Economic Security Act funding to increase the Defense Industrial Base manufacturing capacity in accordance with Federal regulations and Defense Production Act authorities.

Audit of Department of Defense Education Activity Controls Related to the Spread of Coronavirus Disease–2019
The objective of this audit is to determine whether the DoD Education Activity developed and implemented controls in accordance with the Centers for Disease Control and Prevention and DoD guidance related to the spread of coronavirus disease–2019.

Evaluation of Department of Defense Law Enforcement Organizations’ Responses to Active Shooter Incidents
The objective of this evaluation is to determine whether the DoD and its law enforcement organizations established effective active shooter incident policies, plans, and training in accordance with DoD and Military Service guidance.  The review will also determine whether the DoD and its law enforcement organizations have active shooter incident policies, plans, and training that include non-first responder law enforcement organizations, who are authorized to carry weapons on DoD facilities and installations.

Evaluation of the Military Criminal Investigative Organization’s Major Procurement Fraud Program Review
The objective of this evaluation is to determine whether the major procurement fraud investigations conducted by the Army Criminal Investigations Command, the Naval Criminal Investigative Service, and the Air Force Office of Special Investigations comply with DoD, Service, and Military Criminal Investigative Organizations’ policy.

Quality Control Review on the Single Audit of the Institute for Defense Analyses’ Fiscal Year ended September 27, 2019
The objective of this review is to determine whether the audit work was performed according to 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 the Department of Defense’s Implementation of Suicide Prevention Resources for Transitioning Uniformed Service Members
The objective of this evaluation is to determine whether the DoD provided suicide prevention resources for transitioning military service members as required by Executive Order 13822, “Supporting Our Veterans During Their Transition From Uniformed Service to Civilian Life.” 

Evaluation of Department of Defense Voting Assistance Programs for Calendar Year 2020
This project is required by section 1566, title 10, United States Code, 2014, as amended, which requires the DoD IG to report annually to Congress, no later than March 31 each year, about the effectiveness during the preceding calendar year 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.

External Peer Review of the Missile Defense Agency Internal Review Office
The objective of this review is to determine, for the period ending September 30, 2020, whether the quality control system for the Missile Defense Agency Internal Review Office was designed to provide reasonable assurance that the policies and procedures related to the system of audit quality were suitably designed, operating effectively, and complied with in practice.

Evaluation of the Department of Defense’s Transition from a Trusted Foundry Model to a Zero-Trust Model for Procuring Microelectronics
The objective of this evaluation is to determine how the DoD will transition from a “Trusted Foundry” model for procuring microelectronics to a “Zero-Trust” model for procuring microelectronics from the commercial market.  The review will focus on whether the DoD has plans, procedures, processes, standards, and the technology necessary to transition to a “Zero-Trust” model.  The “Zero Trust” model relies on continuous validation for access as a user moves around a network regardless of their physical location and relationship to an organization.

Evaluation of the Department of Defense’s Implementation of the Military Leadership Diversity Commission’s 2011 Report Recommendations and the DoD Diversity and Inclusion Strategic Plan for 2012 to 2017
The objective of this evaluation is to determine the extent the DoD implemented the objectives, strategic actions, and initiatives from the Military Leadership Diversity Commission's 2011 Final Report, “From Representation to Inclusion: Diversity Leadership for the 21st-Century Military,” and the “Department of Defense Diversity and Inclusion Strategic Plan (2012-2017).”