Semiannual Report to the Congress

DoD 1, -October IG Congress 2012 the Report Semiannual to 31, - March 2013

United States Department of Defense

octoberInspector 1, 2012 TO march General 31, 2013 Semiannual Report to the Congress

Required by Public Law 95-452

Integrity  efficiency  accountability  excellence Integrity  efficiency  accountability  excellence

Mission Our mission is to provide independent, relevant, and timely oversight of the Department that: supports the warfighter; promotes accountability, integrity, and efficiency; advises the Secretary of Defense and Congress; and informs the public.

Vision Our vision is to be a model oversight organization in the federal government by leading change, speaking truth, and promoting excellence; a diverse organization, working together as one professional team, recognized as leaders in our field.

Fraud, Waste and Abuse HOTLINE 1.800.424.9098 • www.dodig.mil/hotline

For more information about whistleblower protection, please see the inside back cover. INSPECTOR GENERAL DEPARTMENT OF DEFENSE 4800 MARK CENTER DRIVE ALEXANDRIA, VIRGINIA 22350-1500

I am pleased to present the Department of Defense Inspector General Semiannual Report to Congress for the reporting period October 1, 2012, through March 31, 2013, issued in accordance- with the Inspector General Act of 1978, as amended.

This year marks the 30th anniversary of DoD IG. Over the course of 30 years, many groundbreak ing audits, inspections, and investigations have paved the way for reducing fraud, waste, and abuse across the Department. When you consider the projects we have completed over the past 30 years,- the positive impact we have made on the Department is truly remarkable.

In this report, we highlight a few of those significant projects completed during the reporting pe riod to include: • Identifying government property valued at roughly $892.3 million that was not being valued or tracked in the Army accountability systems or on financial statements. • Investigating a prime DoD contractor for falsely claiming to be a service-disabled veteran owned small business. • Evaluating the Air Force Accident Investigation Board Report on the F-22A mishap of November 16, 2010, and identifying five deficiencies. • Assessing U.S. and coalition efforts to improve health care conditions and develop sustainable Afghan National Security Forces medical logistics at the Dawood National Military Hospital in Kabul, Afghanistan.

Principal Deputy In addition, we highlight the DoD Whistleblower Protection Program including our role in issuing Inspector General policy and procedures, and the appointment of a DoD whistleblower protection ombudsman. - Lynne M. Halbrooks. During this reporting period, we issued 64 reports and identified $1.3 billion in potential monetary benefits. DCIS investigations were the basis for 56 arrests, 102 criminal charges, 98 criminal convic tions, 98 suspensions, and 95 debarments, as well as $1.6 billion returned to the government. The DoD Hotline fielded 16,615 contacts from the public and members of the DoD community.

I would like to thank our counterparts who contributed to this report, including the Army Audit Agency, Naval Audit Service, Air Force Audit Agency, U.S. Army Criminal Investigation Command, Naval Criminal Investigative Service, Air Force Office of Special Investigations, and the Defense Contract Audit Agency.

In closing, I want to express my appreciation for the accomplishments of all DoD IG employees and the entire defense oversight community. As we continue to address efficiencies in the Department, I would once again like to thank the Department and Congress for their commitment to supporting the work of our office.

Lynne M. Halbrooks Principal Deputy

STATISTICAL HIGHLIGHTS

SUMMARY OF AUDIT ACTIVITIES Reports Issued 50 Monetary Benefits Recommendations Made on Funds Put to Better Use $1 billion Achieved Monetary Benefits (Funds Put to Better Use) $932.8 million

SUMMARY OF DEFENSE CRIMINAL INVESTIGATIVE SERVICE ACTIVITIES Total Returned to the U.S. Government1 $1.6 billion Recovered Government Property $5.2 million Civil Judgments/Settlements $898.6 million Criminal Fines, Penalties, Restitution and Forfeitures $717.8 million Administrative Recoveries2 $72.5 million Investigative Activities Arrests 56 Criminal Charges 102 Criminal Convictions 98 Suspensions 98 Debarments 95

SUMMARY OF ADMINISTRATIVE INVESTIGATIONS Complaints Received 695 Complaints Closed 534 Senior Official 256 Whistleblower Reprisal 278

SUMMARY OF POLICY AND OVERSIGHT ACTIVITIES Existing and Proposed Regulations Reviewed 139 Evaluation Reports Issued 7 Inspector General Subpoenas Issued 309 Contractor Disclosures Received 86 Potential Monetary Benefits $249 million

SUMMARY OF INTELLIGENCE AND SPECIAL PROGRAM ASSESSMENTS ACTIVITIES Reports Issued 4

SUMMARY OF SPECIAL PLANS AND OPERATIONS ACTIVITIES Assessment Reports Issued 3

SUMMARY OF DEFENSE HOTLINE ACTIVITIES Contacts 16,615 Cases Opened 1,499 Cases Closed 1,050

1 Includes investigations conducted jointly with other law enforcement organizations. 2 Includes contractual agreements and military non-judicial punishment.

ii SEMIANNUAL REPORT TO THE CONGRESS CONTENTS

1. OVERVIEW MISSION & ORGANIZATION...... 2 MISSION...... 2 ORGANIZATION...... 3 EXECUTIVE SUMMARY...... 4 OVERVIEW...... 4 PRIORITIES...... 4 CORE MISSION AREAS...... 5 ENABLING MISSION AREAS ...... 8 IG HIGHLIGHTS...... 8 WHISTLEBLOWER PROTECTION PROGRAM: PAST, PRESENT AND FUTURE...... 8 2. CORE MISSION AREAS AUDITS...... 12 ACQUISITION PROCESSES AND CONTRACT MANAGEMENT...... 12 FINANCIAL MANAGEMENT...... 21 JOINT WARFIGHTING AND READINESS...... 29 INFORMATION ASSURANCE, SECURITY AND PRIVACY...... 31 EQUIPPING AND TRAINING IRAQI AND AFGHAN SECURITY FORCES ...... 32 INVESTIGATIONS...... 35 PROCUREMENT FRAUD...... 35 PUBLIC CORRUPTION...... 36 PRODUCT SUBSTITUTION...... 39 HEALTH CARE FRAUD...... 40 ILLEGAL TECHNOLOGY TRANSFER...... 43 CYBER CRIME AND COMPUTER NETWORK INTRUSIONS ...... 44 INSPECTIONS...... 45 HEALTH AND SAFETY...... 45 JOINT WARFIGHTING AND READINESS...... 46 POLICY AND OVERSIGHT...... 47 AUDIT POLICY AND OVERSIGHT...... 47 INVESTIGATIVE POLICY AND OVERSIGHT...... 48 TECHNICAL ASSESSMENTS...... 49 ADMINISTRATIVE INVESTIGATIONS...... 50 WHISTLEBLOWER REPRISAL INVESTIGATIONS...... 50 INVESTIGATIONS OF SENIOR OFFICIALS...... 53 3. ENABLING MISSION AREAS CONGRESSIONAL TESTIMONY AND BRIEFINGS...... 56 DOD HOTLINE...... 57 WHISTLEBLOWING AND TRANSPARENCY...... 59 PROGRAMS...... 60 OUTREACH ACTIVITIES...... 62 4. SERVICES ARMY...... 66 ARMY AUDIT AGENCY...... 66 ARMY CRIMINAL INVESTIGATION COMMAND...... 78 NAVY...... 85 NAVAL AUDIT SERVICE...... 85 NAVAL CRIMINAL INVESTIGATIVE SERVICE...... 91 AIR FORCE...... 97 AIR FORCE AUDIT AGENCY...... 97 AIR FORCE OFFICE OF SPECIAL INVESTIGATIONS...... 102 5. APPENDICES A. AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED...... 106 B. REPORTS CONTAINING POTENTIAL MONETARY BENEFITS...... 114 C. FOLLOWUP ACTIVITIES...... 115 D. CONTRACT AUDIT REPORTS ISSUED...... 117 E. STATUS OF ACTION ON POST-AWARD CONTRACTS...... 118 F. STATUS OF REPORTS WITH ACTION PENDING...... 119 G. CONTRACT AUDITS WITH SIGNIFICANT FINDINGS...... 125 H. RESULTS OF PEER REVIEWS...... 129 I. ACRONYMS...... 130

OCTOBER 1, 2012 TO MARCH 31, 2013 iii REPORTING REQUIREMENTS

The Inspector General Act of 1978, as amended, states that each inspector general shall no later than April 30 and October 31 of each year prepare semiannual reports summarizing the activities of the office during the immediately preceding six-month periods ending March 31 and September 30. The IG Act specifies reporting requirements for semiannual reports. The requirements are listed below and indexed to the applicable pages.

REFERENCES REQUIREMENTS PAGE Section 4(a)(2) “review existing and proposed legislation and regulations...make recommendations...” N/A

Section 5(a)(1) “description of significant problems, abuses, and deficiencies...” 12-54

Section 5(a)(2) “description of recommendations for corrective action...with respect to significant problems, abuses, and 12-54 deficiencies...”

Section 5(a)(3) “identification of each significant recommendation described in previous semiannual reports on which cor- N/A rective action has not been completed...” Section 5(a)(4) “a summary of matters referred to prosecutive authorities and the prosecution and convictions which have 12-54 resulted.” Section 5(a)(5) “a summary of each report made to the [Secretary of Defense] under section 6(b)(2)...” instances where infor- N/A mation requested was refused or not provided” Section 5(a)(6) “a listing, subdivided according to subject matter, of each audit report, inspection report, and evaluation re- 106-113 port issued” showing dollar value of questioned costs and recommendations that funds be put to better use. Section 5(a)(7) “a summary of each particularly significant report...” 12-54

Section 5(a)(8) “statistical tables showing the total number of audit reports, inspection reports, and evaluation reports and 115 the total dollar value of questioned costs...” Section 5(a)(9) “statistical tables showing the total number of audit reports, inspection reports, and evaluation reports and 115 the dollar value of recommendations that funds be put to better use by management...” Section 5(a)(10) “a summary of each audit report, inspection report, and evaluation report issued before the commencement 115 of the reporting period for which no management decision has been made by the end of reporting period...” Section 5(a)(11) “a description and explanation of the reasons for any significant revised management decision...” N/A

Section 5(a)(12) “information concerning any significant management decision with which the Inspector General is in N/A disagreement...” Section 5(a)(13) “information described under Section 05(b) of the Federal Financial Management Improvement Act of 1996...” N/A (instances and reasons when an agency has not met target dates established in a remediation plan) Section 5(a)(14) “An Appendix containing the results of any peer review conducted by another Office of Inspector General 129 during the reporting period...” Section 5(a)(15) “A list of any outstanding recommendations from any peer review conducted by another Office of Inspector N/A General that have not been fully implemented, including a statement describing the status of the implementation and why implementation is not complete...” Section 5(a)(16) “Any peer reviews conducted by DoD IG of another IG Office during the reporting period, including a list of 129 any outstanding recommendations made from any previous peer review...that remain outstanding or have not been fully implemented...” Section 5(b)(2) “statistical tables showing the total number of audit reports, inspection reports, and evaluation reports and 116 the dollar value of disallowed costs...” Section 5(b)(3) “statistical tables showing the total number of audit, inspection, and evaluation reports and the dollar value 116 of recommendations that funds be put to better use by management agreed to in a management decision...” Section 5(b)(4) “a statement with respect to audit reports on which management decisions have been made but final action 125-128 has not been taken, other than audit reports on which a management decision was made within the preceding year...” Section 8(f)(1) “information concerning the number and types of contract audits...” 117 Section 5 note “an annex on final completed contract audit reports...containing significant audit findings.” 119-124

iv SEMIANNUAL REPORT TO THE CONGRESS 1

Overview Mission

Serving the Congress and the Department Department of Defense Inspector General is an independent, objective agency within the U.S. Department of Defense that was created by the Inspector General Act of 1978, as amended. DoD IG is dedicated to serving the warfighter and the taxpayer by conducting audits, investigations, inspections and assessments that result in improvements to the Department. DoD IG provides guidance and recommendations to the Department of Defense and the Congress. Mission Our mission is to provide independent, relevant and timely oversight of the Department of Defense that: • Supports the warfighter. • Promotes accountability, integrity and efficiency. • Advises the secretary of defense and Congress. • Informs the public. Vision Our vision is to be a model oversight organization in the federal government by leading change, speaking truth and promoting excellence; a diverse organization, working together as one professional team, recognized as leaders in our field. Core Values • Integrity • Efficiency • Accountability • Excellence Goal 1 Promote economy, efficiency and effectiveness. Goal 2 Identify, deter and investigate fraud, waste and abuse. Goal 3 Engage, enable and empower our people. Goal 4 Achieve excellence through unity.

2 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 3 Organization

Secretary of Defense

Inspector General

Intelligence & Administrative Policy & Special Plans & Auditing Investigations Special Program Investigations Oversight Operations Assessments

Auditing Intelligence and Special The Office of the Deputy Inspector General for Program Assessments Auditing conducts audits on all facets of DoD The Office of the Deputy Inspector General for operations. The work results in recommenda- Intelligence and Special Program Assessments tions for reducing costs; eliminating fraud, waste provides oversight (audits, evaluations and in- and abuse of authority; improving performance; spections) across the full spectrum of programs, strengthening internal controls; and achieving policies, procedures and functions of the intelli- compliance with laws, regulations and policy. gence enterprise, special access programs, nuclear enterprise and related security issues within Investigations DoD. The Office of the Deputy Inspector General for Investigations leads the Defense Criminal Policy and Oversight Investigative Service, which protects America's The Office of the Deputy Inspector General for warfighters by conducting criminal and civil Policy and Oversight provides oversight and investigations in support of crucial national de- policy for audit and investigative activities, fense priorities. conducts engineering assessments of DoD programs, provides technical advice and support to Administrative Investigations DoD IG projects and operates the DoD IG sub- The Office of the Deputy Inspector General for poena and contractor disclosure programs. Administrative Investigations investigates and oversees investigations of allegations regarding Special Plans and Operations the misconduct of senior DoD officials, both The Office of the Deputy Inspector General for civilian and military; restriction from commu- Special Plans and Operations provides assess- nicating with an IG or member of Congress; ment oversight to facilitate informed decision whistleblower reprisal against service members, making by senior civilian and military leaders defense contractor employees and DoD civilian of DoD and Congress to accomplish priority na- employees (appropriated and nonappropriated tional security objectives. fund); and improper command referrals of servicemembers for mental health evaluations.

2 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 3 Executive Summary

Administrative Investigations received a total of Overview 695 complaints for the first half of FY 2013 and The Inspector General Act of 1978, as amended, closed a total of 534 complaints. Of the 534 com- states that the inspector general is responsible plaints closed, 216 were full investigations. The for conducting audits, investigations and inspec- investigations involved whistleblower reprisal, tions and for recommending policies and pro- restriction of service members from contacting cedures to promote economical, efficient and an IG or member of Congress, procedurally im- effective use of agency resources and programs proper mental health referrals and senior official that prevent fraud, waste, abuse and misman- misconduct. agement. The IG Act also requires the inspector general to keep the Department and Congress Intelligence and Special Program Assessments is- fully and currently informed about problems sued four reports that addressed acquisition pro- and deficiencies in the Department’s operations cesses and contract and financial management in and the need for corrective action. the intelligence enterprise and special programs.

During this reporting period, DoD IG contin- Policy and Oversight issued seven evaluation re- ued directing its resources toward those areas of ports primarily addressing its oversight of audit greatest risk to the Department of Defense. We and investigative issues in DoD agencies and an are dedicated to serving the warfighter and the assessment of the Air Force Accident Investigation taxpayer by conducting audits, investigations Board Report concerning a November 2010 and inspections that result in improvements to F-22A crash. Policy and Oversight also issued the Department. DoD IG provides guidance and four Department-wide policies, coordinated on recommendations to the Department and infor- 139 existing and proposed DoD directives and mation to Congress. We summarize below the instructions, issued 309 IG subpoenas and re- work of each component as of March 31, 2013. ceived 86 contractor disclosures.

Auditing issued 50 reports with 294 recommen- Special Plans and Operations issued three as- dations identifying potential cost savings and sessment reports with 34 recommendations funds that could be put to better use, ensuring that addressed a range of issues, including U.S. the safety of service members; addressing im- and coalition efforts to develop the command, provements in DoD operations, financial report- control and coordination system within the ing and accountability; ensuring the Department Afghan National Army. U.S. and coalition ef- complied with statutory mandates; and identify- forts to improve health care conditions and ing new efficiencies. Of those reports, 30 percent develop sustainable Afghan National Security addressed acquisition processes and contracting Forces’ medical logistics at the Dawood National issues; 46 percent addressed financial manage- Military Hospital in Kabul, Afghanistan, were ment issues; 6 percent addressed joint warfight- also reviewed. ing and readiness issues; 8 percent addressed information assurance, security and privacy issues; As of March 31, 2013, the DoD IG workforce 2 percent addressed health care; 6 percent ad- totaled 1,578 employees, not including military dressed equipping and training Afghan National personnel and contractors. Security Forces; and 2 percent addressed ethics program and federal government standards. Priorities “DCIS opened 325 Investigations-Defense Criminal Investigative As a Department-wide priority, the secretary of cases, closed 357 cases Service opened 325 cases, closed 357 cases and defense identified the need to improve effective- and has 1,620 ongoing has 1,620 ongoing investigations. Cases resolved ness and efficiencies in business operations to investigations.” in this reporting period primarily addressed sustain mission-essential activities. In support of criminal allegations of procurement fraud, this focus, DoD IG uses its extensive oversight public corruption, product substitution, illegal capabilities to promote economy, efficiency and transfer of technology and health care fraud. effectiveness throughout the Department. DoD

4 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 5 IG performs audits, investigations and assess- “We issued 64 ments to support the Department’s goals to: Audits • We identified government property (Army- reports identifying • Prevent and deter conflict. owned inventory), valued at roughly $1.3 billion in • Prevail in today’s wars. $892.3 million, that was not being valued • Prepare to defeat adversaries and succeed in potential monetary or tracked in Army property accountabil- a wide range of contingencies. benefits." ity systems or on the financial statements. • Preserve and enhance the all-volunteer force. Our review of 21 high-dollar parts, valued • Reform and find further efficiencies in the at $85.1 million, showed that 16 parts had business and support functions of the de- excess Stryker inventory of $72.7 million fense enterprise. that could be either disposed of ($58 million) or potentially used on other contracts We performed audits, inspections and assess- ($14.7 million). Additionally, we found 170 ments of key programs and operations. We also empty engine containers, valued at $1.1 consulted on a variety of Department initiatives million, that the contractor determined and issues. DoD IG is focusing work efforts on could be used to store a different engine, preventing and detecting fraud, waste and abuse thereby reducing future requirements. and improving efficiency and effectiveness in Report No. DODIG-2013-025 critical areas for the Department such as: • We identified that the NATO Training • Acquisition processes and contract Mission – Afghanistan/Combined Security management. Transition Command – Afghanistan and • Financial management. G222 Program Management Office -offi • Joint warfighting and readiness. cials had not effectively managed the G222 • Information assurance, security and privacy. program and had not determined the cost • Equipping and training Afghan National or availability of spare parts to sustain the Security Forces. aircraft. As a result, NTM-A/CSTC-A and G222 PMO officials may have spent about Our investigations resulted in criminal, civil and $200 million in Afghanistan Security Forces administrative actions. We report on the follow- Funds on spare parts for an aircraft that ing investigative priorities for crimes impacting may not be sustainable. After DoD IG is- the Department: sued the draft report, the Air Force noti - • Procurement fraud. fied the contractor that when the G222 • Public corruption. follow-on sustainment support contract • Product substitution. expired in March 2013, no action would • Health care fraud. be taken to issue a new delivery order, • Illegal technology transfer. ending the G222 program. According to • Cyber crime and computer network the Air Force, if the program continued intrusions. through March 2022, as originally planned, it would have required $830 million, in addition to the nearly $200 million identified Core Mission Areas in the report, in sustainment costs, to in- We issued 64 reports identifying $1.3 billion in clude a significant amount for spare parts. potential monetary benefits. We achieved an ad- Report No. DODIG-2013-040 ditional $932.8 million in financial savings based • We identified that the Army chief informa- on management completed corrective actions to tion officer did not implement an effective reports issued this year an in previous reporting cyber security program for commercial periods. In addition, DCIS investigations were mobile devices. The Army CIO did not ap- the basis for 56 arrests, 102 criminal charges, 98 propriately track commercial mobile de- criminal convictions, 98 suspensions and 95 devices and was unaware of more than 14,000 barments, as well as $1.6 billion returned to the commercial mobile devices used through- government. out the Army. Additionally, the Army CIO did not ensure that commands configured

4 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 5 Executive Summary

“Critical information commercial mobile devices to protect violation of the International Emergency assurance controls stored information; required them to be Economic Powers Act and the Iranian were not appropriately properly sanitized; controlled commercial Transaction Regulations and U.S. export mobile devices used as removable media; laws. After her arrest, Yeh pleaded guilty applied, which left and required training and use agreements to conspiracy to violate the International the Army networks specific to commercial mobile devices. Emergency Economic Powers Act and the vulnerable to cyber Critical information assurance controls Iranian Transaction Regulations. She was security attacks were not appropriately applied, which left sentenced to two years confinement and and leakage of the Army networks vulnerable to cyber se- three years supervised release. curity attacks and leakage of sensitive data. sensitive data.” Report No. DODIG-2013-060 Inspections • We assessed U.S. and coalition efforts to Investigations develop the command, control and coordi- • We investigated Silver Star Construction, nation system within the Afghan National LLC, a prime DoD contractor, for falsely Army. Extensive U.S. and coalition efforts claiming to be a service-disabled veteran- have yielded a foundational C2 capability owned small business. As such, the com- that is adequately resilient, coherent and ca- pany obtained more than $5 million in con- pable of transitioning to Afghan lead in plans tracts set aside under the SDVOSB program and operations by 2014. However, the capac- and procured them under the American ity for sustained continuity of an effective Recovery and Reinvestment Act of 2009. ANA C2 system was fragile and remained The owner, Warren Parker, was sentenced to highly dependent upon International 87 months in prison and ordered to forfeit Security Assistance Force enablers includ- $6.8 million to be paid jointly and severally ing intelligence, surveillance and reconnais- with other co-defendants. sance capabilities with an analysis capabil- • We investigated EMH Regional Medical ity, counter-improvised explosive device Center and North Ohio Heart Center for technology and mine clearance assets, (in- allegedly performing unnecessary cardiac direct and aerial) fires capability, ground procedures on patients, to include TRICARE and air mobility, and logistics sustainment. beneficiaries. The Department of Justice en- Report No. DODIG-2013-058 tered into civil settlement agreements with • We assessed U.S. and coalition efforts to both companies. North Ohio Heart Center improve health care conditions and develop and EMH Regional Medical Center agreed sustainable Afghan National Security Forces to pay $541,870 and $3.8 million, respec- medical logistics at the Dawood National tively, to settle allegations that they sub- Military Hospital in Kabul, Afghanistan. mitted false claims to Medicare, Medicaid, Since our last assessment in 2011, we found TRICARE and Federal Employees Health development at NMH had advanced in the Benefits Programs. This was a qui tam case areas of planning and mentoring, leader- and $682,859 of the settlement amount will ship and management and logistics and go to the relator. patient care, specifically with respect to • We investigated Susan Yeh, an employee the establishment of a strategic plan to de- of a Taiwanese technology company, who velop the ANSF health care system jointly attempted to purchase extra-high-per- with Afghan ministries, and strengthened formance microwave pyramid absorbers, personnel accountability and patient care ultra-broadband microwave absorbers and procedures and increased inventory ac- multiline low pass filter networks from a countability and control measures for medi- DoD contractor. Yeh tried to arrange to cal supplies. However, significant challenges transship the items to Iran through the remain, specifically in the assignment of ad- United Arab Emirates and Taiwan. The at- ditional nursing personnel to patient wards tempted purchase and shipment was in based on the demands for nursing services,

6 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 7 increasing the number of trained phar- F-22A mishap of Nov. 16, 2010, for adher- macists assigned to the pharmacy and im- ence to the procedures set forth in Air Force proving the distribution of medical equip- Instruction 51-503, Aerospace Accident ment to ensure patient care areas with the Investigations. We assessed whether the greatest need have the necessary equipment board’s conclusions were supported by facts to provide safe and effective patient care. consistent with the standards of proof es- Report No. DODIG-2013-053 tablished by the instruction. The board’s statement of opinion regarding the cause of the mishap was not supported by the facts Policy and Oversight within the Accident Investigation Board • We performed a review of the Defense report consistent with the clear and con- Finance and Accounting Service audit or- vincing standard of proof established by ganization covering a one-year period that the instruction. The report lacked detailed ended June 30, 2011, and identified signifi- analysis of several areas, such as the emer- cant deficiencies in the DFAS audit organi- gency oxygen system activation as well as zation’s compliance with its system of qual- the physiological reactions to lack of oxy- ity control, including the failure to exercise gen. Of the 109 references in the board’s sufficient professional judgment. DFAS was summary of facts, 60 of those references issued a fail opinion on its audit organiza- were either incorrect or did not direct the tion’s system of quality control. We con- reader of the report to the information cluded that the DFAS audit organization did cited in the paragraph. We recommended not comply with generally accepted govern- that the judge advocate general of the Air ment auditing standards and their system Force reevaluate the board’s report and take of quality control for audits for the review appropriate action in light of the DoD IG period. We determined that the system of findings regarding the board’s report state- quality control did not provide reasonable ment of opinion and other deficiencies. assurance that DFAS audit personnel were Report No. DODIG-2013-041 following established guidance, policies, procedures and applicable audit standards. Report No. DODIG-2013-047 Administrative • The evaluation of the Military Criminal Investigative Organizations’ sexual assault Investigations investigation training focused on the types • During the first half of FY 2013, the and effectiveness of training, as well as how Department substantiated three of 55 (5 they leverage their resources and expertise. percent) investigations of whistleblower re- DoD IG found the training adequately sup- prisal, six of 10 (60 percent) investigations ports the Department; however, initial base- of improper mental health referrals and one line training was inconsistent between the (100 percent) investigation of restricting a MCIOs, effectiveness of refresher training member from contacting an IG or member was not measured and efforts to leverage re- of Congress. sources and expertise for advanced training • The Department substantiated 47 of 150 varied. DoD IG recommended the MCIOs (31 percent) investigations of senior official form a working group to establish consis- misconduct. tent initial baseline training, develop requirements for measuring the effectiveness of refresher training and capitalize on existing efforts to leverage training resources and expertise for advanced training programs. Report No. DODIG-2013-043 • We reviewed the Air Force Aircraft Accident Investigation Board report on the

6 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 7 IG Highlights

DoD IG authority when DoD IG was established Enabling Mission Areas by an amendment to the IG Act. DoD Hotline The DoD Hotline is the primary means for The DoD Hotline received 16,615 contacts from whistleblowers to report fraud, waste, misman- the public and members of the DoD community agement, abuse of authority and threats to the during this reporting period. Of those contacts, public health and safety involving DoD. 7,014 (43 percent) were telephone calls. Based on these contacts, the hotline opened 1,499 cases and Along with the establishment of inspectors gen- closed 1,050 cases. eral to receive and investigate complaints of fraud, waste and abuse, Congress also has en- acted several laws to protect whistleblowers (see Congressional chart on next page).

Testimony & Briefings DoD IG is responsible for issuing regulations During the reporting period, DoD IG had 65 implementing whistleblower laws. Specifically, meetings with members of Congress and their DoD IG issues whistleblower protection pol- staffs on subjects including plans for the IG com- icy and procedures pertaining to members of munity reviews required by the Reducing Over- the armed forces and nonappropriated fund Classification Act, pending legislative taskings, employees: ongoing assessments in Southwest Asia and an • DoD Directive 7050.06, Military Whistle- audit of the cost and availability of G222 spare blower Protection. parts. DoD IG received 123 new congressional • DoD Instruction 1401.03, DoD Nonappro- inquiries and closed 94 cases, including a re- priated Fund Instrumentality Employee port on noncompliant crime laboratory analyses Whistleblower Protection. based on allegations that a forensic analyst at the USACIDC allegedly falsified critical test results and an audit on Antideficiency Act violations in DoD Whistleblower Program military personnel accounts. New inquiries in- Today volved issues such as discussions on proposed Between 2009 and 2013, DoD IG increased legislative changes related to reprisal investiga- resources dedicated to the Whistleblower tions, requests related to senior official investi- Protection Program, established a Directorate of gations and concerns about the Department’s Whistleblowing and Transparency and appoint- implementation of IG recommendations. ed a DoD whistleblower protection ombudsman.

The Whistleblower Protection Enhancement Act IG Highlights of 2012 requires each inspector general to des- IG Highlights ignate a whistleblower protection ombudsman. Within DoD IG, the director of whistleblowing Whistleblower and transparency has been designated to serve Protection Program: as the whistleblower protection ombudsman. The role of the ombudsman is to educate DoD Past, Present and Future employees about the prohibitions on retaliation In April 1979 after allegations of $600 toilet seats for protected disclosures and the rights and rem- and other reports of DoD procurement scan- edies available to whistleblowers. dals, the secretary of defense authorized creation of the DoD Hotline to provide a mechanism for DoD IG ensures that allegations of whistle- DoD military members, employees and contrac- blower reprisal are resolved in an objective and tors to report fraud, waste and abuse. In 1982, timely manner. DoD IG encourages personnel the secretary of defense placed the hotline under to report fraud, waste and abuse to appropriate authorities; provides mechanisms for addressing

8 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 9 complaints of reprisal; and recommends rem- History and Evolution of Whistleblower edies for whistleblowers who encounter reprisal, consistent with applicable laws, regulations and Protection Program policies. DoD IG has statutory responsibility to investigate complaints of reprisal for making DoD issued policy that “no adverse disclosures protected by three federal statutes action” is to be taken against any Congress passes Title 10, U.S.C., 1982 employee who reports question- under Title 10 of the United States Code (1) Section 1587, prohibiting reprisal able activities within the intelli- U.S.C., Section 1034 for members of the armed against employees of nonappro- gence community. priated fund instrumentalities: 1983 forces, (2) U.S.C., Section 1587 for DoD non- reprisals for whistleblowing. appropriated fund employees and (3) U.S.C., Section 2409 for DoD contractor employees. Congress passes Title 10, U.S.C., DoD IG also investigates allegations of reprisal 1986 Section 2409, Contractor employ- filed by DoD appropriated fund civilian em- FY1989 NDAA provides “Military ees: protection from reprisal for ployees in accordance with the IG Act, consis- Whistleblower Protection” under 1988 disclosure of certain information. tent with Title 5, U.S.C., Section 2302. Reprisal Title 10, U.S.C., Section1034. is a prohibited personnel practice under Title 5. This latter authority is crucial to whistleblower 1989 Congress passed the Whistleblower protections for members of the intelligence com- Protection Act of 1989. munity who cannot avail themselves of Office of FY1993 NDAA prohibits use Special Counsel and Merit Systems Protection of referrals for mental health 1992 evaluations to retaliate against Board protection. Whistleblower reprisal inves- whistleblowers. Congress amends Title 10, U.S.C., tigations have been the only recourse for mem- Section 1034 to add protection bers of the defense intelligence community who 1994 for disclosures alleging violations of a law or regulation prohibiting believe they have been retaliated against, espe- sexual harassment or unlawful cially if retaliation is related to access to classi- discrimination. fied information or a security clearance. Congress amends Title 10, U.S.C., Section 1034 to protect disclosures DoD IG predominantly receives allegations of 2004 to any person or organization in Congress amends Title 10, U.S.C., reprisal through the DoD Hotline and members the chain of command or others Section 2409 to a member, a of Congress. However, in some instances, service designated by regulations. representative of a committee of and defense agency IGs refer allegations to DoD 2008 Congress, an IG, the Government IG if the service member is serving in a joint as- Accountability Office and a DoD employee responsible for contract signment or other special circumstances exist. oversight or management. DoD IG conducts complaint analysis of each The DoD updates Defense Federal Acquisition Regulation to imple- 2009 case to determine whether the whistleblower has ment 2008 amendment to Title 10, set forth a “prima facie” allegation of reprisal. If U.S.C., Section 2409. so, DoD IG has the discretion to either conduct FY2012 NDAA amends Title 10, an investigation or forward it to the service IG U.S.C., Section 1034 to protect for investigation. disclosures of a threat by another member of the armed forces or • Congress passes the 2011 employee of the federal govern- Although the service and defense agency IGs Whistleblower Protection ment of intent to kill or cause may also independently receive and investigate Enhancement Act of 2012 with serious bodily injury to members reprisal allegations, Title 10, U.S.C., Section 1034 provisions for a whistleblower of the armed forces or civilians or protection ombudsman. 2012 charges DoD IG with a critical oversight role to damage to military, federal or civil- • President Obama issues ian property. approve any decision made by a service IG that Presidential Policy Directive 19, investigation of military whistleblower reprisal Protecting Whistleblowers with is not warranted and to approve the results of Access to Classified Information. FY2013 NDAA extends contrac- all military whistleblower reprisal investigations 2013 tor whistleblower protection to conducted by service IGs. This requires extensive subcontractors. collaboration with the service IG counterparts to

8 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 9 IG Highlights

ensure each allegation of whistleblower reprisal • Employees of subcontractors. receives a thorough and independent review. • Disclosures that are made to management officials of the contractor. “DoD IG is dedicated to The Way Forward • Abuses of authority that undermine perfor- educating, training and During this reporting period, the president and mance of a contract. Congress issued policy and amended statutes to • Reprisal actions taken at the request of con- conducting outreach tracting agency. with service and expand and enhance whistleblower protections in three areas: • A violation of a law, rule or regulation [prior defense agency IGs and language only included violation of a law] their staffs on how to Presidential Policy Directive 19, Protecting related to a DoD contract or grant. investigate allegations Whistleblowers with Access to Classified • An employee who initiates or provides evi- Information. dence of contractor or subcontractor mis- of whistleblower conduct in any judicial or administrative reprisal... ” The directive ensures that employees serving in the intelligence community or who are eligible proceeding relating to waste, fraud or abuse for access to classified information can effective- on a DoD contract or grant. ly report waste, fraud and abuse while protecting classified national security information. The amendment revises the standard for burden of proof in investigations, stipulates that Whistleblower Protection Enhancement Act of whistleblower rights may not be waived by an 2012 agreement and establishes a three-year statute The Act amended Title 5, U.S.C., Section 2302 to of limitations for filing complaints. The changes expand the whistleblower protections afforded followed testimony by the deputy inspector gen- to appropriated fund civilian employees in mul- eral for administrative investigations on Dec. 6, tiple respects. For example, under the Act, dis- 2011, before the Subcommittee on Contracting closures may now qualify for protection even if Oversight of the Senate Committee on the whistleblower was not the first to report the Homeland Security and Governmental Affairs at misconduct and even if the disclosure was con- a hearing titled, "Whistleblower Protections for nected to the whistleblower’s job duties—two Government Contractors." common scenarios that previously caused complaints to fail. DoD IG is dedicated to educating, training and conducting outreach with service and defense In October 2012, DoD IG established an infor- agency IGs and their staffs on how to investigate mal working group to support implementation allegations of whistleblower reprisal, including of the directive throughout the defense intelli- the joint IG training courses and whistleblower gence community. reprisal outreach initiatives, among others.

Enhanced Protections for Contractor Employees Congress amended Title 10, U.S.C., Section 2409 to extend coverage and protection to:

10 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 PB 2

Core Mission Areas Core Mission Areas

The following are highlights of DoD IG audit Acquisition, Technology and Logistics has de- work during the reporting period. DoD IG per- fined instances where DoD awarded contracts Audits formed audits in the following categories: using competitive procedures, where only a • Acquisition processes and contract single bid was received, as ineffective competi- management. tion. For this audit, DoD IG determined whether • Financial management. DoD followed applicable guidance when award- • Joint warfighting and readiness. ing competitive contracts after receiving a single • Information assurance, security and privacy. offer. Specifically, DoD IG reviewed 107 con- • Equipping and training Afghan security tracts valued at almost $1.4 billion, 47 contract forces. modifications valued at $461.3 million and 83 Broad Agency Agreement and Small Business Innovation Research contracts valued at $96.3 Acquisition Processes & million to determine whether the services fol- Contract Management lowed single-bid guidance. The Department faces many challenges as it Findings: The services did not follow applicable attempts to restructure the force needed to ex- single-bid guidance when awarding approxi- ecute the national security strategy while main- mately $656.1 million in contracts and did not taining readiness and reducing infrastructure, verify that modifications were only made with- modernizing aging equipment, introducing new in the three-year limitation from base contract technologies, preserving the industrial base and award. The services did not always follow single- ensuring our technological superiority over our bid guidance because the services’ competition enemies. Since 2010, DoD has been working to advocates did not adequately monitor their strengthen its buying efforts, improve industry commands’ implementation of the guidance to productivity and provide an affordable, value- verify proper application. Additionally, the ser- added military capability to the warfighter. The vices did not develop adequate plans to increase Better Buying Power initiative encompasses a set competition because Defense Procurement and of fundamental acquisition principles to achieve Acquisition Policy did not provide effective greater efficiencies through affordability, cost oversight of the plans. Also, the competition control, elimination of unproductive processes advocates did not develop specific steps to im- and bureaucracy and promotion of competition. prove competition rates in their plans or develop specific steps to prevent all contract modifica- The Department continues to face persistent and tions from exceeding the three-year limitation significant challenges in acquiring goods and on awarding contract modifications without first services, including those in support of contin- re-competing them. Also, the services did not gency operations in Southwest Asia. During this correctly code all the contracts in the Federal reporting period, DoD IG continued to identify Procurement Data System-Next Generation da- weaknesses in obtaining adequate competition tabase because the services’ competition advo- for contracts, defining contract requirements, cates did not establish an adequate review pro- overseeing contract performance, obtaining fair cess to verify that contracting officers correctly and reasonable prices, interagency contracting inputted the type of contract. Finally, DPAP al- and contract payments. lowed the single-bid guidance to expire because DPAP did not incorporate the single-bid guid- “The services have Improvement Needed With DoD Single-Bid ance requirements into policy within 180 days. not realized potential Program to Increase Effective Competition for DPAP also did not classify 83 Broad Agency cost savings associated Contracts Agreement and Small Business Innovations with increased Overview: According to the Office of Federal Research contracts as having effective competi- Procurement Policy, competitions that receive tion, because DPAP incorrectly identified them competition and re- in the DoD effective competition report. As a competing $390.9 only one bid in response to a solicitation deprive agencies of the ability to compare alternatives result, the services have not realized potential million in contract and determine a fair and reasonable price. The cost savings associated with increased compe- modifications ...” Office of the Under Secretary of Defense for tition for 31 of the 78 single-bid contracts and

12 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 13 with re-competing 39 of the 47 contract modifi- not approve the justification and approval for cations reviewed. The services have not realized one contract until 462 days after it was awarded potential cost savings associated with increased because of funding and organizational changes. competition and re-competing $390.9 million in For the other contract, ACC-APG contracting contract modifications. DoD also cannot accu- personnel could not produce evidence that a rately assess the percentage of improvements in justification and approval was completed or that DoD achieving effective competition. market research was adequately documented. Result: DoD IG recommended that the DPAP Additionally, ACC-APG contracting personnel director review the services’ competition re- did not include one or both of the statements reports, direct the services’ competition advo- quired by the FAR in nine contract synopses of a cates to develop a plan related to the length of noncompetitive award to ensure that interested contract modifications and modify the DoD sources were aware of actions they can take to effective competition report. Additionally, the compete for the contract award. services’ competition advocates should develop Result: DoD IG recommended that the ACC- procedures to adequately monitor their com- APG executive director issue guidance establish- mands’ implementation of the single-bid guiding the number of days in which a justification ance, develop steps to increase competition in and approval must be approved within when a their competition plans and three-year period of contract is awarded or require the contracting performance plans and monitor their contract- officer to document the reason(s) for the delay. ing officers’ Federal Procurement Data System- DoD IG also recommended the ACC-APG ex- Next Generation input. ecutive director issue a memorandum empha- Report No. DODIG-2013-002 sizing the importance of completing a justification and approval in accordance with FAR “ACC-APG personnel Army Contracting Command–Aberdeen 6.303, adequately performing and documenting Proving Ground Contracting Center’s market research in accordance with FAR part adequately justified Management of Noncompetitive Awards Was 10, including the statements required by FAR contracts as sole Generally Justified 5.207 and reviewing the performance of the con- source for 28 of the Overview: Full and open competition is the tracting officer who awarded a noncompetitive 30 noncompetitive preferred method for federal agencies to award contract to determine whether administrative contracts reviewed.” contracts. Contracting officers may use pro- action is warranted. The Army agreed with the cedures other than full and open competition recommendations. under certain circumstances. However, each Report No. DODIG-2013-003 contract awarded without providing for full and open competition must conform to poli- Better Processes Needed to Appropriately Justify cies and requirements in the Federal Acquisition and Document NAVSUP WSS, Philadelphia Site Regulation. DoD IG determined whether DoD Sole-Source Awards noncompetitive contract awards were prop- Overview: Title 10, U.S.C., Section 2304 requires erly justified as sole source at the Army Con contracting officers to promote and provide for tracting Command–Aberdeen Proving Ground full and open competition when soliciting offers Contracting Center. DoD IG reviewed 30 non- and awarding contracts. Promoting competition competitive contracts with a combined obligated in federal contracting presents the opportunity value of about $529.2 million that ACC-APG for significant cost savings. In addition, competi- contracting personnel awarded in FYs 2009 and tive contracts can help improve contractor per- 2010. formance, prevent fraud and promote account- Findings: ACC-APG personnel adequately jus- ability. Contracting officers may use procedures tified contracts as sole source for 28 of the 30 other than full and open competition under noncompetitive contracts reviewed. However, certain circumstances. However, each contract contracting personnel did not provide adequate awarded without providing for full and open justification for the noncompetitive award of two competition must conform to policies and pro- contracts with an obligated value of about $29 cedures in the Federal Acquisition Regulation. million. ACC-APG contracting personnel did

12 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 13 Core Mission Areas

“DLA Troop Support Findings: Naval Supply Systems Command Defense Logistics Agency Could Improve Its Construction and Weapons System Support-Philadelphia con- Oversight of the Maintenance, Repair, and Equipment contract tracting personnel obtained approval from the Operations Prime Vendor Contract for Korea management appropriate personnel in the time frames re- Overview: At the request of the chairman, House quired for 31 of 32 justification and approvals for of Representatives Subcommittee on National personnel did not have other than full and open competition. However, Security and Foreign Affairs, Committee on adequate purchase personnel did not properly justify the award of Oversight and Government Reform, DoD IG de- review and approval 13 sole-source contracts because personnel did termined whether the maintenance, repair and procedures in place.” not: operations prime vendor contractor received • Explain why there was only one capable volume discount savings or rebates for items source. associated with the contract and whether the • Address all content requirements within 31 prime vendor credited these savings and rebates of the 32 justification and approvals because to DoD. The Defense Logistics Agency changed personnel relied on a standardized justifica- its business practices and entered into long- tion and approval template and omitted re- term prime vendor sustainment contracts with quired information. various suppliers to provide materials needed • Obtain legal reviews before approval of 23 to support the maintenance, repair and opera- of the 32 justification and approvals because tions for DoD facilities. Under the prime vendor internal guidance improperly limited when concept, a single commercial distributor serves they were required. as the major provider of products or services to • Adequately document the market research various federal customers within a geographi- conducted or the results for 29 of 32 con- cal region at discounted commercial prices. tracts because technical personnel did not The maintenance, repair and operations prime document the steps taken when reviewing vendor contracts are primarily long-term, fixed- DoD IG reviewed NAVSUP sole-source internal and external databases and con- price contracts with economic price adjustment contracts. tracting personnel relied on the sole-source or indefinite-delivery/indefinite-quantity deliv- determinations provided. ery orders and generally, including options, span • Follow some synopsis requirements for the five years. The DoD prime vendor program pro- 27 proposed contracts that required a syn- vides items quickly and meets customers’ needs opsis because contracting personnel were at discounted commercial prices, which helps unaware of a few of the requirements. reduce DoD’s overall maintenance supply costs. As a result, improper sole-source awards could Findings: The prime vendor obtained volume occur. Personnel could not make informed deci- discounts through price competition on items sions that the proposed contractors were the sole purchased for DoD and credited those discounts source. Also, interested sources were not aware to DoD. However, the prime vendor did not seek of future contracting opportunities. rebates related to the contract purchases and re- Result: DoD IG recommended the Naval Supply turned those rebates it received in error. DLA Systems Command commander update justifi- Troop Support Construction and Equipment cation and approval training and templates and Directorate contract management personnel did require personnel to fully address justification not consistently monitor airfreight charges and and approval content requirements to adequately fixed markup fees that the prime vendor charged justify noncompetitive contracts. Additionally, to DoD for purchases made under the contract. DoD IG recommended requiring personnel to Specifically, DLA Troop Support Construction include adequate documentation of market re- and Equipment Directorate contract manage- search in the contract files to support that only ment personnel did not review and approve one source can meet government requirements delivery orders with airfreight charges or verify for a given procurement. Command comments that delivery orders with fixed-fee markup pric- were responsive. ing complied with the maximum contractually Report No. DODIG-2013-034 established markup rate. DLA Troop Support Construction and Equipment Directorate contract management personnel did not have ad-

