Publicly Released: April 1, 2022
The objective of this audit was to determine whether the process for activating Army National Guard (ARNG) and Air National Guard (ANG) members in response to the coronavirus disease–2019 (COVID‑19) pandemic ensured that entitlements were accurately identified and processed.
The Military Services of the Armed Forces include the Army, Marine Corps, Navy, Air Force, Space Force, and Coast Guard. The Military Services, except the Space Force, have Active and Reserve Components. In total, there are seven Reserve Components, including the Army Reserve, ARNG, Air Force Reserve, ANG, Navy Reserve, Marine Corps Reserve, and Coast Guard Reserve. The Coast Guard Reserve is a Service of the Department of Homeland Security and the other six Reserve Components of the Armed Forces are DoD Components. The Reserve Components provide trained units and individual members that may be ordered to active duty in the Armed Forces in times of war and national emergencies. From the six DoD Reserve Components, we selected the ARNG and the ANG for our review, as they represent the Reserve Components with the largest numbers of Reserve Component members supporting COVID‑19 missions. Members of the ARNG and ANG are part of the Reserve Component forces supporting states, U.S. territories, the District of Columbia (the District), or the United States when activated. The National Guard Bureau (NGB) ensures that ARNG and ANG members are accessible, capable, and ready to protect the United States and territories. The NGB issues directives, regulations, and publications for the ARNG and ANG consistent with approved policies of the Army and Air Force.
COVID‑19 is an infectious disease that can cause a wide spectrum of symptoms. On March 11, 2020, the World Health Organization declared the COVID‑19 outbreak a pandemic. A pandemic is a global outbreak of a disease that can infect people and spread between people sustainably. On March 13, 2020, the President of the United States declared the COVID‑19 outbreak an emergency. As a result, on March 22, 2020, the President issued a memorandum authorizing Federal funding to activate ARNG and ANG members to support COVID‑19 missions. In addition, on March 27, 2020, the President issued an Executive Order authorizing the activation of members of all Reserve Components to support COVID‑19 relief efforts.
ARNG and ANG members receive certain entitlements when activated. Entitlements are benefits available to Reserve Component members meeting eligibility requirements. Specifically, entitlements consist of basic pay, special and incentive pay, and allowances. An allowance is a type of entitlement that is paid to Reserve Component members for specific needs and added expenses, such as food, housing, or enforced family separation, under certain conditions. For our review, we selected the three most commonly paid allowances to members supporting COVID‑19 missions: (1) Basic Allowance for Housing (BAH), (2) Family Separation Allowance (FSA), and (3) Basic Allowance for Subsistence (BAS). The ARNG and ANG identify and process entitlements based on guidance and requirements noted in the DoD Financial Management Regulation (FMR) and Service‑specific guidance. We reviewed the ARNG and ANG activation processes and determined if the processes included steps to ensure that members received correct entitlements.
Although ARNG and ANG officials used appropriate authorities to activate Reserve Component members in support of COVID‑19 missions, the activation process did not include steps to consistently validate and accurately process BAH, FSA, and BAS entitlements. We selected a sample of 66 ARNG and ANG members and reviewed associated orders and supporting documents. We found that officials did not consistently validate the primary residence used to determine the amount of BAH entitlement for all 64 eligible members in our sample. In addition, for the members in our sample, the ARNG or ANG did not:
- validate the dependency status used to determine the amount of BAH entitlements for 34 Reserve Component members;
- validate FSA eligibility for 12 Reserve Component members;
- process FSA payments in a timely manner for 2 Reserve Component members; or
- confirm the accuracy of BAH, FSA, and BAS transactions manually entered into the payment system for 9 Reserve Component members.
