Report | May 17, 2022

Audit of North American Aerospace Defense Command and U.S. Northern Command Use of Coronavirus Aid, Relief, and Economic Security Act Funding (DODIG-2022-098)

Audit

Publicly Released: May 19, 2022

 

Objective

The objective of this audit was to determine whether North American Aerospace Defense Command (NORAD) and U.S. Northern Command (USNORTHCOM) officials used Coronavirus Aid, Relief, and Economic Security (CARES) Act funding to prevent, prepare for, and respond to the coronavirus disease–2019 (COVID‑19) pandemic.

We conducted this audit in response to an allegation made to the DoD Hotline regarding the improper use of CARES Act funds. Specifically, the complainant alleged that NORAD and USNORTHCOM officials used CARES Act funds for information technology projects that were unrelated to the COVID‑19 pandemic response.

 

Background

On March 27, 2020, the President signed the CARES Act that provided the DoD with $10.5 billion in supplemental funding for the DoD’s COVID‑19 pandemic response. The CARES Act did not provide supplemental funding directly to NORAD and USNORTHCOM; however, NORAD and USNORTHCOM received CARES Act funding from the Air Force between May 2020 and September 2020.

CARES Act guidance—issued by the Office of Management and Budget, Office of the Under Secretary of Defense (Comptroller), and Department of the Air Force—requires that Air Force, and NORAD and USNORTHCOM officials use CARES Act funds to prevent, prepare for, and respond to the COVID‑19 pandemic. According to the Office of Management and Budget, and Office of the Under Secretary of Defense (Comptroller) guidance, NORAD and USNORTHCOM officials must maintain evidence for goods and services acquired in response to COVID‑19. The guidance further states that adequate evidence must include clear and accurate data of sufficient quality that articulates the need for the transaction. According to the Air Force guidance, Air Force officials will validate NORAD and USNORTHCOM expenses prior to reimbursement.

We selected and reviewed a nonstatistical sample of 25 COVID‑19 transactions, totaling $61.0 million, from a population of 497 transactions, valued at $66.4 million. For the selected transactions, NORAD and USNORTHCOM officials used CARES Act funds to increase information technology equipment and support, and DoD operations.

 

Finding

For the 25 COVID‑19 transactions we reviewed, NORAD and USNORTHCOM officials used $34.4 million of $61.0 million in CARES Act funds to prevent, prepare for, and respond to the COVID‑19 pandemic. However, NORAD and USNORTHCOM officials did not use $19.2 million for the COVID‑19 pandemic response. In addition, NORAD and USNORTHCOM officials did not maintain adequate evidence to support whether they used $7.4 million for the COVID‑19 pandemic response. Furthermore, we substantiated the DoD Hotline allegation that NORAD and USNORTHCOM officials did not use all CARES Act funds for the COVID‑19 pandemic response.

The improper use of CARES Act funds and lack of adequate evidence occurred because NORAD and USNORTHCOM officials did not develop effective internal controls for CARES Act funding to ensure that they used those funds for COVID‑19 efforts. Instead, NORAD and USNORTHCOM officials followed their existing process for unfunded requirements, which did not require adequate evidence to support that goods and services acquired were to prevent, prepare for, and respond to the COVID‑19 pandemic, as required by the CARES Act guidance.

The improper use of CARES Act funds and lack of adequate evidence also occurred because Air Force financial management officials did not verify whether funds spent on information technology equipment and support, and DoD operations, were COVID‑19 related prior to reimbursing NORAD and USNORTHCOM, as required by the Air Force guidance. (U) As a result, NORAD and USNORTHCOM officials used $19.2 million in CARES Act funds that did not contribute to the overall Federal and DoD priorities for the COVID‑19 pandemic response. Consequently, the officials may have violated the purpose statute by using CARES Act funds to pay for projects unrelated to COVID‑19. NORAD and USNORTHCOM officials’ improper use of CARES Act funds diminishes Congressional and taxpayer trust in the DoD.

Additionally, for transactions without adequate evidence, NORAD and USNORTHCOM officials did not provide reasonable assurance that they used $7.4 million in CARES Act funds to prevent, prepare for, and respond to the COVID‑19 pandemic. Inadequate evidence along with non‑specific transaction descriptions prevent DoD management, Congress, and the public from determining whether officials used CARES Act funds as intended.

 

Recommendations

We recommend that the NORAD and USNORTHCOM Commander develop internal controls that implement emergency funding guidance, ensure proper use of emergency authorized funds, and require officials to retain sufficient evidence, including a clear and accurate description of the goods and services purchased, that demonstrates how those goods and services supported the specific emergency.

We also recommend that the Director, Budget Operations and Personnel, Office of the Deputy Assistant Secretary of the Air Force (Budget), review the transactions related to $19.2 million (in questioned costs) that did not support the COVID‑19 pandemic and another $7.4 million (in unsupported costs) that did not have adequate evidence to support whether officials used funds for the COVID‑19 pandemic. Based on the review, the Director should determine whether any purpose statute violations and resulting Antideficiency Act violations exist.

 

Management Comments and Our Response

The Chief of Staff, NORAD and USNORTHCOM, responding for the Commander, NORAD and USNORTHCOM, did not agree or disagree with the recommendations, stating that NORAD and USNORTHCOM officials have processes and internal controls in place to implement emergency funding guidance and ensure proper use of funds. In addition, the Chief of Staff stated that NORAD and USNORTHCOM officials retained sufficient “plain language” evidence to document fiscal decision making and provided sufficient evidence to show that they carefully considered and appropriately documented CARES Act funds expenditures.

Comments from the Chief of Staff did not address the specifics of the recommendations; therefore, the recommendations are unresolved. The processes and internal controls that the Chief of Staff referenced are not effective to ensure the proper use of emergency authorized funds, such as CARES Act funds. Furthermore, we disagree that NORAD and USNORTHCOM officials retained sufficient support for all CARES Act expenditures, as some of the support provided lacked a clear and documented connection to the COVID‑19 pandemic.

Therefore, we request that the Chief of Staff provide additional comments to the final report on the development of internal controls to implement emergency funding guidance, ensure the proper use of funds, and sufficiently support how goods and services support a specific emergency.

In addition, the Chief of Staff did not comment on the potential monetary benefits. Therefore, we request that the Chief of Staff provide comments on the potential monetary benefits of $19.2 million in questioned costs and $7.4 million in unsupported costs.

The Acting Assistant Secretary of the Air Force (Financial Management and Comptroller), responding for the Director, Budget Operations and Personnel, Office of the Deputy Assistant Secretary of the Air Force (Budget), agreed with the recommendations, stating that the Air Force will coordinate with NORAD and USNORTHCOM to correct issues identified in the report.

 

This report is the result of Project Number D2021-D000AU-0134.000.