14 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 15 equate purchase review and approval procedures perform adequate surveillance on 18 task orders in place. The prime vendor charged questionable valued at $100.2 million. Contracting officers costs of $200,224 for purchases the prime ven- and CORs did not understand quality assurance dor made between May 10, 2010, and Aug. 1, surveillance plan requirements; the contracting 2011. The total amount of questioned costs may officers misinterpreted the internal contract -ad be greater if all the delivery orders that occurred ministration policy; and the CORs relied on un- on the seven-year contract were reviewed. authorized NAVFAC personnel to perform sur- Result: Among other recommendations, DoD veillance functions, including reviewing invoices IG recommended that the DLA Troop Support which included unsupported other direct costs, director establish procedures to identify, analyze totaling $556,590. As a result, Specialty Center and determine if the delivery orders that include Acquisition, NAVFAC did not have assurance airfreight and fixed markup fees are allowable. that the contracted services were received. The DLA Troop Support director agreed with Result: DoD IG recommended the Specialty the recommendations. Center Acquisition, NAVFAC director verify Report No. DODIG-2013-006 that all contractors under a MAC receive the Request for Task Order Proposal, even if the Award and Administration of Multiple Award request is amended to incorporate changes and Contracts at Naval Facilities Engineering verify that the independent government cost es- Command Specialty Centers Need Improvement timates and fair and reasonable price determi- Overview: Multiple award contracts are a group nations are adequately supported. Additionally, of indefinite-delivery/indefinite-quantity con- Specialty Center Acquisition, NAVFAC direc- tracts used by DoD customers to obtain services. tor should coordinate with the Naval Facilities Specifically, all indefinite-delivery/indefinite- Engineering Service Center commander to re- quantity contractors with contracts in the group quire that contracting officers appoint a COR for are to be given fair opportunity to compete for each task order and require CORs to document award of a task order. MACs enable the govern- surveillance performed and report progress to ment to procure services more quickly using the contracting officer. Management agreed with streamlined acquisition procedures while taking the recommendations. advantage of competition to obtain optimum Report No. DODIG-2013-007 prices. Findings: Contracting officials at Specialty Contracting Improvements Still Needed in “DoD contracting Center Acquisition, NAVFAC generally pro- DoD’s FY 2011 Purchases Made Through the officials generally vided contractors a fair opportunity to compete Department of Veteran Affairs complied with policies for task orders awarded under MAC. However, Overview: Interagency acquisition is how an and procedures contracting officials limited competition for agency obtains needed supplies or services two task orders by not sending the solicitation through another agency’s contract, the acqui- when issuing or amended solicitation to all contractors under sition assistance of another agency or both. direct interagency the MAC, because they believed they had the Interagency acquisitions are commonly con- acquisitions through authority to exclude contractors from receiving ducted through indefinite-delivery contracts, Veterans Affairs.” the solicitation. In addition, contracting officials such as task and delivery-order contracts. The in- did not adequately determine price reasonable- definite-delivery contracts used most frequently ness on six task orders awarded, which had only to support interagency acquisitions are federal one proposal valued at $45.6 million and nine supply schedules, government-wide acquisition modifications with price increases valued at $3.8 contracts and multiagency contracts. The two million, because they relied on unsupported, in- types of interagency acquisitions are direct and dependent government cost estimates to make assisted. In a direct interagency acquisition, the their determinations. As a result, NAVFAC did requesting agency places an order against the not have assurance that the services acquired servicing agency’s indefinite-delivery contract. resulted in fair and reasonable prices for DoD. The servicing agency manages the indefinite- Contracting officer representatives at Naval delivery contract but does not participate in the Facilities Engineering Service Center did not placement of an order. In an assisted acquisi-

14 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 15 Core Mission Areas

tion, the servicing agency and requesting agency the U.S. Army Medical Research Acquisition enter into an interagency agreement where the Activity contracting officer should seek a refund servicing agency performs acquisition activities of $44,952 for products not delivered. on the requesting agency’s behalf. The servicing Report No. DODIG-2013-028 agency is responsible for awarding contracts, task orders or delivery orders and for appointing DoD Does Not Have Visibility Over the Use of contracting officer representatives. Funds Provided to the Department of Energy Findings: DoD contracting officials generally Overview: DoD IG determined whether the complied with policies and procedures when memorandum of agreement and corrective ac- issuing direct interagency acquisitions through tion plan between DoD and the Department of Veterans Affairs. Specifically, DoD contracting Energy addressed the findings in DoD IG re- officers defined requirements and used funds port D-2011-021, titled , “More DoD Oversight appropriately when awarding contract orders on Needed for Purchases Made Through the all 20 direct interagency acquisitions, competed Department of Energy,” dated Dec. 3, 2010. DoD five orders, justified 13 sole-source orders and IG also determined whether DoD personnel documented receipt of products for 18 orders. complied with the roles and responsibilities out- However, DoD contracting officers did not de- lined in the MOA. obligate unused funds of $293,625 for one order Findings: To address conditions identified in and obtain a refund of $44,952 on another order the previous audit report, Defense Procurement for products not delivered, because the contract- and Acquisition Policy and DOE officials agreed ing officer (1) did not track funds and items de- to corrective actions in the MOA and corrective livered properly, (2) did not determine whether action plan. However, DPAP officials did not the prices paid for 131 open market products fully implement or verify compliance with the (products not on vendors VA federal supply MOA and corrective action plan. Specifically, schedules) valued at $5.3 million on five orders DPAP officials did not develop a standardized were fair and reasonable, because they relied reporting system to allow DoD officials to track on information in vendor quotes and pricelists funds provided to DOE, to issue guidance that without verifying that the products were on the required technical project managers performing vendors VA federal supply schedules, (3) did not oversight to meet standard contracting officer request price reductions for six orders valued at representative training requirements, or for- $2.7 million, because the vendor did not provide mally collaborate or meet quarterly with DOE. discounts in the past or contracting officials were These conditions occurred because DPAP offi- not aware that they were required to seek price cials did not place a high priority on implement- reductions and (4) did not support best procure- ing the terms of the MOA and corrective action ment-approach determinations for four orders plan. As a result, DoD did not have visibility of valued at $9.1 million. As a result, DoD might approximately $7.3 billion in funds provided to not have always received the best value when DOE from FY 2010 through FY 2012. DoD IG using VA for direct interagency acquisitions. also determined that Air Force and Office of the Result: DoD IG recommended the U.S. Army Under Secretary of Defense (Comptroller)/Chief Medical Research Acquisition Activity director, Financial Officer officials did not perform a re- the North Atlantic Regional Contracting Office view of a potential Antideficiency Act violation, director, the Naval Medical Logistics Command as recommended in DoD IG report D-2011-021. commander, the Contracting Squadron direc- Result: DoD IG recommended that the director, tor of contracting, 502 Contracting Squadron DPAP: commander and the 802 Contracting Squadron • Direct DoD components to perform a re- commander provide refresher training to their view to determine whether they are com- contracting officers, ensuring the training -fo plying with the MOA and defense policies cuses on the problems identified in the re- issued as a result of the MOA. port. Additionally, the North Atlantic Regional • Coordinate with the USD(C) to develop a Contract Office contracting officer needed to de- method for gathering data for DoD-related obligate funds in the amount of $293,625, and projects with DOE.

16 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 17 • Implement the remaining action items in Findings: The Office of the Under Secretary the corrective action plan. of Defense for Acquisition, Technology and • Establish a quality control process to en- Logistics officials did not establish a working force the requirement for DoD components group or develop and implement procedures to to provide monthly obligation reports for recover organizational clothing and individual funds provided to DOE and maintain them equipment from civilians and contractor em- in an auditable system. ployees. Instead, Office of the Assistant Secretary DoD IG recommended that the USD(C): of Defense for Logistics and Materiel Readiness • Require DoD components to use a standard officials discussed the prior report recommen- funding document number and ensure the dations during existing working group meet- first six positions are the DoD activity ad- ings and agreed that the Army would serve as dress code for the funding agency. the lead agent and develop and implement cor- • Require DoD components to provide the rective actions. However, neither the discussion USD(C) with copies of all funding docu- nor the decision to delegate the responsibility to ments sent to DOE. the Army was documented. In addition, Defense • Instruct the Air Force to initiate a review of Procurement and Acquisition Policy officials the potential Antideficiency Act violation. did not review contracting policies for neces- The DPAP director and the USD(C) generally sary changes. This occurred because Defense agreed with the recommendations. Procurement and Acquisition Policy officials Report No. DODIG-2013-046 were waiting for the results from the working group before changing contracting policies. Recovering Organizational Clothing and Army officials from Army G-4, Army Materiel “DoD IG identified Individual Equipment From Civilians and Command, and the central issue facilities at Fort approximately $20 Contractor Employees Remains a Challenge Benning and Camp Atterbury implemented million in unreturned Overview: Central issue facilities dispense orga- some controls to mitigate risks associated with nizational clothing and individual equipment to recovery of organizational clothing and individ- items issued to civilian civilians and contractor employees from all ser- ual equipment. Despite these efforts to improve and contractor vices and defense agencies. Civilians and con- controls, many challenges related to the recovery employees...” tractor employees receive organizational cloth- of organizational clothing and individual equip- ing and individual equipment at the central issue ment from civilians and contractor employees facilities based on their mission and theater of still existed and resulted in increased costs to re- deployment. At a minimum, the central issue fa- place unreturned items, as well as potential loss cilities provide equipment, such as duffel bags, of funds from uncollected debt. DoD IG iden- body armor, helmets and chemical biological tified approximately $20 million in unreturned masks. Additional items issued to civilians and items issued to civilian and contractor employ- some contractor employees (such as linguists ees who deployed from Fort Benning and Camp and law enforcement officials) include cloth- Atterbury between October 2006 and May 2012. ing, safety glasses and sleeping bags. On average, Improved procedures to recover organizational civilians receive items valued at about $5,300, clothing and individual equipment from em- and contractor employees receive items valued ployees should reduce costs for replacing unre- at about $3,400. DoD IG determined whether turned items and decrease the potential loss of the Office of the Under Secretary of Defense for funds from uncollected debt. Acquisition, Technology and Logistics estab- Result: DoD IG recommended that the under lished a working group and developed and im- secretary of defense for acquisition, technology plemented procedures to recover organizational and logistics, implement corrective actions to clothing and individual equipment from civil- address the recommendations in report D-2010- ians and contractor employees, as recommended 069 and develop a time-phased plan with mea- in DoD IG report D-2010-069, titled, “Central surable goals and metrics regarding the imple- Issue Facility at Fort Benning and Related Army mentation of recommendations in that report. Policies,” dated June 21, 2010. Management agreed with the recommendations. Report No. DODIG-2013-050

16 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 17 Core Mission Areas

“U.S. Transportation Quality Controls for the Rotary Wing Transport surveillance plan requirements established for Command was Contracts Performed in Afghanistan Need CORs to verify that contractors complied with established in 1987 Improvement contractual requirements for transport services and is the single Overview: U.S. Transportation Command worth approximately $1.5 billion as of September was established in 1987 and is the single man- 2012. The inadequate controls increased the risk manager of the ager of the U.S. global defense transportation that the government would pay for services not U.S. global defense system. USTRANSCOM coordinates people rendered. transportation system.” and transportation assets to allow the United Result: DoD IG recommended that the contract- States to project and sustain forces, when and ing officer require CORs to provide their surveil- where they are needed, for as long as neces- lance files to the contracting officer when com- sary. USTRANSCOM also coordinates missions pleting their tours of duty, assess the adequacy worldwide using both military and commercial of surveillance measures used by the CORs in sea, air and land transportation resources in re- Afghanistan, create and implement standard op- sponse to DoD’s warfighting commanders’ needs erating procedures to establish the methodology across the full spectrum of support, ranging for monitoring and validating fuel purchases, from humanitarian operations to military con- update and revise the quality assurance surveil- tingencies. Since FY 2009, USTRANSCOM con- lance plans to include all contract terms requir- tracting officials awarded indefinite-delivery/ ing surveillance and the method of surveillance, indefinite-quantity contracts in support of the and perform a resource analysis to determine Afghanistan Rotary Wing Transport Program. the number of CORs needed in Afghanistan. The contractors provide medium, heavy and Report No. DODIG-2013-037 super heavy lift helicopters to support rotary wing transport of supplies, U.S. mail and passen- U.S. Army Corps of Engineers Needs to Improve gers throughout Afghanistan. Contract Oversight of Military Construction Findings: USTRANSCOM did not establish ad- Projects at Bagram Airfield, Afghanistan equate surveillance controls for the 28 task or- Overview: The U.S. Army Corps of Engineers ders supporting the transportation of supplies, mission is to provide vital public engineering mail and passengers in Afghanistan. Specifically, services to strengthen our Nation’s security, en- the USTRANSCOM contracting officer did not ergize the economy and reduce risks from disas- perform periodic reviews of the contracting of- ters. USACE is the Army’s construction agent ficer representatives’ files or request the COR for the design or construction execution respon- files be sent when the CORs completed their sibilities associated with military construction tours of duty. The contracting officer did not program facilities and is the lead construction perform the reviews or request the COR files be- agent supporting the U.S. Central Command cause the COR file documentation was located area of responsibility, including Afghanistan. in an austere location, and the contracting offi- As the lead construction agent, USACE is re- cer wanted to leave the documentation onsite to sponsible for performing oversight of MILCON maintain continuity among the COR rotations. contractors and conducting contract admin- Additionally, the contracting officer did not es- istration. USACE Afghanistan Engineering tablish effective surveillance elements and meth- District-North, located in Kabul, Afghanistan, odologies necessary for CORs to determine that administers construction projects at Bagram services met contract requirements when the Airfield, Afghanistan. contracting officer developed quality assurance Findings: USACE Afghanistan Engineering surveillance plans for each of the contracts. The District-North quality assurance personnel did contracting officer stated that this occurred be- not properly monitor contractor performance cause of unintentionally omitting the required and fulfill quality assurance responsibilities for surveillance elements from quality assurance the four military construction projects reviewed surveillance plans. As a result, the contract- at Bagram Airfield, which were valued at $49.6 ing officer did not perform oversight to verify million. Specifically, QA personnel did not de- whether the CORs performed effective contract velop supplemental project QA plans, approve surveillance and did not have quality assurance contractors’ quality control plans before contrac-

18 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 19 tors began construction, maintain documenta- and environmental management, execution and tion of QA personnel surveillance activities, fol- technical services that optimize the Air Force low responsibilities in the contracting officer’s and joint capabilities through sustainable instal- designation memoranda and request technical lations. According to AFCEE, they have provided specialists to perform technical inspections. In construction services in Afghanistan since 2006 addition, QA personnel relied on the Logistics and have executed more than 160 task orders Civil Augmentation Program contractor to per- valued at $2.3 billion for its customers, such as form infrequent technical inspections and relied the Combined Security Transition Command-

on their own experience to identify construction Afghanistan and U.S. Forces-Afghanistan. DoD DoD IG reviewed military construction deficiencies. These conditions occurred because IG determined whether the AFCEE provided projects in Afghanistan. USACE Afghanistan Engineering District-North effective oversight of construction projects in officials did not provide sufficient oversight Afghanistan. of QA personnel. For example, QA personnel Findings: AFCEE Contingency Construction stated they were not aware of their responsibili- Division officials did not provide effective ties because USACE Afghanistan Engineering oversight of military construction projects in District-North officials did not provide enough Afghanistan. Specifically, AFCEE officials did guidance or training to QA personnel operat- not develop a formal process to monitor, assess ing in a contingency environment. Further, QA and document the quality of work performed by personnel stated they were either unaware of, contractor personnel for four projects valued at did not see a need for, did not have time to fol- $36.9 million. AFCEE officials stated that this low, or did not have proper personnel to follow occurred because they relied completely on the QA guidance. As a result, USACE did not have technical expertise of their contractor personnel. reasonable assurance that contractors’ quality In addition, AFCEE officials stated the Federal control programs were effective and the four Acquisition Regulation requirement for a qual- MILCON projects met or would meet contract ity assurance surveillance plan did not apply to requirements. architect-engineer services contracts. As a result, Result: Among other recommendations, DoD AFCEE’s process for developing and reviewing IG recommended that the USACE Afghanistan contract requirements design was not adequate Engineering District-North commander verify to prevent (1) conflicting electrical standards that project engineers develop supplemental from being cited in one contract’s statement of project QA plans and approve contractor qual- work and statement of requirement and (2) in- ity control plans before contractors begin con- correct fire protection standards from being struction; direct contracting officers to verify cited in two contracts’ statements of requirement the performance of requirements in their des- used during construction. In addition, AECOM ignation memoranda; access the availability of Technical Services, Inc. personnel at Camps technical specialists and verify the use of tech- Bastion and Leatherneck did not identify signifi- nical specialists to support the conduct of tech- cant deficient work performed. The deficiencies nical inspections; and conduct training for QA led to serious increased hazards to the life and personnel on QA surveillance requirements in a safety of coalition forces who occupy two of the contingency environment. USACE agreed with four facilities reviewed at Camps Bastion and recommendations. Leatherneck and contributed to more than a six- Report No. DODIG-2013-024 month delay in government acceptance of one facility. DoD IG notified AFCEE officials of those Inadequate Contract Oversight of Military deficiencies during a site visit to Afghanistan in Construction Projects in Afghanistan Resulted May 2012 and again during meetings held in in Increased Hazards to Life and Safety of June 2012. According to Air Force Civil Engineer Coalition Forces Center officials, all electrical deficiencies were Overview: The Air Force Center for Engineering corrected as of October 2012. In addition, Air and the Environment was a field operating agen- Force Civil Engineer Center officials stated that cy for the Air Force Civil Engineer. AFCEE’s additional strobe lights were installed in one mission was to provide integrated engineering facility and the fire department conducted its

18 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 19 Core Mission Areas

official fire alarm and functionality test on that did not apply to task or delivery orders when the same date and found no issues. AFCEE officials basic contract was issued before the rule or did also stated that they planned to install additional not document actions taken to conform to the egress doors on the second floor of one facility; rule. As a result, Air Force contracting person- however, they did not plan to install a fire sup- nel may increase the Air Force’s risk because cost pression system in either facility. reimbursable contracts provide less incentive for Result: The Air Force Civil Engineer Center contractors to control costs. DoD IG identified director should (1) develop quality assurance internal control weaknesses for implementing DoD IG identified electrical hazards surveillance plans for the Title I, Title II, and the interim rule changes regarding the use of during a site visit in Afghanistan. Global Engineering, Integration and Technical cost-reimbursable contracts. Assistance contract task orders and (2) develop Result: DoD IG recommended that the deputy procedures to verify contracting officer repre- assistant secretary of the Air Force (contract- sentatives conduct and document appropriate ing) emphasize the FAR revisions to contracting surveillance of contractors as called for in the personnel, consider issuing more hybrid con- quality assurance surveillance plan to ensure tracts, establish better communication chan- that work performed is carried out in accor- nels to identify areas to transition to firm-fixed- dance with the task order requirements. The U.S. price contracts and require contracting officers Forces-Afghanistan commander and the AFCEE to document instances where they maintained director should assess the life and safety hazards oversight functions. Additionally, DoD IG identified and determine the appropriate actions recommended that the Defense Procurement needed to correct the electrical hazards and fire and Acquisition Policy director initiate a pro- safety and emergency egress deficiencies. cess to reduce the potential contradiction be- Report No. DODIG-2013-052 tween Defense Federal Acquisition Regulation Supplement 242.75 and FAR revisions. DoD IG Air Force Needs Better Processes to recommended that the Warner Robins Air Force Appropriately Justify and Manage Cost- Sustainment Center director of contracting ad- Reimbursable Contracts just templates to include approval above the con- Overview: Section 864 of the FY 2009 National tracting officer. Management generally agreed Defense Authorization Act, Regulation on the with the recommendations. Use of Cost Reimbursement Contracts, requires Report No. DODIG-2012-059 Federal Acquisition Regulation revisions regarding the documentation of decisions and ap- TRICARE Managed Care Support Contractor provals necessary before issuance of other than Program Integrity Units Met Contract firm-fixed-price contracts. Federal Acquisition Requirements Circular 2005-50 issued March 16, 2011, imple- Overview: The Program Integrity Office at mented the required revisions on an interim TRICARE Management Activity manages basis. DoD IG determined whether Air Force anti-fraud and abuse activities to protect ben- complied with interim FAR revisions on the use efit dollars and safeguard eligible beneficiaries. of cost-reimbursable contracts. This was a first in The office’s responsibilities include developing a series of reports as DoD IG plans to issue (1) and executing anti-fraud/abuse policies and separate reports for each service, (2) one report procedures; monitoring and providing over- to include the Missile Defense Agency and the sight of contractor program integrity activities; Defense Microelectronics Activity and (3) one and developing cases for criminal fraud/abuse summary report. prosecutions and civil lawsuits. TMA Program Findings: Of the 156 contracts reviewed, valued Integrity Office personnel are responsible for at about $10.5 billion, Air Force contracting per- performing site visits to the managed care sup- sonnel did not consistently implement the in- port contractors, who administer purchased care terim rule for 75 contracts, valued at about $8.8 medical services for TMA. During these visits, billion. Air Force contracting personnel issued the managed care support contractor program contracts that did not follow the interim rule be- integrity units are assessed against the contract cause they were unaware of the rule, assumed it requirements.

20 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 21 Findings/Result: DoD IG determined that the Improvements Needed in Managing managed care support contractors had dedi- Maintenance Contracts in Korea for Air Force cated program integrity functions that met the Aircraft TRICARE operations manual and government Overview: DoD IG determined whether Air contractual requirements for preventing and de- Force aircraft maintenance contracts in Korea tecting fraud. were effectively administered. During FYs 2010 Report No. DODIG-2013-029 and 2011, the Defense Contract Management Agency-Korea administered six contracts awar Defense Advanced Research Projects Agency’s ded to Korean Air Lines in support of depot Ethics Program Met Federal Government maintenance for Air Force A-10, F-15, F-16 and Standards HH-60 aircraft. The contractor billed $45.7 mil- Overview: DoD IG determined whether lion for maintenance services during FYs 2010 Defense Advanced Research Projects Agency’s and 2011. ethics policies and program implementation Findings/Result: The report is FOUO.

were consistent with federal government con- Report No. DODIG-2013-049 DoD IG reviewed AF aircraft flict-of-interest mitigation standards and wheth- maintenance contracts in Korea. er DARPA personnel were properly trained and Audit of the F-35 Lightning II Autonomic following their policies. Logistics Information System Findings/Result: The DARPA ethics policies and Overview: The overall objective of the audit was program implementation were consistent with to evaluate the management of the Autonomic federal government conflict-of-interest mitiga- Logistics Information System. DoD IG also per- tion standards, and the DARPA personnel DoD formed follow-up on recommendations made in IG selected for review were properly trained and DoD IG report 07-INTEL-05, titled, “Audit of followed DARPA policies. In the last three years, Controls Over Protecting and Releasing Special DARPA officials issued standard ethics guidance Program Information to the Joint Strike Fighter and operating procedures that implemented eth- Foreign Partners,” dated Feb. 9, 2007. ics laws and regulations. The only DARPA ethics Findings/Result: This report is classified. rule change was to the broad agency announce- Report No. DODIG-2013-031 ment process and the recusal rules interpretation for employees covered by the Intergovernmental Personnel Act. DARPA’s ethics program appro- Financial Management priately mitigated the potential for conflicts-of- The Department cannot yet produce financial interest. In addition, DARPA’s ethics training statements that are auditable, and manage- followed federal government ethics rules and ment cannot yet provide sufficient assurance regulations. For its annual training, the DARPA of effective internal controls. The Financial deputy designated agency ethics official used the Improvement and Audit Readiness initiative ethics training material developed each year by is guiding the Department’s effort to improve the DoD Standards of Conduct Office. Finally, financial management and achieve audit readi- DoD IG determined that the program manage- ness for key financial statements by 2014 and ment and contract award process participation for all statements by 2017. It is important that of the DARPA employees who formerly worked the Department is committed to improving its for BAE Systems or its subsidiary, AlphaTech, financial management efforts to ensure it is a did not create a conflict-of-interest between the good steward of the taxpayer dollars and can two entities. In addition, DARPA did not award successfully meet national security objectives. BAE Systems contracts as a result of undue in- DoD IG continues to focus its oversight efforts fluence from former BAE employees in DARPA’s on three aspects of the Department’s efforts for Information Innovation Office. achieving auditability including financial re- Report No. DODIG-2013-039 porting, audit readiness efforts and development and implementation of the Department’s enterprise resource planning systems. During this reporting period DoD IG issued various financial

20 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 21 Core Mission Areas

statement opinions including the Department Support System-Army, General Fund Enterprise of Defense principal financial statements. This Business System, Integrated Personnel and Pay year, the same 13 material weaknesses still exist System-Army and Logistics Modernization from the previous year: Program. For this audit, DoD IG determined • Financial management systems. whether the strategy and its implementation • Fund balance with treasury. provided adequate governance and program • Accounts receivable. management of enterprise resource planning • Inventory. systems. • Operating materials and supplies. Findings: Army OBT officials developed and -im • General property, plant and equipment. plemented a strategy that was not comprehensive • Government property in possession of enough for adequate governance and manage- contractors. ment of its enterprise resource planning systems. • Accounts payable. The strategy did not include specific implemen- • Environmental liabilities. tation milestones and performance measures • Statement of net cost. for accomplishing the stated goals, including a • Intragovernmental eliminations. plan for using ERP capabilities. Nor did it clearly • Accounting entries. define the Army Enterprise Systems Integration • Reconciliation of net cost of operations to Program’s ERP integration role or milestones. budget. This occurred because OBT officials focused Other financial oversight focused on DoD de- on near-term milestones but did not develop a velopment and implementation of ERP systems, comprehensive plan outlining milestones and examinations of existence and completeness of performance measures for all planning periods. assets, controls over cash and other monetary In addition, their strategy did not focus on elim- assets, DoD efforts to correct the causes of inating legacy system interfaces and incorporat- Antideficiency Act violations concerning mili- ing additional functionalities into the enterprise tary personnel accounts and compliance with resource planning systems. Finally, OBT officials Improper Payments Elimination and Recovery did not decide on the scope and future of the Act requirements. Army Enterprise Systems Integration Program. Although OBT officials included 25 implemen- Army Business Systems Information Technology tation tasks in the strategy, with due dates of May Strategy Needs Improvement 2011 and August 2011, the Army did not com- Overview: For more than two decades, Congress plete 16 of these tasks as of March 2012. This oc- has asked DoD to improve its systems of account- curred because OBT officials did not adequately ing, financial management and internal controls monitor the development and completion of the to produce reliable financial information and implementation tasks. Without a comprehensive to deter fraud, waste and abuse of government strategy guiding the successful implementa- resources. Enterprise resource planning systems tion of its enterprise resource planning systems, are commercial software packages containing with an estimated life-cycle cost of $10.1 billion, functional modules that integrate all the infor- Army management may not have the timely, ac- mation flowing through an entity. Individual curate and complete information it needs for de- modules contain the business processes needed cision-making. In addition, the Army risks not to complete their intended function. The Army being able to achieve an auditable Statement of Office of Business Transformation is assisting Budgetary Resources by FY 2014 or accomplish the Army in transforming its business opera- its goal of full financial statement audit readiness tions to more effectively and efficiently use na- by FY 2017. tional resources. The Army Business Systems Result: DoD IG recommended that the OBT Information Technology Strategy serves as the director coordinate with Army comptroller of- Army’s roadmap for compiling and detailing ficials to schedule ERP audits. In addition, the their enterprise architecture. The strategy focus- director should: es on the Army’s four core enterprise resource • Issue an updated strategy to include a plan planning systems including the Global Combat outlining specific milestones and perfor-

22 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 23 mance measures that the Army is to use to prise resource planning system that was incapa- govern and manage ERP implementations ble of providing standardized data for an audit- and to help achieve the strategy’s goals. able DoD Statement of Budgetary Resources by • Implement controls to monitor the develop- FY 2014. In addition, DLA missed opportunities ment and completion of the strategy imple- to reduce the more than $30 million that it pays mentation tasks and milestones. DFAS annually to perform accounting functions Report No. DODIG-2013-045 by enhancing EBS functionality. Result: DoD IG recommended the deputy chief Enterprise Business System Was Not Configured management officer and deputy chief financial “...DLA missed to Implement the U.S. Government Standard officer restrict funding until EBS program man- opportunities to reduce General Ledger at the Transaction Level agers demonstrate that EBS contains all SFIS the more than $30 Overview: In FY 2007, Defense Logistics Agency requirements. After DLA certifies SFIS compli- million that it pays officials combined business system moderniza- ance, DLA should conduct a one-time validation tion, which included order fulfillment, supply to document that EBS program managers cor- DFAS annually to and demand planning, procurement, technical rectly implemented all SFIS requirements and perform accounting quality and financial capabilities with the cus- then validate EBS after each subsequent SFIS functions by enhancing tomer service management and product data update. Additionally, DoD managers should EBS functionality.” management initiatives to develop the enter- extend the validation processes to all DoD ERP prise business system core system. EBS became systems and publish a definitive listing of busi- the enterprise resource planning system solution ness rules needed for FY 2014 financial report- supporting DLA nonenergy commodity activi- ing. DoD IG recommended that the DLA direc- ties. EBS serves as DLA’s general ledger system tor develop a plan of action and milestones to of record for both general fund and working implement the most recent SFIS requirements, capital fund operations. The Defense Finance an alternate chart of accounts and the function- and Accounting Service uses EBS financial data ality to internally crosswalk to the new alternate to produce DLA financial statements, including chart of accounts. The director should also de- the Statement of Budgetary Resources. During velop procedures to update EBS for changes in FY 2012, DLA processed a majority of the more the DoD standard chart of accounts. Comments than $53.9 billion in DoD budgetary authority from the DoD deputy chief management officer, using EBS. deputy chief financial officer and the DLA depu- Findings: EBS program managers did not con- ty director were generally responsive. figure the system to report U.S. Government Report No. DODIG-2013-057 Standard General Ledger financial data using the Standard Financial Information Structure Accountability Was Missing for Government data standards. Specifically, they did not prop- Property Procured on the Army’s Services erly implement 99 business rules, the SFIS post- Contract for Logistics Support of Stryker ing logic and 41 attributes; establish and update Vehicles EBS’s capability to record and report 241 DoD Overview: DoD IG evaluated the effective- reporting accounts; or establish EBS’s capability ness of the contractor logistics support strategy to generate trial balance data and report the data for the Stryker family of vehicles. The Project to financial systems. This occurred because DoD Management Office for Stryker Brigade Combat managers did not initially establish the stringent Team entered into the contract with General validation and certification procedures imple- Dynamics Land Systems with a singular focus to menting SFIS requirements correctly and DLA achieve an operational readiness rate goal of 90 did not prioritize its funding to ensure that EBS percent and actually achieved a readiness rate in complied with the SFIS requirements. As a re- excess of 96 percent. This report is the second sult, DoD managers approved EBS funding and in a series of three reports and addresses con- did not require SFIS implementation before de- trols over government property (Army-owned veloping and deploying additional EBS capabili- Stryker inventory). ties. As of Sept. 30, 2012, DLA obligated more Findings: PMO Stryker officials did not prop- than $2 billion to develop and deploy an enter- erly account for government property procured

22 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 23 Core Mission Areas

on the cost-reimbursable services contract for requirements and aggressive potential reuti- logistics support of Stryker vehicles. DoD IG lization and disposal reviews to meet the in- identified 19,365 different items of Stryker -in tent of Public Law 111-84, National Defense ventory (spare and repair parts) being man- Authorization Act for FY 2010, Section 328, aged by General Dynamics Land Systems at a Improvement of Inventory Management government-owned, contractor-operated ware- Practices, Oct. 28, 2009. house. The inventory had not been assigned a The review of 21 high-dollar parts, valued at value and recorded in appropriate Army prop- $85.1 million, showed that 16 parts had excess DoD IG evaluated contracts related to erty accountability and financial accounting Stryker inventory of $72.7 million that could be the Stryker Infantry Carrier Vehicle. systems. At request, General Dynamics Land either disposed of ($58 million) or potentially Systems assigned a value to the Stryker inven- used on other contracts ($14.7 million). General tory of about $892.3 million. Stryker inventory Dynamics Land Systems initiated action to dis- was not properly accounted for because PMO pose of different obsolete parts identified dur- Stryker inappropriately treated the inventory ing our review. During our visit to the govern- as contractor-acquired property, while General ment-owned, contractor-operated warehouse in Dynamics Land Systems considered the invento- Auburn, Wash., DoD IG identified 170 empty ry as government property after it was delivered engine containers, valued at $1.1 million, that to the government-owned, contractor-operated were purchased to store an engine that was no warehouse. Consequently, neither PMO Stryker longer being procured. General Dynamics Land nor General Dynamics Land Systems accounted Systems determined that the empty containers for the Stryker inventory in appropriate prop- could be used to store a newer engine, thereby erty management systems. Contractor-acquired reducing future requirements. property business rules for cost-reimbursable Result: Management comments were respon- contracts were generally designed to address sive to the recommendations, and management “property acquired, fabricated or otherwise pro- was taking action to address Stryker inventory vided by the contractor” that would eventually acceptance, accountability and financial report- be delivered to the government as part of a high- ing issues. Among other recommendations, the er-level end item, not as used by the Army on Defense Procurement and Acquisition Policy its logistics services contract with no end-item director working with the assistant secretary deliverable. While Stryker inventory consumed of defense for logistics and materiel readiness, during the contract periods of performance for agreed to issue guidance during the second the logistics services contract could possibly be quarter of FY 2013 that clarifies (1) the proper considered contractor-acquired property, most use of contractor-acquired property business of the inventory identified in this report was rules specifically for logistics services contracts from prior contract periods and needed to be with no end-item deliverables and (2) how to delivered and accepted by the Army as govern- properly account for inventory on these con- ment property. As a result of incorrectly classi- tracts that is not consumed during the contract fying Stryker inventory as contractor-acquired period of performance. Additionally, the assis- property, PMO Stryker did not: tant secretary of the Army (acquisition, logistics, • Comply with multiple DoD and Army and technology), with support from the assistant property regulations designed to provide secretary of the Army (financial management good stewardship and fiduciary responsi- and comptroller), established a multifunctional bility of government property, support the support team to assist PMO Stryker in properly Army goal of creating auditable financial valuing and recording Stryker inventory. The statements and correctly use the Army’s Ground Combat Systems program executive of- system that is designed to integrate logistics ficer agreed that the Stryker inventory should be and financial operations. delivered and accepted on a contract line item, • Implement a comprehensive inventory properly valued, recorded in an Army property management improvement plan that ad- accountability system, and stratified and clas- dressed over-forecasting, total asset visibil- sified in the proper logistics and financial ac- ity, excess inventory, economic retention counts. Also, Ground Combat Systems PEO will

24 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 25 require the PMO Stryker to implement a com- to future MILPERS ADA violations. Army and prehensive inventory management improve- Navy comptroller personnel did not assess the ment plan that addresses overforecasting, total adequacy of control procedures established for asset visibility, excess inventory and economic managing centrally managed allotments. This retention requirements and aggressive potential occurred because Army personnel did not recog- reutilization and disposal reviews. nize this requirement before FY 2012, and Navy Report No. DODIG-2013-025 personnel did not understand that the MILPERS accounts were covered by this requirement. As DoD Generally Effective at Correcting Causes a result, the Army and Navy had limited assur- of Antideficiency Act Violations in Military ance that controls will prevent future MILPERS Personnel Accounts, But Vulnerabilities Remain ADA violations, and they have not justified the Overview: The Office of the Under Secretary continued operation of MILPERS accounts as of Defense (Comptroller)/Chief Financial centrally managed allotments. Officer submitted proposals for FYs 2012 and Result: DoD IG recommended the under secre- 2013 to the House and Senate Appropriations tary of defense (comptroller)/chief financial of- Committees that requested the authority to ex- ficer should require the military departments to tend 2 percent of each military personnel ap- report the status of all unimplemented corrective propriation for obligation for an additional year. actions, update the DoD Financial Management USD(C)/CFO personnel stated in their proposal Regulation to clarify the definition of centrally that this would reduce the rate of military per- managed allotments and require the military de- sonnel Antideficiency Act violations by allow- partments to provide written assurance of their ing the military departments more flexibility for annual review of centrally managed allotments unidentified or underestimated requirements to the USD(C)/CFO. Additionally, the assistant that occurred after a MILPERS appropriation secretaries of the Army, Navy and Air Force (fi- was no longer available for new obligations. As nancial management and comptroller) should a result of interest in this request, Section 8109 establish procedures to document corrective of the Consolidated Appropriations Act, 2012, actions taken. The Navy should also identify all required DoD IG to conduct a review of ADA its centrally managed allotments and begin per- violations and their causes in DoD MILPERS forming and documenting annual reviews. accounts. Report No. DODIG-2013-027 Findings: The military departments were generally effective in implementing and sustaining Deliveries and Payments for the Defense “... personnel in the corrective actions for the nine MILPERS ADA Advanced GPS Receivers Met Contract acquisition and logistics violations, totaling $541.9 million, reported Terms, but Property Accountability Needed offices in each military since Oct. 1, 2002. Specifically, the Office of Improvements department did not the Under Secretary of Defense (Comptroller)/ Overview: The Defense Advanced GPS Receiver Chief Financial Officer, DoD and the military is a hand-held, dual-frequency, GPS device that properly account department’s assistant secretaries for financial provides guidance capabilities for vehicular, for 75,727 DAGRs, management and comptroller personnel pro- hand-held receiver, sensor and gun-laying ap- which were valued at vided adequate support to substantiate that 36 plications. The DAGR features an anti-spoofing $114.8 million...” of 44 corrective actions were implemented and module, simultaneous dual-frequency signal sustained. However, in four of the nine viola- reception and situational awareness. It also sup- tions, Army and Navy Comptroller personnel ports laser range finders and has a minimum of could not demonstrate that they had completed 14 hours continuous battery life. and sustained eight corrective actions, includ- Findings: Rockwell Collins Inc. delivered ing three actions still in process. This occurred DAGRs in accordance with contract terms, and because DoD had not established sufficient the Defense Finance and Accounting Service controls to ensure that required corrective ac- correctly paid $27.1 million in DAGR contract tions in MILPERS ADA violation reports were transactions reviewed. As a result, the military properly implemented, sustained and docu- departments received the DAGRs needed to mented. As a result, DoD remained vulnerable meet mission requirements. However, person-

24 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 25 “DoD reported $1.7 billion in cash and other monetary assets on its DoD agency- wide consolidated balance sheet...”