ARNG and ANG officials did not validate Reserve Component members’ information that determined the BAH rate and FSA eligibility because the NGB did not establish policies requiring officials to confirm the correct BAH rate and eligibility to receive FSA entitlements. In addition, the NGB did not develop communication and dissemination methods for ARNG and ANG officials to provide all states, territories, and the District with applicable entitlement processing policies. Finally, the ARNG and ANG did not implement sufficient controls to verify that BAH, FSA, and BAS entitlements were properly paid, and ANG officials did not comply with guidance for timely processing of FSA payments. Without clear activation processing guidance and controls, ARNG and ANG members supporting COVID‑19 missions are not receiving accurate and timely payments for BAH, FSA, and BAS entitlements. Specifically, the ARNG and ANG did not accurately pay 21 of 66 Reserve Component members; 15 were underpaid a total of $4,817.92, and 6 were overpaid a total of $1,536.05 for the 3‑month period we reviewed. Since ARNG and ANG officials used the same procedures and policies to confirm and pay Reserve Component members BAH and FSA entitlements for other active duty missions, the issues we identified could be systemic, affecting current and future Reserve Component members. Although we reviewed activation documentation for only 66 ARNG and ANG members, any of the 44,116 members in our audit universe, or members currently supporting other missions are at increased risk of not receiving accurate and timely payments for BAH, FSA, and BAS entitlements due to lack of guidance, controls, and oversight.
Paying ARNG and ANG members accurately and in a timely manner may protect members from unexpected financial hardships and prevent ARNG and ANG officials from performing additional steps to correct overpayments or underpayments. Furthermore, inadequate BAH primary residence validation procedures could place the ARNG and ANG at risk for potential fraud when establishing members’ BAH rates.
To clarify Reserve Component members’ FSA entitlements eligibility, we recommend that the Under Secretary of Defense (Comptroller)/Chief Financial Officer, in coordination with the Under Secretary of Defense for Personnel and Readiness, update the DoD FMR, volume 7A, chapter 27 to provide definitions and clarifications for the FSA entitlement as it relates to Reserve Component members.
We also recommend that the NGB Chief, in coordination with the Director of the ARNG and the Director of the ANG, develop and implement policies and procedures to:
- require the ARNG and ANG to complete a review of proof of residency documentation when the member’s primary residency is established or changed for the BAH entitlement;
- outline the process and frequency of recertification for BAH entitlement that ARNG and ANG officials use to verify and fully document members’ dependency status;
- require ARNG and ANG officials to review and document the status of a military member married to another military member and identify which member will claim any applicable dependents;
- specify the methods for confirming eligibility and paying FSA for ARNG and ANG members; and
- establish formal dissemination and communication procedures for policies related to entitlements provided to the ARNG and ANG.
Finally, we recommend that the NGB Chief, in coordination with the Director of the ARNG and the Director of the ANG, develop and implement additional internal control procedures for the review of transactions manually submitted by the ARNG and ANG to the payment system prior to payment to ensure the completeness and accuracy of transactions.
Management Comments and Our Response
The Acting Deputy Chief Financial Officer, responding for the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, agreed with our recommendation. The Acting Deputy Chief Financial Officer stated that the DoD FMR, volume 7A, chapter 27, will be updated to incorporate language that defines and clarifies the FSA entitlement as it relates to Reserve Component members. Comments from the Acting Deputy Chief Financial Officer addressed the specifics of the recommendation; therefore, the recommendation is resolved but remains open. We will close this recommendation once we verify that the updates to the DoD FMR, volume 7A, chapter 27 have been completed and determine that the updates fully address the recommendation.
The NGB Director of Staff, responding for the NGB Chief, agreed with the recommendations. Specifically, the Director stated that the recommendations were coordinated with the appropriate functional owners within ARNG and ANG offices. While the Director responded in agreement to each recommendation, the responses did not indicate whether the NGB would develop and implement the recommended NGB‑level policies and procedures to consistently validate and accurately process BAH, FSA, and BAS entitlements. Therefore, the recommendations are unresolved. We request that the NGB Chief provide information regarding the actions the NGB intends to take to address the recommendations.
This report is the result of Project No. D2020-D000RG-0116.000.