Publicly Released: June 29, 2021
Objective
The objective of this audit was to determine whether the Military Departments properly made purchases using the Aviation Into‑Plane Reimbursement (AIR) Card program in accordance with applicable laws and regulations.
Background
The Defense Logistics Agency–Energy (DLA Energy) AIR Card program allows the Military Departments, Defense agencies, and other Federal Departments to procure aviation fuel, fuel related supplies, and approved ground services worldwide at both DLA Energy contract fuel vendor locations and non‑contracted commercial fuel merchants.
Acquisition of aviation fuel is required to be completed at U.S. military bases if available, then from contract vendors, and finally from non‑contract merchants. DLA Energy pays for fuel purchases and the Military Departments reimburse DLA Energy at a standard price per gallon.
The AIR Card System (ACS) is an online tool featuring account profile information, detailed transaction information, the capability to upload transaction or training documentation, and a reporting module that includes both ad hoc reports and standard prepared reports that users can run at any time.
Finding
AIR Card program officials and card users did not comply with applicable regulations when making fuel and non-fuel purchases using the AIR Card and significant improvements are needed to strengthen the program. In FY 2019 the Military Departments spent $866 million using the AIR Card.
We determined that program officials did not identify instances in which the DoD wasted money, or potentially wasted money, when:
- fuel purchases violated mandatory sourcing requirements;
- fuel purchases exceeded the aircraft’s capacity in ACS;
- AIR Card accounts reflected incomplete or inaccurate fuel capacities;
- charges were made for aircraft not matching any known DoD aircraft; and
- charges for non-fuel services, fees, and taxes were unauthorized or potentially unreasonable.
These problems occurred because AIR Card program officials did not conduct oversight of the transactions or correct deficiencies with AIR Card policy, training, or contracts. As a result of AIR Card program control weaknesses, the Military Departments incurred $250.5 million in questioned costs, affecting the amount of funds available for readiness and other support functions. As of September 23, 2020, DLA Energy officials were taking action to collect $2.9 million in erroneous taxes. Unless the DLA Program Management Office and the Military Departments improve AIR Card program controls, the Military Departments may continue to miss opportunities to identify fraud, waste, and abuse.
Recommendations
Among other recommendations, we recommended that the Defense Logistics Agency–Energy Commander:
- strengthen internal controls for the program,
- revise the AIR Card contract,
- perform a comprehensive review of AIR Card transactions to identify and recover erroneous taxes, and
- coordinate with the Military Departments to update AIR Card training.
We recommended that the Departments of the Army, Navy, and Air Force require their Component Program Managers to:
- require monthly reviews of high-risk transactions,
- review all AIR Card accounts for accuracy,
- review the FY 2020 “Fuel Capacity Report” to determine which merchant-billed transactions exceeded aircraft fuel capacity and correct any violations of policy, and
- hold card users, accountable officials, and certifying officers accountable for non‑contract purchases that resulted in the waste of funds.
Management Comments and Our Response
The DLA Energy Commander partially agreed with all recommendations to modify DLA Energy P‑8, “Fuel Card Program.” The Commander stated that DLA Energy does not have the authority to dictate how the Services operate their missions or the tools to be used to monitor the fuel card program. We disagree that the Commander does not have the authority over the Military Services when managing the AIR Card Program. DLA Energy is responsible for the AIR Card contract, policy, management, and oversight of the program including development and maintenance of functional requirements for the card program, so this recommendation is unresolved.
The Commander also partially agreed to discuss additional contractual requirements for the follow-on AIR Card contract to address non‑contract purchases, pricing transparency, upfront tax exemptions, and pricing reasonableness; however, the Commander did not agree to modify the existing contract, which is estimated to end in September 2022. We disagree with the Commander’s decision because this is an opportunity for potential cost savings and to improve internal controls over the remaining 16 months of the current contract term, so these recommendations are unresolved.
The Commander also partially agreed with our recommendation related to the AIR Card training, but stated the Service officials should be responsible. The Commander agreed to update DLA Energy P‑8, “Fuel Card Program” to advise that the Services provide guidance and training related to taxes and authorized users of the AIR Card. We disagree with the Commander because DLA Energy is responsible for the development of policy, procedures, and training for the AIR Card program. Therefore, this recommendation is unresolved.
The Division Chief, Supply, Headquarters Department of the Army, Office of the Deputy Chief of Staff, agreed with all recommendations, but the recommendations are unresolved because the Division Chief did not explain the specific actions the Army will take to address the recommendation.
The Director of the Department of the Navy Consolidated Card Program Management Division, agreed with all recommendations, and provided plans to address specifics for 2 of 5 recommendations, so we consider these recommendations resolved but open. However, 3 of 5 recommendations are unresolved because the Director did not agree to address accountability for wasting funds and to review fuel purchases that exceeded aircraft capacity.
The Assistant Deputy Chief of Staff, Operations, Headquarters Air Force agreed with all recommendations and provided plans to address the specifics of the recommendations, so we consider these recommendations resolved but open.
This report is the result of Proj. No. D2020-D000AX-0034.000.