Core Mission Areas

nel in the acquisition and logistics offices in Improvements to Controls Over Cash Are each military department did not properly ac- Needed at the Army Disbursing Office at Soto count for 75,727 DAGRs, which were valued at Cano Air Base, Honduras $114.8 million and stored in a Rockwell Collins Overview: DoD reported $1.7 billion in cash Inc. warehouse. Those responsible for the DAGR and other monetary assets on its DoD agency- inventory inappropriately relied on the Rockwell wide consolidated balance sheet as of Sept. 30, Collins Inc. inventory system. Additionally, a 2011. The Army General Fund Cash and Other discrepancy of approximately 72,550 DAGRs ex- Monetary Assets represented $1.4 billion (83.1 isted between the number of DAGRs delivered percent) of the DoD agency-wide cash and other by Rockwell Collins Inc. and the total number of monetary assets amount, of which $18.7 million DAGRs reported by the military departments as was attributable to Army disbursing offices out- deployed or stored outside the Rockwell Collins side the continental United States that did not Inc. customer-owned property system. This oc- previously have oversight by an Army financial curred because acquisition and logistics per- management center. Army disbursing offices sonnel did not maintain appropriate account- are located in Sinai, Egypt; Soto Cano Air Base, ability records. Each military department must Honduras; and Riyadh, Saudi Arabia. As of Nov. properly manage its DAGR inventory to provide 2, 2011, the Honduras disbursing office cash bal- optimal support to the warfighter. In addition, ance was about $1.2 million. the DoD accountability records must be easily Findings: Controls at the Honduras disbursing retrievable and reconcilable to the number pro- office were not adequate to safeguard, account duced. Furthermore, the procurement contract- for, document and report cash. Specifically, the ing officer, Air Force, Space and Missile Systems then-deputy disbursing officer did not avoid Center, Global Positioning Systems Directorate, conflicts of interest and properly complete secu- inappropriately authorized $102.4 million in rity container check sheets. The then and former performance-based payments on the DAGR DDOs did not use acceptable storage containers contract. The contract did not meet Federal to store cash, conduct semiannual security in- Acquisition Regulation requirements that would spections, maintain records and report a major justify authorization of performance-based pay- physical loss of funds. This occurred because ments. The procuring contracting officer used deputy disbursing officer appointments were performance-based financing on this contract rotated approximately every six months, and the because the previous contract contained per- disbursing office did not have adequate standard formance-based payments and because of the operating procedures in place. Moreover, the increased DoD emphasis on the use of this type then-DDO stated he was not aware of the re- of financing for fixed-price contracts. The use of quirements and was not trained to perform these performance-based payments cost the military duties. The disbursing officer did not prepare the departments $49,788 in processing fees and cre- report on foreign currency purchased and im- ated an unnecessary administrative burden. properly revoked and appointed the DDO. This Result: DoD IG recommended the military occurred because the disbursing officer did not departments record all DAGRs in government have procedures in place to ensure that the re- property systems and initiate complete inventory port was prepared and deputy disbursing officer reconciliation. In addition, the Air Force, Space revocations and appointments were conducted and Missile Systems Center, Global Positioning in a timely manner. The Joint Task Force-Bravo Systems Directorate chief of contracts should commander did not properly complete physi- provide training for procuring contracting offi- cal loss of funds investigations. The disbursing cers about when and how to use performance- office staff stated that the lack of command in- based payments. volvement in appointing investigating officers Report No. DODIG-2013-018 and the inexperience of the DDOs and their six- month rotation caused the problems with loss of funds investigations. The Joint Task Force-Bravo deputy commander also attributed the problems with the investigations to the lack of continuity

26 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 27 of staff. The U.S. Army Financial Command -di showing that DoD met five of the six require- rector did not provide adequate oversight. The ments of the Improper Payments Elimination director stated that adequate oversight was pro- and Recovery Act of 2010. Specifically, DoD vided during staff assistance visits. However, published an Agency Financial Report, con- none of the visits corrected the control issues ducted program specific risk assessments, pub- identified in this report. As a result, the Army lished improper payment estimates, published increased its risk of loss due to error, theft and corrective action plans and reported improper fraud at the Honduras disbursing office. pay rates of less than 10 percent. DoD did not Result: Among other recommendations, DoD meet the established reduction target for one of IG recommended corrective actions in the areas its eight payment programs, DFAS travel pay. of separation of duties, training, staff assistance USD(C)/CFO set an FY 2012 reduction target visits and improved procedures, which should for DFAS travel pay at 3.27 percent in the DoD improve security of cash. Additionally, senior FY 2011 Agency Financial Report. However, the management should review the actions of offi- actual improper payments reported in the DoD cials responsible for providing oversight of the FY 2012 Agency Financial Report for DFAS Honduras disbursing office, conducting loss of travel pay were 5 percent of total outlays, or funds investigations and ensuring adequate pro- $419.3 million. This occurred because autho- cedures are in place. rizing officials’ reviews of travel vouchers were Report No. DODIG-2013-051 not adequate to prevent improper payments. As a result, improper payments increased in travel, DoD Efforts to Meet the Requirements of the and DoD did not achieve the improper payment “The guidance also Improper Payments Elimination and Recovery reductions intended in the Improper Payments encourages agencies’ Act in FY 2012 Elimination and Recovery Act of 2010 for DFAS OIGs, as part of their Overview: On July 22, 2010, the president travel pay or fully comply with the Act in FY reports, to include any signed Public Law 111-204, Improper Payments 2012. The USD(C)/CFO made other program recommendations for Elimination and Recovery Act of 2010, which improvements during FY 2012, including using amended the Improper Payments Information statistical samplings of contract and vendor pay- actions to improve the Act of 2002. The Office of Management and ments, as well as reviewing additional military agency’s performance Budget issued Circular A-123, Appendix C, health benefit programs that had previously in reducing improper Requirements for Effective Measurement and not been included in the Improper Payments payments.” Remediation of Improper Payments, parts I Elimination and Recovery Act reviews. However, and II, April 14, 2011, as guidance for agencies other challenges remained, including $12.3 bil- to implement the requirements of Improper lion in outlays that were not reviewed for im- Payments Elimination and Recovery Act of proper payments but should have been. As a re- 2010. If an agency did not meet one or more sult, the USD(C)/CFO did not provide accurate of these requirements, it was not compliant improper payment estimates. with the Improper Payments Elimination and Result: DoD IG recommended that the under Recovery Act of 2010, which implemented guid- secretary of defense (comptroller)/chief finan- ance encouraging agencies’ offices of inspectors cial officer work with military departments and general to (1) evaluate, as part of its review of defense agencies to (1) develop metrics and these improper payment elements, the accuracy quality assurance goals as well as programmatic and completeness of agency reporting and (2) corrective action plans for authorizing/certify- evaluate agency performance in reducing and ing officials who certify vouchers that result in recapturing improper payments. The guidance an improper payment, including holding those also encourages agencies’ OIGs as part of their officials financially liable where appropriate and reports, to include any recommendations for ac- (2) submit a remediation plan as required by the tions to improve the agencies’ performance in Improper Payments Elimination and Recovery reducing improper payments. Act of 2010. Management comments were re- Findings: The Office of the Under Secretary of sponsive to the recommendations. Defense (Comptroller)/Chief Financial Officer Report No. DODIG-2013-054 published the FY 2012 Agency Financial Report

26 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 27 Core Mission Areas

Defense Hotline Allegations Concerning of Defense (Acquisition, Technology and Contractor-Invoiced Travel for U.S. Army Corps Logistics) requested this audit. DoD IG deter- of Engineers’ Contracts W912DY-10-D-0014 mined whether Department of Defense approv- and W912DY-10-D-0024 ing/billing officials adequately reviewed transac- Overview: A hotline complainant alleged that tions that the Purchase Card On-Line System the contractor profited on travel costs, specifical- referred for being at-risk of noncompliance with ly lodging costs, by negotiating firm-fixed-price applicable laws and criteria. In addition, DoD IG task orders using maximum per diem rates for determined whether DoD approving/billing of- DoD IG reviewed at-risk purchase card lodging but requiring employees to stay at ho- ficials adequately reviewed cases in which they transactions. tels charging far less than the maximum lodging identified cards as lost or stolen. rates. The complainant alleged that this practice Findings: Neither DoD IG nor Defense resulted in the contractor’s profiting on lodging Procurement and Acquisition Policy could use costs, a process contrary to the contract terms the Purchase Card On-Line System to assess of not allowing profit on travel costs. DoD IG and determine whether DoD approving/billing determined whether the contractor’s invoiced officials adequately reviewed 32,690 transac- travel expenditures were allowable, reasonable tions that the system referred (during the period and allocable for task orders awarded against January through June 2012) as being at-risk of the U.S. Army Corps of Engineers Worldwide noncompliance with applicable laws and criteria, Environmental Remediation Services contracts. including lost and stolen cards. This occurred DoD IG determined, specifically, whether the because the automated system: contractor charged profit on travel costs, an ac- • Did not contain sufficient capability to au- tion that the contracts prohibit. tomatically retrieve and match the case dis- Result: Federal Acquisition Regulation 31.205- position reviews with the universe of the at- 46, Travel Costs, allows a contractor to ne- risk government purchase card transactions. gotiate travel costs at maximum Joint Travel • Was unable to archive case history file data Regulations per diem rates but does not restrict that were maintained in a separate data the contractor from incurring less than that rate warehouse. during the performance of the contract. Section The automated system cannot be employed for A, paragraph 5, of contract W912DY-10-D-0014 oversight reviews, such as assessments of ap- states that travel costs are limited to maximum proving/billing reviews and disposition of at- per diem rates by the Joint Travel Regulations risk transactions. and that profit is not allowed on travel costs. The Result: Because of the information DoD IG hotline complainant stated that this language requested to conduct the audit, the Defense was inserted to stop the contractor from prof- Procurement and Acquisition Policy became iting from travel costs. The contracting officer aware the automated system lacked the capabil- explained that this language was not related to ity to produce the data needed to complete the the contractor but was included in the solicita- assessment of the approving/billing officials’ tion to ensure that all contractors understood reviews and initiated actions to improve the bidding requirements. DoD IG did not substan- Purchase Card On-Line System. DoD IG did not tiate the allegation that the contractor improp- make any recommendations. erly realized profit on lodging costs on the eight Report No. DODIG-2013-061 task orders awarded under contract W912DY- 10-D-0014 and one task order awarded under Audit of Hotline Allegations Involving Defense W912DY-10-D-0024. Intelligence Mission Area Report No. DODIG-2013-056 Overview: The overall objective was to examine the allegations made in a hotline complaint in- Improvements Needed to the Purchase Card volving the Defense Intelligence Mission Area, On-Line System a program management office that addresses Overview: The director of program development integration of the DoD intelligence community and implementation, Defense Procurement and Information Technology Portfolio Management. Acquisition Policy, Office of the Under Secretary Specifically, DoD IG examined whether Defense

28 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 29 Intelligence Mission Area funds were properly tions in their efforts to address capacity gaps in allocated and executed in accordance with the such key functions as development of policy and stated purpose. strategy, ministerial organization, force devel- Findings: DoD IG did not substantiate the ho- opment, budgets, human resources (including “The DIRI program tline allegations. However, DoD IG found that professional defense and military education), seeks to enhance DoD the Office of the Under Secretary of Defense for logistics, civil-military relationships and inter- capacity to conduct Intelligence and the Defense Intelligence Agency agency coordination. The DIRI program seeks were not in compliance with DoD policies for to enhance DoD capacity to conduct defense defense institution information technology portfolio management. institution building with a balanced, centralized, building with a Result: The report provided a recommendation expert and efficient approach that includes de- balanced, centralized, that would ensure information technology in- liberate outreach to security cooperation provid- expert and efficient vestments are adequately managed and redun- ers and decision-makers. approach...” dancies and efficiencies are identified. The under Findings: Office of the Deputy Assistant secretary of defense for intelligence comments Secretary of Defense for Partnership Strategy were not fully responsive to the recommenda- and Stability Operations program officials ad- tion. This report is FOUO. ministered the DIRI program since its incep- Report No. DODIG-2013-004 tion in 2009 without a defined and published program mission and goals, program strategy or performance measures. Furthermore, CCMR Joint Warfighting and program officials did not adequately implement Readiness procedures to establish a clear tracking process DoD is determined to maintain a ready and ca- for DIRI program engagements or document pable force, even as it reduces its overall capac- all DIRI program efforts. Specifically, CCMR ity. As the drawdown continues in Afghanistan, program officials did not prepare 24 event plans the resetting of equipment and materials from for the 175 DIRI program engagements held ongoing operations is critical to ensure the op- through August 2009 and April 2012. In addi- erational readiness of the troops. It is also criti- tion, 149 event plans and 173 engagement re- cal to properly account for unneeded equipment ports lacked approval. This occurred because and materials by reusing or disposing of them. the under secretary of defense for policy did Additionally, the Department continues not only not develop defense institution-building policy to ensure support for the troops but also to as- to guide the DIRI program or any other defense sist in building partner nations security capacity. institution-building-related efforts. Also, DASD The nation’s security is inextricably tied to the ef- PSO and CCMR program officials stated they fectiveness of its efforts to help partners and al- wanted flexibility to execute the DIRI program. lies build their own security capacity. The value As a result, DASD PSO program officials had an of programs to build partner capacity extends insufficient basis for determining the program’s well beyond conflicts such as Afghanistan and effectiveness in partnering with 17 countries or Iraq. Conducting such efforts before conflicts of its use of the $20.2 million provided to the pro- become serious can help mitigate them or even gram as of third quarter FY 2012. Furthermore, prevent them in the first place. During this re- without defined performance measures, DASD porting period, DoD IG issued reports address- PSO and CCMR program officials could not ac- ing supply-support activities in Afghanistan and count for the program’s results. Because CCMR the Department’s management efforts associated program officials did not adequately implement with the Defense Institution Reform Initiative. tracking and documentation procedures, a complete record of what was accomplished during Defense Institution Reform Initiative Program DIRI program engagements and lessons-learned Elements Need to Be Defined from those engagements were not easily acces- Overview: The Defense Institution Reform sible or disseminated. Lastly, the lack of defense Initiative program is a global institutional ca- institution-building policy allowed overlapping pacity-building program that supports partner missions in DoD’s defense institution-building- nation Ministries of Defense and related institu- related efforts. An emerging and growing pro-

28 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 29 Core Mission Areas

gram, DIRI needs written guidance to govern the four of the seven SSAs exceeded the Army’s goal program and define how it fits with other U.S. for the readiness driver fill rate. However, even security cooperation and defense institution- though the SSAs provided the necessary support building efforts. In addition, corrective actions to their customers, they could be managed more that officials take will help ensure the efficient effectively to ensure that assets were accounted use of the approximately $12 million requested for and properly safeguarded. Specifically, the for the DIRI program in FY 2013. SSAs DoD IG visited had recorded losses of Result: DoD IG recommended the under secre- approximately $23.5 million from June 2010 tary of defense for policy issue guidance that de- through July 2011. Of the $23.5 million, about fines the DIRI program’s mission and goals, pro- $10.3 million could not be adequately explained. gram strategy, and performance measures. The The lack of accountability occurred because SSA under secretary of defense for policy should also accountable officers did not conduct adequate issue guidance that defines defense institution causative research or implement the use of com- building roles and responsibilities. The under sec- mand inspection controls. Without adequate retary of defense for policy should also issue guid- causative research, the SSA accountable official ance about implementing procedures that require could not determine if the inventory discrep- the coordination of a defense institution-building ancies were caused by system problems or if a program’s mission and goals, program strategy financial liability investigation of property loss and performance measures with other security was necessary. As a result, unless controls are cooperation activities. In addition, the center for implemented to safeguard inventory, SSAs are at civil-military relations director should develop an increased risk of continued loss, damage or and implement procedures to document all in- theft of inventory. dividual DIRI program efforts, provide evidence Result: DoD IG recommended the U.S. Forces- of review and approval of those documents, and Afghanistan commander issue a policy memo- establish a clear tracking method for each effort. randum requiring that: Report No. DODIG-2013-019 • SSA accountable officers conduct causative research on all qualifying Inventory adjust- Supply Support Activities in Afghanistan Could ment reports. At a minimum, the causative Be Managed More Effectively to Improve research should include a complete review Inventory Accountability of all transactions and supporting docu- Overview: Supply support activities in mentation to include identification, analyses Afghanistan are responsible for providing supply and evaluation of the cause for the inven- support to help units maintain operational read- tory discrepancy. If the causative research iness. As of June 2011, 19 SSAs were operating showed that the inventory discrepancy re- throughout Afghanistan. As of June 2011, SSAs sulted in an actual loss of property and can

DoD IG reviewed supply support in Afghanistan reported a cumulative total of be related to the contractor’s performance, activities in Afghanistan. 189,443 line items of inventory, valued at $596.1 the accountable officer should prepare a fi- million. DoD IG determined whether selected nancial liability investigation and take the supply support activities in Afghanistan effec- appropriate actions. tively and efficiently supported their customers • Responsible approval authorities review and and evaluated procedures for establishing autho- approve all Inventory adjustment reports to rized stockage lists. verify that causative research conducted by Findings: SSAs in Afghanistan generally pro- SSA accountable officers was conducted vided the necessary support to their customers, in accordance with Army Regulation 735- maintained readiness status and implemented 5, Policies and Procedures for Property procedures for establishing effective authorized Accountability, Feb. 28, 2005. stockage lists. The seven SSAs DoD IG visited • Sustainment brigades conduct command met the Army’s goal for the number of line items inspections of SSAs in accordance with with a zero balance with dues-out and generally Army policy. met the sustainment brigade’s established goal Management agreed with the recommendations. for customer demand satisfaction. In addition, Report No. DODIG-2013-026

30 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 31 Counterintelligence Screening Needed to appropriately track commercial mobile devices Reduce Security Threat That Unscreened Local and was unaware of more than 14,000 commer- National Linguists Pose to U.S. Forces cial mobile devices used throughout the Army. Overview: DoD IG reviewed counterintelli- Additionally, at the sites visited, CIO did not: gence screening needed to reduce security threat • Ensure that commands configured com- that unscreened local national linguists pose to mercial mobile devices to protect stored in- U.S. forces. formation. The chief information officers at Findings/Result: The report is FOUO. the U.S. Military Academy and U.S. Army Report No. DODIG-2013-030 Corps of Engineers Engineer Research and Development Center did not use a mobile device management application to config- Information Assurance, ure all commercial mobile devices to pro- Security and Privacy tect stored information. DoD IG oversight focuses on the Department’s • Require commercial mobile devices to cyber security efforts including information be properly sanitized. CIOs at USMA security and assurance, operations and contin- and USACE Engineer Research and gency planning, information technology acqui- Development Center did not have the ca- sitions, vulnerability management and emerging pability to remotely wipe data stored on capabilities. During this reporting period, DoD commercial mobile devices that were trans- IG issued reports on tracking and security of ferred, lost, stolen or damaged. commercial mobile devices, security posture of • Control commercial mobile devices used critical infrastructure and industrial control sys- as removable media. The CIOs at USMA tems, and controls over wireless connections. and USACE Engineer Research and Development Center allowed users to store Improvements Needed With Tracking and sensitive data on commercial mobile devic- “Specifically, CIO Configuring Army Commercial Mobile Devices es used as removable media. did not appropriately Overview: With the rapid changes in informa- • Require training and user agreements spe- track commercial tion technology, the Army decided to adopt cific to commercial mobile devices. The CIOs at USMA and USACE Engineer mobile devices and was newer technologies, starting with incorporating unaware of more than commercial mobile devices into daily activities. Research and Development Center did not As the Army adopted this newer technology, it train commercial mobile device users and 14,000 commercial began testing commercial mobile devices in the require users to sign user agreements. mobile devices used field and in administrative offices. In 2009, the These actions occurred because the Army CIO throughout the Army.” Army vice chief of staff directed the Army chief did not develop clear and comprehensive policy information officer to begin procuring inexpen- for commercial mobile devices purchased under sive systems such as Apple iPhone and Google pilot and nonpilot programs. In addition, the Android commercial mobile devices instead Army CIO inappropriately concluded that com- of the traditional procurement of dedicated mercial mobile devices were not connecting to software and hardware. DoD IG determined Army networks and storing sensitive informa- whether the Army had an effective cyber secu- tion. As a result, critical information assurance rity program that identified and mitigated risks controls were not appropriately applied, which surrounding portable electronic devices and re- left the Army networks more vulnerable to cyber movable media. Specifically, at the sites visited, security attacks and leakage of sensitive data. DoD IG verified whether Army officials appro- Result: The Army chief information officer priately tracked, configured and sanitized por- should develop clear and comprehensive policy table electronic devices and determined whether to include requirements for reporting and track- the Army used authorized removable media on ing all commercial mobile devices. In addition, its network. the Army chief information officer should extend Findings: The Army CIO did not implement an existing information assurance requirements to effective cyber security program for commer- the use of all commercial mobile devices. cial mobile devices. Specifically, CIO did not Report No. DODIG-2013-060

30 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 31 Core Mission Areas

Better Reporting and Certification Processes needed to train and equip ANSF and Afghan Can Improve Red Teams’ Effectiveness Local Police by providing funding to train, equip Overview: DoD IG assessed the effectiveness of and sustain ANSF. the cyber red teams’ activities. Specifically, DoD IG determined whether the red teams followed A top priority of DoD IG is to provide monitoring DoD and components’ standard operating pro- and oversight of the acquisition and contracting cedures when evaluating or testing for vulner- efforts associated with training, equipping and abilities, threats, infiltration controls or other sustaining ANSF and Afghan Local Police. DoD services performed on components’ systems. IG oversight addresses the management and ad- Findings/Result: This report is classified. ministration of contracts for goods and services Report No. DODIG-2013-035 that directly support efforts funded by Afghan Security Forces Fund. During this reporting pe- Improvements are Needed to Strengthen the riod, DoD IG reported on the efforts of acquir- Security Posture of USACE, Civil Works Critical ing a medium airlift aircraft for the Afghan Air Infrastructure and Industrial Control Systems in Force and the management of the Ministry of the Northwestern Division Defense Advisors program to assist in building Overview: DoD IG determined whether U.S. a ministerial capacity in Afghanistan. Army Corps of Engineers, Civil Works personnel in the Northwestern Division implemented Critical Information Needed to Determine the effective procedures and security controls to Cost and Availability of G222 Spare Parts

DoD IG audited physical security protect information systems used to operate Overview: Congress created the Afghanistan measures at Chief Joseph Dam. critical infrastructure against unauthorized ac- Security Forces Fund in FY 2005 as an emer- cess from physical and cyber threats. gency supplemental appropriation for equip- Findings/Result: This report is FOUO. ment and services to support the Afghan Report No. DODIG-2013-036 National Security Forces. From FY 2005 to 2012, Congress appropriated about $50.9 bil- Improvements Needed With Wireless Intrusion lion to the Afghanistan Security Forces Fund. Detection Systems at the Defense Logistics The U.S. government uses pseudo-foreign mili- Agency tary sales cases to procure items and services Overview: DoD IG determined whether Defense such as the G222 to support the ANSF through Logistics Agency officials were using wireless in- this fund. Foreign military sales cases for pur- trusion detection systems in their facilities to de- chasing items with Afghanistan Security Forces tect unauthorized activity from wireless local area Fund are “pseudo” because the United States is network devices. DoD IG also determined whether not selling the items to foreign customers, but DLA officials took appropriate actions to prevent instead, to DoD, which provides those items to DoD IG reviewed wireless intrusion detector systems. and mitigate unauthorized wireless connections. the ANSF. In May 2007, NATO Training Mission Findings/Result: This report is FOUO. -Afghanistan/Combined Security Transition Report No. DODIG-2013-055 Command-Afghanistan sent a memorandum of request to the Air Force Security Assistance and Cooperation Directorate to acquire a medi- Equipping and Training um airlift aircraft for the Afghan Air Force. The Afghan Security Forces medium airlift aircraft was required to perform A sufficient and sustainable Afghan National missions in a high-altitude/high-temperature Security Force is necessary for Afghanistan’s environment and to address three requirements: long-term stability and security. As the transfer- presidential airlift, medical evacuation and proj- ring of security authority and responsibility shifts ect combat capability. In October 2007, NTM-A/ from International Security Assistance Force CSTC-A requested the acquisition of the G222 to the Afghan government by the end of 2014, to perform these missions and as requested, the the training, equipping and mentoring efforts G222 Program Management Office awarded a of ANSF is crucial. The Afghanistan Security contract to Alenia North America. Forces Fund provides the resource foundation

32 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 33 Findings: G222 PMO officials have not de- the NTM-A/CSTC-A commanding general must termined the cost or availability of G222 spare develop a long-term strategy if the G222 will parts. This occurred because NTM-A/CSTC-A continue to be used to meet the Afghan Air Force and G222 PMO officials did not effectively man- medium airlift requirement. Because of actions age the G222 program. Specifically, NTM-A/ taken by the Air Force Mobility Programs, Air CSTC-A and G222 PMO officials had not agreed Force Life Cycle Management Center PEO after on a course of action for the G222, and G222 draft report issuance, DoD IG acknowledges that PMO officials had not prepared a sustainment a sustainment plan is no longer necessary for the plan that considered cost. As a result, NTM-A/ G222 program. Therefore, DoD IG recommend- DoD IG reviewed the cost of G222 spare CSTC-A and G222 PMO officials may spend ed the PEO direct G222 PMO officials not to -ob parts. about $200 million in Afghanistan Security ligate any additional funds related to the about Forces Funds on spare parts for an aircraft that $200 million in Afghanistan Security Forces does not meet operational requirements, may be Funds. Additionally, DoD IG recommended that cost-prohibitive to fly and does not have criti- they do not expend funds previously obligated cal spare parts to sustain it. This amount would for spare parts until exhausting all available spare be in addition to the $486.1 million that G222 parts inventory, cannibalizing spare parts from PMO officials have already obligated for the pro- other G222 aircraft, and when feasible, continu- gram on two contracts. In addition, the aircraft ing the practice of using other aircraft to meet flew only 234.2 of the required 4,500 hours from the medium airlift capability. G222 PMO officials January to September 2012. In an Aug. 28, 2012, should also develop an executable disposal plan memorandum to NTM-A/CSTC-A and Air for the G222 and determine whether any spare Force Life Cycle Management Center officials, parts are needed to support the disposal plan. DoD IG suggested they delay the procurement Report No. DODIG-2013-040 of spare parts until they determined (1) whether to replace or use the G222 in a limited capac- Performance Framework and Better ity, (2) the service life of the G222, (3) the im- Management of Resources Needed for the pact of diminishing manufacturing sources and Ministry of Defense Advisors Program (4) the estimated sustainment costs. NTM-A/ Overview: In 2009, DoD developed the Ministry CSTC-A and Air Force Life Cycle Management of Defense Advisors pilot program to support a Center officials agreed with our suggestions ex- pool of civilians capable of building ministerial cept for preparing a sustainment plan before capacity in Afghanistan. DoD officials designed obligating funds for the procurement of spare the MoDA program to forge long-term relation- parts. In December 2012, the Air Force Mobility ships with a partner nation’s ministry of defense Programs, Air Force Life Cycle Management by matching senior civilians to partner-identified Center program executive officer notified the requirements. DoD civilians can forge long-term contractor that they would not take action to relationships under the auspices of the civilian issue a new delivery order when the G222 fol- expeditionary workforce, which allows civilians low-on sustainment support contract expired to deploy for as long as two years. The MoDA in March 2013. The PEO also indicated the program also provides temporary backfill fund- Afghan Air Force would use an alternate aircraft ing to the civilian’s parent organization to hire to meet the long-term medium airlift require- temporary replacements. DoD IG determined ment. According to the PEO, if the program had whether the program met its intended purpose; continued through March 2022 as originally specifically, DoD IG determined whether MoDA planned, it would have required $830 million, program goals, objectives and resources were in addition to the about $200 million identified managed effectively and efficiently. in the report, in sustainment costs, to include a Findings: MoDA program officials did not -es significant amount for spare parts. tablish a performance management framework Result: DoD IG recommended that the NTM-A/ to include goals, objectives and performance CSTC-A commanding general and the assistant indicators to assess progress and measure pro- secretary of the Air Force (acquisition) determine gram results. Instead, program officials relied whether to continue to use the G222. In addition, on NATO Training Mission-Afghanistan/U.S.

32 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 33 Core Mission Areas

Combined Security Transition Command- reimbursed other DoD agencies for some of the Afghanistan officials to determine whether deployed civilians’ costs, to include premium MoDAs were effectively building ministerial pay, backfilling the vacant position and training capacity in the Afghanistan Ministry of Defense costs. DoD IG determined whether MoDA pro- and Ministry of Interior. Also, program officials gram officials established adequate controls over did not establish goals and objectives to deter- the distribution of funds to other DoD agencies. mine whether an adequate number of MoDA Findings: MoDA program officials did not de- positions were filled in a timely manner. This velop adequate controls over the distribution of occurred because program and command offi- funds to other DoD agencies for deployed civil- cials did not establish a cooperative agreement ians’ premium pay, backfill and training costs. to identify roles and responsibilities and com- Instead, program officials relied on other DoD municate and share information. Other contrib- agencies to ensure $19.3 million in estimated uting factors cited by program officials included costs for 118 military interdepartmental pur- an absence of DoD guidance on building min- chase requests issued in FY 2010 to FY 2012 isterial capacity and the tentative nature of a were adjusted to the final payment amounts. pilot program creating uncertainty of its future. MoDA program officials did not develop and Without a framework, program officials cannot implement policies and procedures to obtain fully assess the effectiveness of the program in actual-cost data, perform reconciliations and building ministerial capacity or hold individu- adjust final payments made to DoD agencies. As als accountable for achieving program results. In a result, for $3.6 million disbursed through 56 addition, command officials may not have effec- military interdepartmental purchase requests, tively and efficiently managed MoDA resources. MoDA program officials: Specifically, officials were unable to justify the • Potentially overpaid nine military interde- need for all 97 authorized MoDA positions and partmental purchase requests by $124,195. placed five of 28 MoDAs interviewed into non- • Potentially underpaid 13 military interde- advisory positions with Afghan officials. This partmental purchase requests by $318,892. occurred because command officials did not The remaining 34 military interdepartmental develop criteria to identify and validate MoDA purchase requests did not require adjustment. positions. As a result, MoDAs may be unable to Without taking corrective action, MoDA pro- fully exchange expertise and build long-term re- gram officials risk augmenting MoDAs or other lationships with Afghan ministry officials. DoD agencies’ appropriations, which could re- Result: Among other recommendations, DoD sult in Antideficiency Act violations. IG recommended the deputy assistant secretary Result: DoD IG recommended the deputy assis- of defense for partnership strategy and stability tant secretary of defense for partnership strategy operations and command officials should work and stability operations: together to establish a performance manage- • Update policy and develop and implement ment framework and cooperative agreement procedures to obtain actual-cost data and and develop and implement criteria to identify reconcile funds disbursed through military and validate MoDA positions. interdepartmental purchase requests for de- Report No. DODIG-2013-005 ployed advisors premium pay, backfill and training costs. Policies and Procedures Needed to Reconcile • Reconcile prior disbursements to actual Ministry of Defense Advisors Program costs and adjust the final payment amount, Disbursements to Other DoD Agencies as appropriate. Overview: Between FY 2010 and FY 2012, Report No. DODIG-2013-062 Ministry of Defense Advisors program officials

34 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 35 The following cases are highlights of investiga- Bragg, N.C. As a stipulation of the contracts, tions conducted by DCIS and its federal law en- Caddell represented that it would hire and men- forcement partners during the reporting period. tor Mountain Chief Management Services, a Investigations DCIS investigations are listed under the follow- Native American-owned company, under the ing categories: Department of Defense’s Mentor-Protégé and • Procurement fraud. Indian Incentive Programs. Allegedly, Caddell • Public corruption. falsely represented in invoices and supporting • Product substitution. documents that it was mentoring Mountain • Health care fraud. Chief and that Mountain Chief was perform- • Illegal technology transfer. ing work on the construction projects. However, • Cyber crime and computer network Mountain Chief did not receive mentoring ser- intrusions. vices and did not perform the work for Caddell. In effect the company was a pass-through entity Caddell used to claim payments under the two Procurement Fraud programs. Procurement fraud investigations continue to Result: On Dec. 20, 2012, the Department of comprise a major part of the DCIS case inven- Justice entered into a nonprosecution agreement tory. Of all forms of white-collar crime, procure- with Caddell Construction. As part of the agreement fraud is probably the least visible, yet the ment, Caddell agreed to pay a monetary penalty most costly. Procurement fraud includes, but is of $2 million and to cooperate with Department not limited to, cost or labor mischarging, defec- of Justice for the two-year term of that agree- tive pricing, price fixing, bid rigging, and defec- ment. On March 25, 2013, the Department of tive and counterfeit parts. The potential damage Justice entered into a civil settlement agreement resulting from procurement fraud extends well with Caddell, in which Caddell agreed to pay beyond financial losses. This crime poses a se- $1.1 million to settle the allegations of fraud. rious threat to the ability of the Department to achieve its operational objectives and can have DoD Contractor Falsely Certified as a Service- a negative effect on the implementation of pro- Disabled Veteran-Owned Small Business to grams. DCIS places the highest priority on in- Obtain DoD Contracts vestigations impacting safety and operational Overview: A joint investigation with GSA OIG, readiness to protect the welfare of warfighters SBA OIG and Veterans Affairs OIG disclosed throughout the procurement process. that Silver Star Construction, LLC, a prime DoD contractor, falsely certified it was a service-dis- Caddell Construction Paid a $2 Million Fine and abled veteran-owned small business to obtain $1.1 Million to Settle Allegations of Fraud set-aside contracts under the program valued Overview: A joint investigation with the in excess of $5 million and procured under the Department of Labor OIG, General Services American Recovery and Reinvestment Act of Administration OIG and Small Business 2009. A review of military records did reveal Administration OIG determined that Caddell that company owner, Warren Parker, served in Construction Company, Inc., submitted alleg- the Missouri National Guard from 1963 through edly false claims to the government seeking 1968, but failed to confirm that Parker was payment for work performed on the Edward a service-disabled veteran. Records from the DCIS investigated alleged false claims involving the Zorinsky building. Zorinsky Federal Building renovation project Federal Data Procurement System revealed two in Omaha, Neb. The Zorinsky renovation proj- service-disabled veteran-owned small business ect was a $43 million contract issued through DoD contracts obtained by Silver Star as a pri- GSA. The U.S. Army Corps of Engineers pro- mary contractor including one for $7,450 and vided onsite project management during the the other for $740,875. renovation project and maintains office space Result: Warren Parker previously pleaded guilty in the Zorinsky Federal Building. Between 2003 to conspiracy to commit fraud against the United and 2005, USACE contracted with Caddell to States, major program fraud, wire fraud, con- build barracks at Fort Campbell, Ky., and Fort spiracy to commit money laundering and false

34 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 35 Core Mission Areas

statements. On Nov. 5, 2012, Warren Parker manager, respectively, under a contract that was sentenced to 87 months of confinement and Parsons held to support the Coalition Munitions three years of supervised release. A final order Clearance Program operated by the USACE. The of forfeiture was also granted for $6.8 million to Coalition Munitions Program sought to prevent be paid jointly and severally with any co-defen- insurgents and other unfriendly groups from dants ordered to pay forfeiture judgments. acquiring munitions that had been stockpiled, abandoned or seized. Newell and Hunt admitted Nearly $3 Million Paid by NCR Corporation to that from 2005 to 2007 they accepted more than Settle False Claims Allegations $1 million in kickbacks in return for steering Overview: A joint investigation with USACIDC, contracts to specific subcontractors. Newell and Naval Criminal Investigative Service and the Hunt also admitted to filing false federal income OIGs for Department of Energy, Department tax returns by not disclosing kickback income. of Interior, Environmental Protection Agency, Ahmed Sarchil Kazzaz previously pleaded guilty GSA, NASA and the Postal Service disclosed for his role in the scheme. According to his plea that NCR Corporation allegedly provided im- agreement, between March 2006 and June 2007, proper payments amounting to kickbacks to Kazzaz agreed to pay kickbacks to Newell and Systems Integrators and other Alliance partners Hunt. He obtained more than $23 million in in exchange for their recommendation of NCR subcontracts providing materials and equipment products to government end users. Between to Parsons. 2001 and 2004, NCR, acting through its Teradata Result: On Oct. 9, 2012, Newell was sentenced Division, allegedly entered into agreement with to 27 months in prison, three years of supervised Accenture LLP where NCR paid Accenture il- release and $1.2 million in restitution to be paid legal benefits for contracts and discounts on jointly and severally between co-defendants equipment purchases. NCR is one of several Hunt and Kazzaz. In addition, Newell was or- defendants named in the qui tam lawsuit under dered to forfeit $861,027. On Oct. 10, 2012, Hunt investigation for violations of the Anti-Kickback was sentenced to 15 months in prison and three Act and the False Claims Act. Several of the con- years of supervised release. Along with the joint tracts affected were DoD contracts, including and several restitution with Newell and Kazzaz, contracts with Defense Commissary Agency, Hunt was further ordered to forfeit $236,472. Defense Information Systems Agency and U.S. On Oct. 29, 2012, Kazzaz was sentenced to Transportation Command. 15 months in prison, ordered to pay a fine of Result: On Dec. 28, 2012, the Department of $15,000 and held jointly and severally liable for Justice entered into a civil settlement agreement restitution to be paid to USACE. Kazzaz was with NCR Corporation, in which the company also ordered to forfeit an additional $947,585. agreed to pay $2.8 million to settle the allega- The combined forfeitures, fines, penalties and tions of false claims. The settlement amount in- restitution for all three defendants amounted to cludes $572,994 paid to the relator of the qui tam more than $3.2 million. suit.

Two U.S. Contractor Employees Sentenced Public Corruption for Kickback Conspiracy Related to Iraq Corruption by public officials poses a fundamen- Reconstruction Efforts tal threat to our country’s national security and Overview: A joint investigation with the Special overall safety and undermines the public trust in Inspector General for Iraq Reconstruction, the government. Public corruption wastes bil- FBI and Internal Revenue Service-Criminal lions of tax dollars and negatively affects DoD Investigation disclosed that two former em- and the mission of the warfighter. DCIS com- ployees of the Parsons Company conspired with bats this issue with the authority, resources and expertise to conduct undercover operations, DCIS investigated a kickback conspiracy U.S. government subcontractors to receive kick- in Iraq. backs in return for contracts. Gaines R. Newell court-authorized electronic surveillance and fo- and Billy Joe Hunt were employed by Parsons in rensic audits. Using these tools, DCIS holds ac- Iraq as program manager and deputy program countable those who undermine the integrity of

36 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 37 the DoD acquisition system. The entire procure- specific documents, including Transportation ment system is based on the trust and integrity Movement Requests, which authorized the use of the public officials who oversee the purchase, of trucks. Montes’s duties included receiving quality, safety and security of the equipment and Transportation Movement Requests from vari- services our warfighters require to carry out the ous contractors and reconciling any discrep- mission. ancies between the services described in the Transportation Movement Requests and the ser- Kentucky-Based Defense Contractors Pay vices the contractors claimed in their invoices. $6.2 Million to Resolve Allegations of False On numerous occasions, Montes received and Statements reviewed Transportation Movement Requests Overview: A DCIS investigation determined and invoices for services allegedly provided by that Commonwealth Technologies, LLC; Lusk Afghanistan Trade Transportation that Montes Mechanical Contractors, Inc. and its owners al- knew were not performed. From approximately legedly committed fraud by claiming to operate May 2008 through December 2008, in return for in an historically underutilized business zone her knowingly handling the fraudulent trans- and subsequently received approximately $61 portation movement requests and invoices, million in set-aside HUBZone contracts from the Afghanistan Trade Transportation paid Montes Army. A contracting officer representative with approximately $50,000. the U.S. Army’s Network Enterprise Center at Result: In a plea agreement Oct. 24, 2012, Fort Knox, Ky., allegedly steered contracts related Montes pleaded guilty to one count of receipt to information technology work at Fort Knox of bribes by a public official. On Jan. 31, 2013, to HD Solutions, LLC, a subcontractor of Lusk Montes was sentenced to nine months impris- Mechanical Contractors, Inc. onment and 12 months supervised release. She Result: On Dec. 5, 2012, the Department of was also ordered to pay $50,000 restitution to Justice entered into a civil settlement agreement the Defense Finance and Accounting Service with Lusk Mechanical Contractors, Inc. and and was debarred from contracting with the U.S. Commonwealth Technologies to settle allega- government until October 2016. tions of violating the civil False Claims Act. $3.7 million was payable by the defendants (within 15 Former U.S. Army Major Sentenced to 18 days). The remaining $2.5 million was seized Oct. Months in Prison for Bribery Scheme Related to 22, 2008, from Lusk Mechanical Contractors, Inc. DoD Contracts in Kuwait bank accounts and was forfeited in accordance Overview: A joint investigation with the with the civil settlement agreement. USACIDC, IRS-CI, FBI and Special Inspector General for Iraq Reconstruction disclosed that Former KBR Employee Pleads Guilty to Bribery former Army Major James Momon Jr. was infor Facilitating Theft by Trucking Contractor in volved in a criminal conspiracy to accept cash Afghanistan bribes from multiple DoD contractors that sup- Overview: A joint investigation with the plied bottled water and other goods and ser- USACIDC, FBI and Special Inspector General vices to U.S. military bases in Kuwait. In return, for Afghanistan Reconstruction disclosed that Momon assisted the contractors in obtaining former KBR employee, Diyana Montes, re- contracts and blanket purchase agreements. ceived bribes for her role in a scheme to fraud- Momon agreed to accept approximately $5.8

ulently bill the Army for trucking services in million from his co-conspirators as payment for DCIS investigated fraudulent billing for Afghanistan. From approximately April 2008 his actions, including $1.6 million in cash and trucking services in Afghanistan. through December 2008, Montes worked at luxury items. Momon assumed contracting du- Bagram Airfield, Afghanistan, where KBR ties at Camp Arifjan, Kuwait, from former Army provided services to the Army’s Movement Major John C. Cockerham, who served as a con- Control Branch that coordinated requests from tracting official in Kuwait in 2004 and 2005. In various U.S. military units for trucking ser- February 2008, Cockerham, who solicited and vices and assigned those requests to particular received bribes from DoD contractors in ex- contractors. Each trucking request generated change for contracts and blanket purchase agree-

36 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 37 Core Mission Areas

ments, pleaded guilty for his role in the conspir- of a forfeiture money judgment and to forfeit ad- acy and was sentenced to 210 months in prison ditional assets totaling $4.8 million. In addition, and ordered to pay $9 million in restitution. Markus was sentenced to three years of super- Result: On Nov. 13, 2012, Momon was sentenced vised release, fined $75,000 and ordered to co- to 18 months in prison, three years of supervised operate with the IRS concerning the payment of release and ordered to pay $5.8 million in res- taxes and penalties. titution, jointly and severally with previously sentenced co-defendants. To date, 19 individuals California Army National Guard Orders $6.3 have pleaded guilty or been convicted at trial in Million in Recoupments From More Than 900 the ongoing investigation of corrupt contracting Guard Members at Camp Arifjan. Overview: A joint investigation with the FBI and USACIDC disclosed that Master Sergeant Former USACE Employee Sentenced to 13 Years Toni L. Jaffe, California Army National Guard, for Multimillion-Dollar Bribery and Kickback acted with numerous individuals assigned to CA Scheme ARNG units throughout California to disburse Overview: A joint investigation with IRS- approximately $20 million to officers and enlist- CI, Immigration and Customs Enforcement- ed personnel who were not entitled to receive the Homeland Security Investigations and monetary awards and benefits. Jaffe, CA ARNG’s USACIDC determined that John Alfy Salama incentives program manager, was responsible for Markus, a former USACE employee, accepted the disbursement of approximately $300 million bribes and kickbacks while deployed to Tikrit, in payments under various incentives programs Property recovered as part of asset forfeiture program. Iraq. The bribery was in connection with more for more than a decade. The programs involved than $50 million in USACE contracts awarded funding set aside for enlistment, re-enlistment to foreign companies in Gulf Region North, Iraq. and accession bonuses, as well as education as- From July 2007 to June 2008, Markus accepted sistance, and tuition and student loan reim- at least $3.7 million in bribes and kickbacks in bursement. DoD funded the programs affected connection with USACE contracts awarded to by Jaffe’s misconduct multiple companies associated with two foreign Result: Previously, Jaffe was sentenced to serve contractors. From September 2005 to July 2008, 30 months in federal prison and pay restitution Markus was assigned to Tikrit as a project engi- to DoD of $15.2 million. On Jan. 28, 2013, the neer. While there, he and his co-worker, Onisem CA ARNG reported that to date $6.3 million in Gomez, were involved in the review and award administrative recoupments had been initiated process for USACE contracts in Gulf Region involving more than 900 current and former CA North, Iraq, as well as the post-award admin- ARNG members. istration, oversight and modification of such “The implicated contracts. Markus admitted that he and his co- DoD Contractors and Navy Employees defense contractors worker provided favorable official action and Sentenced to Pay More Than $3 Million for paid more than $1 assistance to co-conspirators for the benefit of Fraud Scheme at Naval Air Station North Island their associated companies. This included ob- Overview: A joint investigation with the FBI, million in bribes... ” taining and disseminating confidential bid and NCIS, IRS-CI and GSA OIG uncovered a wide- internal USACE pricing information to indi- spread bribery and corruption scheme operat- viduals seeking the award of USACE contracts ing at the Naval Air Station North Island, Calif. to their companies, and approving lucrative pay- The implicated defense contractors paid more ments for these companies. Markus opened or than $1 million in bribes, including cash, retail established control over multiple foreign bank gift cards, electronics and home remodeling in accounts in Jordan and Egypt to receive illegal exchange for nearly $4 million in orders. The bribe and kickback payments that he took from fraud involved contracts to provide goods and foreign contractors in connection with USACE services to the Naval Air Systems Command E-2 contracts. Hawkeye/C-2 Greyhound Program. An anony- Result: On Feb. 12, 2013, Markus was sentenced mous complaint alleged Jesse Denome, president to 156 months in prison. He agreed to the entry of J.D. Machine Tech, Inc., and Kaiser Defense,

38 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 39 LLC., paid Naval Air Station North Island em- products, and substituted products that do not ployees, Donald VanGundy, contracting officer, conform with the requirements of the contract. and Brian Delany, E2/C2 team lead, for work to Nonconforming products disrupt readiness and be directed to Denome’s businesses. VanGundy waste economic resources. They also threaten and Delany allegedly circumvented the bidding the safety of military and government personnel process to exclude competition, ignored non- and other end-users. When substituted prod- delivery of ordered items and certified receipt ucts are deliberately provided to DoD, mission- of items that were never delivered to Naval Air critical processes and capabilities can be severely Station North Island. Investigation revealed the impacted until those products are removed from scheme was more widespread and included the the DoD supply chain. DCIS works with federal receipt of bribes and gratuities by other E2/C2 law enforcement partners, supply centers and employees. Evidence indicated other Navy em- the defense industrial base to ensure that DoD ployees circumvented the internal controls en- contractors provide the correct parts and com- abling the fraud scheme to proliferate and in- ponents to meet DoD requirements. DCIS ac- volve additional contractors. tively participates in the Defense Supply Center- Result: On Oct. 12, 2012, Brian J. Delaney was Columbus Counterfeit Material/Unauthorized sentenced to 36 months probation and ordered Product Substitution Team and partners at the to pay $60,700; Michael K. Graven was sen- national level with the Intellectual Property tenced to 18 months confinement, 36 months Rights Coordination Center, to focus on pre- probation and ordered to pay $622,381; Paul A. venting the proliferation of counterfeit parts. Grubiss was sentenced to 18 months confine- Pooling the member agencies’ resources allows ment, 36 months probation and ordered to pay for more effective detection and removal of in- $300,200; David W. Lindsay was sentenced to 36 ferior goods that threaten the safety of America’s months probation and ordered to pay $66,500; soldiers, sailors, airmen and Marines. Kiet P. Luc was sentenced to 30 months confinement, 36 months probation and ordered to pay Bowman Plating Company Fined $500,000 for $718,748; John R. Newman was sentenced to Providing Nonconforming Parts to the U.S. 18 months confinement, 36 months probation Government and ordered to pay $760,037; and Donald K. Overview: A joint investigation with VanGundy was sentenced to 41 months confine- Department of Transportation OIG disclosed ment, 36 months probation and ordered to pay that Bowman Plating Company knowingly con- $501,396. On March 4, 2013, DoD contractors ducted substandard non-destructive testing, Robert Ehnow, Joanne Loehr, and Centerline had significant plating nonconformance issues Industrial, Inc. (Loehr’s company), were con- related to out-of-range solution analysis, and DCIS investigated Bowman for victed in federal court of conspiracy, bribery, failed to notify government customers of the test providing nonconforming parts. wire fraud and money laundering. Sentencing is failures. In June 2003, a Boeing Defense Systems pending. On March 8, 2013, Naval Air Station audit team discovered process control test fail- North Island employee Kenneth Ramos was ures at Bowman. Boeing suspended Bowman sentenced to 30 consecutive weekends in cus- for failing to notify its government customers. tody followed by five years of supervised release As part of Bowman’s corrective action, the com- and ordered to pay $5,000 in restitution. To date, pany promised to notify past Boeing customers 12 defendants have been convicted in this wide- of test failures and to notify customers if any fail- spread bribery and corruption scheme and the ures occur in the future. A review of the Boeing court has ordered approximately $3 million in audit results from 2003 to 2007 showed Bowman penalty assessments and restitutions. did not notify customers of repeated salt spray failures. In August 2003, the National Aerospace and Defense Contractors Accreditation Program Product Substitution began audits of Bowman’s processes. NADCAP DCIS supports DoD and its warfighting mis- auditors identified major nonconformance is- sion through timely, comprehensive investiga- sues at Bowman related to out-of-range solution tions of counterfeit, defective or substandard analysis and failure to notify customers. A re-

38 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 39 Core Mission Areas

view of laboratory tests performed for Bowman previously had been debarred from federal con- disclosed that numerous tests failed after the tracting for 10 years. 2003 Boeing audit. Bowman’s quality manual included instructions and requirements concern- Contractors Sentenced to Prison and Debarred “... the owners of ing customer notification of nonconforming for Supplying $3 Million in Nonconforming Roth Fabricating, Inc., parts, as did the quality manuals for Bowman’s Parts to DoD conspired to supply prime contractors. Overview: A joint investigation with USACIDC nonconforming parts to Result: On Oct. 29, 2012, Bowman Plating disclosed that the owners of Roth Fabricating, Company was sentenced to three years proba- Inc., conspired to supply nonconforming parts DoD through Defense tion, a special assessment of $1,200, and a crimi- to DoD through Defense Logistics Agency using Logistics Agency using nal fine of $500,000. In addition, Bowman was purchase orders valued at $3.9 million. Shane M. purchase orders valued also directed to adopt and implement a Code of S. Sarnac, president, and Simone L. Haas, vice at $3.9 million.” Ethics and Corporate Compliance Program. president, are co-owners of Roth Fabricating. DLA-Land and Maritime issued purchase or- Married Couple Incarcerated, Debarred, and ders to Roth Fabricating for the supply of vari- Ordered to Pay Nearly $1 Million for Providing ous items including small arms storage racks, Nonconforming Parts to DoD ammunition box trays, boarding ladders and Overview: A joint investigation with USACIDC other items associated with military vehicles. disclosed that Prime Procurement, LLC was However, the items were found to be noncon- supplying substituted and non-conforming parts forming. The parts were found to be defective to DoD. From April to May 2008, the Defense for various reasons including, but not limited Logistics Agency-Land and Maritime awarded to, incorrect dimensions, substituted materials, Prime five purchase orders totaling $18,219 for missing welds and poor workmanship. fuel filter assemblies and fluid filter elements. Result: Previously, Haas had been sentenced to These parts are critical application items used on 15 months imprisonment plus six months home amphibious transport docks, armored assault ve- confinement and three years of supervised re- hicles and fire trucks. DLA-Land and Maritime lease for conspiracy to commit wire fraud. Haas conducted inspections of these items and deter- was also ordered to pay restitution in the amount mined the items were not original equipment of $825,000. DLA debarred Haas from doing manufacturer parts as specified in the purchase business with the government until Aug. 16, orders. As a result, the parts were suspended 2016. Haas had previously been debarred based from use. The investigation also revealed that the on poor performance. On Dec. 19, 2012, Sarnac owners of Prime, Tommy Hudgens and Anna was sentenced to 26 months imprisonment, Rebecca Hudgens, were previously debarred by three years of supervised release and ordered to DLA for three years as of Nov. 15, 2007. To cir- pay restitution of $825,000 (joint and severally cumvent the debarment, the Hudgens created liable with the corporation and co-owner Haas) ten companies, including Prime, to do business for conspiracy to commit wire fraud. The cor- with the DoD and the government. The couple poration was sentenced to five years probation, created fictitious names as owners and operators held joint and severally liable for the restitution for the companies and entered false information and ordered to pay a $25,000 fine. Additionally, into the DoD Central Contractor Registration on Feb. 20, 2013, DLA debarred Sarnac and Roth database. Fabricating from doing business with the gov- Result: On Nov. 29, 2012, Tommy Hudgens was ernment. Sarnac was debarred until March 15, sentenced to 27 months imprisonment, three 2018, and the corporation was debarred through years of supervised release and ordered to pay Jan. 14, 2021. $983,782 in restitution. Anna Hudgens was sentenced to 21 months imprisonment, three years of supervised release and ordered to pay Health Care Fraud $983,782 in restitution jointly and severally with The rising costs associated with health care con- Tommy Hudgens. In addition, 12 individuals tinue to be a national concern. DCIS has expe- and entities associated with this fraud scheme rienced an increase in allegations of health care

40 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 41 fraud and combatting this crime is one of our the government, the relator was paid $84.1 mil- top investigative priorities. Of particular con- lion. On Oct. 2, 2012, Abbott was sentenced to cern are allegations of potential harm to DoD five years probation, a $500 million criminal military members and their dependents. In ad- fine and was ordered to pay $1.5 million to the dition to patient harm, typical investigations Virginia Medicaid Fraud Control Unit’s Program scrutinize health care providers participating Income Fund. In total, between civil and crimi- in corruption or kickback schemes, overcharg- nal fines and penalties, Abbot agreed to pay $1.5 ing for medical goods and services, marketing billion to settle the allegations of fraud. of drugs for uses not approved by the Food and Drug Administration, and approving unauthor- Medical Facilities Agree to More Than $3 Million ized individuals to receive TRICARE health care Settlement benefits. DCIS continues to proactively target Overview: A joint investigation with HHS OIG health care fraud through coordination with disclosed that between 2001 and 2006, EMH other federal agencies and participation in fed- Regional Medical Center and North Ohio Heart eral and state task forces. Center allegedly performed unnecessary cardiac procedures on patients. Specifically, the com- Abbott Labs to Pay $1.5 Billion for Off-Label panies performed unnecessary angioplasty and Promotion of Depakote stent placement procedures on patients who Overview: A joint investigation with the Offices had heart disease but whose blood vessels were of Inspector General for Department of Labor, not sufficiently blocked to require the specified Department of Veterans Affairs, Department procedures. EMH Regional Medical Center is a of Health and Human Services and Office of non-profit community hospital system and the Personnel Management, along with the FDA, North Ohio Heart Center was an independent IRS-CI and concerned state agencies, disclosed physician group (during the relevant time pe- that Abbott allegedly used kickbacks and other riod) that practiced at EMH. From 2001 to 2006, incentives to entice doctors and other medi- EMH billed TRICARE for $697,000, while the cal professionals to promote and prescribe Heart Center billed TRICARE for $8,467. This Depakote for non-FDA approved use. Depakote was a qui tam suit. was approved by the FDA for patients with epi- Result: On Dec. 14, 2012, the Department of leptic seizures, bipolar mania and migraines. Justice entered into a civil settlement agreement Abbott allegedly trained its sales force to pro- with the Heart Center and EMH. Both agreed mote Depakote to health care providers and em- to pay the government $541,870 and $3.8 mil- ployees of nursing homes as more advantageous lion, respectively, to settle allegations that they than other antipsychotic drugs for controlling submitted false claims to Medicare, Medicaid, agitation and aggression in elderly dementia pa- TRICARE and Federal Employees Health tients, to include some military retirees and de- Benefits Programs. The relator will be paid pendents. In addition, Abbott created programs $682,859 of the settlement amount. and materials to train the pharmacy providers’ consultant pharmacists about the off-label use Boehringer Ingelheim to Pay $95 Million of Depakote to encourage them to recommend to Resolve Allegations of False Claims Act the drug for the unapproved use. As a result, Violations TRICARE reimbursed pharmacies in excess of Overview: A joint investigation with HHS $9 million for use by covered patients. OIG and VA OIG disclosed that Boehringer Result: Previously Abbott pleaded guilty to one Ingelheim allegedly promoted the sale and use of count of introduction of misbranded drug into Combivent and Atrovent at doses that exceeded interstate commerce. At that time, Abbott agreed those covered by federal health care programs. to the criminal forfeiture of $198.5 million and The investigation also determined Boehringer DCIS investigated Boehringer for entered into a civil settlement agreement with allegedly made unsubstantiated claims about the alleged false claims. the Department of Justice, agreeing to pay $560.8 efficacy of Aggrenox, including that it was supe- million to the government and $239.1 million to rior to a competitor’s drug, Plavix. It was also al- state Medicaid programs. Of the monies paid to leged that the company paid kickbacks to health

40 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 41 Core Mission Areas

care professionals to induce them to prescribe ers’ selection of Aranesp for treatment of kidney Aggrenox, Atrovent, Combivent and Micardis. disease. Finally, it was alleged that Boehringer Ingelheim Result: On Dec. 12, 2012, the Department of improperly marketed its drugs and caused false Justice entered into a civil settlement agreement claims to be submitted to government health with Amgen, in which the company agreed to care programs, including TRICARE. This was a pay $612 million to settle the allegations of fraud qui tam suit. and to enter into a corporate integrity agreement Result: On Oct. 25, 2012, the Department of with HHS. On Dec. 13, 2012, the Department Justice entered into a civil settlement agreement of Justice entered into a civil settlement agree- with Boeringer Ingelheim in which the company ment with INN, in which INN agreed to pay $15 agreed to pay $95 million to resolve civil allega- million to settle allegations of fraud. On Dec. 18, tions under the False Claims Act. Of the $95 mil- 2012 Amgen pleaded guilty to introduction into lion settlement, TRICARE received $6 million interstate commerce of a misbranded drug. On state Medicaid programs received $16.5 million, Dec. 19, 2012, Amgen was ordered to pay a fine and the relator received $17 million. The remain- of $136 million, $14 million in criminal forfei- ing $55.4 million was paid to the government. tures and to sign a corporate integrity agreement with HHS. TRICARE will receive approximately “The investigation Amgen to Pay $762 Million and Integrated $1.4 million from the two settlements. disclosed claims of Nephrology Network to Pay $15 Million to illegal kickbacks to Resolve Criminal Liability and Civil Allegations $30 Million Settlement by Blackstone Medical to influence health care of False Claims Resolve Allegations of False Claims Overview: A joint investigation with the FBI, Overview: A joint investigation with the FBI providers’ selection of HHS OIG, OPM OIG and the FDA disclosed that and HHS OIG disclosed that Blackstone Medical Aranesp for treatment from Sept. 17, 2001, to Sept. 30, 2011, Amgen Inc. Inc., a subsidiary of Orthofix, allegedly paid of kidney disease.” knowingly promoted the sale and use of a variety kickbacks to orthopedic surgeons to induce of drugs, mainly Aranesp, for indications, dosing them to use Blackstone’s line of spinal implant intervals, amounts and regimens that were not products. Blackstone allegedly provided false approved by the FDA. This included using the consulting agreements, research grants, enter- drugs to treat chronic anemia as well as anemia tainment, travel and other illegal incentives in caused by cancer, chronic disease, and myelo- order to induce physicians and other health care dysplastic syndrome. Amgen allegedly violated providers to use Blackstone surgical devices, im- the Anti-Kickback Statute and False Claims Act plants and instrumentation products. This was a by improperly remunerating health care provid- qui tam suit. ers for the purpose of influencing their selection Result: On Oct. 29, 2012, the Department of and use of Amgen’s drugs, regardless of whether Justice entered into a civil settlement agreement the product was administered, reimbursable by with Blackstone, in which the company agreed federal health care programs or medically nec- to pay $30 million to settle the allegations of essary. Additionally, Amgen allegedly inaccu- fraud. TRICARE received $327,670 from the rately reported average sales prices, best prices settlement and the qui tam relator received $8 and average manufacturer’s prices for their million. drugs. Amgen’s marketing materials indicated that Amgen’s misbranding of Aranesp was a core PAR Pharmaceuticals to Pay $45 Million to business strategy to gain market share from its Resolve Criminal and Civil Allegations of Drug competitors. Amgen formed an agreement with Misbranding AmerisourceBergen Corporation subsidiary Overview: A joint investigation with the HHS International Nephrology Network (renamed OIG disclosed that PAR Pharmaceuticals Inc. Integrated Nephrology Network) to execute promoted the sale and use of Megace ES to phy- an aggressive off-label marketing campaign of sicians, long-term care facilities and other health Aranesp. The investigation disclosed claims of care professionals for non-FDA approved uses. DCIS investigated PAR Pharmaceuticals illegal kickbacks to influence health care provid- Specifically, the FDA approved Megace ES for for off-label marketing. treatment of unexplained weight loss in AIDS

42 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 43 patients and certain cancer patients. In spite of with its role in protecting America’s warfighters, this limited medical indication, PAR allegedly DCIS is an integral participant in the President’s aggressively marketed Megace ES to long-term Export Control Reform Initiative. DCIS is a care facilities for off-label use without regard to charter member of the Export Enforcement the patients’ AIDS or cancer status, to include Coordination Center, a multi-agency center es- TRICARE beneficiaries. This was a qui tam suit. tablished to serve as a focal point for the coordi- Result: On Jan. 3, 2013, PAR pleaded guilty to in- nation and enhancement of government export troduction of a misbranded drug into interstate enforcement efforts. commerce and entered into a plea agreement to pay a criminal fine of $18 million. On March 5, DoD Contractor Pleaded Guilty to Illegally 2013, the Department of Justice entered into a Attempting to Export U.S. Technology to Iran civil settlement agreement with PAR, in which Overview: A joint investigation with the U.S. the company agreed to pay $22.5 million to set- Immigration and Customs Enforcement dis- tle the allegations of fraud. The TRICARE por- closed that Gregory S. Colichio, an employee tion of the recovery was $984,348 and $4.4 mil- of Dal-Tech Devices Inc., doing business as lion was paid to the relator of the qui tam suit. Microwave Distributors, attempted to purchase and illegally export four radio frequency coaxial $10.1 Million Settlement by Morton Plant Mease detectors to the Islamic Republic of Iran in viola- Health Care and Affiliates to Resolve Allegations tion of the International Emergency Economic of False Claims Powers Act. Colichio and Dal-Tech Devices Overview: A joint investigation with the FBI knowingly circumvented export controls and and HHS OIG disclosed that Morton Plant willfully attempted to export the items from the Mease Health Care Inc. and its affiliates allegedly United States to Iran without the required au- submitted false claims for services rendered to thorization. The detectors are designated as con- Medicare and TRICARE patients. Between July trolled items on the U.S. Munitions List and are 1, 2006, and July 31, 2008, Morton Plant alleg- not authorized for sale to Iran. DCIS investigated Morton Plant Mease edly billed for certain interventional cardiac and Result: On Nov. 14, 2012, Dal-Tech Devices en- Health Care Inc. for alleged false claims. vascular procedures as inpatient care when those tered into a deferred prosecution agreement in services should have been billed as less costly which the company agreed to pay $10,000 to the outpatient care or as observational status. There Department of Treasury, Office of Foreign Asset was a cost difference of approximately $5,000 for Control. On Jan. 3, 2013, Colichio was sentenced each claim submitted as inpatient care versus to 24 months probation. Colichio had previously outpatient care. This was a qui tam suit. pleaded guilty to violating the International Result: On Nov. 23, 2012, the Department of Emergency Economic Powers Act by attempting Justice entered into a civil settlement agreement to transact commerce with Iran. with Morton Plant Mease, in which the company agreed to pay $10.1 million to settle the allega- Taiwanese Technology Company Illegally tions of fraud. The relators in the case will receive Attempted to Use DoD Contractor to Transship approximately $1.8 million of the settlement. U.S. Technology to Iran Through the United Arab Emirates Overview: A joint investigation with the Illegal Technology ICE Homeland Security Investigations and Transfer Department of Commerce-Bureau of Industry DCIS serves a vital role in national security and Security disclosed that Susan Yeh, an em- through investigations of theft and illegal ex- ployee of a Taiwanese technology company, at- port or diversion of strategic technologies and tempted to purchase extra-high-performance U.S. Munitions List items to banned nations, microwave pyramid absorbers, ultra-broad- criminal enterprises and terrorist organizations. band microwave absorbers and multi-line low This includes the illegal transfer or theft of de- pass filter networks from a DoD contractor. fense technology, weapon systems and other Investigative efforts showed Yeh, acting as a sensitive components and programs. Consistent broker, was attempting to transship U.S. man-

42 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 43 Core Mission Areas

ufactured items to Iran through the United that Cernaianu Manole Razvan, also known as Arab Emirates and Taiwan. The attempted “Tinkode,” knowingly attacked the U.S. Armed purchase and shipment was in violation of the Forces Information Services website, http://pen- International Emergency Economic Powers tagon.afis.osd.mil. On Jan. 5, 2011, Razvan effec- Act and the Iranian Transaction Regulations. tively took the website offline in a denial-of-ser- The investigation showed that the items Yeh re- vice attack. The AFIS website is maintained and quested were on the U.S. Munitions List and on hosted by the Offices of the Assistant Secretary the Commodity Control List, and the shipment of Defense for Public Affairs. A denial-of-service A DCIS investigation prevented U.S. would violate U.S. Export Laws. On May 21, attack is designed to overwhelm a computer or technology from being exported to Iran. 2012, Yeh was arrested as she entered the United information system with electronic requests for States. information. The victim computer becomes un- Result: On Oct. 24, 2012, Yeh, after pleading able to respond to legitimate user requests, and guilty to one count of conspiracy to violate the may experience total system failure. The attacks International Emergency Economic Powers Act can be network-based, wherein the victim com- and the Iranian Transaction Regulations, was puter receives thousands of internet requests sentenced to two years confinement, followed by every second, or they can be executed via mali- three years of supervised release. cious software that infects the victim computer and overwhelms its processors. These denial of service attacks not only render the affected sys- Cyber Crime and tem ineffective, but also impose substantial costs Computer Network due to lost productivity and the cost of response and remediation. In addition to the attack on Intrusions the Pentagon, Razvan attacked computer serv- DCIS investigates cyber crime, including com- ers owned by the U.S. Army, NASA and Oracle. puter network intrusions. DCIS also provides Through coordination with the Department digital exploitation and forensics services in of Justice Computer Crimes and Intellectual support of traditional investigations. The Cyber Property Section and the Department of Justice Crime Program focuses primarily on the compro- Office of International Affairs, DCIS and its mise and theft of sensitive defense data contained partner agencies worked with the Romanian in government and DoD contractor information Ministry of Administration and Interior and the systems. In addition, there is a particular focus on Romanian National Police to resolve the case. instances where contract fraud by DoD informa- Result: Previously Cernaianu Manole Razvan tion technology contractors has been a factor in was convicted in Romanian court of unauthor- either the penetration of DoD networks or the ized computer intrusion, altering of computer loss of DoD information. The DCIS Cyber Crime data, unauthorized damages to a computer sys- Program assigns experienced agents fulltime to tem and distributing software that can be used cyber-related investigations and the exploitation to commit those crimes. On Sept. 26, 2012, of digital media seized as evidence during all in- Razvan was sentenced in Romanian court to two vestigations. The program recently deployed a years in prison, which was suspended, and four wide-area network examination cloud to improve years probation. Razvan was also ordered to pay DCIS capabilities by allowing the collaborative restitution to the following entities: $59,002 to review of digital media during investigations. Oracle, $52,575 to NASA, $5,025 to U.S. Army, and $7,348 to DoD. Romanian Hacker Sentenced to Prison for Attack on Pentagon Website Overview: A joint investigation with the USACIDC, FBI and NASA OIG determined

44 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 45 The following cases are highlights of inspections, commander and staffed by ANA medical per- assessments and evaluations conducted by DoD sonnel. As of July 2012, there were approxi- IG in the following categories: mately 260 patients hospitalized in the NMH. Inspections • Health and safety. During the fall of 2010, DoD IG became aware • Joint warfighting and readiness. of potential problems with the accountability and distribution of pharmaceuticals at the NMH and within the ANA, and management issues Health and Safety specifically at the NMH. Accordingly, DoD IG DoD IG has identified health care as one of the conducted several audits and assessments of the critical management and performance challeng- ANSF health care system, which included visits es facing the Department. The military health to NMH in 2010 and 2011. This report is the care system provides services to approximately fourth in a series of reports focusing on the de- 9.5 million beneficiaries, including active duty velopment of a sustainable medical logistics and personnel and their families. Of special concern health care capability in support of the ANSF. is the proper care and support to the thousands Findings: DoD IG found that development of of soldiers, sailors, airmen and Marines wound- NMH had advanced in the areas of planning and ed due to combat actions in Operations Iraqi mentoring, leadership and management, logis- and Enduring Freedom. tics and patient care, specifically with respect to: • Establishment of a strategic plan to develop Medical care required by military personnel is the Afghan National Security Forces health expected to increase in the next several years, care system jointly with Afghan ministries especially in the areas of rehabilitation and tran- and ANSF. sition care. It is critical for DoD IG to maintain • Strengthened personnel accountability and vigorous oversight of the health and safety chal- patient care procedures. lenges facing the Department, not only to en- • Inventory accountability and control measure that wounded warriors receive high-quality sures instituted for medical supplies. health care but that DoD health care dollars are • Improved patient care and nutrition. spent wisely and prudently. • Medical mentors receiving pre-deployment training. DoD IG supports this priority by focusing its Result: Significant challenges remain, which oversight efforts on preventing and detecting include: fraud, waste and abuse, and improving efficien- • Assignment of additional nursing personnel cy and effectiveness of the programs affecting to patient wards based on the demands for the health and safety of service members and nursing services. employees. • Increasing the number of trained pharmacists assigned to the pharmacy. Oversight of U.S. Military and Coalition • Improving the distribution of medical Efforts to Improve Healthcare Conditions and equipment to ensure patient care areas with to Develop Sustainable Afghanistan National the greatest need have the necessary equip- Security Forces Medical Logistics at the Dawood ment to provide safe and effective patient National Military Hospital care. Overview: Built in the early 1970s by the Soviet • Developing policies and procedures to en- Union, the Dawood National Military Hospital sure that the transfer and acceptance of resides on a seven-acre medical campus that ANSF patients from U.S. and coalition hos- encompasses the eight-story hospital, an out- pitals is conducted properly. DoD IG audited Afghanistan National patient complex, the Armed Forces Academy Furthermore, DoD IG identified additional is- Security Force health care system. of Medical Sciences, a garrison support facility sues which not only affect the NMH but the en- and a logistics complex that includes a medical tire ANSF health care system, including limited warehouse. NMH is under the command of the capability for medical equipment maintenance Afghan National Army surgeon general and is and repair, and the lack of a sustainable procure- managed by an Afghan National Army Hospital

44 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 45 Core Mission Areas

ment process for cleaning supplies, including (plan, prepare, execute and assess) operations disinfectants. that accomplish the mission. Report No. DODIG-2013-053 Findings: Extensive U.S. and coalition efforts to develop Afghan National Army C2 had produced a marginally sufficient capability that was Joint Warfighting and adequately resilient to provide minimal essential Readiness support for transition to Afghan lead in plans DoD IG has identified joint warfighting and and operations by 2014. However, U.S. and co- readiness, and training and equipping the Iraq alition enablers would still be required to ensure and Afghan National Security Forces as criti- momentum for and execution of the planned cal management and performance challenges transition. facing the Department. While the Department Result: While ANA C2 structures are emerging is continuing to equip the Iraq Security Forces and developing it is hindered by a host of mul- through the Office of Security Cooperation-Iraq, tifaceted challenges including limited command operating under Chief of Mission authority at authority to remove ineffective senior officers; the U.S. Mission-Iraq, it is also engaged in the logistical impediments that limit the ANA’s op- mission to train, equip and mentor the Afghan erational independence; limited capacity for National Security Forces. both human capital and physical infrastructure to integrate complex technology and automa- Between now and the completion of the sched- tion; and a significant reliance on U.S. and co- uled drawdown of combat forces at the end of alition enablers, such as aviation, signals, intel- 2014, DoD will continue training, equipping, ligence and engineering. partnering and mentoring the ANSF to enable Report No. DODIG-2013-058 it to assume the leading security operations role. Assessment of Afghan National Security Forces Assessment of U.S. Government and Coalition Metrics--Quarterly Efforts to Develop the Afghan National Army Overview: DoD IG selected, summarized and Command, Control, and Coordination System concisely presented six months of quantitative Overview: Command and control is the exercise and qualitative metrics deemed indicative of of authority and direction by a commander over progress toward the goal of developing a sustain- subordinate military forces in the accomplish- able Afghan National Security Force for transi- ment of a mission. Through C2, commanders tion to Afghan control by 2014. Reports will be assess the situation, make decisions, and direct produced separately for the Afghan National actions. However, commanders cannot exer- Police and the Afghan National Army. cise C2 alone; they must perform these actions Findings: The fourth report, providing an over- through a C2 system including the arrangement view of the development of the Afghan National of personnel, information management, proce- Army, was released Feb. 20, 2013. dures, equipment and facilities. An effective C2 Result: This report is classified. system is essential for commanders to conduct Report No. DODIG-2012-034.4

46 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 47 DoD IG provides policy, guidance and over- had not implemented a risk-based audit plan- sight to audit and investigations within DoD. ning process as recommended by the Defense DoD IG also provides analysis and comments Business Board and that DCMA is not prepared Policy And on all proposed draft DoD policy issuances, as to perform contract cost analysis in place of a well as conducts technical assessments of DoD DCAA audit and that DCMA cannot reliably Oversight programs and provides engineering support for report performance. Additionally DPAP did not other assessments. demonstrate that DCMA has a probable chance to replicate the $249.1 million in potential return on investment identified by DCAA and Audit Policy and that DPAP did not demonstrate why they chose Oversight to direct Department and taxpayer resources to DoD IG provides audit policy direction, guid- DCMA to perform a job DCMA was not pre- ance and oversight for its auditing component; pared to perform when DCAA had existing in- the military departments’ audit organizations, frastructure in place to get the job done. the Defense Contract Audit Agency, other de- Result: DoD IG recommended that DCAA fense audit organizations and public account- implement a risk based audit planning process ing firms under the Single Audit Act. As such, based upon achieving higher rates of return to DoD IG provides guidance and oversight for the taxpayer and other high risk factors and that more than 6,700 DoD auditors in 22 DoD audit DPAP re-instate the pre-Sept. 17, 2010, thresh- organizations, which is nearly 40 percent of olds for requesting DCAA audit as soon as prac- all auditors in federal inspector general audit tical until such time as a business case analysis organizations. can support a policy change. Additionally, DoD IG recommended Defense Pricing reassess the Actions to Align Defense Contract Management decision to revise DoD procurement and acqui- “The decision will Agency and Defense Contract Audit Agency sition policy and validate that the decision suf- cost the Department ficiently considers the potential return to DoD Functions and taxpayers $249.1 Overview: DoD IG evaluated actions taken and the taxpayers resulting for DCAA audits by DoD officials to align the Defense Contract and other factors, and that Defense Contract million per year in lost Management Agency and the Defense Contract Management Agency proceed with scheduled potential return on Audit Agency functions by increasing the dol- corrective actions regarding case file documen- investment from DCAA lar thresholds a contractor proposal must meet tation and information system reliability. contract audits. ” before a contracting officer can request a DCAA Report No. DODIG-2013-015 audit. DoD IG evaluated the factors DoD officials considered in making the decision as well Quality Control Review of the Defense Finance as controls established to ensure the change in and Accounting Service Audit Organization dollar thresholds adequately protects the inter- Overview: Generally accepted government au- ests of the Department and taxpayer. diting standards require audit organizations per- Findings: The Office of Defense Procurement forming GAGAS-compliant audits to undergo and Acquisition Policy did not perform a an external quality review at least once every business case analysis to support the deci- three years. DoD IG performed a review of sion to revise Defense Federal Acquisition Defense Finance and Accounting Service audit Regulation Supplement Procedures Guidance organization covering a one-year period that and Instructions 215.404-2(c). The decision will ended June 30, 2011. cost the Department and taxpayers $249.1 mil- Findings: DoD IG identified significant defi- lion per year in lost potential return on invest- ciencies in the DFAS audit organization’s com- ment from DCAA contract audits. Had DPAP pliance with its system of quality control, includ- evaluated rates of return across the DCAA audit ing the failure to exercise sufficient professional portfolio, DPAP could have achieved the same judgment. DFAS was issued a fail opinion on its results by redirecting DCAA resources from audit organization’s system of quality control. low-risk audits and services to higher risk areas Federal audit organizations can receive a rating of the portfolio. DoD IG also found that DCAA of pass, pass with deficiencies or fail.

46 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 47 Core Mission Areas

Result: The DoD IG review concluded that the profiles generated from retesting evidence found DFAS audit organization did not comply with in an unsecured USACIL refrigerator years after GAGAS and their system of quality control for Mills resigned, were deleted only due to the DoD audits for the review period that ended June 30, IG continuing concerns about chain of custody 2011. DoD IG determined that the system of and controls of the evidence involved. quality control did not provide reasonable assur- Result: The review found that each service de- ance that DFAS audit personnel were following veloped separate, ad hoc processes for identify- established guidance, policies, procedures and ing individuals and completing notifications. applicable audit standards. Thirteen recommen- Standard policy or guidance would have ensured dations were made to correct the noted defi- individuals were treated consistently across the ciencies. The DFAS concurred with 12 of the 13 services. As such, DoD IG recommended that recommendations. the DoD general counsel develop and imple- Report No. DODIG-2013-047 ment standard DoD guidance to govern post- conviction notifications. In addition, DoD IG recommended that the Army complete its Investigative Policy and planned courtesy notifications to the individu- Oversight als DoD IG identified as punished in Army cases DoD IG evaluates the performance of and de- involving Mills and meriting notification. This velops policy for the DoD criminal investigative report is FOUO. and law enforcement community, as well as the Report No. DODIG-2013-033 (FOUO) noncriminal investigative offices of DoD. Evaluation of the Military Criminal Investigative “DoD IG reviewed 482 Review of DoD Response to Noncompliant Organizations’ Sexual Assault Investigation Crime Laboratory Analyses Training criminal investigations Overview: DoD IG evaluated the military crim- involving 676 Overview: At congressional request, DoD IG reviewed misconduct allegations against Phillip R. inal investigative organizations sexual assault investigative subjects Mills, a forensic analyst at the USACIDC, to de- investigation training to determine whether it or suspects, dating termine (1) whether suspects involved in crimi- adequately supports the Department. The evalu- back approximately nal investigations in which Mills performed ation focused on three questions (1) what sexual assault investigation training do the MCIOs pro- 20 years.” laboratory analyses were properly notified in accordance with requirements and (2) if the FBI vide?, (2) how do the MCIOs ensure that sexual was properly notified about nonconforming assault investigation training is effective? and (3) tests, and data included in the Combined DNA how do the MCIOs leverage their resources and Index System were verified or expunged, as ap- expertise? propriate. DoD IG reviewed 482 criminal inves- Findings: Each MCIO provides initial baseline, tigations involving 676 investigative subjects or periodic refresher and advanced training in suspects, dating back approximately 20 years. sexual assault investigation. The training is given Findings: DoD IG found that no law, rule or to assigned criminal investigative personnel regulation specifically required the services to who may conduct sexual assault investigations. notify individuals about possibly compromised Between MCIOs the training hours devoted to DNA evidence developed in their cases. The initial baseline training tasks varied. Further, Army did forward two USACIL notifications to NCIS initial baseline training materials did not Army trial and defense counsel alerting them to cover four required essential training subtasks. the issues and cases involved. Although stressing All MCIO training academies measure the effec- the notifications met all requirements, the Army tiveness of initial and advanced training courses, planned a courtesy letter notification to all possi- and they use the results to adjust training content bly affected individuals in Army cases. The Navy to increase effectiveness. Conversely, the MCIOs and Air Force notified or attempted to notify all do not measure the effectiveness of periodic possibly affected individuals in their cases. The refresher training. USACIDC has attempted to Army ultimately verified or expunged Mills- consolidate MCIO advanced sexual assault in- related data from CODIS. However, seven DNA vestigation training. USACIDC and NCIS share

48 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 49 highly qualified subject matter experts to assist Assessment of the USAF Accident Investigation with training course development and delivery. Board Report on the F-22A Mishap of November Also, USACIDC assisted NCIS by instructing at 16, 2010 their advanced sexual assault investigation train- Overview: DoD IG reviewed the Air Force ing course. Aircraft Accident Investigation Board report Result: DoD IG recommended: on the F-22A mishap of Nov. 16, 2010, for ad- • The director, NCIS, ensure lesson materials herence to the procedures set forth in Air for initial sexual assault investigation train- Force Instruction 51-503, Aerospace Accident ing covers all essential training tasks. Investigations. DoD IG assessed whether the DoD IG assessed the USAF board report • The director and commanders of the MCIOs board’s conclusions were supported by facts con- on the F-22 mishap. form a working group to review (1) initial sistent with the standards of proof established by baseline sexual assault investigation train- the instruction. ing programs to establish common criteria Findings: The board’s statement of opinion re- and minimum requirements, (2) periodic garding the cause of the mishap was not support- refresher sexual assault investigation trained by the facts within the Accident Investigation ing programs to establish common criteria board report consistent with the clear and con- and minimum requirements for measuring vincing standard of proof established by the in- effectiveness and (3) advanced sexual as- struction. The Board’s report contained the fol- sault investigation training programs to fur- lowing deficiencies: ther capitalize on efforts to leverage training • The report cited three causal factors (chan- resources and expertise. nelized attention, breakdown of visual scan Report No. DODIG-2013-043 and unrecognized spatial disorientation) as the cause of the F-22 mishap. However, Criminal Investigative Policy these three factors are separate, distinct and On Jan. 25, 2013, DoD IG issued a new DoD in- conflicting. The board’s report did not clear- struction that establishes policy, assigns respon- ly explain their interrelationship and how it sibilities and provides procedures for the inves- is possible that all three factors concurrently tigation of adult sexual assaults within the DoD. caused the mishap. Failure to adequately ex- DoD instruction 5505.18; Investigation of Adult plain this interrelationship calls into ques- Sexual Assault in the Department of Defense, tion the board’s statement of opinion re- expands the roles and responsibilities of the mil- garding the cause of the mishap. itary criminal investigative organizations when • The report’s determination that the mis- conducting adult sexual assault investigations. hap pilot’s mask was in the full up position The issuance provides overarching investigative throughout the mishap sequence was not guidance and details advanced training require- adequately supported by the summary of ments for MCIO investigators. The issuance also facts or by the analysis cited in the report’s requires MCIOs to investigate all allegations of enclosures. This determination directly af- sexual assault and for the investigators to work fected several conclusions of the board in partnership with the sexual assault response and precluded the analysis of other poten- coordinator to ensure system accountability and tial causes of the mishap. Failure to pro- victims’ access to services. vide adequate facts or analysis to support this determination calls into question the board’s finding. The report’s noncontribu- Technical Assessments tory portion of the human factors section DoD IG performs expert technical assessments inadequately analyzed the human factors that affect improvements in defense system ac- listed, such as hypoxia, gravity-induced loss quisition, operation and sustainment by proac- of consciousness, and sudden incapacita- tively addressing issues of concern to Congress, tion, but did not contain any references DoD and the public. and/or supporting documentation. Without detailed analysis and proper documentation, it is unclear how the board determined

48 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 49 Core Mission Areas

that these factors did not contribute to the • Expanded the outreach program and pro- mishap. vided robust training to DoD IG and com- • The report lacked detailed analysis of sev- ponent IG staff. eral areas, such as the Emergency Oxygen • Collaborated and shared best practices System activation as well as the physiologi- with other members of the inspector gen- cal reactions to lack of oxygen. eral and federal whistleblower protection • Of the 109 references in the board’s report community. summary of facts, 60 of those references • Filled several new positions focused on ad- were either incorrect or did not direct the ministration, policy and outreach, and sev- reader of the report to the information cited eral key investigative vacancies to address in the paragraph. the ever-increasing number of whistleblow- Result: DoD IG recommended that the judge er reprisal complaints filed with DoD IG advocate general of the Air Force reevaluate and the military services. the board’s report and take appropriate action in light of the DoD IG findings regarding the During the reporting period, the department board’s report statement of opinion and other received 458 complaints involving reprisal, re- deficiencies. striction from communicating with a member Report No. DODIG-2013-041 of Congress and inspector general, and procedurally improper mental health evaluation re- DoD IG administrative investigations consists of ferrals. Of the 278 complaints closed, 199 were the following areas: dismissed due to insufficient evidence to war- Administrative • DoD IG investigates allegations of whistle- rant an investigation, 13 were withdrawn and 66 blower reprisal filed by military members, were closed following full investigation. Of the Investigations appropriated fund and nonappropriated 66 investigations closed, 10 involved procedur- fund civilian employees, defense contractor ally improper mental health evaluation referrals employees; and improper command refer- (six substantiated [60 percent]), one involved re- rals of service members for mental health striction from communicating with a member of evaluations. Congress and inspector general (substantiated) • DoD IG investigates and conducts oversight and 55 involved whistleblower reprisal (three reviews of investigations conducted by the substantiated [5 percent]). service/defense agency IGs into allegations of senior official misconduct. Substantiated Whistleblower Reprisal/ Restriction/Procedurally Improper MHE Allegations Whistleblower Reprisal • An Army Reserve officer serving as an -in Investigations spector general disapproved a subordinate DoD IG is committed to maintaining the whis- IG’s previously approved request for a one- tleblower protection program as a model for the year tour extension and operational deploy- federal government by improving the timeliness ment to Afghanistan after the subordinate and quality of reprisal investigations. During the made a protected communication. The sub- reporting period, DoD IG implemented numer- ordinate IG had complained of possible pro- ous enhancements to include: fessional misconduct and inadequate legal • Completed the revision of investigative re- support by his supporting staff judge advo- port templates. cate office. The legal officer was removed as • Renewed emphasis on the Council of an inspector general. Further corrective ac- the Inspectors General on Integrity and tion is pending. Efficiency’s quality standards for investiga- • An Air Force staff sergeant received a let- tions, to include incorporation of standards ter of counseling from his supervisors in into oversight reviews. reprisal for complaining to his commander about tobacco use in government build- ings and vehicles, safety violations, and

50 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 51 poor military bearing Figure 2.1 Complaints Received During FY 2013 and discipline. He also received a lowered en- 25 (5%) 9 (2%) listed performance re- Mental Health Procedural Military Restriction port after reporting the 18 (4%) 73 (16%) same violations to his NAFI Reprisal Civilian Reprisal local equal opportunity 50 (11%) and IG offices. His -su Defense pervisors, a technical Contractor Reprisal sergeant and a master sergeant, each received letters of admonishment for their actions. • An Army National Guard lieutenant colonel, who was the battalion commander, reprised against a major under his command by issuing an adverse counseling and threat- ening him with action under the Uniform 283 (62%) Code of Military Justice Military Reprisal after the major alleged the lieutenant colonel contact a chaplain or physician concerning was engaged in inappropriate relationships an ongoing investigation. The group com- with soldiers he commanded. An indepen- mander received a verbal counseling con- dent investigation substantiated the inap- cerning the importance of not restricting propriate-relationship allegations against service members from making protected the lieutenant colonel. Corrective action communications. included removal from command, release • Three naval officers reprised against a re- from active duty status and placement in the serve lieutenant for making protected com- retired reserves. munications when they issued multiple • An Air National Guard colonel took three unfavorable personnel actions including re- personnel actions against a Title 32 chief moval, early demobilization and an adverse master sergeant in reprisal for his protect- evaluation report. Actions taken by the ed communication (1) denied training, (2) naval officers may have contributed to the terminated duty orders and (3) denied re- lieutenant not being promoted and contrib- enlistment. The chief master sergeant made uted to a requirement to meet a board of in- allegations to his chain of command that an quiry. DoD IG recommended the secretary order to attend weekend drills while on ac- of the Navy take action to remove the ad- tive duty orders was illegal. Corrective ac- verse evaluation report and otherwise cor- tion pending. rect the complainant’s file. DoD IG further • An Air Force group commander attempted recommended the Navy consider taking to restrict two members of his unit from appropriate action against the responsible contacting their congressional represen- management officials. Corrective action is tatives or an IG when he issued a memo- pending. randum to both, stating they could only

50 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 51 Core Mission Areas

Corrective Action Taken during First Half of FY wages and other damages after a DoD IG 2013 on Military Whistleblower Cases Closed in investigation determined the employee was Previous Reporting Periods terminated for making protected disclo- • An Air Force Reserve major general received sures to government personnel. a general officer letter of reprimand and was • An Army colonel received a general officer released from active duty status while being memorandum of reprimand, was relieved placed in the Individual Ready Reserve for of command and given a referred officer removing a colonel from position after the evaluation report for denying an in-place colonel testified in a commander-directed consecutive overseas tour and issuing a inquiry. lowered officer evaluation report rating to • An Air National Guard major general re- a subordinate who made allegations of mis- ceived a general officer letter of reprimand conduct by his commander to the chain of and was relieved of command for (1) re- command. moving a member of his unit from his po- • An Air National Guard lieutenant colonel sition and then forcing him to retire after was relieved for cause and retired for threat- the member filed a congressional complaint ening to court-martial and separate a mem- and (2) for separating a second member for ber from the Active Guard Reserve program filing several IG complaints. because the member made protected com- • A government contractor was ordered by munications to senior leadership. the U.S. Army Corps of Engineers to pay an employee the sum of $59,633.26 for back

Figure 2.2 Complaints Closed During First Half of FY 2013 Reprisal, Restriction and Mental Health Procedural Complaints Closed During First Half FY 2013 Substantiation Total Closed Dismissed Withdrawn Investigated Substantiated Rate

Type of Complaint Closed by DoD IG

Civilian Reprisal 47 43 1 3 0 0% Military Reprisal 65 58 0 7 1 14% Defense Contractor 53 49 1 3 0 0% Reprisal NAFI Reprisal 17 12 2 3 0 0% Reprisal Subtotal 182 162 4 16 1 6% Mental Health Procedural 3 2 0 1 1 100% DoD IG Total 185 164 4 17 2 12%

Type Complaint Closed by Component IG with Oversight Review by DoD IG

Military Reprisal 83 35 9 39 2 5% Reprisal Subtotal 83 35 9 39 2 5% Military Restriction 1 0 0 1 1 100% Mental Health Procedural 9 0 0 9 5 56% Components Total 93 35 9 49 8 16% Grand Totals 278 199 13 66 10 15%

52 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 53 Types of Substantiated Misconduct Investigations of Senior Figure 2.3 Types of Substantiated Misconduct (Total of 88 Allegations) 14 (16%) Officials 11 (12%) Government Resources To promote public confidence in the integrity Travel Violations of DoD leadership, DoD IG conducts or provides oversight on all investigations into alleged misconduct by senior DoD officials (brigadier general/rear admiral and above, members of Travel Violations the senior executive service and senior political 19 (22%) appointees). Misconduct allegations are non- Personnel Personnel Matters criminal in nature and typically involve ethics Matters or regulatory violations. Specialized units within each military department office of inspector Personal Misconduct/ Ethical Violations general conduct the majority of senior official investigations. DoD IG investigates allegations Government Resources against the most senior DoD officials (three-star and above general/flag officers and equivalents), 44 (50%) senior officials in the joint or defense intelli- Personal Misconduct/ Ethical Violations gence community and allegations not suitable for assignment to service IGs. DoD IG conducts Total of Allegations: 88 oversight reviews of service/defense agency investigations of misconduct involving one- and closed, 47 (31 percent) contained substantiated two-star general/flag officers and equivalents. allegations of misconduct. During the reporting period, DoD IG processed 5,279 senior official name checks for general/flag Examples of Substantiated Senior Official Cases officers pending nomination, promotion, retire- The following is a list of substantiated senior of- ment and reassignment. ficial cases: • A member of the senior executive service DoD IG provides oversight of military depart- misused his subordinates by having them ment and agency IG investigations involving se- perform personal services, improperly au- nior DoD officials. thorized the use of administrative leave for employees to participate in a golf tourna- During the reporting period, DoD IG conducted ment and engaged in a prohibited personnel several sensitive investigations that directly af- practice by providing preferential treatment fected the Department. In one instance, DoD IG to a subordinate. did not substantiate allegations of an inappro- • An SES improperly arranged air travel on priate relationship against a Marine command- noncontract, city-pair carriers and mis- ing general. In every instance, DoD IG expertly used his public office for the private gain of investigated the facts and circumstances of the someone with whom he was affiliated in a case and presented a timely and independent re- nongovernmental capacity. port of investigation to management officials for • An SES engaged in unprofessional conduct appropriate action. in the workplace by discussing personal medical issues with subordinates and spec- The Department received 237 complaints of se- ulating about a subordinate’s sexual orien- nior official misconduct and closed 256. Of the tation to a subordinate of the opposite sex; 256 complaints closed, 106 were dismissed due misused government resources by directing to lack of a credible allegation of misconduct two contractor employees to plan, organize and 150 were closed following investigation. Of and execute two social events in the office; the 150 investigations closed, 17 were closed by misused public office for private gain by DoD IG and 133 were closed by service IGs with soliciting and accepting gifts from prohib- oversight by DoD IG. Of the 150 investigations ited sources; and failed to comply with the

52 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 53 Core Mission Areas

ethical standards set forth in the Joint Ethics • An SES used her government travel charge Regulation by promising two subordinates a card for unauthorized personal use. position when next filled.

Figure 2.4 Senior Official Complaints Closed During FY 2013 Senior Official Complaints Closed in FY 2013

Substantiated Substantiation Total Closed Dismissed Investigated Cases Rate

Senior Official’s Affiliation Closed by DoD IG

Army 39 35 4 0 0% Navy 12 10 2 0 0% Air Force 20 17 3 0 0% Marine Corps 5 4 1 0 0% COCOM/Defense Agency 47 40 7 4 57% Subtotal 123 106 17 4 24%

Senior Official’s Affiliation Closed by Component IG with Oversight Review by DoD IG

Army 66 66 22 33% Navy 16 16 3 19% Air Force 33 33 9 27% 0 Marine Corps 5 5 1 20% COCOM/Defense Agency 13 13 8 62% Subtotal 133 133 43 32% TOTALS 256 106 150 47 31%

54 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 PB 3

Enabling Mission Areas Enabling Mission Areas

Section 4(a) of the Inspector General Act of ings with members of Congress and their staffs. 1978, as amended, requires the inspector general Topics of discussion during those meetings Congressional “to review existing and proposed legislation and included issues such as discussing the plan de- regulations relating to the programs and opera- veloped for the IG community reviews required Testimony tions of [the Department of Defense]” and to by the Reducing Over-Classification Act, pend- make recommendations “concerning the impact ing legislative taskings, ongoing assessments in and Briefings of such legislation or regulations on the econo- Southwest Asia and an audit on the cost and my and efficiency in the administration of pro- availability of G222 spare parts. grams and operations administered or financed by [the Department] or the prevention and de- Congressional Requests tection of fraud and abuse in such programs and During this reporting period, DoD IG received operations.” DoD IG provides information to 123 new congressional inquiries and closed Congress by participating in congressional hear- 94, including a report on noncompliant crime ings and briefings. laboratory analyses based on allegations that a forensic analyst at the U.S. Army Criminal Hearings Investigation Laboratory allegedly falsified criti- Principal Deputy Inspector General Lynne cal test results, an audit on Antideficiency Act Halbrooks testified March 19, 2013, be- violations in military personnel accounts, and fore the House Oversight and Government oversight of coalition efforts to improve health Reform Committee at a hearing titled, “DoD care conditions at the Dawood National Military and DHS: Implementing Agency Watchdogs’ Hospital. Recommendations Could Save Taxpayers Billions.” The testimony focused on the status New inquiries involved issues such as inqui- of reports with pending action, which include ries on proposed legislative changes related Halbrooks testified before the House Oversight to reprisal investigations, requests related to and Government Reform Committee. recommendations that have not yet been implemented, as well as opportunities to improve ef- senior official investigations and concerns ficiencies within the Department. about the Department’s implementation of IG recommendations. Meetings with Congressional Members and Staff During the reporting period, the inspector general and representatives of DoD IG had 65 meet-

56 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 57 The DoD Hotline is a confidential and reliable $89,000. The unit administrator received a vehicle for military service members, DoD civil- letter of admonishment. ians, contractors and the public to report allega- • An anonymous complainant reported that DoD tions of fraud, waste and abuse, threats to home- during the construction of a building proj- land security and trafficking in persons related ect, the shop foreman directed employees Hotline to programs and personnel under the purview of to remove the ‘Made in China’ stamps of the Department of Defense. groovelets and threadlets used for a water system. The individual admitted to directing Figure 3.1 Contacts received in FY 2013 the use of nonconforming parts in the sys- 16,615 contacts received in FY 2013 to date tem installed in the building. The individual 4,561 cases in open status. was sentenced to five months incarceration 1,803 cases opened. with two years supervised release, ordered to pay $22,917 in restitution, and fined 22 cases received through congressional channels. $2,000 and a special assessment of $200. The 105 cases received through the GAO. individual was also debarred from government contracting for 28 months. • A government contractor, working for Substantiated Allegations Lucent, engaged in fraudulent activities • A unit administrator used her position to which included submitting false claims, manipulate the orders process and allow a false test results and cost mischarging. The reservist to be called to active duty without allegations were submitted to the DoD a valid need or authorization. When mem- Hotline and resulted in a joint investigation. bers of the assigned unit were questioned, The government and Lucent entered into a no one had knowledge of the individual settlement agreement wherein Lucent, with ever being assigned to the unit or attending no admission of guilt, agreed to pay the gov- drills. The reservist was court-martialed and ernment $4,211,314. The government will sentenced to reduction in grade, received 45 pay the relator more than $758,000 as their daysNumber confinement and of was Hotlinefined more than Contactsshare of the settlement. Compared to Cases Opened 1995 through 2012 Figure 3.2 Number of Hotline Contacts Compared to Cases Opened 1995 through 2012 25000 Number of Hotline Contacts Compared to Cases Opened 1995 through 2012 20000 25000

20000 Contacts 15000 ContactsContacts Cases Opened 15000 CasesCases OpenedOpened 10000 10000

5000 5000

0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

56 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 57 Enabling Mission Areas

The following charts describe DoD Hotline contacts. The contacts are shown by subject, origin and type of allegations. Subjects by Type Open Cases by Origin Figure 3.3 Subject by Type Figure 3.4 Open Cases by Origin

651 16,825 Letter/Fax Unknown 98 Retiree 384 Military Letter/Fax 34,486 GAO 1,326 Military 27 Internet NAF 149 Government Civilian GAO Phone 43 22,728 Walk-in Contractor Phone Contractor Retireee Walk-in

Unknown Email

NAF Internet

27,201 2,657 Government Civilian Email Allegations by Primary Type Figure 3.5 Allegations by Primary Type

Travel Violations 136 Human Traﬃcking 17 Security 97 Safety Matters 79 Restricted from Whistleblowing 40 Reprisal related 3,736 Procurement/Contract Administration 3,569 Personnel Matters 428 Personal Misconduct/Ethical Violations 4,081 Pay and Beneﬁts 115 Other 514 Medical 41 Improper Mental Health Referral 224 Government Resources 1,004 Government Programs/Projects 223 Criminal allegations 172 Civil Liberties 11 American Recovery act 1

58 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 59 The passage of the Whistleblower Protection tor mistreated patients while collecting Enhancement Act of 2012 requires inspectors federal funding to care for them. general to designate a whistleblower protec- • A case settled for $30 million by Whistleblowing & tion ombudsman whose role is to (1) educate Blackstone Medical, Inc., a subsidiary of agency employees about prohibitions on retal- Orthofix International, in lieu of pros- Transparency iation for protected disclosures and (2) edu- ecution, to resolve allegations brought, cate agency employees who have made, or are in part, by two whistleblowers under the contemplating making, a protected disclosure False Claims Act, that kickbacks were about the rights and remedies against retalia- made to doctors to induce them to use of tion for protected disclosures. The director for products . whistleblowing and transparency was designated as the Department’s whistleblower pro- DoD IG provides protection for defense in- tection ombudsman in January 2013. Working telligence and counterintelligence employees through DoD Hotline outreach and training, and military members using existing author- the whistleblower protection ombudsman de- ity granted under the Inspector General Act of termined that the lead priority is standardized 1978, as amended. In addition to the author- agency, component and field office-level train- ity provided in the Act, the president signed ing for the Department’s more than 700,000 Presidential Policy Directive 19 on Oct. 10, civilian employees. 2012, ordering the director of national intelligence to confirm the existence of policies Qui tam whistleblowers continue to provide and procedures providing whistleblower pro- the DCIS with actionable information leading tection for members of the intelligence com- to the prosecution of fraud cases. Prominent munity by July 8, 2012. Presidential Policy on the DCIS docket during this reporting pe- Directive 19 requires agency heads and intelli- riod were the following qui tam cases: gence community heads to make the certifica- • A JPoJ prosecution and conviction of tions to the director of national intelligence. In Navy officials accepting bribes from an response to this important initiative, DoD IG E2/C2 aircraft program facility at Naval designated the director of whistleblowing and Air Station North Island, Coronado in transparency, as chair of an informal working San Diego County, Calif., in which de- group supporting the Department and intel- fense contractors paid more than $1 mil- ligence community inspectors general prepa- lion in bribes, in exchange for nearly $4 rations to meet the pending deadline. From million in orders 2012 to 2013, relevant stakeholders within • A case settled by Golden Living Nursing the Department met to educate themselves on Homes in lieu of prosecution, to resolve whistleblower protection in general and the allegations brought forward, in part, by unique aspects of that protection within the a whistleblower under the False Claims intelligence operational and analysis context. Act, namely that the TRICARE contrac-

58 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 59 Enabling Mission Areas

Subpoena Program cial, and state and local government records. Programs The DoD IG authority to issue subpoenas is Records obtained by DoD IG subpoenas may based on the Inspector General Act of 1978, as also be used to locate witnesses, confirm state- amended. The Act authorizes the IGs to issue ments made by witnesses or subjects and pro- subpoenas in matters that involve fraud and vide other relevant information. DoD IG issued abuse in Department programs and operations. more than 500 subpoenas each year during the Historically, most DoD IG subpoenas were is- past three years in support of DoD criminal in- sued on fraud-related matters. During 2005, vestigations, audits and evaluations. During this DoD IG recognized the need to expand the DoD reporting period, 309 subpoenas were issued. IG Subpoena Program into nonfraud related crimes such as violent crime, cyber crime, child Contractor Disclosure Program pornography and theft of government property. All contractor disclosures made pursuant to the During 2008, after a trial period, DoD IG made Federal Acquisition Regulation shall be report- the issuance of subpoenas for certain specifically ed to DoD IG in accordance with the Defense enumerated general crimes permanent. Acquisition Regulation. A contractor disclosure is a written disclosure by a DoD contractor or A DoD IG subpoena request must meet three subcontractor to DoD IG an the existence of criteria (1) the subpoena can only be issued for credible evidence that the contractor or subcon- investigations within the statutory authority of tractor has committed a violation of Title 18, the IG, (2) the information sought must be rea- or Title 31, U. S. Code, in connection with the sonably relevant to the IG investigation, audit, award, performance or closeout of a contract or investigation or evaluation and (3) the subpoena any subcontract. During this reporting period, cannot be unreasonably broad or burdensome. 86 contractor disclosures were received.

Using DoD IG subpoenas is a useful procedure for legally obtaining business, personnel, finan-

Figure 3.6 Subpoenas Issued by Type of Investigation - FY 2013 Figure 3.7 Open ContractorOpen Disclosures Contractor Disclosures

21 (3%) 23 (3%) Non Conforming Parts 64 (21%) Signiﬁcant 56 (18%) Pay, Allowance 15 (2%) Overpayments Crimes & Entitlement Fraud 19 (3%) False Certiﬁcations Against Persons Counterfeit Parts 29 (4%) False Claims 32 (5%) Signi�icant Overpayments Anti-Kickback Act 26 (9%) Non Conforming Parts Computer Related Crime False Certi�ications

10 (3%) Other Counterfeit Parts False Claims 35 (11%) 89 (29%) 548 (80%) Theft/Larceny of Procurement Fraud Labor Mischarging Government Property Anti-Kickback Act or Funds 29 (9%) TOTAL:Labor Mischarging 687 Public Corruption Total: 309 Total: 687 TOTAL: 309

60 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 61 Asset Forfeiture Program The DCIS asset forfeiture program provides Figure 3.8 Results - Asset Forfeiture Program support to DCIS investigations involving fraud, waste and abuse by including forfeiture counts in all indictments, criminal informations and consent agreements when warranted by the evi- Seizures Forfeitures Judgments dence. The program’s goal is to deter criminal activity by depriving criminals of property used $300.00 or acquired through illegal activity both in the United States and Southwest Asia. Since the pro- $250.00 gram began in May 2007, DCIS has participated in the seizure of assets totaling $814.2 million. $200.00 During the reporting period, DCIS participated in investigations that led to seizures of $8.42 $150.00

million. Additionally, DCIS participated in in- Millions

vestigations with court orders of final forfeiture $100.00 of $7.38 million and judgments of $4.78 million.

Assets that have been seized or forfeited include $50.00 cash, financial instruments, real property, vehicles and vessels. $0.00 FY 09 FY 10 FY 11 FY 12 FY 13 Asset forfeiture highlights for this reporting Fiscal Year period include a final order of forfeiture filed in November 2012, for two properties in San Figure 3.9 Seized Assets by Type Antonio, Texas, and one in Canyon Lake, Texas, Seized Assets by Type with a total value of $566,730. The forfeited properties will be applied to satisfy an order of $161.8 thousand (2%) restitution for $860,863 to the Defense Logistics Cash/ Currency Agency Disposition Services. The investiga- $69.3 thousand (1%) $366.8 thousand (4%) Vessels tion involved an Army master sergeant, his wife Vehicle and an Air Force Reserve technician. They en- Vessels gaged in larceny of government property from the Defense Reutilization and Marketing Office, Cash/ Currency Fort Sam Houston, Texas, to sell the goods for $2.1 million (26%) personal gain. The stolen items consisted of mili- Financial Instrument tary uniforms and clothing, computers and ac- Vehicle cessories, as well as other equipment.

On March 3, 2013, a final order of forfeiture was Financial Instrument filed containing a forfeiture money judgment of $3.7 million and $1.1 million in real prop- Real Property erty, vehicles and motorcycles. The investigation involved three former U.S. Army Corps of Engineers employees and two foreign contrac- $5.6 million (67%) tors who were responsible for a multi-million Real Property dollar bribery scheme relating to more than $60 million in DoD construction contracts in Iraq.

60 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 61 Enabling Mission Areas

Interagency Initiatives oversight community within the Department Outreach of Defense. Key areas of focus during the re- Southwest Asia Joint Planning Group porting period included exploring audit pri- Activities The Southwest Asia Joint Planning Group is the orities among Defense Council on Integrity and coordinating body for U.S. government organi- Efficiency members and ensuring compliance zations conducting oversight of U.S. military and with the Reducing Over-Classification Act and civilian activities in Southwest Asia. The group the Federal Voting Assistance Program and meets quarterly to coordinate and de-conflict Military Overseas Voter Empowerment Act. oversight activities. The group last met in January 2013. In November 2012, the Southwest Intelligence Community Inspectors General Asia Joint Planning Group chairman established Forum an office at New Kabul Compound, Kabul, DoD IG participates in the Intelligence Afghanistan. This allows the chairman and the Community IG Forum, which promotes and Southwest Asia Joint Planning Group to address furthers collaboration, cooperation and coordi- oversight issues closer to where operations are nation among the inspectors general of the intel- being conducted. The last two Southwest Asia ligence community. The forum meets quarterly Joint Planning Group meetings were conducted to discuss issues of common concern and to plan from Kabul with attendees based in the conti- how to address them collaboratively. nental United States during a video teleconfer- ence at the Mark Center in Alexandria, Va. Joint Intelligence Oversight Coordination Group The deputy inspector general for intelligence Council of the Inspectors General on Integrity and special program assessments chairs the Joint and Efficiency Intelligence Oversight Coordination Group, The Council of the Inspectors General on which meets quarterly. The group promotes Integrity and Efficiency was statutorily estab- and furthers collaboration, cooperation, coor- lished as an independent entity within the ex- dination and information sharing among the ecutive branch by the Inspector General Reform inspectors general and auditors general of the Act of 2008. Its purpose is to address integrity, Department of Defense. The group’s objectives economy and effectiveness issues that tran- are to support the DoD inspectors general and scend individual government agencies; and auditors general in the performance of audits, in- increase the professionalism and effectiveness spections and evaluations within their respective of personnel by developing policies, standards departments and agencies as well as strengthen and approaches to aid in the establishment of a their collective role and effectiveness to en- well-trained and highly-skilled workforce in the hance their support of the National Intelligence offices of inspectors general. DoD IG is an ac- Strategy. Finally, the group seeks to optimize the tive participant in the Council of the Inspectors use of resources, increase efficiency and avoid General on Integrity and Efficiency and serves as duplication of effort among DoD inspectors and editor-in-chief of the Journal of Public Inquiry. auditors general. The group can also explore op- Key areas of focus during the reporting period portunities for joint and interagency training included improving availability of relevant ex- and education, as well as examine defense pro- ecutive branch records to the National Instant grams and operations and identify those requir- Criminal Background Check System and com- ing coverage from more than one member of the pliance with the Improper Payments Elimination group. and Recovery Act. Public Law 111-258, Reducing Over- Defense Council on Integrity and Efficiency Classification Act Work Group The Defense Council on Integrity and Efficiency DoD IG was asked by the Council of the is chaired by DoD IG and meets on a quarterly Inspectors General on Integrity and Efficiency basis to discuss issues of common interest, share to lead a work group across the federal govern- information and best practices, and build closer ment in responding to requirements of Public working relationships among members of the Law 111-258, Section 6(b), which requires the

62 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 63 inspector general of each department or agency and School initiative is supportive of the DoD of the government with an officer or employee IG vision to lead change, speaking truth, pro- authorized to make original classifications, to mote excellence in fiscal accountability through- carry out no less than two evaluations of that out the Department. Guest speakers included department or agency not later than Sept. 30, Shay Assad, director of Defense Pricing, and 2016. The objective of the evaluation is to assess Tom Steffens, director, Policy, Integration, and whether applicable classification policies, proce- Control, Accountability, and Audit Readiness dures, rules and regulations have been adopted, Directorate, Office of the Assistant Secretary followed and effectively administered within of the Army for Financial Management and each department, agency or component; and to Comptroller. identify policies, procedures, rules, regulations or management practices that may be contrib- Joint IG Program uting to persistent misclassification of material. DoD IG manages a Joint Activities Division Section 6(b)(3)(C), requires that inspectors gen- to interface with DoD agencies, other federal eral required to carry out the evaluations under agencies, and joint IGs worldwide; develop and the Act shall coordinate with each other and sustain joint IG publications; develop and de- with the Information Security Oversight Office ploy joint IG training; conduct mobile training to ensure that evaluations follow a consistent teams and staff assistance visits; and develop methodology and, as appropriate, allows for and deploy an integrated knowledge manage-

cross-agency comparisons. To this end, DoD IG, ment system and structure. DoD IG conducted DoD IG manages the Joint Inspector in conjunction with 17 offices of inspectors gen- one resident DoD joint IG course and provided General Course. eral from across the federal government, have three mobile training teams during the reporting developed a CIGIE-approved evaluation guide. period.

Whistleblower Reprisal IG Roundtable DoD IG hosted a meeting with representatives Awards from each of the service whistleblower reprisal and senior official IG offices, the Joint Staff IG DCIS Special Agent Receives Award from and National Guard Bureau IG and provided International Association of Chiefs of Police updates to the attendees on policies and ongo- A DCIS special agent’s work with the FBI Joint ing programs within whistleblower reprisal Terrorism Task Force led to the International investigations. Association of Chiefs of Police Outstanding Achievement in the Prevention of Terrorism Award. The special agent of the Raleigh Resident Courses Agency and other members of the FBI Joint Terrorism Task Force; the Durham, N.C. Police Seventh Annual Comptroller’s Accreditation A DCIS special agent received an award Department, the Raleigh, N.C., Police Depart- from IACP. and Fiscal Law Course ment; and the Department of Justice were rec- DoD IG and the Contract and Fiscal Law ognized for their outstanding collaboration in Department, the Judge Advocate General’s Legal a complex six-year investigation that resulted Center and School, held its seventh annual in the conviction and sentencing of members jointly sponsored, Comptroller’s Accreditation of a North Carolina-based extremist group. The and Fiscal Law Course, in the National Capital Islamic extremist group, led by Daniel Boyd, Region from March 26 to 29, 2013. The course, was heavily armed and organized and had held at the Defense Acquisition University, made plans to attack targets both overseas and Fort Belvoir, Va., promotes the accountabil- in the United States, to include military targets ity of DoD funds by reinforcing and increasing and others they deemed enemies of Islam. In the attendees’ understanding of the principles the course of two years, seven defendants, two critical to safeguarding DoD funds from fraud, of whom were Boyd’s sons, were convicted of waste and abuse, as well as what constitutes an terrorism-related charges to include conspir- Antideficiency Act violation. This joint DoD ing to provide material support to terrorists and IG and Judge Advocate General’s Legal Center

62 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 63 Enabling Mission Areas

“DoD IG received conspiring to murder, kidnap, maim and injure DoD IG Receives Eight Awards From CIGIE eight awards at the persons abroad. DoD IG received eight awards at the 15th Annual 15th Annual Awards Awards Ceremony hosted by the Council of the National Intelligence Professional Awards Inspectors General on Integrity and Efficiency Ceremony hosted by In October 2012, the intelligence community IG Oct. 16, 2012, held in the Baird Auditorium the Council of the approved for presentation, National Intelligence of the Smithsonian National Museum of Inspectors General Professional Awards to two DoD IG, Office of Natural History in Washington, D.C. J.T. on Integrity and Intelligence and Special Program Assessment “Mickey” McDermott received the Individual Efficiency...” evaluation teams. The actual awards ceremony Achievement Award and Qarmat Ali Team re- was cancelled due to Hurricane Sandy. Principal ceived the Glenn/Roth Award for Exemplary Deputy Inspector General Lynne Halbrooks Service. Six other awards included the Award for presented the National Intelligence Professional Excellence–Interagency Afghan National Police Awards on March 28, 2013. The Inspections Training Program Audit and Management Award was presented for assessment of security Analyst Team; Award for Excellence–Sexual within the DoD, in recognition of the team’s role Assault of Lance Corporal Maria Lauterbach in the creation of a departmental security enter- Review Team; Award for Excellence–False prise capability where none previously existed. Claims Act Investigation of ATK; Award for The Collaboration Award was received for the Excellence–Southwest Asia Task Force; Award team’s concurrent continuity of operations and for Excellence–FMU-143 Fuze Investigation intelligence readiness evaluations. The National Team; and Award for Excellence–Afghan Intelligence Professional Award recognizes in- National Security Forces Medical Logistics dividuals, teams and projects in the intelligence Team. CIGIE presented DoD IG with the Glenn/ Roth Award for Exemplary Service. community that have advanced the status and standing of the inspector general’s function and discipline as a profession.

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Services Services

ect management related to the Millennium Army Audit Agency Redesign and Stream Restoration projects. Army To accomplish its mission, the U.S. Army Audit Findings: USAAA reported Norfolk District Agency relies on a workforce of highly trained program and project managers had a process professional auditors, many with advanced de- in place to account for Millennium Redesign grees and professional certifications. USAAA’s and Stream Restoration project funds and ex- staff consists of approximately 600 employees penses using the Corps of Engineers Financial and is organized into 20 functional audit teams Management System and the Primavera that provide audit support to all aspects of Army Management System database. USAAA found operations. that Norfolk District personnel could monitor, track and support expenditures associated with USAAA also maintains a significant presence the funded Millennium Redesign and Stream in the U.S. Central Command area of responsi- Restoration projects (valued at $479,000). In ad- bility assisting Army commanders. At the end dition, Norfolk District project managers draft- of March 2013, 26 auditors were deployed in ed two project management plans that not only Kuwait and Afghanistan. Overall, USAAA has document the parameters for implementing the deployed more than 200 auditors since 2002 Millennium Redesign and Stream Restoration and issued more than 200 reports on Operations projects, but also established sufficient controls Enduring Iraqi Freedom. to monitor progress towards project completion. Result: Norfolk District’s policies and proce- USAAA’s goal is to be a highly sought after and dures should provide its customer, Arlington integral part of the Army by providing timely National Cemetery, with reasonable assurance and valued services that focus on the evolving that the Millennium projects will be completed needs of Army leadership. To ensure its audits on time and within budget and quality expecta- are relevant to the needs of the Army, USAAA tions. However, the projects cannot move for- aligned their audit coverage with the Army’s ward until the acquisition strategy is finalized highest priorities and high-risks areas as deter- and the National Park Service provides the re- mined by its enterprise-level risk assessment and quired permits for the stream restoration project. from input from Army senior leaders. Report No. A-2013-0009-ALC

During the first half of FY 2013, USAAA pub- Accession of Military Personnel into Contracting “USAAA determined lished 75 reports, made more than 225 recom- military personnel Overview: USAAA audited the accession of mendations and identified about $1.4 billion of military personnel into contracting positions. should transition into potential monetary benefits. A few of USAAA’s The audit focused on the contracting career field contracting positions significant reports are described in the following to identify the most appropriate time to transi- no later than the paragraphs: tion military personnel into contracting to better staff contingency contracting offices. three-year mark in Arlington National Cemetery Millennium their careers.” Findings: USAAA determined military person- Project, U.S. Army Corps of Engineers, Norfolk nel should transition into contracting positions District no later than the three-year mark in their ca- Overview: At the request of the executive di- reers. The initial three-year period would allow rector, Army National Cemeteries Program, officers and enlisted personnel to experience USAAA verified that controls were in place the many facets of Army operations and gain at the U.S. Army Corps of Engineers Norfolk leadership experience, while not overly delay- District to: ing their first contracting assignment. It would • Fully account for Millennium Redesign also prevent personnel from entering contract- and Stream Restoration project funds and ing positions at levels too senior for their ex- expenses. perience began gaining and building technical • Promptly and effectively address potential experience from entry-level positions. Earlier schedule delays and cost increases for proj- entry would demonstrate to soldiers the extent to which Army leaders now recognize contract-

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ing as a core warfighting capability, thereby at- Findings: USAAA reported that maintenance tracting more high-quality personnel into the activities completed repair work to bring left be- contracting field. Recognizing the need for mili- hind equipment to the required technical manual tary contracting professionals to gain hands-on standard and that the units receiving the equip- contracting experience and training earlier in ment were generally satisfied with it. However, their careers, Army policy reduced the goal of maintenance activities frequently exceeded the accession from eight years to between six and technical manual standard and did not perform seven years for officers and before 10 years for maintenance effectively. Specifically, mainte- enlisted personnel. However, military person- nance activities: nel did not actually start their first contracting • Replaced serviceable parts on equipment. assignment until 10 to 11 years into their ca- • Projected repair times exceeding mainte- reers. Additionally, the Army needed to signifi- nance allocation chart times. cantly improve the readiness levels of military • Exceeded the inflated-repair projections on personnel in contracting. More than four years work orders. after the U.S. Army Expeditionary Contracting In addition, USAAA identified that units were Command was stood-up, almost half of the not inducting equipment into the left behind military personnel assigned to those units were equipment program at the required technical designated as unready for service in expedition- manual standard due to competing priorities ary environments. The longer the Army waits for and time constraints immediately before de- military personnel to transition into contracting, ployment. Also, U.S. Army, Europe, 21st Theater the greater the risk military personnel will not Sustainment Command, and Theater Logistic have the technical skills and experience needed Supply Center–Europe did not identify and cor- to effectively execute complex contracting oper- rect inefficiencies in the left behind equipment ations or technically supervise others. The risk is maintenance program because of insufficient greatest in high-operational tempo expedition- oversight. ary environments, where speed and effectiveness Result: USAAA estimated that by increasing the “ ... the Army in support of military operations are critical. oversight to ensure maintenance activities ad- could reduce the Result: USAAA recommended the under secre- hered to projected repair hours, the Army could required staffing tary of the Army commission and oversee analy- reduce the required staffing of the maintenance sis, led by both assistant secretary of the Army activities and save about $12 million in the next of the maintenance for acquisition, logistics, and technology and six years. Additional savings could be achieved activities and save Army Materiel Command in coordination with as efficiencies increased and maintenance ac- about $12 million in the deputy chiefs of staff, on how best to stand tivities adhered to maintenance allocation chart the next six years. ” up a contracting or acquisition branch. Or they times. Also, USAAA identified savings to the should determine other feasible, alternative new Army with the full European theater implemen- approaches for military personnel transitioning tation of the unit maintained equipment pro- into contracting that would provide reasonable gram which would allow rear detachments to assurance their contracting knowledge, skills retain equipment instead of inducting it into the and work experiences would sufficiently prepare left behind equipment program. Implementation military personnel to fulfill future expeditionary of this recommendation could save the Army contracting requirements. about $100 million in the next six years. Report No. A-2013-0047-ALC Report No. A-2013-0041-ALE

Maintenance of Left Behind Equipment in Audit of Army Prepositioned Stock, Medical Europe Materiel Overview: USAAA reviewed the maintenance Overview: At the request of the Office of the of left behind equipment in Europe to identify Deputy Chief of Staff, G-4, USAAA audited the condition of the equipment when inducted the requirements for Army prepositioned stock into the program and the maintenance per- medical materials. USAAA audited the devel- formed on the equipment while in the program. opment process to verify planned procurement quantities were based on modified tables of or-

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ganizational equipment, and unit sets were rea- Foreign Language Proficiency Bonus Pilot sonably estimated over the FYs 2013 to 2017 Program program objective memorandum. Overview: At the request of the deputy chief Findings: USAAA reported that planned proof staff, G-2, USAAA audited the foreign lan- curement quantities for medical materiel were guage proficiency bonus pilot program to verify supported by the Army prepositioned stock that the program successfully incentivized spe- modified tables of organizational equipment. cial operations forces’ soldiers to maintain or The U.S. Army Medical Materiel Agency en- increase their language skills and to verify that sured that the appropriate amount of sets would the Army had proper management controls in USAAA reviewed the foreign language be available if needed to support contingency place to manage the foreign language proficiency proficiency bonus pilot program. operations. Ninety-four percent of the inven- bonus pilot program. The pilot program allows tory items reviewed was properly accounted for SOF’s soldiers with language proficiency at or at the Army Strategic Logistics Activity storage above one but below two to receive payments. site. Controlled substances were properly se- Findings: USAAA concluded that the pilot pro- “USAAA concluded cured and had sufficient inventory procedures in gram successfully incentivized SOF’s soldiers to that the pilot place and operating. USAMMA fully used po- maintain or improve their language proficiency. program successfully tency and dated cost avoidance initiatives, such USAAA found that the Army had some pro- incentivized SOF’s as the pharmaceutical goods return contract, cedures and controls in place to manage and to minimize losses associated with expired ma- monitor the program, but some additional con- soldiers to maintain teriel. As a result, the Army had assurance that trols were needed. The Army Special Operations or improve their class VIII materiel was on hand and accounted Command G-1 office had a centralized process language proficiency.” for if needed to support potential contingencies. in place to manage active SOF’s soldiers’ par- However, the 50 percent potency and dated ma- ticipation in the pilot program that requested teriel replenishment rate used in calculating pro- payment for them; however, it did not keep sup- gram objective memorandum requirements was porting documentation. This occurred because not supported by historical data or generic item the command did not have any guidance on shelf-life codes. USAMMA used the 50-percent the documentation needed to make a payment replenishment rate because the Army’s logistics request and did not have any requirements to requirements submission instructions required maintain documentation that supported foreign its usage in developing budget projections. Also, language proficiency bonus payment requests. USAMMA did not have automated or historical The U.S. Army National Guard’s SOF units had data to estimate expected annual percentage of some controls but did not prepare and maintain potency and dated losses. As a result, the FYs documentation in accordance with pilot pro- 2013 to 2017 program objective memorandum gram requirements. This was because the guard requirements may be overstated by as much as headquarters had not enforced pilot program re- $34.2 million. quirements and had not issued guidance speci- Result: U.S. Army Medical Command and fying reporting procedures to subordinate units. USAMMA took action towards implementing the USAAA also found that the Army did not have recommendations during the audit. Specifically, direct oversight of the funds expended for the USAMMA used actual potency and dated expira- pilot program because the funds were combined tion rates associated with items already on hand with the Army’s regular foreign language profi- to determine the optimal replenishment rates for ciency bonus funds. developing the FYs 2014–2018 program objec- Result: USAAA reported that the deputy chief tive memorandum funding requirements. U.S. of staff, G-2 could improve the processes by: Army Medical Command began accumulating • Tracking changes in language proficiency historical data to calculate future program objec- for SOF’s soldiers receiving payments from tive memorandum requirements and planned to the pilot program. revise future replenishment rates based on the • Establishing specific responsibilities for historical data. Both actions will assist the Army managing the funds provided for the pilot in estimating requirements more accurately. program and have the Army budget office Report No. A-2013-0031-ALM provide the status of the funds executed at

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quarterly in-process reviews based on the of the Army data-center footprint. Although the Defense Finance and Accounting Services Army had processes in place for identifying data execution reports for the pilot program. center efficiencies, the processes were not pro- In addition, USAAA recommended that the viding enough accurate information to assist the Army Special Operations Command and ARNG Army in resource recovery. The Army’s strategy issue a formal policy on the process and proce- for identifying data center consolidation efficien- dures to manage the pilot program. This policy cies relied heavily on commands to provide and should include specifics on documentation update a series of reports to determine an ac- required for payment eligibility and methods curate “as-is” baseline and to report efficiencies for retaining this supporting documentation. gained through the closures. While this strategy Also, USAAA recommended that Army Special was generally sound, commands were not con- Operations Command and ARNG identify a sistently reporting the required information. method for tracking the amount expended for Result: At the request of CIO/G-6, USAAA re- the foreign language proficiency bonus pilot pro- viewed FY 2012 closure reports to determine gram and report this amount to the Department whether progress was made in comparison to of the Army headquarters at quarterly in-process FY 2011 closures. USAAA found that as FY 2012 reviews. By tracking the status of language profi- progressed, commands began to report more of ciencies of SOF’s soldiers and managing the ex- the required information and efficiencies. As of ecution of funds provided for the pilot program, July 30, 2012, 23 non-base realignment and clo- USAAA helped the Army determine language sure data centers were closed and the Army Data proficiencies available to meet the missions and Center Consolidation Plan identified more than manage the funds received for the pilot program. $10.9 million in efficiencies. (One closure result- Report No. A-2013-0072-FMI ed in $9.1 million of the $10.9 million; a majority of the closures in FY 2012 did not achieve the ex- Audit of Army Data Center Consolidation pected efficiencies.) In addition, the Army Data Overview: USAAA evaluated the progress of Center Consolidation Plan developed a process the Army’s data center consolidation and fo- to work with commands to capture the pertinent cused on data center closures in FY 2011 and information within the closure reports. USAAA the strategy for recovering efficiencies. This is provided three suggested actions that address the second audit in support of the Army Data some of the challenges the Army needs to over- Center Consolidation Plan. USAAA published come to effectively consolidate data centers results of the previous effort in audit report and realize efficiencies. The Army Data Center A-2011-0143-IET (application migration), dated Consolidation Plan team, including their part- July 6, 2011. That report focused on data centers ner organizations, will incorporate these actions affected by base realignment and closure and the into future operations. chief information officer/G-6’s oversight of the Report No. A-2013-0023-FMT program. Findings: USAAA concluded that the Army did Audit of Army Workers’ Compensation “The Army has spent not achieve expected efficiencies in FY 2011. Program: U.S. National Guard nearly $2 billion in the The Army closed six non-Base Realignment and Overview: The Army has spent nearly $2 billion last 11 years to provide Closure data centers in FY 2011, none of which in the last 11 years to provide wage replacement reported cost savings in their closure reports. and medical benefits to federal civilian employ- wage replacement CIO/G-6 expected commands to achieve at least ees for on-the-job injuries and illnesses. USAAA and medical benefits $2.5 million in cost savings as a result of these conducted this audit to verify that the Army to federal civilian closures. Commands did not achieve the expect- National Guard’s process ensured that workers’ employees... ” ed cost savings because they did not reduce the compensation claims were associated with inju- number of applications they maintained through ries that occurred during employees’ official -ci rationalization as expected, nor did they transfer vilian capacity/duty. This audit is one in a series applications to the Defense Information Systems addressing the Army’s Workers’ Compensation Agency or a commercial provider for hosting. Program. This resulted in little overall change to the size

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“USAAA’s review of Findings: USAAA found that the Army Programs has this responsibility. USAAA fo- 56 of 303 workers’ National Guard’s process ensured that workers’ cused on claimants who would have been 55 compensation claims compensation claims were associated with in- years or older at the end of charge-back year juries that occurred during employees’ official 2010, as of June 30, 2010, had they lived. Using for two states showed civilian capacity/duty. USAAA’s review of 56 of Accurint and information from Department that all 56 claims met 303 workers’ compensation claims for two states of Labor’s Agency Query System, USAAA re- the performance- showed that all 56 claims met the performance- viewed 357 of 358 (99.7 percent) death benefit of-duty claim.” of-duty claim. Additionally, USAAA identified cases and found they were properly managed. 102 of 3,829 claims guard-wide, valued at about USAAA was unable to review one case because $209,000 and $9.8 million, respectively, with dates the Army could not locate the claimant’s Social of injuries that coincided with dates technicians Security number in the Department of Labor’s received military pay; therefore, USAAA was un- system. USAAA’s review of the 357 showed sure if these claims met the performance-of-duty that 321 cases were active and 36 cases were element of a valid claim. USAAA reviewed nine of closed. However, the review showed that the these 102 claims that were associated with the two Department of Labor had officially closed 25 of states to verify whether the injuries occurred while the 36 cases. Additionally, 15 of 357 beneficia- in the performance of duty (technician status) or ries were not surviving spouses so USAAA could in the line of duty (military status). USAAA’s re- not determine if the beneficiaries (son, daughter, view showed that one of the nine claims did not guardian or case payee) were still eligible to re- meet the performance-of-duty element of a valid ceive death benefits. claim. The claim was not challenged because the Result: To provide assurance that the Army is supervisor who certified the worker’s compensa- paying death benefits to eligible beneficiaries, tion claim for the technician was not the tech- USAAA recommended that the Army (1) re- nician’s assigned first-line supervisor. Key state search the one claim that could not be located personnel took corrective action and submitted in the Department of Labor’s system, (2) request a letter to the Department of Labor’s Office of that the Department of Labor officially close the Workers’ Compensation Program requesting that 25 cases in its system and (3) coordinate with the approved claim be rescinded. the Department of Labor’s Office of Workers’ Result: To provide assurance that claims sub- Compensation to determine the continued eli- mitted to the Department of Labor were and are gibility of the 15 beneficiaries who were catego- associated with performance-of-duty injuries, rized as case payee, claimant, son/daughter or USAAA recommended that the National Guard guardian. review the remaining 93 claims and implement a Report No. A-2013-0026-IEE new control that requires either the technician’s supervisor or the Injury Compensation Program Actions Taken by USACE at Lake Cumberland, administrator to verify that the technician did Kentucky not receive military pay for the date and time of Overview: At the request of the secretary of the injury. the Army, USAAA conducted a comprehensive Report No. A-2013-0006-IEE audit of the actions taken by the U.S. Army Corps of Engineers at Lake Cumberland, Ky., concern- Audit of Army Workers’ Compensation ing marina owners, following a drawdown of Program: Death Benefit Cases the lake in January 2007. USAAA determined Overview: USAAA conducted this audit to ver- whether USACE complied with applicable laws, USAAA reviewed the U.S. Army Corps of Engineers at Lake Cumberland, Ky. ify that the Army had sufficient data to manage regulations and guidance for actions related to the Army’s Workers’ Compensation Program’s marina owners and in developing its 2011 Lake death benefit cases. Cumberland Master Plan. Findings: USAAA found that the Army did not Findings: USAAA reported that USACE gener- have a process or procedures in place to verify ally complied with applicable laws, regulations that beneficiaries of deceased Army employees and guidance for actions related to marina con- were still alive, primarily because Department cessionaires at Lake Cumberland and in its de- of Labor’s Office of Workers’ Compensation velopment of the Lake Cumberland Master Plan.

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Specifically, USAAA found that the USACE managers established some internal controls, appropriately: and purchase orders generally had required • Exercised its permissive authority to grant approvals, the date and quantity of goods and rent abatement to nine marina concession- services received, and supporting invoices and aires due to the short notice of the draw- payments with matching information. However, down and to offset anticipated one-time some controls, such as separation of duties, reconfiguration costs. Under the abatement, timely approval of purchase orders and audit nine USACE-leased marinas collectively trails, either were not established or were not op- paid $9 for the period July 1, 2007, to June erating as intended. These weaknesses occurred 30, 2008, instead of about $800,000. The because the partnerships’ legal agreements did district also expended about $1.7 million not have specific requirements for establish- on other actions to mitigate the drawdown’s ing, maintaining or reviewing internal con- effect. In accordance with its authority, the trols. Therefore, property managers established Nashville District also appropriately denied controls they believed necessary to accomplish the concessionaires’ requests for an exten- their mission. In addition, the Army’s Portfolio sion of rent abatement. Asset Management Handbook did not specifi- • Coordinated and involved the public in the cally require Residential Communities Initiative master planning process to ensure the plan program managers and asset management teams sufficiently addressed regional and ecosys- to review internal controls. These weaknesses in- tem needs, project resource capabilities and creased the risk for fraud, waste and abuse. As suitability, and public interests and desires. a result, the Army’s interests in the Residential The plan also aligned with applicable na- Communities Initiative program were not fully tional and local initiatives. protected. Result: USAAA identified that improvements Result: This audit provided the Army with a were needed for the USACE’s out-grant man- sound means of protecting its interests, not only agement process; however, the improvements from ensuring the operations that provide hous- did not affect the validity of the district’s deci- ing to its soldiers are adequate, but also ensur- sion to deny requests for extended abatement. ing that the Army remains, in the public’s view, a Additionally, USAAA found that USACE needed good steward of resources. to make sure actions are taken USACE-wide to Report No. A-2013-0024-IEI address systemic issues with the master planning process identified in a 2007 Engineers Inspector Deployment Health Assessments “USAAA found General report. USAAA provided assurance that Overview: USAAA audited the Army’s pro- that at least 4,000 the actions of USACE were appropriate and in cesses to provide soldiers with the deployment assessments did not compliance with laws, regulations and guidance. health assessments required by DoD policy to Report No. A-2013-0033-IEE mitigate deployment-related health threats and result in referrals...” to ensure soldiers had an opportunity to receive Residential Communities Initiative—Controls treatment if needed. Over Purchase Order Expenditures, Fort Rucker Findings: Of the 29,448 soldiers who deployed and Fort Drum in selected units between 2009 and 2011, Overview: At the request of the Office of USAAA determined that almost 99 percent re- the Deputy Assistant Secretary of the Army ceived pre-deployment assessments, 97 percent (Installations, Housing and Partnerships), received post-deployment assessments and 85 USAAA audited selected aspects of the percent received post-deployment reassess- Residential Communities Initiative projects ments. About 82 percent of the assessments at Fort Rucker, Ala., and Fort Drum, N.Y. The met DoD timeliness standards. In addition, the objective was to verify that purchase order ex- Army made further treatment available to sol- penditures controls were in place and operating diers when health care providers determined effectively to ensure payments were valid. it was needed. However, USAAA found that at Findings: USAAA determined that controls least 4,000 assessments did not result in refer- were partially in place and operating. Property rals even though they indicated that soldiers had

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behavioral health concerns. At least 43 percent Additionally, USAAA made recommendations of these assessments did not explain why further about how to refine the method used by the pro- treatment was not needed. gram to collect complaint data that is provided Result: To improve oversight and ensure sol- to the medical command and the program’s diers receive appropriate referrals and care, stakeholders to present a better overview of the USAAA recommended that U.S. Army Medical problems associated with its medical activities Command make deployment and redeploy- and operations. ment dates available for tracking in the Medical Report No. A-2013-0012-IEM Protection System, so commanders could ensure that more soldiers received timely assessments. U.S. Army Fisher House Program Management, In addition, USAAA recommended that the U.S. Army Medical Command Medical Command require health care provid- Overview: The Fisher House Foundation, ers to document the actions they take when sol- founded by Zachary and Elizabeth Fisher, is a diers’ responses to assessment questions indicate private-public partnership that provides “com- health-related concerns and, if applicable, why fort homes” to military families so they can be referral was not needed. This will ensure that close to military loved ones who are hospital- soldiers’ medical history details are available if ized. The program builds the Fisher Houses USAAA reviewed Fisher House future deployment-related health problems arise. on the grounds of major military medical cen- management. Report No. A-2013-0010-IEM ters across all services and the Department of Veterans Affairs, and then donates them to the Audit of U.S. Army Medical Command respective military service to manage. The Army Ombudsman Program has 15 Fisher Houses at 10 different Army instal- Overview: The Army established thelations that provide 146 guest suites. U.S. Army Ombudsman Program to assist soldiers and Medical Command requested USAAA audit their families with concerns about their medical controls of the Army Fisher House program. care, as well as to provide general assistance with USAAA visited three sites to include Joint Base the Army’s disability evaluation system. The San Antonio, Joint Base Lewis-McChord and Office of the Surgeon General asked USAAA to Fort Bliss. verify that ombudsmen provided the intended Findings: USAAA determined that program support in accordance with program guid- controls were generally in place and operat- ance and that the program provided U.S. Army ing, but improvements can be made in several Medical Command with information to improve areas. USAAA reviewed the program financial its business operations. In May 2012, subsequent controls along with personally identifiable in- to the surgeon general’s request, the secretary of formation controls. Additionally, USAAA re- the Army ordered a comprehensive review of viewed the Fisher Houses for compliance with how the Army conducts behavioral health diag- the Americans with Disabilities Act. noses and disability evaluations. To coordinate Result: USAAA recommended that the Army this effort, the secretary established the Army (1) place nonmonetary gifts on the property re- Task Force on Behavioral Health and directed cords, (2) obtain required higher-level approv- USAAA to submit the results of the audit to the als for large dollar value gifts, (3) safeguard cash task force. receipts and deposits including making timely “USAAA conducted the Findings: USAAA conducted the audit at seven deposits, (4) obtain preapproval for credit card audit at seven military military treatment facilities and concluded that purchases, (5) standardize the guest registration treatment facilities ombudsmen generally provided the intended process, including not collecting unnecessary support as required. personally identifiable information and (6) en- and concluded that Result: USAAA made recommendations to im- sure facilities comply with the Americans with ombudsmen generally prove management of the program by imple- Disabilities Act. Making these improvements provided the intended menting standing operating procedures that will increase program oversight, accountability support as required.” included performance metrics and developing a and transparency; ensure consistency of opera- training program that fully prepared personnel tions; better safeguard personally identifiable to perform their ombudsman responsibilities.

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information; and ensure people with disabilities mission resources and capabilities of financial can access Army Fisher Houses. management soldiers performing resource man- Report No. A-2013-0059-IEM agement and financial operations functions. Finding: USAAA reported that the financial Initial Outfitting of Equipment at Military management community was struggling to de- Treatment Facility Construction Projects, fine themselves as the Army shifts its focus away MEDCOM from Southwest Asia. Lessons learned from Overview: In response to an unprecedented overseas contingency operations and recent amount of funding for medical facility construc- changes in the defense strategy indicate that the tion projects in the FYs 2013 to 2017 Program community will need to make significant chang- Objective Memorandum, the U.S. Army Medical es to how it conducts its operations to support Command asked USAAA to verify the Health emerging requirements. The national defense

Planning Facility Agency’s process for develop- strategy, coupled with the Army strategic plan- USAAA reviewed the Health Planning ing and managing equipment requirements. In ning guidance, outlines 10 strategic objectives Facility Agency’s processes. addition, MEDCOM asked USAAA to validate that minimize long-term stability operations, whether an available, automated DoD system such as contingency operations in Southwest provided project specific detailed equipment Asia. These objectives, along with the require- requirements the Army could use to develop ment for auditable financial statements, will ne- equipment requirements. cessitate that the Army undergo a dramatic cul- Findings: USAAA determined that the Army’s ture change that hinges on resource-informed process for developing $1.4 billion in initial out- decision-making and building-partnership ca- fitting equipment requirements was not trans- pacity. USAAA found the Army had challenges parent enough to fully support those require- incorporating a cost culture. Commanders must ments. USAAA recommended that MEDCOM make more resource-informed decisions in con- establish guidance for developing and managing sideration of budget constraints and competing the execution of the initial outfitting program requirements. However, brigade combat teams to ensure effective oversight of funds obligated do not have resource management capability (S- and executed. USAAA also tested the reliability 8), and echelons above the brigade do not have of DoD’s Space and Equipment Planning System cost analysts’ capabilities to assist with decision- and concluded it was a highly reliable model for making. USAAA also found the Army may not estimating equipment requirements. Using the be using financial management soldiers to their Space and Equipment Planning System, USAAA full potential in such areas as banking, economic estimated that MEDCOM could reduce require- assessments and building-partnership capacity. ments by about $572 million. Result: Recent shifts in the Army’s defense strat- Result: By implementing USAAA recommen- egy and lessons learned from publicized fraud dations, the U.S. Army Medical Command will in Southwest Asia may require commanders to improve its processes for developing and manag- reevaluate how they use their resources to assess ing equipment requirements, and the Army can operational risk. There are many variables based reallocate $572 million to other unfunded criti- on outside factors such as pending decisions cal medical requirements. MEDCOM immedi- about troop reduction and budget constraints ately took corrective action and adjusted the FYs that continue to make it difficult to envision the 2014-2018 Program Objective Memorandum by future force. However, USAAA audit results sup- about $285 million of the reported $572 million port the need for the emerging requirements of in monetary savings. cost management and building-partnership ca- Report No. A-2013-0061-IEM pacity. Due to budget constraints and personnel reductions, the Army should prioritize, redefine Resource Capabilities of Financial Management and adjust its workforce to minimize financial Enablers risk in an evolving Army while remaining rel- Overview: At the request of the Office of evant to the warfighter. the Deputy Assistant Secretary of the Army Report No. A-2013-0045-MTS (Financial Operations), USAAA audited the

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Audit of Financial Management—Force Doctrine Command, USAAA evaluated the Structure Army’s management and scheduling of re- Overview: At the request of the Office of sources to implement new or adjusted training the Deputy Assistant Secretary of the Army requirements for institutional training. In ad- (Financial Operations), USAAA audited the dition, USAAA evaluated key efforts taken by mission command and organizational alignment TRADOC to automate manual processes, to of financial management units to verify that they include the acquisition of an enterprise schedul- allowed financial management soldiers to meet ing system and implementation of the Training mission requirements and support financial re- Development Capability system. porting effectively. Findings: USAAA reported that the Army had Findings: USAAA reported that financial man- a process in place that allowed it to accomplish agement soldiers faced significant challenges in its mission by executing approved training. performing their assigned missions and ensur- However, the process used was not efficient being properly trained soldiers. Specifically, units cause it relied on labor-intensive procedures faced challenges conducting and enforcing in- requiring personnel to manually link and ana- ternal controls, implementing theater policy and lyze data from various systems to validate re- aligning to meet mission requirements. USAAA source needs and schedule training. Despite found this occurred in part because the doctrine this shortcoming, the Army used this process and organization of financial management units because it did not have an automated tool capa- was not properly aligned to create a strong en- ble of quantifying training resources as a result forcement mechanism. For example, units did of increases and decreases in training require- not have the authority, through a mission comments. Although TRADOC had implemented mand relationship, to carry out some of their the Training Development Capability system in assigned duties. USAAA also found the follow- December 2011 to standardize course Programs ing contributing factors that impacted financial of Instruction and the use of training resourc- management units: es Armywide, efforts to acquire an enterprise • Sustainment commanders had a limited un- scheduling system were not successful. For ex- derstanding of financial management tech- ample, crucial capability requirements of an en- nical operations. terprise scheduling system were not properly ad- • Financial management units had varying dressed in the draft performance work statement, success in marketing the importance of dated March 2011. Also, headquarters TRADOC their mission. and the schools USAAA visited were not suc- • Financial management support operations cessful in their attempts to acquire an automated officer was not working as intended. system that provided these capabilities. As a re- As a result, financial management units had to sult, headquarters, TRADOC personnel gener- rely on personality-driven relationships and out- ally could not efficiently or sufficiently validate side support to meet mission needs. training resource needs across the command or Result: By helping the Army identify the chal- Armywide. Instead, they generally relied on the lenges in both conflicting doctrine and organi- individual schools’ assessments because they did zational alignment, the financial management not have visibility of resource availability. Also, and broader sustainment community have taken TRADOC schools that USAAA visited expended steps to correct many of the weaknesses. The about $13.3 million during FYs 2008 to 2012 to improvements will allow financial management acquire, modify and sustain scheduling systems units to meet mission requirements and support with minimal to no return on investment. financial reporting effectively. Result: USAAA recommended that TRADOC Report No. A-2013-0046-MTS implement an automated scheduling system that at a minimum has proven automated capa- Managing Resource Requirements for TRADOC bilities, compatibility to interface with required Institutional Training existing Army systems and “what-if” analytical Overview: At the request of the deputy com- functions for planning purposes. USAAA also manding general, U.S. Army Training and recommended that TRADOC direct schools

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currently using scheduling systems to stop in- of TSS funds and develop future TSS programs. “USAAA estimated that vesting additional Army funds to modify and As a result, key TSS stakeholders could not suf- about $6.9 million sustain these systems once an enterprise sched- ficiently monitor IMCOM’s execution of the in funds could be uling system is fielded. Finally, USAAA rec- Army’s training resourcing. Additionally, TSS ommended that the Combined Army Support stakeholders could not readily determine how put to better use in Command discontinue the use of its scheduling programmed resources were applied during the the FYs 2013-2018 system at Fort Lee schools. USAAA estimated year of execution to achieve approved objectives Program Objective that about $6.9 million in funds could be put to and gain feedback for adjusting future resource Memorandum...” better use in the FYs 2013 to 2018 program ob- requirements. jective memorandum as a result of discontinu- Result: USAAA recommended the Army pro- ing the scheduling system. vide access to funding-execution data to TSS Report No. A-2013-0022-MTT stakeholders to allow more visibility and adjust its manning models to reflect estimates that are Training Support System Manning Models more accurate. This will ensure that limited TSS Overview: At the request of the director of funds are allocated and used more accurately to training, Office of the Deputy Chief of Staff, prevent unnecessary funding shortages. G-3/5/7, USAAA evaluated the Army’s manning Report No. A-2013-0028-MTT models used to determine required staffing levels and make resourcing decisions for the active Operating Tempo Fund Use component, continental United States, Training Overview: At the request of the Army vice chief Support System. TSS includes products, services of staff, USAAA reviewed the use of operat- and facilities that support Army training mis- ing tempo funds in the Army. The purpose of USAAA evaluated the Army’s manning sions. USAAA focused its review on four TSS OPTEMPO funds is to support home station models used to determine staffing levels. common levels of support and their associated training. The Army vice chief of staff was con- management decision packages. cerned about the amount of OPTEMPO funds Findings: USAAA reported that the Army being migrated for non-OPTEMPO require- proactively implemented a process to deter- ments, particularly for base operations and in- mine TSS manning requirements. The Training formation technology equipment and services. Simulations Division within the Office of the USAAA reviewed FY 2011 OPTEMPO funds Deputy Chief of Staff, G-3/5/7 worked close- for U.S. Army Forces Command, U.S. Army ly with the Army Installation Management European Command and U.S. Army Pacific Command to quantify and standardize staff- Command activities to verify whether these ac- ing requirements for training support at in- tivities used OPTEMPO funds for OPTEMPO stallations. The models provided the Training requirements. Simulations Division a consistent and reasonable Findings: USAAA determined that the Army methodology to estimate manpower require- commands generally used OPTEMPO funds ments, prepare and justify budget requests, and for OPTEMPO requirements during FY 2011. program funding to meet installations’ TSS mis- However, USAAA identified various Army sions. However, because of anticipated budget command activities migrated about $29.7 mil- reductions in FY 2012 affecting Army civilian lion (about 11 percent) of $258.9 million of authorizations and service contracts, IMCOM OPTEMPO funds for non-OPTEMPO require- created FY 2013 provisional tables of distribu- ments, which were primarily for base operation and allowances, making implementation tions support and information technology re- of the TSS models optional. As a result, not all quirements. This occurred because activities TSS funding received by IMCOM was used in only received OPTEMPO funding for their the areas as originally programmed. The method home station training mission, and did not IMCOM used to execute TSS funds potentially have the appropriate source of funds for U.S. increased the Army’s risk for meeting training Army Installation Management Command and support requirements. Also, TSS stakeholders U.S. Army Network Enterprise Technology did not have real-time access to resourcing ex- Command services above the baseline, or for ecution data to effectively monitor the execution other non-OPTEMPO requirements associated

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with home station training. In addition, activities the contract to determine whether U.S. Central believed the FY 2011 Office of the Deputy Chief Command reduced transportation risk and im- of Staff, G-3/5/7, OPTEMPO management in- proved contractor performance. In addition, structions did not clearly define the term migra- USAAA assessed price risk and, as appropriate, tion, information technology equipment or ser- compared to the prior transportation contract, vices and allowable and unallowable OPTEMPO Host Nation Trucking, to verify command’s po- requirements. Also, while the Army commands tential to reduce transportation costs. provided some oversight of its subordinate ac- Findings: USAAA reported the criteria and con- tivities’ use of OPTEMPO funds, there were ad- cepts of the contract were not fully implemented ditional opportunities for increased monitoring. as intended, which weakened the effectiveness Result: As a result, the Army did not have full of the process during the initial six months of visibility of how OPTEMPO funds were used, or the contract. Further, the lack of transportation- the full amount of funds required for U.S. Army performance information limited the ability Network Enterprise Technology Command and to sufficiently assess the contract’s progress to U.S. Army Installation Management Command achieve performance and cost goals. USAAA services, which potentially hindered the Army’s also reported that while the contract generally ability to make informed budget decisions. fulfilled mission requirements, process weak- USAAA recommended the Army update the nesses prevented the contract from achieving OPTEMPO management instructions to (1) its intended contractor-performance improve- define the term migration, (2) define allow- ments and cost savings. Inaccurate contractor able and unallowable OPTEMPO and (3) direct performance assessments resulted in erroneous Army commands/Army service component contractor ranking used to allocate missions, Commands to issue policies and procedures for which caused an unintentional deviation from monitoring OPTEMPO fund use by subordinate fair opportunity for consideration requirements. activities. These actions should strengthen over- In addition, USAAA identified opportunities to sight of OPTEMPO migrations and provide a realize the contract’s efficiencies and implement more accurate reflection of OPTEMPO fund use corrective actions to improve contractor perfor- for budgetary decisions. mance and recoup transportation overpayments Report No. A-2013-0029-MTT totaling more than $2 million. Result: USAAA made several recommendations Performance Metrics for National Afghan to improve contract performance and over- Trucking Contract, Bagram Airfield, Afghanistan sight and reduce costs to achieve transportation Overview: The United States Central Command- goals. USAAA recommended the U.S. Forces- Joint Theater Support Contracting Command Afghanistan commander issue a fragmentary requested the audit to verify the National order to reinforce transportation delivery valida- Afghan Trucking contract performance metric tion and receiving report processing within three process improved contractor performance and days for transportation oversight. USAAA also reduced cost. The National Afghan Trucking recommended that the U.S. Central Command- USAAA reviewed performance metrics for contract provided a framework to mitigate risk Joint Theater Support Contracting Command National Afghan Trucking contract. and established a performance measurement commander provide training to its contract process to improve contractor performance and staff, improve asset visibility, perform delivery achieve U.S. Central Command’s transporta- spot checks, use contractors’ available asset re- tion goals. This audit focused on the contract’s ports, modify the contract’s performance mea- performance metrics and information from the surement process and metrics, and reevaluate contract’s order of merit list and performance contractors’ performance assessments to correct requirements summary to verify that the con- payment deductions and recoup transportation tract established a systematic method to evaluate overpayments. The U.S. Forces-Afghanistan and contractor performance, quantify performance U.S. Central Command-Joint Theater Support ratings, allocate mission assignments and apply Contracting Command commanders agreed appropriate payment deductions. USAAA ana- with USAAA’s contract performance and over- lyzed information from the initial six months of sight recommendations and took actions to im-

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plement improvements. The commands’ actions operated installations because those sites used will help mitigate risk associated with the armed contracted security guards who were limited by force’s transportation mission in Afghanistan. inherently governmental guidelines and legal Report No. A-2013-0054-MTE jurisdictions. Local commanders also had limited control of contracted guards, and contractor Army Protection Program at Depots, Arsenals responsibilities and authorities sometimes were and Plants not clearly defined. Overview: At the request of the executive dep- Result: USAAA concluded there was a higher uty to the commanding general of U.S. Army risk of vulnerabilities to personnel, property and Materiel Command, USAAA verified the imple- mission accomplishment at these five contrac- mentation of four key protection program ele- tor-operated facilities. This occurred, primar- ments including continuity of operations, emer- ily, because protection requirements were not gency management, fire and emergency services; always included or clearly defined in contract and law enforcement. solicitation documents. Additionally, there was Findings: USAAA found that, in general, an inconsistent understanding and application AMC’s government-operated installations of onsite command and control, jurisdictional met protection program requirements, but requirements and authorities related to contract- AMC’s contractor-operated facilities had ed security guards. Therefore, USAAA recom- challenges;,particularly related to effective onsite mended the Army clarify responsibilities and au- law enforcement. USAAA visited five sites and thorities for contracted security guards, and that found that all five sites met continuity of opera- AMC include protection program requirements tions requirements and had fire and emergency in contract solicitation documents and perfor- capabilities. USAAA also found that AMC had mance work statements or develop a strategy to effective law enforcement programs in place at mitigate protection elements that contractors do three of the five installations, which were gov- not implement at contractor-operated facilities. ernment-operated. However, AMC had limited Report No. A-2013-0063-MTP onsite law enforcement protection at its contractor-operated facilities. Army law enforcement Attestation Review of Data on Child, Youth and and physical security policies require command- School Services Personnel Suitability ers to direct law enforcement and security activi- Overview: Department of Defense and Army ties to maintain law and order and protect instal- policy both require criminal background checks lation personnel and property against trespass, are conducted on individuals working in child terrorism, sabotage, theft, arson and other illegal care services. For the safety and well-being of the acts. USAAA reviewed law enforcement pro- military-connected youth, it is imperative that grams at 11 AMC installations including three background checks are accurate and proper doc- government-operated and eight contractor-op- umentation is maintained verifying the check. USAAA verified more than 17,000 erated. USAAA visited five (three government- As part of a multifaceted oversight approach, personnel involved in child care services. operated, and two contractor-operated) installa- the secretary of the Army directed USAAA to tions and reviewed programs at six other AMC conduct a review on the use of criminal back- contractor-operated facilities. USAAA found ground checks, examining the verifications that the three government-operated installations made by the assistant chief of staff for installa- visited had effective law enforcement programs tion management. in place, but five of the eight contractor-operated Findings: The USAAA review verified more installations had limited onsite law enforcement than 17,000 personnel involved in child care ser- protection. AMC had effective law enforcement vices on 76 Army installations. USAAA project- programs at its three government-operated in- ed about 86 percent of the child care personnel stallations because it employed Army police and population had at least a portion of completed security forces that were extensively trained and criminal background checks. However, only under the direct command and control of the about 33 percent had all portions of the criminal local commanders. However, onsite law enforce- background checks completed. ment protection was limited at the contractor-

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Result: USAAA results will be used to assist the of Army guidance did not explicitly direct termi- Army in improving the process at Army instal- nating Servicemembers’ Group Life Insurance lations for providing and maintaining criminal coverage for soldiers designated to have premi- background checks for the safety and security of ums withheld from their pay. USAAA estimated children. U.S. Army Reserve Command could realize po- Report No. A-2013-0065-IEO tential monetary benefits of $40.5 million during the FYs 2013 to 2018 program objective memo- “Overall, USAAA Out-of-Service Debt, U.S. Army Reserve randum by revising its methodology to calculate estimated U.S. Army Command bonus recoupment amounts. Reserve Command Overview: USAAA audited the out-of-service Result: USAAA’s review disclosed DFAS took debts for soldiers discharged from the Army appropriate action to collect the debts of all 48 understated bonus Reserve. The audit objectives were to verify that soldiers in the statistical sample. DFAS sent de- debts of $20.3 million the U.S. Army Reserve Command forwarded mand letters to the 27 soldiers whose debts were for this period by a appropriate and supportable data to the Defense economical to collect. Ten of those soldiers ei- net of $9.9 million.” Finance and Accounting Service to ensure ac- ther paid their debts or worked out payment curate recording of debts for discharged soldiers plans. The remaining soldiers’ unsatisfied debts and that DFAS took appropriate action to collect were reported to credit bureaus, the Treasury those debts owed to the government. Offset Program or commercial collection firms Findings: USAAA determined that the U.S. in efforts to collect the debts. DFAS appropriately Army Reserve Command forwarded appropriate wrote off debts that were uneconomical to collect. and supportable data to establish original bonus USAAA’s efforts led to Department of the Army entitlement and payment amounts. However, Headquarters revising its regulation to be con- U.S. Army Reserve Command forwarded incor- sistent with the DoD Instruction to ensure that rect bonus debt data, which understated debt all bonus recoupment amounts are calculated by amounts for discharged soldiers. Primarily, only giving discharged soldiers credit for earning this happened because U.S. Army Reserve bonuses when they satisfactorily participated in Command followed Army Regulation 601-210 unit training assemblies. Also, U.S. Army Reserve (Active and Reserve Components Enlistment Command established new policies and proce- Program) that was not consistent with DoD dures to be in concert with the Department of the Instruction 1205.21 (Reserve Component Army Headquarters and DoD guidance. Incentive Programs Procedures). U.S. Army Report No. A-2013-0075-MTH Reserve Command’s methodology for calculating bonus recoupment amounts was only partially consistent with Army Regulation 601-210. U.S. Army Criminal U.S. Army Reserve Command’s methodology gave soldiers credit for earning bonuses even Investigation though they had continual unexcused absences from unit training assemblies. Overall, USAAA Command estimated U.S. Army Reserve Command understated bonus debts of $20.3 million for this pe- Significant Activities riod by a net of $9.9 million. U.S. Army Reserve Command unnecessarily paid $1.3 million of The U.S. Army Criminial Investigation $3.9 million of Servicemembers’ Group Life Command is a combat ready organization dedi- Insurance premiums for the 12 months ending cated to providing the Army critical investiga- March 31, 2011, because the Army did not have tive support, actionable criminal intelligence, a uniform policy to terminate premium pay- logistics security and protective services to ments for soldiers when they had unexcused senior DoD personnel around the globe. absences from unit training assemblies. U.S. USACIDC has 469 agents and other personnel Army Reserve Command did not terminate forward-deployed in support of ongoing con- Servicemembers’ Group Life Insurance coverage tingency operations in Kuwait and Afghanistan. for these soldiers because DoD and Department This support extended beyond normal criminal

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investigations and included logistics security op- Since Oct. 2012, the Protective Service Branch erations; training host nation law enforcement conducted more than 300 protective services personnel; detainee investigations; and the use missions in the continental United States, of forensic sciences and criminal investigative OCONUS and in deployed environments. This techniques which aid combat commanders in included three visiting foreign counterpart identifying, targeting, capturing, deterring and missions for ministers and chiefs of defense prosecuting insurgents and criminal elements within the national capital region and throughout The USACIDC Protective Services that pose a threat to U.S. forces. the continental United States. The Protective Battalion on an official visit. Service Branch continued to provide protective Since Oct. 1, 2012, USACIDC generated more support for two former secretaries of defense than 4,949 new reports of investigation and and a former chairman of the joint chiefs of staff. more than 3,789 non-report of interest investi- The battalion’s protective intelligence section gative sequence actions. In spite of the demand- conducted full spectrum threat assessments for ing caseload, USACIDC maintained a solve rate every low, medium or high risk travel mission, of 99.6 percent for drug crimes, 95 percent for and for each personal security vulnerability persons crimes, 98 percent for economic fraud assessment, incorporating terrorist and criminal crimes, 100 percent for violent death crimes, threat data into a comprehensive risk analysis 89 percent for violent sex crimes, 64 percent program. The Protective Service Branch for property crimes and 84 percent for miscel- continued to deploy special agents to the U.S. laneous crimes, with an overall solve rate of 96.8 Central Command to lead protective services percent. The solve rate for general crimes was 64 details for senior U.S. combat commanders. percent in comparison to the national average of 18.6 percent. USACIDC generated $20,733,143 Computer Crime Investigative Unit in recoveries during the reporting period. The Computer Crime Investigative Unit supported the new DoD strategy for operating in cy- USACIDC continues to place significant empha- berspace and the recently established U.S. Cyber sis on the conduct of sexual assault and death Command and Army Cyber Command by ag- investigations to help meet the intent of DoD gressively investigating intrusions and related and Army leadership in reducing the number of malicious activities targeting Army computer sexual assaults and suicides that affect the Army networks. The Computer Crime Investigative community. USACIDC hired additional dedi- Unit’s increased emphasis on insider threats cated sexual assault investigators, formed special came to the forefront with its lead role in DoD’s units to improve the quality of sexual assault in- cyber espionage investigation of the largest dis- vestigations and increased efforts to hold offend- closure of classified material in U.S. history, alleg- ers accountable for their actions. edly perpetrated by an Army intelligence analyst in Iraq. The Computer Crime Investigative Unit’s Specialized Unit Operations ongoing partnership with the Army chief information officer to conduct proactive vulnerability assessments of the LandWarNet produced note- Protective Services Battalion worthy successes. This proactive crime preven- The Protective Services Battalion conducted tion effort, part of Computer Crime Investigative continuous worldwide executive protection Unit’s multi-faceted virtual community policing from assassination, kidnapping, injury and campaign, identified and remediated vulnerabil- embarrassment for designated senior high-risk ities before cyber criminals or other adversaries personnel of the DoD, the Joint Chiefs of Staff could access and damage Army systems, steal or and Army, and for their foreign counterparts alter sensitive information, or disrupt network during official visits to the United States. The operations and other critical military actions. Protective Service Branch also provided oversight During this reporting period, Computer Crime of training and operational effectiveness for Investigative Unit’s vulnerability assessment pro- Combatant Commander protective services in gram identified $7.4 million in cost avoidance to U.S. Southern Command and U.S. Forces Korea. the Army. Following the mandatory remediation

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of these vulnerabilities, no computer network extensive training of CODIS staff and compromises occurred at assessed installations all new equipment. The next generation for this reporting period. CODIS software provides enhanced search capabilities and will increase the ability of “Since October 2012, Major Procurement Fraud Unit the USACIL to leverage DNA data to pro- the Major Procurement The Major Procurement Fraud Unit continues vide investigative leads and information to Fraud Unit has initiated to combat fraud and corruption related to con- investigative agencies throughout DoD. tingency operations. Its global mission is to con- • The Latent Print Branch has been instru- 93 investigations, duct criminal investigations into allegations of mental with technological advances to with more than $78 fraud associated with major Army system acqui- super glue fuming and incorporating all million in actual, sition programs to recover Army funds, ensure other latent print processing techniques into total recoveries...” the integrity of the Army procurement process, one single system. The Adroit 300, a low- and deter future crimes in order to preserve sol- pressure sublimation processing system, dier safety and Army readiness. In support of was initially researched at USACIL, work- the Major Procurement Fraud Unit’s focus on ing closely with LINDE Gas Corporation allegations of fraud affecting contracting opera- of Germany (Canadian Division) and came tions in contingency environments throughout on line at USACIL during February 2013. the world, it has four forward operating investi- This system delivers “like” quality prints on gative offices in Afghanistan and Kuwait. Since every processing technique used in a single October 2012, the Major Procurement Fraud chamber unit. It reduces chemical usage Unit has initiated 93 investigations, with more and chemical cost on many latent print pro- than $78 million in actual, total recoveries and cesses, is eco-friendly and computer-driven, more than $11 million returned to the Army. eliminates human error in timing and for- Specific to overseas contingency operations, the mulation, is standardized for all users and Major Procurement Fraud Unit initiated 13 in- is capable of developing prints. Operating vestigations and realized more than $3 million cost is reduced, as little to no chemicals are in fines and restitutions. required, development times are shortened and examiner time is minimized. U.S. Army Criminal Investigation Laboratory • The USACIL Logistics Branch occupied The U.S. Army Criminal Investigation Labo- its newly renovated Logistics Operations ratory, located in the Gillem Enclave, Ga., is Center at Gillem Enclave, Ga. The renovat- the only full service forensic laboratory in DoD ed facility provides comprehensive state-of- and provides forensic laboratory services to the-art logistics support to the continental Department of Defense investigative agencies United States and OCONUS operations. and other federal law enforcement agencies. The USACIL Logistics Branch has complet- USACIL examiners and analysts testify in fed- ed the acquisition of one deployable foren- eral, military and state courts as well as multi- sic laboratory that will allow deployment to The USACIL is the only full service forensic laboratory in DoD. national courts. USACIL is on the forefront of a theater in as little as 10 days. battlefield forensics and has a robust Science and • The Expeditionary Forensic Division Technology Program collaborating with other and its subordinate organizations, the laboratories and researchers, customers, law en- Expeditionary Forensic Laboratories and forcement, academia and industry to develop Reach Back Operations Center, recently state-of-the-art protocols in scientific investi- changed their respective names to the gation. During the reporting period, USACIL Forensic Exploitation Directorate, Forensic made several technological improvements: Exploitation Teams, and Global Forensic • The Combined DNA Index System Branch Exploitation Center, respectively. These completed the conversion to the next gen- name changes better reflect the organiza- eration of CODIS software, CODIS 7.0. The tional structure that will be used to ser- conversion process took approximately six vice the global customer base post-Oper- months and involved preparation of exist- ation Enduring Freedom. The mission of ing data to conform to new requirements, the organization has not changed as the

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Expeditionary Forensic Division will con- Forensic Exploitation Team 3 has maintained a tinue to provide full service forensic exploi- robust capability to conduct forensic examina- tation to the DoD customer base across the tions in the following disciplines such as explo- full range of military operations. sive triage, latent prints, DNA, chemistry (explo- • The Global Forensic Exploitation Center re- sives and drug analyses), electronic engineering, ceived 302 new exploitation requests from firearms and tool marks and forensic/biometric the Afghanistan theatre of operations and enabled intelligence analysis. Its forensic analy- completed 335, including 33 received dur- sis provides timely intelligence used for forensi- ing the previous reporting period. Of the cally linking known insurgents to capture enemy total received and completed, the latent materiel, such as improvised explosive devices, print section completed analysis on 107 weapons, documents and other materials that submissions, 393 DNA submissions, 42 are used for targeting and prosecution in Afghan electronic engineering submissions, and courts. four explosive chemistry submissions. The “The analysis of the analysis of the received materials resulted in Between June 2010 and November 2012, received materials 632 searchable DNA profiles, yielding 588 Afghan court statistics from the Justice Center biometric matches. There were more than in Parham, disclosed out of 195 cases processed, resulted in 632 512 latent fingerprints found and 10 data- evidence matched forensically using DNA and searchable DNA base matches. fingerprints to the insurgent had a 97 percent profiles, yielding 588 • The Global Forensic Exploitation Center conviction rate and 99 percent affirmation on biometric matches.” also received an additional 61 lab requests appeal. The average prison sentence for a convic- from the Armed Forces DNA Identification tion was 6.2 years. The maximum sentence was Laboratory containing 1,700 reference sam- 16 years, and 46 percent of the sentences were ples (buccal swabs) for processing in order between eight and 16 years. to develop the DNA profile which can subsequently be searched in the appropriate da- The case load for forensic analysis in Afghanistan tabase. The Expeditionary Forensic Division has continued to remain steady even during has reached an agreement with the Armed the mostly non-fighting season. The Forensic Forces DNA Identification Laboratory to Exploitation Team 3 examiners conducted fo- provide the same processing services for the rensic examinations on more than 316,000 DNA reference swabs. The DNA branch has pieces of material completing more than 5,180 also created a database called Expeditionary laboratory requests. Forensic DNA Index System. So far, more than 5,000 profiles have been entered into More than 700 insurgents were uniquely identi- the database. fied using latent prints and DNA processed from captured enemy materiel and matching to known The Forensic Exploitation Team 3 deployed profiles in DoD databases, of which 634 of those to Afghanistan Nov. 10, 2012, and continued identifications came from latent prints submitted the mission of providing forensic support to to the Biometrics Identity Management Agency Regional Commands East, North, Capital, South and searched for in the Automated Biometric and Southwest from three main laboratories at Identification System database and 124 identifi- Kandahar Air Base, Bagram Air Base and Camp cations came from DNA submitted to the Armed Leatherneck. The Forensic Exploitation Team 3 Forces DNA Identification Laboratory and along with Combined Joint Task Force Theater searched for in their database. Once insurgents Explosive Exploitation Paladin has operational were identified by DNA and/or fingerprints, 275 control and support of four smaller satellite labs be-on-the-look-out notices were disseminated located at Camp Stone Herat, Camp Marmal and 308 criminal activity analysis reports were Mazar-e-Sharif, the Multi-National Lab at Camp developed. Warehouse Kabul and the Australian Lab in Tarin Kowt Uruzgan that provide support on a regional basis.

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Criminal Investigation Task Force Law Enforcement Professionals USACIDC continued to serve as the execu- The Law Enforcement Professionals Program tive agency for the DoD Criminal Investigation is an ongoing USACIDC-managed program Task Force. CITF helps remove terrorists and which supports both the Army and the Marine insurgents from the battlefield by conducting Corps during contingency operations. The LEP criminal investigations of suspected terrorists in Program embeds experienced former law en- Guantanamo Bay, Cuba, and suspected terrorists forcement personnel at all echelons from corps and insurgents in Afghanistan. to battalion and some select companies. CTIF agents collected evidence to support potential prosecution of terrorists. Teams of USACIDC special agents, attorneys During the reporting period, LEP personnel and analysts were located at CITF’s headquar- were instrumental in the arrest or capture of ters, Fort Belvoir, Va.; several other locations 29 insurgents, and spent 287 hours training 96 “... LEP personnel were in Virginia; several locations in Afghanistan; Afghan National Security Forces. The following instrumental in the and the U.S. Naval Station at Guantanamo Bay. summaries provide a snapshot of the contribu- arrest or capture of 29 In Guantanamo and from CITF’s headquarters, tions that LEP personnel provided to the combat CITF teams continued to conduct criminal in- mission in Afghanistan. insurgents, and spent vestigations of Guantanamo detainees and to • On Sept. 30, 2012, two LEPs attached 287 hours training pursue justice for the victims of the 9/11 attack to Investigative Surveillance Unit Team 96 Afghan National on the United States and the Oct. 12, 2000 at- Paktika were involved in an investigation Security Forces.” tack on the USS Cole. In the afghanistan theater that led to a joint operation with Afghan of operation, CITF deploys agents to conduct National Security Forces. Through the use criminal investigations and criminal intelligence of a cooperating individual, ANSF obtained operations in support of various coalition task information that an abandoned house was forces. They are responsible for suppressing in- being used to make improvised explosive surgent activity, assisting the anticorruption ef- devices. After obtaining a search warrant forts by the Afghan government and preventing from an Afghan prosecutor, ANSF conduct- stolen U.S. government property from falling ed a search that resulted in the seizure of 50 into the hands of insurgent groups or being used kilograms of aluminum powder, 1,000 feet to fund insurgent activities. of detonating cord, 220 kilograms of chlo- • At the Task Force Shafafiyat’s Major Crimes rate-based HME, 10 remote receivers; two Task Force, CITF agents mentored Afghan remote triggers, 1,000 electric elasting caps, law enforcement officers working on high- 150 kilograms of potassium chlorate; eight profile corruption cases of Afghan officials pressure plates, 1,000 kilograms of ammo- and networks and provided training on in- nia nitrate, 1,000 kilograms processed am- vestigating organized crime, weapons traf- monia nitrate HME; mortar rounds and ficking and other crimes. other assorted munitions. • Afghan investigators working with CITF • Two Investigative Surveillance Unit LEPs agents assigned to the Major Crimes Task provided support and guidance to ANSF Force recovered an estimated $1.5 million of who received information from a confi- stolen U.S. military equipment. Recovered dential informant who stated that a suicide items included two large prime power in- bomber was going to attack the Provincial dustrial grade generators and a varied as- police headquarters or governor’s com- sortment of new high mobility multipur- pound in Paktika Province. The Investigative pose wheeled vehicle parts and tires. Surveillance Unit LEPs assisted in the inter- • At the Criminal Prosecution Exploitation view of a confidential informant to gather SSE Refinement Team, CITF agents collect- details about the alleged attack. The resulted and preserved evidence as close to the ing interview revealed the suicide bomber point of capture as possible. The evidence and his handler were going to conduct a is used to support potential prosecution or reconnaissance of the targets prior to the at- continued detention of the most dangerous tack. The ANSF, with the assistance of the detainees. LEPs, initiated a surveillance operation of

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the target areas and apprehended both indi- Assessments completed in support of major viduals without incident, thereby thwarting conferences and events sponsored by the the attack. Army or subordinate units. These Criminal • On Nov. 7, 2012, two LEPs attached to 3rd Activity Threat Assessments reports are Battalion, 8th Marine Regiment mentored used by the requesting unit or organization and advised ANSF units who had detained to identify the possible criminal and ter- three suspected insurgents in possession of rorist threats to planned events such as the medium sized weapons and IED compo- annual Army Birthday Ball and the annual nents. The two LEPs assisted the ANSF with Army-Navy football game, and assist them the interviews of the suspected insurgents. with preparing an appropriate security plan Two of the suspects admitted to being infor the event to mitigate any threats to the surgents and emplacing IEDs. The third sus- event or the senior civilian and military pect, a Pakistani national, admitted to being personnel who may be attending the event. an insurgent fighter. One of the suspects In December 2012, at the special request of was linked biometrically to an IED incident the Anti-Terrorism Branch, Office of the from 2010. Provost Marshal General, personnel from the CIOC traveled to the Army-Navy game Command Intelligence Operations Center in Philadelphia and were on-site during “Within the past The CIOC continues to expand its analytical the event to provide real-time intelligence two years, USACIDC support to investigative elements worldwide by and threat information and assist with se- has increased Army collecting, assessing and disseminating criminal curity issues as needed. Members of CIOC e-Guardian reporting intelligence to USACIDC field elements con- assigned to support the Criminal Activity ducting criminal investigations or employed in Threat Assessments mission work in con- by more than 47 from crime prevention efforts. The CIOC also conjunction with representatives from the FBI, 193 reports in 2011 tinues to grow the Army’s e-Guardian Program, Secret Service, Department of Homeland to 284 in 2012.” which allows Army law enforcement to share Security, National JTTF, CID field offices, and disseminate potential terrorist threat infor- and other local and state law enforcement mation with the FBI, other DoD law enforce- and intelligence agencies in order to ensure ment agencies, state and local civilian law en- the safety and security of Army sponsored forcement authorities, nationwide. Within the events and the individuals attending these past two years, USACIDC has increased Army events. e-Guardian reporting by more than 47 from 193 • Since October 2011, the CIOC has had an reports in 2011 to 284 in 2012; and increased the analyst dedicated to solely monitoring the amount of e-Guardian users Army-wide from gang and domestic extremist threat to the 222 users in 2011 to 461 in 2012. Since 2011, Army. The analyst works with the National there have been six incidents that resulted in Gang Intelligence Center to cultivate work- identifying a terrorist nexis. CIOC also acts as a ing relationships with federal and state agen- liaison to the FBI National Joint Terrorism Task cies and to share operational information. Force. CIOC personnel detailed to NJTTF and Gang activity continues to be a contributing regional Joint Terrorism Task Force have assist- factor in only a very low number of crimi- ed the FBI in several investigations concerning nal investigations conducted by USACIDC. former Iraqi insurgents who entered the United However, the threat of gang and domestic States under various U.S. immigration programs. extremist groups conducting criminal ac- Additionally, CIOC members have been leading tivity on Army installations, the threat of an initiative at the NJTTF to identify potential extremist infiltration of the Army to pursue insider threats posed by DoD contractors work- training in weapons and explosives, and the ing in support of U.S. military operations in the potential loss in public confidence by the United States and overseas. appearance of the Army allowing extremists • CIOC acts as the lead agency responsible for in its ranks requires constant monitoring. the assignment, conduct and supervision of all USACIDC Criminal Activity Threat

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Significant Investigative Cases privately owned vehicle. USACIDC went to Jackson’s barracks room and found him bleed- Costs Charged to Government for Company’s ing and unresponsive after an apparent suicide Reorganization attempt. A knife with red stains on both the Overview: A joint investigation between handle and the blade was found on the floor USACIDC and DCIS revealed Aerojet, a sub- near Jackson. Forensic examinations of the evi- sidiary company of GenCorp Inc., knowingly dence collected revealed Jackson’s DNA was at passed unallowable proxy costs onto contracts three different locations within the specialist’s awarded to the Tank Automotive and Armament room. Fibers found on Jackson’s sweatshirt were Command and Aviation and Missile Command. matched to fibers from the specialist’s blanket, Aerojet principally serves the missile and space pillowcase and shirt. Handwriting analysis of a propulsion, defense and armaments markets. note found at the scene of the suicide attempt Ninety-two percent of Aerojet’s sales are attrib- was determined to be written by Jackson. In the utable to government customers. Aerojet fraud- note, Jackson expressed remorse for what he had ulently included costs associated with resisting a done and provided instructions regarding what 2004 takeover bid in calculating its indirect over- to do with his personal belongings. The note was head rate proposals submitted to the govern- dated and signed by Jackson. USACIDC was un- ment for various national defense-related con- able to identify a specific motive for the murder. tracts. Aerojet’s inclusion of these costs inflated Result: On Dec. 13, 2012, Jackson was convicted the subject rate and resulted in overpayments by by a jury for the unpremeditated murder of the the United States to the company. Aerojet also specialist and was sentenced to reduction to the included unallowable costs associated with a grade of E-1, forfeiture of all pay and allowances, 2006 proxy contest by another company in cal- life in prison with the eligibility for parole and a culating such overhead rates. Applicable Federal dishonorable discharge. Acquisition Regulations expressly disallow reim- “With the assistance bursement for costs associated with “resisting or Stolen Military Equipment Recovered of ATF, USACIDC and planning to resist the reorganization of the cor- Overview: This investigation was initiated ATF recovered 118 porate structure of a business or a change in the after the Joint-Base Lewis-McChord, Wash., USACIDC was notified of stolen military equip- stolen items valued controlling interest in the ownership of a business.” GenCorp Inc. was aware the costs associ- ment to include thermal sites, night vision opti- at approximately ated with the proxy contest were not allowable cal devices and other weapon accessories from $600,000.” and subsequently billed the Army approximately a storage unit on base. The total value of the $1.1 million in unallowable proxy costs in addi- stolen property was approximately $628,805. tion to fraudulent charges billed to the National Confidential sources identified an Army private, Aeronautics and Space Administration. Nicholas Solt, as being responsible for the larce- Result: GenCorp Inc. entered into a civil settle- ny of the equipment. USACIDC discovered that ment agreement in the Northern District Court Solt gave or sold the stolen equipment to several of California and agreed to pay the government non-DoD civilians. With the assistance of ATF, $3.3 million. USACIDC and ATF recovered 118 stolen items valued at approximately $600,000. USACIDC Murder of U.S. Army Specialist uncovered several other unrelated thefts of mili- Overview: This investigation was initiated after tary equipment and efforts to obstruct justice. USACIDC was informed by base emergency of- The investigation revealed an Army staff ser- ficials of the death of an Army specialist in her geant and a specialist, David Greene, who stole barracks room. USACIDC established probable approximately $7,000 of assorted military prop- cause that an Army sergeant, Vincinte Jackson, erty from a supply room on base and sold it to murdered the specialist after he entered her bar- a specialist, Joshua Chandler. Forensic examina- racks room and stabbed her approximately 70 tion of the Army staff sergeant’s cell phone re- times. During a search of the parking lot outside vealed text messages instructing Chandler to get of the barracks where the specialist was found, rid of the stolen property he purchased from the USACIDC found a drop of blood on Jackson’s Army staff sergeant. Solt and Chandler threat-

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ened to kill the other suspects if they disclosed construction projects identified more than $400 “NAVAUDSVC audits of information to USACIDC. Additionally, the million in potential monetary benefits for DON military construction investigation revealed a specialist, Troy Harris, through the elimination or reduction of various projects identified more stole multiple M249 machinegun barrels and projects. To date, NAVAUDSVC’s FY 2013 assist gave them to Chandler. The barrels were subse- reports for NCIS have identified approximately than $400 million in quently sold to non-DoD civilians. USACIDC $1.3 million in potential fraud. NAVAUDSVC potential monetary recovered 10 M294 machinegun barrels, 659 M4 will continue to work with senior DON officials benefits for DON...” magazines, a thermal camera, five rifle Aimpoint to provide them with an expert and impartial as- rifle scopes and 10 boxes of meals ready to eat, sessment of critical issues and, if necessary, make which were all reported as stolen. recommendations that address identified condi- Result: Solt was tried and convicted of larceny tions and help DON achieve greater efficiency and destruction of government property by and effectiveness in its operations. general court-martial and sentenced to 10 years confinement, reduction in rank to E-1, forfei- During this period, NAVAUDSVC issued 19 ture of all pay and allowances and received a final reports, which identified $443.9 million of dishonorable discharge. Chandler was tried and potential funds to be put to other use. To date, convicted of larceny, conspiracy, perjury, and management has agreed to $424.3 million. destruction of government property by general NAVAUDSVC provided performance and finan- court-martial and sentenced to 10 years confine- cial audit coverage in areas with significant im- ment, reduction to E-1; and forfeiture of all pay pact. The sources of work for reports published and allowances, and received a dishonorable dis- in this period are shown in Figure 4.1. charge. Greene was tried and convicted of larceny and conspiracy by general court-martial and Figure 4.1 Workload by Source Published Reports October 1, sentenced to 30 days confinement, 90 days hard 2012 – March 31, 2013 labor without confinement, reduction in rank to Source Reports E-1, forfeiture of $500 per month for five months Congressional Requests and Statutory 0 and a bad conduct discharge. Harris was tried Management Requests 13 and convicted of conspiracy and destruction of Risk Benefit Assessments 6 government property by general court martial Total 19 and sentenced to three months confinement and reduction in rank to E-1. There was no action taken against the Army sergeant. Figure 4.2 shows the funds identified for potential other use through audit reports issued by NAVAUDSVC in the past three years. Naval Audit Service The Naval Audit Service’s mission is to pro- Figure 4.2 Funds Identified for Potential Other Use ($ in thousands) Navy vide independent and objective audit services Program Past 3 Years Past 6 Months to assist Department of the Navy leadership in Acquisition Programs $399,827 $0 assessing risk to improve efficiency, accountability and program effectiveness. Each year, Construction Programs 914,342 443,924 NAVAUDSVC works with senior Navy and Logistics Programs 0 0 Marine Corps officials to develop a risk-based Other Programs 4,375 0 audit plan addressing critical areas officials feel Total $1,318,544 $443,924 merit additional oversight. NAVAUDSVC also responds to requests from senior DON officials to provide audit work on emergent issues, such as the DON Financial Improvement Program initiative. In the past six months, NAVAUDSVC audits have addressed such issues as aviation safety, acquisition controls, contract administration and more. NAVAUDSVC audits of military

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Figure 4.3 shows the authorized and actual civilian they are responsible, and if they are not, ensure year-end strengths for FYs 2010-2013. that they are properly trained on the technical aspects of the specific contracts, (2) establish Figure 4.3 Civilian Year-End Strength (Includes audit, other professional, administrative, and support internal controls to maintain auditable contract personnel) records as they relate to verifying work billed in Fiscal Year Authorized Actual comparison to work performed, (3) specifically, 2010 398 391 maintain more detailed records that relate prog- 2011 398 370 ress reports of the technical work completed to 2012 398 373 the invoices received from the contractor and (4) establish internal controls to ensure proper 2013 383 366 separation of duties exist over the contract administration process. Report No. N2013-0003 Acquisition Processes and Department of the Navy Communications Contract Management Security Account Reconciliation Under Common Tier 1 Accounting System “NAVAUDSVC Naval Sea Systems Command, Logistics, Overview: The audit objective was to verify that determined that the Maintenance, and Industrial Operations (1) all DON communication security accounts Contract N00024-01-D-7025, DO 0001 have been reconciled, for the first time, under prior contracting Overview: NAVAUDSVC’s objective was to officer representative Common Tier 1 accounting system, (2) inven- verify that payments made for contract N00024- tory data is reliable and (3) supporting evidence had improper oversight 01-D-7025, DO 0001 were valid and accurate, is sufficient and appropriate to support final -rec of the contract.” matched progress reports and had a proper con- onciliation determination by the respective cen- tracting officer representative review. tral office of record. Findings: NAVAUDSVC determined that the Findings: NAVAUDSVC found that the DON’s prior contracting officer representative had im- Central Office of Record needs to improve their proper oversight of the contract. Specifically, administrative procedures for reconciling and the prior contracting officer representative (1) documenting DON Communications Security did not have the proper experience or technical accounts. Specifically, NAVAUDSVC found knowledge to monitor the work being performed managers were not maintaining sufficient evi- by the contractor, (2) was unable to match the dence of inventory reconciliations and not al- work performed and reported on the progress ways performing timely account reconciliations. reports to the proper invoices that were submit- Result: NAVAUDSVC recommended that the ted and (3) was not involved in monitoring the DON develop formal policy addressing the contractor’s performance due to the prior pro- management and oversight of communication gram manager independently monitoring all as- security accounts and identify alternatives to pects of the contract. CORs not adhering to their reduce the overall reconciliation cycle and in- contracting responsibilities, as required by guid- crease productivity. ance, could prevent the government from hav- Report No. N2013-0006 ing assurance that it was receiving the goods and services for which it was paying. Additionally, a Joint Mission Planning System lack of adherence to contract oversight respon- Overview: The objective of the NAVAUDSVC sibilities could lead to fraud, waste and abuse of audit was to verify that the oversight and pro- government funds. gram management planning and execution for Result: NAVAUDSVC recommended that the Joint Mission Planning System were effec- Naval Sea Systems Command, Maintenance, tively implemented to achieve its desired results. Modernization, Environment and Safety (1) es- Findings: NAVAUDSVC found that, prior to tablish internal controls to ensure that individu- FY 2010, the Joint Mission Planning System als appointed as CORs are technically compe- Program Management Office did not sufficiently tent in regard to the specific contract for which plan, manage or execute the program in accor-

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dance with DON acquisition policy and guid- allowed contracting officers to maintain con- ance. For instance, NAVAUDSVC found the Joint tract files that did not contain documentation Mission Planning System Program Management required by the command’s instruction, which Office was developing two follow-on capability could result in the command being vulnerable to improvements, Framework Version 1.3.5 and potential fraud, waste and misuse. 1.4, for the program, without: Result: NAVAUDSVC recommended that Navy • Recommending to the assistant secretary Region Mid-Atlantic, Fleet and Family Readiness of the Navy (research, development and ac- (1) establish oversight and procedures in the acquisition) that the oversight of the program counts payable department that ensure invoices needs to be raised to the level of an acquisi- paid against blanket purchase agreements con- tion category I or II program. tain all the elements required by command in- • Establishing program goals for cost, sched- struction, (2) establish oversight and procedures ule and performance supporting each for purchasers to ensure that blanket purchase increment. agreement call logs are maintained in accor- • Updating program documentation needed dance with command instruction, (3) estab- for program execution and decision making. lish a standard operating procedure for blanket Result: NAVAUDSVC recommended that purchase agreements, clarifying that purchases Program Executive Office for Unmanned may not exceed the target amount nor exceed Aviation and Strike Weapons (1) request that the maximum amount allowed by command in- the assistant secretary of the Navy (research, destruction, (4) review all blanket purchase agree- velopment, and acquisition) designate the Joint ments currently in place to ensure that the target Mission Planning System as an acquisition cat- amounts have not been reached, ensure that only egory II program and (2) require the program current blanket purchase agreements are being manager for the Joint Mission Planning System used and the blanket purchase agreement and to update the Acquisition Program Baseline contract files have all required documentation, Agreement and the Acquisition Strategy to in- and (5) establish oversight and procedures for corporate the two follow-on capability improve- contracting officers to ensure that the required ments, Framework Version 1.3.5 and 1.4, for the documentation is included in all contract files. Joint Mission Planning System. Report No. N2013-0012 Report No. N2013-0007 Financial Management Internal Controls Over Selected Contracts and Blanket Purchase Agreements at Navy Region Independent Attestation — Agreed-Upon Mid-Atlantic, Fleet and Family Readiness Procedures Attestation Engagement of Assessing Overview: NAVAUDSVC analyzed whether se- Internal Controls over Financial Reporting lected acquisition instruments at Navy Region in the Department of the Navy, Phase 3 Mid-Atlantic, Fleet and Family Readiness were Overview: On July 28, 2011, an Office of the in compliance with applicable criteria, focusing Under Secretary of Defense (Comptroller) on blanket purchase agreements and contracts memorandum requested that military related to prior assist work performed for NCIS. department audit agencies apply their knowledge Findings: Internal control weaknesses existed and experience in support of management’s at Navy Region Mid-Atlantic, Fleet and Family efforts to evaluate and strengthen their internal Readiness which (1) allowed for more than control environment, policies and procedures. $715,000 to be spent above the $50,000 autho- On Aug. 19, 2011, the assistant secretary of the rized target value of a blanket purchase agree- Navy (financial management and comptroller) ment, (2) did not ensure purchases were tracked/ issued a memo to DON organizations to comply reconciled to the agreement call logs, (3) allowed with the comptroller’s request. At the request use of one blanket purchase agreement after of the assistant secretary of the navy (financial cancellation and (4) allowed invoices that were management and comptroller) and based on missing required information to be processed procedures agreed upon by NAVAUDSVC, and paid. In addition, internal control weakness the assistant secretary of the Navy (financial

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“Information management and comptroller), and the director, (9 percent), which statistically equates to an technology and audio- Office of Financial Operations, NAVAUDSVC estimated 2,031 missing assets, worth $2.4 mil- visual assets were not completed an attestation engagement. The lion. These items included laptops, desktops, objective of the attestation engagement was to personal digital assistants and monitors. Also, sufficiently controlled verify that source documentation exists and 102 of the 227 sampled property records (45 and accounted for and is maintained for selected transactions, and to percent) contained key field documentation er- were vulnerable to verify that targeted and limited internal controls rors, and 631 assets valued at $735,246 were not waste and misuse.” are in place and functioning. properly investigated. Furthermore, one hospi- Result: Phase 3 reviewed 11 Navy Working tal augmented its appropriations by $95,265 by Capital Fund activities and eight re-visits improperly disposing of information technology of general fund activities from Phase 1 of assets to a private contractor in lieu of disposing NAVAUDSVC’s review. NAVAUDSVC found the assets through the Defense Logistics Agency that of the 11 Navy Working Capital Fund sites Disposition Service. completed, transactions were readily document- Result: The audit recommended that Navy ed approximately 86 percent of the time and Medicine West develop and implement an over- internal controls were in place and function- sight process to ensure compliance with recording reasonably approximately 71 percent of the keeping policies and that hospitals track infor- time. In addition, NAVAUDSVC found that of mation technology and audio-visual assets to the the eight general fund sites revisited, transac- end users or department custodians. The Navy tions were readily documented approximately 88 needs to set up a record-custody control pro- percent of the time and internal controls were in cess of all source documents, improve physical place and functioning reasonably approximately security controls of hospital warehouse storage, 66 percent of the time. The previous results for obtain documented authorizations to dispose of those same eight general fund sites completed assets, maintain verifiable audit trails and use during Phase 1 were 93 percent and 40 percent, Defense Logistics Agency Disposition Services respectively. NAVAUDSVC provided this report for disposal. Navy Medicine West needs to es- to assist the DON in evaluating audit readiness tablish an oversight process to ensure hospitals related to transaction source documentation and sufficiently investigate missing property. In ad- selected testing of internal controls applicable to dition, the Navy needs to remit proceeds im- the documentation. Since this was an indepen- properly received for disposing of information dent attestation, no recommendations were made. technology assets. Report No. N2013-0002 Report No. N2013-0010

Information Technology and Audio-Visual Asset Information Assurance, Accountability at Selected Hospitals within Navy Medicine West Security and Privacy Overview: NAVAUDSVC analyzed whether the controls over property records were in place to Business Process Reengineering Efforts for ensure information technology and audio-visual Selected Department of the Navy Business assets were sufficiently accounted for at selected System Modernizations hospitals within Navy Medicine West. Overview: NAVAUDSVC conducted the audit Findings: Information technology and audio- to verify whether supporting documentation for visual assets were not sufficiently controlled selected DON programs was accurate and met and accounted for and were vulnerable to waste the business process reengineering requirements and misuse. Significant control weaknesses were defined in DoD policy and guidance. Findings: NAVAUDSVC’s review of support- NAVAUDSVC reviewed documentation found in processes including receipt and accep- for selected DON programs. tance documentation; asset tracking and prop- ing documentation for five selected commands’ erty recordkeeping; source document filing and business process reengineering systems deter- maintenance; asset storage; asset disposal; and mined that there were opportunities to improve missing asset investigations. Hospitals could not the business process reengineering assessment locate 21 of the 227 statistically sampled items submission process. Two of the five commands

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selected for review did not provide full docu- authorized by a secretarial process for unusual mentation to completely support assertions circumstances, emergency circumstances, con- made about the business process reengineering tingency operations or exigencies of the service submissions. One of the commands relied on de- concerned. According to DON officials, they cisions made more than a decade ago. Therefore, did not use a secretarial process because they the supporting information provided was not a were unaware of the JTFR requirement to do so. timely representation. Another command did According to U.S. Fleet Forces Command (Fleet not provide sufficient documentation to support Personnel, Resources, and Programs) data, there the assessment submitted. were 616 CONUS mobilization requirements as Result: NAVAUDSVC recommended that the of July 1, 2012. If the formal secretarial process is deputy under secretary of the Navy/deputy chief not followed, the Navy will continue to be non- management officer establish policy to strength- compliant with the JFTR and may lack sufficient en management internal controls of business controls for the authorization of per diem for process reengineering documentation. reservists. Report No. N2013-0013 Result: NAVAUDSVC recommended deputy assistant secretary of the Navy (reserve affairs and Other total force integration) institute a secretarial process to determine that the call to active duty for Navy Reserve Use of Per Diem reservists for other than training for more than Overview: The audit objective was to verify that 180 days at one location, with or without an ex- the Navy Reserve’s use of per diem (1) complied tension, is required by unusual circumstances, with applicable laws and DoD and DON regu- emergency circumstances, contingency opera- lations and (2) when used in lieu of permanent tions or exigencies of the service concerned. The change of station orders, was used appropriately. secretarial process should also address current Specifically, NAVAUDSVC focused on the au- reservist activations that exceed, or are expected thorization of per diem for Navy reservists on to exceed, 180 days. mobilization, active duty training, and active Report No. N2013-0011 duty for special work orders. Findings: NAVAUDSVC found that authoriza- Department of the Navy’s Military Construction tion of Navy reservists’ per diem for active duty Projects Proposed for Fiscal Year 2014 “NAVAUDSVC made training orders and active duty for special work Overview: NAVAUDSVC’s objective was to recommendations orders generally complied with joint federal verify that the project scope requirements were to cancel the two travel regulations and other pertinent guidance. sufficiently supported for selected DON military construction projects. unneeded projects and Also, NAVAUDSVC did not find internal con- reduce the scope of the trol weaknesses that they considered material. Findings: NAVAUDSVC reviewed 15 (five However, the audit did find an opportunity for Marine Corps and 10 Navy) projects valued at projects for a potential improvement in compliance with JTFR policy $844.98 million. Thirteen of the 15 military con- monetary benefit of for mobilization orders. NAVAUDSVC reviewed struction projects selected were deemed needed; $443.9 million.” 102,645 Navy Reserve active duty for training, however, the remaining two projects, valued at continental U.S. orders from FYs 2006 to 2010 $412.73 million, were not needed. Ten projects and found at least 99.8 percent of the $160.9 mil- were not sized in accordance with criteria and/or lion of per diem authorized complied with JTFR included items that were not required or autho- order writing requirements for authorization of rized. The proposed military construction proj- per diem. NAVAUDSVC tested 102 active duty ects were over-scoped by $31.194 million. for special work orders statistically selected from Result: NAVAUDSVC made recommendations 1,716 CONUS orders from FYs 2007 to 2010 and to cancel the two unneeded projects and reduce found they all fully complied with the JTFR guid- the scope of the projects for a potential mone- ance regarding the authorization of per diem in tary benefit of $443.9 million. excess of 180 days. For mobilization orders, the Report No. N2013-0004 JTFR generally limits temporary duty and related per diem to no more than 180 days unless

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Prioritization and Selection Process of nationals (“indirect hires”) and resulting per- Department of the Navy Aviation and sonnel actions are executed in accordance with Operational Safety Concerns established policies and procedures and (3) the Overview: NAVAUDSVC’s objective was to appropriate authority has been granted to the verify whether DON had an effective process in individuals responsible for processing personnel place to fund, implement and track required avi- actions. onic safety capabilities on DON aircraft as out- Findings: NAVAUDSVC determined that lined in Office of the Chief of Naval Operations opportunities existed for the Naval Station Instruction 13210.1A. Guantanamo Bay Human Resources, the Findings: NAVAUDSVC reviewed 27 type/ Navy Exchange and the Morale, Welfare and model/series aircraft. Controls and oversight Recreation Office to improve internal controls, were not adequate to ensure that DON fully policies and procedures over personnel adminis- funded, implemented and tracked the four avi- tration of non-U.S. citizens. This occurred due to onic safety capabilities required by Office of the insufficient application of internal controls over Chief of Naval Operations Instruction 13210.1A. compensation; personnel action processing and Six mishaps, with an estimated cost of $315 mil- overtime; employee recruitment and relations; lion, were identified (from FYs 2007-2011) that and Foreign National Program oversight. As a had a direct reference to one of the four re- result, Naval Station Guantanamo Bay Human quired safety capabilities. In the auditors’ profes- Resources, the Navy Exchange and the Morale, sional opinion, if the four safety capabilities are Welfare and Recreation office could not provide not fully funded, as a first priority, preventable reasonable assurance that personnel administra- mishaps and hazards that adversely affect asset tion of non-U.S. citizens was conducted in ac- availability may continue to occur. Inaccurate cordance with applicable guidance. and inconsistent tracking of these capabilities Result: NAVAUDSVC recommended that the may also hinder DON’s ability to establish bud- Navy Region Southeast commander establish get priorities and monitor at-risk aircraft. and implement controls to ensure that reviews of Result: NAVAUDSVC recommended that Office various aspects of the foreign national employ- of the Chief of Naval Operations’ Air Warfare ee program at the Naval Station Guantanamo (N98) strengthen controls and oversight to en- Bay Human Resources Office and the Naval sure that the safety capabilities are considered Station Guantanamo Bay Morale, Welfare and for funding as a first priority for all DON air- Recreation Human Resources Office are con- craft; the status of compliance with the safety ducted on a regular, consistent basis and cor- capabilities are sufficiently and accurately moni- rective actions from prior reviews are taken. tored and maintained; and the safety compli- NAVAUDSVC recommended that Naval Station ance matrix is published on a quarterly basis. In Guantanamo Bay commanding officer update addition, program manager Air 265 agreed to Naval Station Guantanamo Bay instruction strengthen controls and oversight to ensure that 12000.7 to include (1) documentation require- documentation in support of the implementa- ments for each activity to support supervisor con- tion and installation of required safety capabili- firmation of acceptable employee performance ties is properly maintained. when granting within-grade increases, (2) clear, Report No. N2013-0001 specific instructions for calculating separation pay, (3) documentation requirements for each Naval Station Guantanamo Bay Human activity to support separation pay calculations Resources Office and Local National Employee and payments, (4) procedures for maintaining Program documentation of prior authorization for over- Overview: NAVAUDSVC’s objective was to time, (5) procedures for recruiting employees verify that (1) legal and regulatory requirements from Jamaica and other countries, (6) documen- concerning labor affairs between Naval Station tation requirements for vacancy announcements Guantanamo Bay and respective countries are and (7) procedures for the disestablishment properly executed, (2) internal controls are in and subsequent re-establishment of the Cuban place to ensure that hiring practices for local Community Committee, including documenta-

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tion requirements. In addition, establish specific Combating Insider Threat “In the past six months, written authority to process and approve per- NCIS’s operations tempo for national security 12 individuals were sonnel actions for appropriate personnel in ac- operations and investigations continued to in- arrested and indicted cordance with Office of Personnel Management crease. An aggressive Department-wide insider guidance. Also, establish and implement proce- threat briefing program and NCIS’s continued for espionage...” dures to ensure that employees’ personnel files cooperation with partners throughout the U.S. include all required personnel action documen- government led to an increase in investigations tation. NAVAUDSVC recommended that Navy of suspected espionage and foreign collection Exchange Command Southeast District esta targeting Navy and Marine Corps personnel and blish and implement controls to ensure that re- technologies. During a typical year, NCIS makes views of various aspects of the foreign national one or two arrests for suspected espionage and re- employee program are conducted on a regular, lated crimes. In the past six months, 12 individu- consistent basis. In addition, NAVAUDSVC rec- als were arrested and indicted for espionage and ommended that Navy Exchange general man- related crimes after a joint investigation involving ager establish and implement procedures to FBI, Commerce Department and NCIS. Eleven ensure that within-grade increases are granted of the arrests were attributable to a multi-year, and processed in accordance with applicable cri- multi-agency investigation that successfully lever- teria. Also, establish and implement procedures aged the strengths and capabilities of each agency. to ensure that all personnel actions are reviewed and approved by appropriate personnel; and es- NCIS is currently working with defense con- tablish and implement procedures to ensure that tractors to identify and mitigate specific threats employees’ personnel files include all required to the Navy that were exposed during an FBI, personnel action documentation. NAVAUDSVC Commerce Department and NCIS joint inves- also recommended that the Morale, Welfare and tigation into illicit procurement activities. In Recreation Office director establish and imple- October 2012, 11 people connected to a Russian ment procedures to ensure that all personnel military procurement network were indicted for actions are reviewed and approved by appro- illegally obtaining and exporting high-tech mi- priate personnel, and establish and implement croelectronics used for weapons guidance and procedures for ensuring that employees’ person- radar and surveillance systems. The network ob- nel files include all required personnel action tained high-tech goods from a variety of manu- documentation. facturers and suppliers through a front company Report No. N2013-0005 in Texas and then used intermediaries to export the goods to end-users in Russia, including the military. Additionally, 165 foreign persons and Naval Criminal companies that facilitated the defendants’ export of controlled commodities were added to Investigative Service the Commerce Department’s Entity List, a designation, which effectively prevents them from Significant Activities receiving goods exported from the United States. The Naval Criminal Investigative Service has primary responsibility for law enforcement and In late October 2012, a joint FBI and NCIS in- counterintelligence within the Department of vestigation led to the arrest and indictment of a the Navy and actively supports interagency ef- contract linguist working in Bahrain. James F. forts to identify and interdict terrorist activity. Hitselberger was charged with two counts of un- NCIS’s focus on information dominance and in- lawful retention of national defense information. vestigative and operational excellence provides According to the criminal complaint, the investi- Navy and Marine Corps commanders with de- gation revealed probable cause that Hitselberger, cision-making advantage over our adversaries. who had received extensive training in the proper handling of classified materials, unlawfully re- tained classified reports that contained current and sensitive information about the activities of

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U.S. armed forces in the region. NCIS leveraged In addition, NCIS developed a comprehensive, relationships with diplomatic and law enforce- three-course training program to ensure inves- ment partners to track Hitselberger around the tigators know the most current information and world and serve the arrest warrant. Hitselberger procedures for responding to sexual and fam- was arrested in Kuwait, a testament to the strong ily violence. The three-course training included diplomatic relationships and the trust and confi- the Advanced Adult Sexual Violence Training dence foreign governments have in NCIS. Program, the trial Component Training Program and the U.S. Navy Trial Counsel In December 2012, a joint FBI and NCIS inves- Assistance Program. The Advanced Adult Sexual tigation led to the arrest of a former sailor who Violence Training Program was developed with was willing to give information to a presumed USACIDC, and the Trial Component Training foreign entity about U.S. submarine capabili- Program was developed in conjunction with the ties. Robert Patrick Hoffman II, a 20-year Navy Navy Trial Counsel Assistance Program. veteran was indicted by a federal grand jury for attempting to provide classified information to Focused Collaboration and Partnerships individuals whom he believed to be representa- NCIS targets the transnational organized net- tives of the Russian Federation. Hoffman, how- works (such as pirates in the 5th Fleet area of ever, delivered the information to the FBI during responsibility and drug traffickers in the 4th the undercover operation. Again, collaboration Fleet area of responsibility) that criminal en- with strategic partners was critical to identify- terprises employ to transport weapons, cash, ing Hoffman as a suspect and building a case for narcotics and other contraband. The disruption prosecution. and interdiction of criminals leads to actionable

NCIS assisted partners in stopping intelligence and decision advantage in times of transnational criminal networks. Investigating and Reducing Family & Sexual conflict. In addition, proactive law enforcement Violence support provided Navy Commanders a non-ki- In an effort to resolve cases faster and minimize netic response option on the high seas, allowing the effects of family and sexual violence in the them to maintain mission focus. Navy and Marine Corps, NCIS began implementing the Adult Sexual Assault Program, an NCIS special agents assigned to Intelligence effort centered on dedicated, multidisciplinary Exploitation Teams leveraged law enforcement teams that respond to all allegations of adult sex- and security relationships in U.S. Southern ual assault. The teams are led by a dedicated fam- Command to support U.S. Naval Forces ily and sexual violence supervisory special agent Southern Command and 4th Fleet to interdict, and consist of NCIS special agents and investiga- arrest and interrogate suspected drug traffickers. tors, as well as representatives from the base and local police. The approach also enhances NCIS’s NCIS provided information that led to the inter- interaction with the legal community and other diction of a high-performance speedboat used by members of the sexual assault prevention and smugglers and targeted by the Joint Interagency response multidisciplinary teams forming at all Task Force South. More than 780 kilograms of military installations. cocaine, with a street value of $23.4 million, was seized, and four people were detained. In 2012, dedicated Adult Sexual Assault Program teams were created at Camp Lejeune, N.C., In December 2012, NCIS provided intelligence Camp Pendleton, Calif., Norfolk, Va., San Diego, that enabled partners to locate a suspected nar- Calif. and Okinawa, Japan. Implementation is cotics trafficker in the eastern Pacific Ocean and underway in Hawaii; Yokosuka, Japan; and the destroy 300 kilograms of cocaine. In January National Capital Region. The goal is for teams 2013, NCIS provided guidance that enabled a to complete the majority of investigative actions boarding team to seize two cellphones, a GPS for each case within 14 days. The Norfolk Adult and numerous phone numbers after the inter- Sexual Assault Program team averages two days. diction of a high-performance speedboat. The

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intelligence was passed to DEA Cartagena and organizations. Collaboration and information other Navy assets for further action. sharing helps agencies identify and minimize duplicative effort and provides a higher level of Because of NCIS’s partnership with Europol, intelligence support to DoD entities investigat- British and French forces positively identified ing national security and terrorism cases. the No. 1 most wanted pirate by European Union Naval Forces. When he was arrested recently, Information shared among the NCIS, FBI, the along with 11 other suspected pirates, his finger- Commerce Department and other partners prints matched those of a pirate NCIS had bio- within the Export Enforcement Coordination metrically enrolled in 2010. NCIS’s partnerships Center helped advance investigations of targets with Europol and INTERPOL provide a broad being investigated by more than one partner coalition engaged in counter piracy efforts with agency. E2C2 allows agencies to de-conflict and access to thousands of piracy-related biometrics coordinate investigations to determine whether enrollments. a target or source is already being used by another agency. In the first year, 79 of the 1,300 In November 2012, 13 adult Somali pirates were E2C2 de-confliction requests to NCIS revealed sentenced to 18 years in prison and two juveniles crossover with an existing investigation or NCIS agents assisted in the capture and each received four years for hijacking a fishing source. Through its participation in E2C2, NCIS interrogation of suspected pirates. vessel and holding the crew hostage for 40 days. discovered new information relating to six tar- NCIS assisted in the capture and arrest, and ob- gets of ongoing investigations, and NCIS shared tained full confessions during interrogation. In information pertaining to 43 subjects under in- addition, NCIS played a large role with the State vestigation by a partner agency. Department, various coalition authorities and the Seychelles government in building the case NCIS obtained 19,000 foreign biometrics cards and securing the prosecution venue. from partner nations and enrolled them into the FBI’s Integrated Automated Fingerprint Mohamad Saaili Shibin, a land-based Somali Identification System. During the reporting pe- pirate negotiator, received 12 life terms plus 30 riod, biometrics queries supporting NCIS opera- years and was ordered to pay $5.4 million for his tions and investigations led to the extradition of role in two hijackings. The joint FBI and NCIS a known terrorist and to the denial of a criminal investigation required collaboration with Naval seeking refugee status in the United States. Special Warfare assets, the State Department and various foreign counterparts to identify, locate Leveraging Technical Capabilities Across

and extract Shibin from Somalia. NCIS analysts Mission Areas NCIS collected biometrics in support of provided the investigative and trial teams with NCIS formed a centralized unit to oversee and international law enforcement. information linking Shibin to known pirate fi- manage technical operations and capabilities nanciers, facilitators and action teams. across the enterprise. The Electronic Surveillance Operations Center leverages technology to iden- NCIS spearheaded the development of the Joint tify efficiencies and encourage innovation in Counterterrorism Coordination Cell enabling supporting criminal, counterintelligence and military departments investigating terror- terrorism operations and investigations. During ism to leverage the strategic terrorism analysis the reporting period, new analytic tools were of the Defense Intelligence Agency. The Joint developed that allow investigators to review sur- Counterterrorism Coordination Cell, located at veillance video quickly and use GPS software to Marine Corps Base Quantico, Va., will facilitate calculate stops and deviations based on a target’s coordination, de-confliction and analytic func- movements. tions in support of investigations by the NCIS, DIA, Air Force Office of Special Investigations, NCIS improved the quality of digitally collected USACIDC and Army Military Intelligence, evidence and decreased the time to collect it by military department counterintelligence orga- automating digital evidence collection. The Law nizations and the military criminal investigative Enforcement Telephone System centrally re-

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cords calls and text messages, establishes cover they engaged in consensual sex. He admit- voicemail accounts for undercover operations ted to NCIS polygraph examiners, however, and changes caller identification numbers for that the victim was unresponsive during the NCIS field agents collecting evidence through assault. approved, digital means. Supporting Forward-Deployed Forces Polygraph examinations continued to be an im- During the first half of FY 2013, 46 NCIS per- portant investigative tool across all aspects of sonnel deployed to Afghanistan and the Horn the NCIS mission. During the reporting period, of Africa supporting overseas contingency NCIS conducted 4,500 polygraph examinat- operations. ions, including 600 issue-specific examinations; 3,900 counterintelligence scope polygraph ex- In August 2012, an Afghan man wearing an aminations, of which 44 were referred for inves- Afghan Uniformed Police uniform opened fire tigation; and obtained admissions in 213 coun- with an assault rifle aboard Village Stability terintelligence scope polygraph examinations. Platform Puzeh in the Helmand Province of The following exemplify NCIS’s use of polygraph Afghanistan. The gunman killed three and in- examinations to support investigations of sexual jured one before escaping the area. Using facial- assault and crimes against persons (of the four recognition software, NCIS identified the sus- cases below, the three sexual cases are pending pect as Abdul Razaq by matching the picture on prosecution). his Afghan uniformed police identification card • NCIS obtained a confession in the case of a to that of a man in a Taliban propaganda video. toddler found unresponsive by her parents, Razaq is believed to have been killed during both Marines stationed at Twenty-Nine fighting with coalition forces. Palms, Calif. During an NCIS-administered polygraph, a friend of the parents con- In summer 2012, NCIS discovered a significant fessed to striking and killing the infant. The threat to DoD forces traveling along Highway 1 Marine lance corporal was convicted of in Afghanistan. Metal grates that prevent plac- second-degree murder and sentenced to 25 ing IEDs in the culverts underneath the highway years to life in October 2012. were not installed in all 625 culverts, as the con- • NCIS obtained a confession from a sailor tracting companies fraudulently claimed. The accused of raping and sexually abusing his Afghan companies hired to install the Culvert younger sister during the eight years prior Denial Systems submitted photographs as evi- to his enlistment. Although no physical dence the work was complete, which the U.S. evidence was recovered, the petty officer forces contracting officer representatives accept- third class fully confessed during an NCIS- ed. However, two Army service members were administered polygraph examination in killed and four soldiers were injured in separate January 2013. IED explosions as they traveled over culverts • NCIS resolved a sexual assault investiga- on Highway 1. NCIS’s investigation determined tion after a Navy petty officer second class that not all of the culvert denial systems had confessed that he provided a false statement been installed. A trial counsel has been assigned when he told investigators that the victim to pursue prosecution under the Uniform Code was a coherent, willing sexual partner. Her of Military Justice. Meanwhile, all of the culvert “NCIS provided more memory of the assault was vague due to the denial systems have since been installed. than 250 finished effects of alcohol, but he admitted during intelligence assessments the polygraph examination that she had not NCIS provided more than 250 finished intel- and analytical reports given consent. ligence assessments and analytical reports to to Navy and Marine • NCIS obtained a confession from Navy sea- Navy and Marine Corps elements worldwide. man accused of sexually assaulting a Navy Of those, 238 were prepared specifically for Corps elements seaman apprentice who had no recollection warships, forward-deployed forces and other worldwide.” of events due to intoxication. In an oral/ transiting units. By leveraging intelligence from wire intercept, the sailor told the victim partners, NCIS fused local information on cur-

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rent criminal, terrorist, espionage and civil dis- services that were provided and misrepresented turbance risks with the latest intelligence report- the number of hours services were provided. ing and assessments of current and emerging Additionally, the complaint alleged Worldwide asymmetric threats. Language Resources falsified compliance with contractual minimum proficiency testing Significant Investigative Cases requirements. Result: In December 2012, Worldwide Language False, Fictitious and Fraudulent Claims Resources and its president reached an agree- Overview: An investigation was initiated ment to pay the U.S. government $5,000,000 to after the commanding officer of Camp Mujuk, settle these fraud allegations with the former Pohang, Korea, expressed concerns with dis- employees who reported the allegation to share crepancies in cost estimates for pending projects $925,000 from the settlement in accordance with inside camp. A joint NCIS and DCIS investiga- the whistleblower provision of the False Claims tion revealed evidence of unbalanced and defec- Act. tive pricing by LIG Engineering & Construction and identified an elaborate conspiracy to commit Contractor Substitutes Multi-Terrain Loaders “Experts, engineers offenses to defraud the United States, the making Supporting the Marines and inspection of a false bid to defraud the United States and Overview: This case was initiated in October personnel at the base 2010 after NCIS was notified that the engines in false statements between multiple Korean con- confirmed the rust and struction companies. 24 multi-terrain loaders provided by Caterpillar Result: In January 2013, LIG Engineering & had been delivered to Marine Corps Logistics related damage...” Construction was debarred from contracting Base Albany, Ga., with rust damage. Experts, with U.S. Forces Korea and the U.S. government engineers and inspection personnel at the base for three years. The Seoul Central Prosecutor’s confirmed the rust and related damage, as well Office sentenced four co-subjects to a total of as identified other possibly compromised load- 12 years of imprisonment in sentences ranging ers. A review of 25,000 subpoenaed documents from two years and six-months to three years revealed that although Caterpillar employees and six-months. One co-subject was sentenced tried to repair and hide the extent of the damage, to five years of probation for their involvement they knowingly provided rusted engines to the in fraudulent activities with U.S. government- Marine Corps. administered contracts in Korea. U.S. Forces Result: In September 2012, the U.S. Attorney’s Korea issued (1) debarments to LIG Engineering Office, Eastern District of Virginia, and & Construction from contracting with U.S. Caterpillar reached a settlement in which the Forces Korea and the U.S. government for a total company agreed to replace 15 new multi- of 43 years, (2) U.S. Force Korea-wide installa- terrain loaders, including standard warranty tion debarments for a total of 24 years and (3) and required modifications, and 10 sets of tools the commander of Fleet Activities Chinhae is- to the Marine Corps Logistics Base. Caterpillar sued installation debarments totaling 20 years. also agreed to pay the Department of Justice The U.S. embassy also revoked two nonim- $275,000. migrant visas. Two major contracts worth $46 million were identified as being awarded under Attempted Murder for Hire fraudulent conditions and canceled. Overview: This case was initiated in May 2012 after NCIS received information that Matthew Fraudulent Claims by Linguists in Afghanistan Wilson, a lance corporal, 10th Marine Regiment, Overview: This case was initiated in 2005 after Second Marine Division at Camp Lejeune, N.C., NCIS received a qui tam complaint alleging that was planning to hire someone to murder his Worldwide Language Resources fraudulently wife so he could claim her $100,000 life insur- invoiced the Department of Defense for inter- ance policy. Wilson had solicited assistance from preter services in Afghanistan. The complaint his girlfriend to help execute his plan. The girl- alleged the contractor billed for translation ser- friend informed NCIS of the plan and agreed to vices that were not provided, double-billed for assist NCIS by telling Wilson she had an uncle,

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an undercover NCIS special agent, in the Italian Sexual Assault in Dubai mafia who could provide assistance. On May 10, Overview: In January 2012, NCIS received an 2012, the undercover agent and Wilson met and allegation from the Maritime Expeditionary discussed the murder of his wife. Wilson made Security Squadron 8 that a hospital corpsman, a down payment to the undercover agent in the Donald McAllister, sexually assaulted a subordi- amount of $700. nate male petty officer in Dubai. The petty officer Result: In December 2012, Wilson was tried alleged he had been sexually harassed, assaulted and convicted of attempted murder by general and threatened by McAllister regularly for a time court-martial and sentenced to 23 years of con- span of two to three years. The petty officer- al finement, forfeiture of all pay and allowances, leged McAllister had drugged the petty officer reduction to E-1 and a dishonorable discharge. with prescription sedatives to render the petty officer incapable of fending off an attack. During “In April 2012, NCIS Kidnapping and Rape Aboard the USS Vella Gulf the investigation, NCIS discovered another sub- responded to an Overview: In April 2012, NCIS responded to an ordinate petty officer who had been assaulted in allegation of kidnap, allegation of kidnap, assault and rape aboard the a similar manner by McAllister. In an interview USS Vella Gulf, a missile cruiser deployed in the with NCIS, McAllister confessed to the assaults assault and rape aboard Mediterranean Sea. A female petty officer third of the two subordinate petty officers. the USS Vella Gulf...” class claimed that after her shift the previous Result: On Oct. 25, 2012, McAllister was tried night, a coworker kidnapped and brutally raped and convicted by a general court-martial of sex- her. She reported that the petty officer, Daniel ual harassment, cruelty and maltreatment, ag- Wilt, forced her by knifepoint to a “kill room,” gravated sexual contact, abusive sexual contact, described as a forward hold lined with duct tape and wrongful sexual contact. McAllister was and plastic garbage bags. Wilt restrained her sentenced to 14 years of confinement, reduction with zip ties and duct tape and assaulted her to E-1, forfeiture of all pay and allowances, and for more than two hours. After the assault, Wilt a dishonorable discharge. McAllister will be re- brandished a dagger, a hacksaw and a face shield, quired to register and maintain registration as a and he explained in detail how he was going to sexual offender. dismember her and throw her overboard in weighted bags. She talked Wilt into letting her Sexual Offender Convicted go by promising not to report him. Wilt released Overview: This case was initiated in May 2012 her, saying she was “lucky” he forgot his hatchet, after NCIS received an allegation that a Marine’s and instructed her to meet him again in 20 min- wife had been sodomized by a Marine Corps utes. The victim returned to her berthing and sergeant, Frances Captain. At the time of the reported the assault. NCIS deployed agents from incident, the wife was home alone with Captain Greece and Italy by helicopter in response to the and under the influence of alcohol. Due to the allegation. During an interview, Wilt claimed he side effects of the alcohol, the wife could not was role playing with the victim during consen- positively identify Captain as the offender. sual sex. While NCIS was unable to obtain a confession Result: In December 2012, Wilt entered a plea of from Captain, they were able to link him to the not guilty. Under a general court-martial ruling, crime after processing the crime scene and DNA Wilt was found guilty of rape, forcible sodomy, evidence. Additionally, NCIS received a tip that assault, and willfully and wrongfully holding Captain had bragged about sexually assaulting another service member, and sentenced to life other Marines and civilians. The tip provided the in prison, reduction to E-1, forfeiture of all pay names of three potential victims. NCIS discov- and allowances be paid to the dependents, and ered one victim had reported the assault in 2010, a dishonorable discharge. Wilt will be required but Captain was acquitted. The other reported to register and maintain registration as a sexual victim relayed that no assault had occurred. The offender. third victim alleged she was raped by Captain in 2009 while being intoxicated at her barracks room in Camp Pendleton, Calif. While investigating the 2009 incident, NCIS examined the

96 SEMIANNUAL REPORT TO THE CONGRESS third victim’s room at the time of the incident and identified a witness who saw Captain and Air Force Audit Agency the third victim together at the barracks on the Air Force night of the assault. The witness account of the Air Force Audit Agency incident in 2009 led to Captain’s conviction. Result: In January 2013, Captain was tried and The Air Force Audit Agency mission is to pro- “To support Air Force convicted by a general court-martial of abusive vide all levels of Air Force management timely, decision makers, AFAA sexual contact. He was sentenced to five and a relevant and quality audit services by reviewing has approximately half years of confinement, reduction to E-1, and promoting the economy, effectiveness and fined $50,000 and given a dishonorable dis- efficiency of operations; assessing and improving 650 personnel charge. Captain will be required to register and Air Force fiduciary stewardship and the accu- at more than 50 maintain registration as a sexual offender. racy of financial reporting; and evaluating pro- worldwide locations.” grams and activities and assisting management Sexual Assault of a Lance Corporal in achieving intended results. AFAA is commit- Overview: This case was initiated in March ted to reaching out to Air Force customers at all 2012 after NCIS received an allegation of a rape levels. To support Air Force decision-makers, at Marine Corps Air Station Futenma, Okinawa, AFAA has approximately 650 personnel at more Japan. A female lance corporal awoke after pass- than 50 worldwide locations. AFAA conducts ing out from intoxication to find the barracks centrally directed, Air Force wide audits in nu- duty officer, Sergeant Christopher Olcott, as- merous functional areas to support Air Force signed to the 1st Marine Aircraft Wing, sexually senior leaders. Installation-level audit teams assaulting her. Witness interviews disclosed on provide additional audit services to installation the night of the incident that Olcott was check- commanders. ing for unlocked rooms supporting the lance corporal’s account. Despite the limited recollec- To provide Air Force officials timely, responsive, tion of events from the lance corporal, physical balanced and value-added audit services, AFAA evidence, DNA analysis and a cell phone con- audit planning methods include frequent containing nude photographs of the unconscious tact with Air Force senior leaders and Joint Audit lance corporal linked Olcott to the allegation. Planning Groups. The FY 2013 Audit Plan was Result: In January 2013, Olcott was tried and prepared in partnership with Air Force decision- convicted by general court-martial of indecent makers to address the most significant areas of acts, burglary and aggravated sexual assault. management concern. As such, AFAA ongo- Olcott was sentenced to eight years of confine- ing and planned audits address many of the Air ment, forfeiture of all pay and allowances, re- Force’s most critical programs and initiatives, duction to E-1 and a bad conduct discharge. including topics such as personnel training, in- Olcott will be required to register and maintain formation assurance, environmental manage- registration as a sexual offender. ment, systems acquisition, health initiatives and Afghanistan base closure planning.

Further, the secretary of defense called for the Department to achieve audit readiness of the Statement of Budgetary Resources by the end of calendar year 2014 and of all Department financial statements by 2017. The secretary also called for personnel to increase emphasis on asset accountability and execute a full review of financial controls. Accordingly, during the first half of FY 2013, AFAA completed seven system accounting conformance audits and five system application control audits in direct support of Air Force financial improvement and audit readiness.

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During the first half of FY 2013, the AFAA pub- figuration data for weapon system equipment lished 52 centrally directed audit reports, made allowances. 86 recommendations to Air Force senior officials Result: As a result of inaccurate allowance data, and identified $365.6 million in potential mon- the weapon system equipment budget was over- etary benefits. The following paragraphs provide stated by $111 million. Air Force personnel can and synopsize a few examples of AFAA audit reduce authorizations and redistribute excess coverage related to specific DoD management equipment to fill other valid equipment require- challenge areas. ments. In addition, accurate configuration data helps ensure equipment is available when and Joint Warfighting and where needed. AFAA made two recommendations to improve the management of weapon Readiness system equipment allowances. Report No. F2013-0003-L40000 United States Air Forces Central Area “Sixty-three percent of Responsibility Base-Level Inventory Training and Equipping Expeditionary Airmen Management Overview: AFAA determined whether deployed of redeployed and Overview: AFAA determined if area of respon- deployed airmen at airmen completed required training and re- sibility personnel properly managed and ac- ceived necessary equipment. 16 locations did not counted for base-level inventory. Findings: Sixty-three percent of redeployed and accomplish required Findings: Area of responsibility personnel did deployed airmen at 16 locations did not accom- expeditionary training” not properly manage adjusted stock levels or ac- plish required expeditionary training. In ad- count for or store base-level inventory. dition, 27 percent of deploying airmen did not Result: Canceling invalid adjusted stock levels receive necessary equipment items. allows the Air Force to reduce FY 2013 to 2017 Result: Providing deploying members the nec- budget requirements by $102,727. In addition, essary skills improves warfighting capability and proper accounting for inventory improves asset helps support current and future contingency visibility in inventory systems and prevents operations. For the 16 locations reviewed, audit shortages and unnecessary purchases, while projected that in FY 2011, at least 2,041 airmen reducing the risk of undetected theft or loss. deployed without completing more than 7,100 Finally, proper storage reduces the risk of secu- required expeditionary skills courses. In addi- rity incidents, losses due to damage and ensures tion, providing airmen with the necessary equip- assets can be located in a timely manner. AFAA ment items improves warfighting capabilities, made four recommendations to improve base- while limiting equipment issues to only needed level inventory management. items effectively maximizes resources. AFAA Report No. F2013-0002-L20000 made three recommendations to improve management of training and equipping expedition- Weapon System Equipment Allowance ary airmen. Standards Report No. F2013-0003-O40000 Overview: AFAA determined if Air Force logistics personnel established and maintained accurate allowances for weapon system equip- Information Assurance, ment and validated the accuracy of Air Force Security and Privacy Equipment Management System configuration data for weapon system equipment allowances. Information Technology Efficiencies Initiative Findings: Base-level equipment custodians pro- Commercial Satellite Communications vided inaccurate allowance data to allowance Overview: AFAA determined whether the com- managers for both mobility-use and base-use mercial satellite communications information weapon system equipment allowance standards. technology baseline was complete and expen- AFAA reviewed Air Force allowances for weapon system equipment. Additionally, equipment custodians at 14 of 16 ditures were supported and recorded in the Air organizations did not adequately validate the Force General Accounting and Finance System. Air Force Equipment Management System con-

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Findings: Air Force personnel did not develop Follow-up Audit, Freedom of Information Act a valid FY 2009 baseline of commercial satel- Overview: AFAA evaluated management actions lite communications information technology implemented in response to Recommendations expenditures. To illustrate, $165 million (59 A.1 through D.1 in Report of Audit F2009-0004- percent) of the $281 million of baseline expen- FB4000, Freedom of Information Act, June 3, ditures were not identifiable to commercial sat- 2009. Specifically, audit determined if Freedom ellite communications management, and there- of Information Act managers properly recorded, fore, not auditable. Further, analyses of $65.5 tracked and efficiently processed FOIA requests; million of the $116 million in auditable expen- provided the public electronic access to fre- AFAA reviewed expenditures for ditures revealed Air Force personnel could not quently requested records; identified, assessed commercial satellite communications. match baseline expenditures with supporting and recouped costs and fees for processing FOIA documents and Air Force General Accounting requests; and minimized FOIA request backlogs. and Finance System-recorded expenditures. Findings: Although Air Force officials imple- Result: Without a valid expense baseline, the mented a new FOIA system and updated guid- Air Force cannot effectively track or demon- ance, FOIA managers did not properly maintain strate the commercial satellite communica- 106 (35 percent) of 299 electronic case files or ef- tions efficiency-initiative savings contribution ficiently process 109 (36 percent) of 299 FOIA re- toward the Air Force’s $33.3 billion goal. AFAA quests reviewed for 2011; provide the public elec- made two recommendations to improve com- tronic access to 113 (87 percent) of 130 frequently mercial satellite communications information requested records; properly identify costs, or ac- technology baseline data and Air Force General curately support fees assessed for processing 255 Accounting and Finance System-recorded (93 percent) of 275 requests; and effectively mini- expenditures. mize FOIA request backlogs for three (75 per- Report No. F2013-0001-O10000 cent) of four requester service centers. Result: Maintaining complete case files electron- Enterprise Information Protection Capability ically and efficiently processing requests are nec- Overview: AFAA determined whether major essary to meet statutory requirements and avoid commands, direct reporting units and installa- litigation costs associated with potential appeals tion officials properly established information and lawsuits. In addition, providing access to protection offices or effectively managed core frequently requested records helps reduce the information protection programs. number of requests received, which saves money, Findings: Air Force organizations did not prop- time and resources. Also, properly identifying erly establish information protection offices or processing costs and fees enables the Air Force effectively manage core information protection to report accurate program amounts. Finally, programs. minimizing request backlogs will help resolve re- Result: Properly established information pro- quester dissatisfaction with untimely responses. tection offices reduce the risk of unauthorized AFAA made six recommendations to improve disclosure, compromise or loss of Air Force the management of the Air Force FOIA program. operational and other critical information. In Report No. F2013-0003-O20000 addition, effective information protection management ensures priority over national security Acquisition Processes and concerns is maintained and the risk of unauthorized collection and exploitation of Air Force Contract Management information is mitigated. AFAA made two recommendations to improve information protec- Eastern Range Technical Services Contract tion office implementation and controls of -in Management and Oversight formation protection programs. Overview: AFAA determined whether Air Force Report No. F2013-0005-O10000 personnel effectively performed acquisition planning, contract administration and financial management.

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Findings: Air Force officials did not accomplish construction requirements. AFAA made one and document required contract performance recommendation to improve management of and metric evaluations or perform effective fi- MILCON requirements. nancial management on the current and prior Report No. F2013-0008-O20000 eastern launch and test range contracts. Result: Performance and metric evaluations provide the Air Force assurance the Eastern Financial Management Range Technical Services contractor satisfactorily performed range technical support services. United States Property and Fiscal Officer In addition, de-obligating and de-commiting ex- Program cess contract funds made $1,231,256 available in Overview: AFAA evaluated effectiveness of the FY 2012 and could make as much as $4 million United States Property and Fiscal Officer pro- available in FY 2013 for other valid mission re- gram to including accountability of Air Force quirements. AFAA made one recommendation funds and effectiveness of current United States to improve Eastern Range Technical Services Property and Fiscal Officer Program policies contract management. and procedures. Report No. F2013-0008-L30000 Findings: Air National Guard personnel did not identify and de-obligate invalid obligations Miscellaneous Equipment Allowance Standards or research questionable obligations in a timely Overview: AFAA assessed whether logistics manner. In addition, draft United States Property personnel accurately used and timely reviewed and Fiscal Officer Program policy (currently in miscellaneous allowance standards. coordination) lacked definitive guidance regard- Findings: Logistics personnel at all levels did ing funds distribution and delegation of finan- not effectively use or timely review miscella- cial management responsibility. neous allowances. Result: De-obligating funds no longer required Result: Proper use and timely review of items au- will make $8,580,196 available for other prior thorized using miscellaneous allowance source year (FY 2006 to 2010) requirements. In addi- codes would allow Air Force personnel to reduce tion, effective control procedures over funding overstated authorizations and redistribute excess improve accountability of federal funds en- equipment items to fill other valid equipment trusted to the United States Property and Fiscal requirements. This would result in a potential Officers. AFAA made three recommendations monetary benefit of $65,421,570. AFAA made to strengthen internal controls over Air Force one recommendation to improve miscellaneous funding and improve guidance. equipment allowance standards management. Report No. F2013-0001-L10000 Report No. F2013-0004-L40000 Air Force Global Logistics Support Center Military Construction Requirements Unliquidated Obligations Overview: AFAA determined whether Air Force Overview: AFAA determined whether Air Force personnel properly prioritized projects and rea- Global Logistics Support Center recorded unliq- sonably estimated and supported programmed uidated obligations were needed, supported and amounts. correctly reported. Findings: Air Force programmers did not rea- Findings: Auditors identified 841 (72 percent) sonably estimate and support programmed of 1,175 unliquidated obligations were no longer amounts for 15 of 26 military construction needed, not supported or incorrectly reported. Result: De-obligating unneeded unliquidated AFAA reviewed military construction projects. requirements. Result: By eliminating overstated costs, the Air obligations balances would achieve $44.1 mil- Force could use more than $6.4 million for other lion for other mission requirements. Projecting valid military construction projects. Further, these results, based on a 95 percent confidence properly supported and documented estimates estimate, could provide a potential monetary allow Air Force leadership to make fully in- benefit of at least $104,893,009. AFAA made formed decisions and effectively use funds for

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three recommendations to improve unliquidat- of $253,781 annually, or $1,522,688 over six ed obligations validation efforts. years (execution year and Future Years Defense Report No. F2013-0015-O10000 Program). Completing medical/dental assessments prior to deployments helps ensure con- Unemployment Compensation Program tract employees will not require additional re- Overview: AFAA evaluated whether Air Force sources or negatively affect the mission. AFAA Personnel Center administrators accurately de- made two recommendations to improve controls termined unemployment eligibility and reim- over medical aspects of contractor deployments. bursed states for former employees’ unemploy- Report No. F2013-0002-O40000 ment compensation. Findings: Air Force Personnel Center admin- Contract Medical Service Personnel “... medical personnel istrators inaccurately determined unemploy- Overview: AFAA evaluated whether medical did not convert 291 ment eligibility for 9 percent of 1,079 military personnel accurately determined contract medi- of 1,771 contractor and civilian claimants paid $352,656 during cal service personnel requirements and effective- the review period. In addition, they reimbursed ly managed contractor to civilian conversions. positions even though states for unemployment compensation on 3 Findings: Although medical personnel at three these positions were percent of former military and civilian em- locations maintained 17 contract medical ser- eligible for conversion ployees reviewed. Misstatements totaled almost vice positions in excess of approved mission and could yield $57,000: $43,300 in overpayments and $13,300 requirements, the condition was not systemic cost savings.” in underpayments. and was addressed in installation-level reports. Result: Establishing a more effective quality However, medical personnel did not convert 291 control program would allow the Air Force to of 1,771 contractor positions even though these avoid at least $20,749,336 million in erroneous positions were eligible for conversion and could unemployment compensation payments over yield cost savings. six years (execution year and the Future Years Result: Converting 291 medical service contrac- Defense Program). In addition, unemployment tor positions at the locations reviewed would payment controls are necessary to validate accu- allow the Air Force Medical Service to put to rate compensation for employees and helps en- better use approximately $70 million over the sure proper stewardship of public funds. AFAA next five years, which is the standard time frame made three recommendations to improve the the Air Force Manpower Agency uses when unemployment compensation program. measuring contractor to civilian cost effec- Report No. F2013-0001-O40000 tiveness. Statistically projecting the results Air Force-wide, the Air Force Medical Service could Health Care convert an estimated 767 eligible contractor positions, achieving a potential monetary benefit Medical Aspects of Contractor Deployments of approximately $170,018,062 over the next five Overview: AFAA determined whether Air Force years. AFAA made one recommendation to im- Medical Service officials provided only emer- prove medical service contractor management. gency medical support to contract employees Report No. F2013-0005-O40000 and whether U.S. contract employees completed required medical/dental assessments prior to Follow-up Audit, Mental Health Provider deployment. Productivity Findings: Medical officials provided nonemer- Overview: AFAA evaluated the effectiveness of gency medical support to 2,895 (48 percent) of management corrective actions in response to 6,070 deployed U.S. contract employees. In ad- recommendations A.1 and A.2, report F2010- dition, 98 percent of U.S. contract employees 0004-FD2000, titled, “Mental Health Provider deployed without completing medical/dental Productivity,” dated March 9, 2010. Specifically, assessments. AFAA determined whether opportunities ex- Result: Limiting routine medical support to isted for Air Force mental health providers services authorized per employees’ contracts to increase the number of patients treated. can produce cost avoidance for the Air Force Additionally, AFAA determined whether the

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“... 58 percent of Air Force achieved the $14.4 million in potential dations to improve management of the NWRM providers did not meet monetary benefits identified in the prior audit. inventory process. productivity standards Findings: Although Air Force officials took -ac Report No. F2013-0001-L40000 tion in response to the prior audit, 58 percent of established by the Air providers did not meet productivity standards Force surgeon general.” established by the Air Force surgeon general. Air Force Office of Result: As a result, the Air Force did not fully achieve the $14.4 million in potential monetary Special Investigations benefits identified in the prior audit. Increasing mental health provider productivity at the 10 Significant Investigative Cases locations reviewed would allow medical facilities to provide more in-house care and avoid Desertion and Armed Robbery purchasing private-sector medical care cost- Overview: On Dec. 21, 2012, members of ing approximately $6,514,437 over the next six AFOSI at Joint Base Lewis-McChord, Wash., ap- years (execution year and Future Years Defense prehended an Air Force staff sergeant, Thomas Program). AFAA made three recommenda- Schwartz, who had deserted the Air Force in June tions to more effectively use unfilled appoint- 1972. Prior to deserting, Schwartz had received ments, increase patient capacity and use within orders to Thailand and had incurred a debt of the mental health clinic, and improve provider $3,000 to his fiancé. Schwartz moved to Calgary, productivity. Canada, in July or August of 1972 and legally Report No. F2013-0006-O40000 changed his name to become a resident alien and start a business. Schwartz attributed his return to Nuclear Enterprise the United States as an attempt to escape debt he had incurred while beginning his business and Follow-up Audit, Nuclear Weapons Related to deal with the charges related to his desertion. Materiel Inventory After AFOSI coordinated with the Vancouver Overview: AFAA determined if Air Force logis- Police Department Violent Crimes Division tics management implemented effective proce- and the Royal Canadian Mounted Police, it was dures in response to report F2011-0002-FC4000, determined that Schwartz was being sought by titled, “Nuclear Weapons Related Materiel local law enforcement in connection with eight Inventories,” dated Nov. 3, 2010. In addition, armed robberies totaling $20,000. Canadian Law audit determined if personnel accurately record- Enforcement secured a provincial warrant and

AFAA determined whether the AF ed and properly identified all nuclear weapons Schwartz was subsequently returned to Canada accurately accounted for NWRM. related materiel assets in Air Force records. to face trial and incarceration. Findings: Logistics personnel effectively nego- Result: On Jan. 31, 20 13, Schwartz waived his tiated a memorandum of agreement with the right to an administrative discharge board and Department of Energy to include roles and re- was subsequently separated from military ser- sponsibilities for nuclear weapons related ma- vice for misconduct with an other than hon- teriel inventories. However, logistics personnel orable conditions service characterization. did not accurately record all NWRM assets on Prosecution for armed robbery will be pursued accountability records or properly identify all by the Royal Canadian Mounted Police. items as NWRM assets at contractor locations. Result: As a result of inaccurate recording, 40 False, Fictitious and Fraudulent Claims against NWRM assets were not properly accounted for the Air Force in Air Force records. Accurate NWRM invento- Overview: This investigation was initiated from ries help ensure the integrity and safety of the a U.S. Transportation Command allegation of nuclear mission aiding national security. In ad- a violation of the False Claims Act. On Oct. 1, dition, complete accountability of NWRM assets 2007, Hummingbird Aviation LLC entered into at contractor facilities is important for ensuring a contract with USTRANSCOM to provide heli- the security of assets outside the physical control copter service in Afghanistan. USTRANSCOM of the Air Force. AFAA made three recommen- noted that the services had not been provided as

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of Feb. 14, 2008. Hummingbird Aviation LLC sub- Rosales-Lopez during which he provided a par- mitted a cost proposal for termination for conve- tial confession before invoking his rights and nience to USTRANSCOM, which complied with asking for an attorney. the request and terminated the contract for con- Result: On Nov. 27, 2012, Rosales-Lopez was venience April 8, 2008. Hummingbird Aviation convicted by a general court-martial and re- LLC requested USTRANSCOM pay them more ceived a reprimand, reduction to E-1, con- than $1.9 million to allow the small business to finement for eight months and a bad conduct continue operating. Hummingbird Aviation LLC discharge. Additionally, Rosales-Lopez was re- failed to provide receipts to USTRANSCOM for quired to register as a sex offender. costs to lease a helicopter totaling $300,000 for the period of Oct. 1 to Dec. 1, 2007. On Sept. 29, 2007, Narcotics and Counterfeit Checks “Lompoc Police USTRANSCOM became aware of a lawsuit from Overview: This investigation was initiated Department arrested Helimed Limited against Hummingbird Aviation after AFOSI at Vandenberg Air Force Base, Cheatham after a LLC. In the lawsuit, Helimed Limited claimed Calif., received notification from Lompoc Hummingbird Aviation LLC did not pay for their Police Department, Calif., of Senior Airman search of his vehicle lease with Helimed Limited for their helicopter John Cheatham who had attempted to cash a where they discovered services. On Dec. 11, 2007, U.S. Transportation forged check. Lompoc Police Department ar- 0.2 grams of Command discovered Hummingbird Aviation rested Cheatham after a search of his vehicle methamphetamines.” LLC sent an email to Executive Helicopters, where they discovered 0.2 grams of metham- Galway, Ireland, requesting they back date their phetamines. Additionally, Cheatham’s presump- lease with Hummingbird Aviation LLC from Nov. tive urine test registered positive for marijuana. 29, 2007 to Aug. 31, 2007. AFOSI confirmed the AFOSI conducted an interview with Cheatham lease had been backdated to Aug. 31, 2007. By resulting in a confession of intending to dis- backdating the lease, USTRANSCOM paid for tribute methamphetamine, smoking marijuana two full months of rent from October through at least five times since August 2011 while sta- November 2007 totaling $300,000. tioned at Vandenberg Air Force Base and lying Result: On Oct. 20, 2010, a grand jury returned to Lompoc Police Department of his attempt to one indictment on Hummingbird Aviation cash a forged check in the amount of $300. LLC for false claims against the government. Results: On Jan. 23, 2013, Cheatham was con- On Jan. 23, 2012, after several continuances, victed by a general court-martial of use and pos- Hummingbird Aviation LLC was convicted of session of marijuana and possession with intent submitting false and fraudulent claims in the U.S. to distribute methamphetamine, reduced to E-1, District Court of Southern District of Illinois. ordered to surrender total forfeiture of all pay Hummingbird Aviation LLC was ordered to pay and allowances, sentenced to 12 months of con- $300,000 in restitution and an additional $4,100 finement and received a bad conduct discharge. in fines, placed on probation for five years and debarred from U.S. government contracting for Sexual Assault of Multiple Active Duty Members six years. Overview: This investigation was initiated after AFOSI at Barksdale Air Force Base, La., received Aggravated Sexual Abuse of a Child notification from Bossier City Louisiana Police Overview: This investigation was initiated after Department of a sexual assault of a female air- an allegation was received that Senior Airman man first class committed by a male airman first Brayan Rosales-Lopez sexually abused a 12-year- class, James Lewis. After assuming jurisdiction of old male at an on-base residence at Vandenberg the investigation, AFOSI discovered Lewis had Air Force Base, Calif., on or about Dec. 24, 2011. been investigated for a sexual assault in 2011 of Rosales-Lopez put his hands down the child’s another female airman first class. Additionally, pants and sexually assaulted him while they Lewis had two other open sexual assault cases were wrestling. The child pushed Rosales-Lopez that were reported the previous week, bringing away. Rosales-Lopez instructed the child not to the total number of sexual assault allegations say anything or he would lose his job with the against Lewis to four. All were investigated by Air Force. AFOSI conducted an interview of AFOSI. Despite the number of allegations, local

102 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 103 Services

“... FMC Technologies police advised they would not charge Lewis due Product Substitution against the Air Force intentionally to lack of evidence. AFOSI assigned a sexual as- Overview: This investigation was initiated Feb. substituted components sault investigator who compiled all of the police 22, 2010, based upon information from a con- reports, transferred recovered physical evidence tracting officer at Robins Air Force Base, Ga., on Diesel Air to AFOSI and reviewed the 2011 investigation. that FMC Technologies intentionally substituted Conditioner-110 units During an interview of Lewis, AFOSI obtained components on Diesel Air Conditioner-110 units without the approval a confession for all four of the alleged sexual without the approval of the Air Force. Under of the Air Force.” assaults. the contract, FMC Technologies was obligated Result: On Dec. 13, 2012, Lewis was convicted to manufacture Diesel Air Conditioner-110 by a general court-martial of sexual assault and air conditioners used to cool aircraft avion- sentenced to nine years of incarceration, reduc- ics during the course of ground maintenance. tion to the grade of E-1, forfeiture of all pay and The contract was in the process of termination allowances and a dishonorable discharge. by default due to FMC Technologies’ inability to manufacture units that met contract speci- Negligent Homicide of an Air Force Member fications. The substitutions were violations of Overview: This investigation was initiated April the contract and resulted in a severe reduction 22, 2012, after an airman first class was killed in a in unit functionality and mission capability. vehicle accident. Airman 1st Class Jose Aguilar, Additionally, FMC Technologies contracted to stationed at Incirlik Air Base, Turkey, was driv- manufacture the trailer-mounted air conditioner ing a high mobility multipurpose wheeled ve- which resulted in the same issues as the Diesel hicle and purposefully drove onto an unpaved Air Conditioner-110. The principle engineer for road against orders. After driving approxi- the trailer-mounted air conditioner examined mately 134 feet, Aguilar made a hard right turn components and determined five components and the vehicle rolled over, pinning the pas- were substituted or removed, all of which re- senger under the vehicle’s turret wall. First resulted in a loss of unit configuration control. The sponders attempted life-saving efforts, but the product substitutions were violations of contract passenger was unresponsive and died. During specifications. FMC Technologies counterargued AFOSI’s investigation, they discovered Aguilar and alleged that because the diesel air condition- had a documented history of reckless driving. A ers were purchased as commercial items, FMC search by AFOSI of Aguilar’s residence disclosed Technologies was permitted to substitute parts as a bloodied video camera. Pursuant to a search it wished. According to the contract, any chang- authorization, the camera was searched and a es to the units must be routed through and ap- video of the accident taken from the perspec- proved by the Air Force before any modifications tive of the deceased airman was recovered. The are authorized. FMC Technologies did not no- final frames of the video showed Aguilar utter an tify the Air Force of any changes to the procured expletive as he picked up the camera and turned units during the acquisition process. it off. An analysis of the blood found on the cam- Result: On Sept. 11, 2012, the Department of era was performed by the U.S. Army Criminal Justice obtained a settlement agreement between Investigation Laboratory. The analysis showed the government and FMC Technologies who the DNA of the blood taken from the camera agreed to pay $14,431,500 to the government for was Aguilar’s. the trailer-mounted air conditioner units and Result: On Nov. 28, 2012, Aguilar was convicted $4,827,000 for the Diesel Air Conditioner-110 at a general court-martial of dereliction of duty, units. The agreement required FMC Technologies reckless driving and conduct prejudicial of good to upgrade the accepted trailer-mounted air con- order and discipline. Under a pretrial agreement, ditioner units at no additional cost to the govern- Aguilar agreed to a reduction to the grade of E-1, ment. FMC Technologies was required to provide forfeiture of all pay and allowance, ordered to an extended warranty covering trailer-mounted three years and nine months of confinement and air conditioner units manufacturing defects spe- a bad conduct discharge. cific to cooling, which would be effective one month after receiving the upgraded parts. The amount recovered was $19,258,500.

104 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 PB 5

Appendices Appendix A

Audit, Inspection, and Evaluation Reports Issued

Copies of reports may be obtained from the appropriate issuing office by contacting:

DoD IG Army Audit Agency (703) 604-8937 (703) 693-5679 www.dodig.mil/PUBS www.hqda.army.mil/aaaweb

Naval Audit Service Air Force Audit Agency (202) 433-5757 (703) 696-7904 www.afaa.af.mil

DoD IG Military Depts. Total Acquisition Processes and Contract Management 19 30 49 Financial Management 25 49 74 Joint Warfighting and Readiness 6 35 41 Information Assurance, Security and Privacy 4 16 20 Health Care 1 6 7 Equipping and Training Iraqi and Afghan Security Forces 4 0 4 Investigative Oversight 2 0 2 Nuclear Enterprise 0 2 2 Other 3 8 11 Total 64 146 210

Acquisition Processes and Contract Management

Agency Report Number Report Title Date DoD IG DODIG-2012-030R Contractor Compliance Varied With Classification of Lobbying Costs and Reporting of Lobbying 01/18/2013 Activities (FOUO) DoD IG DODIG-2013-002 Improvement Needed With DoD Single-Bid Program to Increase Effective Competition for 10/04/2012 Contracts DoD IG DODIG-2013-003 Army Contracting Command – Aberdeen Proving Ground Contracting Center’s Management of 10/19/2012 Noncompetitive Awards Was Generally Justified DoD IG DODIG-2013-006 Defense Logistics Agency Could Improve Its Oversight of the Maintenance, Repair, and 10/19/2012 Operations Prime Vendor Contract for Korea (FOUO) DoD IG DODIG-2013-007 Award and Administration of Multiple Award Contracts at Naval Facilities Engineering Command 10/26/2012 Specialty Centers Need Improvement DoD IG DODIG-2013-015 Actions to Align Defense Contract Management Agency and Defense Contract Audit Agency 11/13/2012 Functions DoD IG DODIG-2013-024 U.S. Army Corps of Engineers Needs to Improve Contract Oversight of Military Construction 11/26/2012 Projects at Bagram Airfield, Afghanistan

106 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 107 Agency Report Number Report Title Date DoD IG DODIG-2013-025 Accountability Was Missing for Government Property Procured on the Army’s Services Contract 11/30/3012 for Logistics Support of Stryker Vehicles DoD IG DODIG-2013-028 Contracting Improvements Still Needed in DoD’s FY 2011 Purchases Made Through the 12/07/2012 Department of Veterans Affairs DoD IG DODIG-2013-031 Audit of the F-35 Lightning II Autonomic Logistics Information System (Classified) 12/10/2012 DoD IG DODIG-2013-034 Better Processes Needed to Appropriately Justify and Document NAVSUP WSS, Philadelphia Site 12/21/2012 Sole-Source Awards DoD IG DODIG-2013-037 Quality Controls for the Rotary Wing Transport Contracts Performed in Afghanistan Need 01/15/2013 Improvement DoD IG DODIG-2013-044 Monitoring of the Quality of the Defense Contract Audit Agency FY 2010 Audits 03/07/2013 DoD IG DODIG-2013-046 DoD Does Not Have Visibility Over the Use of Funds Provided to the Department of Energy 02/15/2013 DoD IG DODIG-2013-048 Quality Control Review of the PricewaterhouseCoopers, LLP and the Defense Contract Audit 02/20/2013 Agency FY 2010 Single Audit of the Institute for Defense Analyses DoD IG DODIG-2013-049 Improvements Needed in Managing Maintenance Contracts in Korea for Air Force Aircraft (FOUO) 02/22/2013 DoD IG DODIG-2013-050 Recovering Organizational Clothing and Individual Equipment From Civilians and Contractor 02/22/2013 Employees Remains a Challenge DoD IG DODIG-2013-052 Inadequate Contract Oversight of Military Construction Projects in Afghanistan Resulted in 03/08/2013 Increased Hazards to Life and Safety of Coalition Forces DoD IG DODIG-2013-059 Air Force Needs Better Processes to Appropriately Justify and Manage Cost-Reimbursable 03/21/2013 Contracts USAAA A-2013-0009-ALC Arlington National Cemetery Millennium Project, U.S. Army Corps of Engineers Norfolk District 11/07/2012 USAAA A-2013-0013-ALE Wide Area Workflow in Europe, 409th Contracting Support Brigade, Expeditionary Contracting 11/29/2012 Command, Europe USAAA A-2013-0015-MTE Audit of Contract Management-Atmospherics Program-Afghanistan 11/28/2012 USAAA A-2013-0016-MTE Audit of Area Support Group-Kuwait S6 Information Technology Contracts (FOUO) 12/07/2012 USAAA A-2013-0020-ALA Time Sensitive Issue—Audit of Aviation Requirements-Small Unmanned Aircraft Systems (FOUO) 12/07/2012 USAAA A-2013-0034-ALA Audit of Mission Command and Communications Capabilities 01/10/2013 USAAA A-2013-0035-ALC Arlington National Cemetery Columbarium Court 9 Design Management 01/22/2013 USAAA A-2013-0038-FMF Yuma Proving Ground Financial Transaction Analysis, Award Fee Procedures (FOUO) 01/18/2013 USAAA A-2013-0047-ALC Accession of Military Personnel into Contracting 01/31/2013 USAAA A-2013-0051-MTE Audit of Contract Administration of the National Afghan Trucking Contract (FOUO) 02/07/2013 USAAA A-2013-0054-MTE Performance Metrics—National Afghan Trucking Contract, Bagram Airfield, Afghanistan (FOUO) 02/13/2013 USAAA A-2013-0076-IEF Agreed-Upon Procedure Attestation, Contracts at U.S. Army Corps of Engineers - Sacramento 03/25/2013 District and Sierra Army Depot (FOUO) NAVAUDSVC N2013-0003 Naval Sea Systems Command, Logistics, Maintenance, and Industrial Operations Contract 11/15/2012 N00024-01-D-7025, DO 0001 NAVAUDSVC N2013-0006 Department of the Navy Communications Security Account Reconciliation Under Common Tier 1 12/27/2012 Accounting System NAVAUDSVC N2013-0007 Joint Mission Planning System 01/11/2013 NAVAUDSVC N2013-0012 Internal Controls Over Selected Contracts and Blanket Purchase Agreements at Navy Region Mid- 01/16/2013 Atlantic, Fleet and Family Readiness AFAA F-2013-0002-L10000 Arnold Engineering Development Center Operations, Maintenance, Information Management, 10/23/2012 and Support Contract Management AFAA F-2013-0001-L30000 Contract Closeout Management 11/26/2012 AFAA F-2013-0003-L30000 Firm-Fixed-Price Contracts 01/25/2013 AFAA F-2013-0004-L30000 Small Diameter Bomb II 01/25/2013 AFAA F-2013-0005-L30000 Services Category II and III Acquisitions 02/08/2013 AFAA F-2013-0006-L30000 C-17 Global Reach Improvement Program Management 02/22/2013 AFAA F-2013-0007-L30000 Acquisition Management of Fifth-Generation Fighter Aircraft Simulators 02/26/2013 AFAA F-2013-0008-L30000 Eastern Range Technical Services Contract Management and Oversight 03/08/2013

106 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 107 Appendix A

Agency Report Number Report Title Date AFAA F-2013-0004-L40000 Miscellaneous Equipment Allowance Standards 02/19/2013 AFAA F-2013-0005-L40000 Heritage Program 02/21/2013 AFAA F-2013-0004-O20000 Independent Agreed-Upon Procedures Report, Plug-In Electric Vehicles Business Case Analysis 10/22/2012 AFAA F-2013-0006-O20000 Construction and Demolition Debris Diversion 02/07/2013 AFAA F-2013-0007-O20000 Sustainment, Restoration and Modernization Project Management 02/11/2013 AFAA F-2013-0008-O20000 Military Construction Requirements 02/20/2013

Financial Management

Agency Report Number Report Title Date DoD IG DODIG-2013-004 Audit of Hotline Allegations Involving Defense Intelligence Mission Area (FOUO) 10/17/2012 DoD IG DODIG-2013-008 Independent Auditor’s Report on the DoD Military Retirement Fund, FY 2012 and FY 2011 Basic 11/06/2012 Financial Statements DoD IG DODIG-2013-009 Independent Auditor’s Report on the Air Force General Fund FY 2012 and FY 2011 Financial 11/08/2012 Statements DoD IG DODIG-2013-010 Independent Auditor’s Report on the Air Force Working Capital Fund FY 2012 and FY 2011 11/08/2012 Financial Statements DoD IG DODIG-2013-011 Independent Auditor’s Report on the Army Working Capital Fund FY 2012 and FY 2011 Annual 11/08/2012 Financial Statements DoD IG DODIG-2013-012 Independent Auditor’s Report on the Department of the Navy General Fund FY 2012 and FY 2011 11/09/2012 Financial Statements DoD IG DODIG-2013-013 Independent Auditor’s Report on the Army General Fund FY 2012 and FY 2011 Financial 11/08/2012 Statements DoD IG DODIG-2013-014 Independent Auditor’s Report on the Department of the Navy Working Capital Fund FY 2012 and 11/09/2012 FY 2011 Financial Statements DoD IG DODIG-2013-016 Independent Auditor’s Report on the DoD Medicare-Eligible Retiree Health Care Fund FY 2012 11/07/2012 Basic Financial Statements DODIG DODIG-2013-017 Independent Auditor’s Report on the DoD Contract Resource Management FY 2012 Basic 11/07/2012 Financial Statements DoD IG DODIG-2013-018 Deliveries and Payments for the Defense Advanced GPS Receivers Met Contract Terms, But 11/08/2012 Property Accountability Needed Improvements DoD IG DODIG-2013-020 Independent Auditor’s Report of FY 2011 Department of State Funds Transferred to DoD for 11/09/2012 Human Immunodeficiency Virus /Acquired Immune Deficiency Syndrome Prevention DoD IG DODIG-2013-021 Independent Auditor’s Report on the Department of Defense FY 2012 and FY 2011 Financial 11/15/2012 Statements DoD IG DODIG-2013-022 Independent Auditor’s Report on the Department of Defense FY 2012 and 2011 Special Purpose 11/15/2012 Financial Statements DoD IG DODIG-2013-023 Independent Auditor’s Report on the U.S. Army Corps of Engineers, Civil Works, FY 2012 and FY 11/15/2012 2011 Basic Financial Statements DODIG DODIG-2013-027 DoD Generally Effective at Correcting Causes of Antideficiency Act Violations in Military Personnel 11/30/2012 Accounts, But Vulnerabilities Remain DoD IG DODIG-2013-038 Independent Auditor’s Report on the Examination of the Existence, Completeness, and Rights of 01/14/2013 the Department of the Air Force’s Uninstalled Missile Motors and Spare Engines DoD IG DODIG-2013-042 Independent Auditor’s Report on the DoD FY 2012 Detailed Accounting Report of the Funds 01/31/2013 Obligated for National Drug Control Program Activities DoD IG DODIG-2013-045 Army Business Systems Information Technology Strategy Needs Improvement 02/07/2013 DODIG DODIG-2013-047 Quality Control Review of the Defense Finance and Accounting Service Audit Organization 02/28/2013 DoD IG DODIG-2013-051 Improvements to Controls Over Cash Are Needed at the Army Disbursing Office at Soto Cano Air 03/04/2013 Base, Honduras DoD IG DODIG-2013-054 DoD Efforts to Meet the Requirements of the Improper Payments Elimination and Recovery Act in 03/13/2013 FY 2012

108 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 109 Agency Report Number Report Title Date DoD IG DODIG-2013-056 Defense Hotline Allegations Concerning Contractor-Invoiced Travel for U.S. Army Corps of 03/15/2013 Engineers’ Contracts W912DY-10-D-0014 and W912DY-10-D0024 DoD IG DODIG-2013-057 Enterprise Business System Was Not Configured to Implement the U.S. Government Standard 03/20/2013 General Ledger at the Transaction Level DoD IG DODIG-2013-061 Improvements Needed to the Purchase Card On-Line System 03/27/2013 USAAA A-2013-0001-IEF Audit of Recruiting Assistance Programs—Active Component (FOUO) 10/03/2012 USAAA A-2013-0006-IEE Audit of Army Workers' Compensation Program: U.S. Army National Guard 11/05/2012 USAAA A-2013-0007-FMF Independent Auditor's Report for FY 12 American Red Cross Financial Statements 11/05/2012 USAAA A-2013-0011-IEI Audit of Army Emergency Relief Operations—U.S. Army Fort Benning (FOUO) 11/05/2012 USAAA A-2013-0014-FMR Update on Attestation Examination, Global Combat Support System-Army Release 1.1 Federal 11/16/2012 Financial Management Improvement Act of 1996 Requirements—Compliance Validation (FOUO) USAAA A-2013-0017-FMR General Fund Enterprise Business System—Vendor Pay 11/19/2012 USAAA A-2013-0021-FMF Yuma Proving Ground Financial Transaction Analysis (FOUO) 12/07/2012 USAAA A-2013-0024-IEI Residential Communities Initiative—Controls Over Purchase Order Expenditures, Fort Rucker and 12/17/2012 Fort Drum USAAA A-2013-0026-IEE Audit of Army Workers' Compensation Program—Death Benefit Cases 12/31/2012 USAAA A-2013-0027-FMR The Army Managers' Internal Control Program for FY 12, Office of the Deputy Chief of Staff, G-1 12/21/2012 USAAA A-2013-0029-MTT Audit of Operating Tempo Funds Use 01/09/2013 USAAA A-2013-0030-FMF Audit of Reimbursable Operations of the Program Manager—Defense Communications and 01/07/2013 Transmission Systems USAAA A-2013-0033-IEE Actions Taken by the U.S. Army Corps of Engineers at Lake Cumberland, Kentucky 01/24/2013 USAAA A-2013-0036-IEF Miscellaneous Adjustments to Military Pay, Army National Guard 01/29/2013 USAAA A-2013-0039-FMR Audit of General Fund Enterprise Business System—Vendor Pay Processing Issues 01/22/2013 USAAA A-2013-0040-IEO Support to Operation Homefront 01/28/2013 USAAA A-2013-0042-ALC Defense Acquisition Workforce Development Fund Tax Payment 01/31/2013 USAAA A-2013-0049-ALA Examination of Army Suggestion Program Number NEPA08021M, Picatinny Arsenal, New Jersey 02/04/2013 USAAA A-2013-0059-IEM U.S. Army Fisher House Program Management, U.S. Army Medical Command 03/08/2013 USAAA A-2013-0060-FMF National Science Center's Special Fund Financial Statement, Fort Belvoir, Virginia (FOUO) 03/01/2013 USAAA A-2013-0062-FMF Issues for Management Consideration, Audit of National Science Center's Special Fund Financial 03/05/2013 Statement (FOUO) USAAA A-2013-0064-IEF Audit of Referral Bonus Programs (FOUO) 03/28/2013 USAAA A-2013-0070-IEM Attestation Examination of Army Suggestion Number SWSM09003C 03/18/2013 USAAA A-2013-0078-IEO Nonappropriated Fund Instrumentalities Risk Assessment (FOUO) 03/29/2013 USAAA A-2013-0079-FMR Audit of Metrics and Milestones of Army Audit Readiness 03/29/2013 NAVAUDSVC N2013-0002 Independent Attestation - Agreed-Upon Procedures Attestation Engagement of Assessing 11/07/2012 Internal Controls over Financial Reporting in the Department of the Navy, Phase 3 NAVAUDSVC N2013-0010 Information Technology and Audio-Visual Asset Accountability at Selected Hospitals within Navy 01/15/2013 Medicine West NAVAUDSVC N2013-0014 Bureau of Medicine and Surgery Government Commercial Purchase Card Program 02/12/2013 AFAA F-2013-0001-L10000 United States Property and Fiscal Officer Program 10/16/2012 AFAA F-2013-0003-L10000 Debt Remission, Phase II 10/26/2012 AFAA F-2013-0004-L10000 Civilian Pay Process - Job Order Cost Accounting System 12/14/2012 AFAA F-2013-0001-L20000 Memorandum Report of Audit, Automated Business Services System Accounting Conformance 11/27/2012 AFAA F-2013-0002-O10000 Memorandum Report of Audit, Air Force - Integrated Personnel and Pay System Accounting 10/22/2012 Conformance AFAA F-2013-0003-O10000 Memorandum Report of Audit, Reliability and Maintainability Information System Application 10/22/2012 Controls AFAA F-2013-0004-O10000 Memorandum Report of Audit, Financial Inventory Accounting and Billing System Accounting 10/22/2012 Conformance

108 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 109 Appendix A

Agency Report Number Report Title Date AFAA F-2013-0006-O10000 Memorandum Report of Audit, Comprehensive Engine Management System Controls 11/20/2012 AFAA F-2013-0007-O10000 Memorandum Report of Audit, Financial Inventory Accounting and Billing System Application 11/20/2012 Controls AFAA F-2013-0008-O10000 Memorandum Report of Audit, Defense Enterprise Accounting and Management System 12/11/2012 Accounting Conformance AFAA F-2013-0009-O10000 Memorandum Report of Audit, Reliability, Availability, Maintainability Support System for 01/03/2013 Electronic Combat Pods - Application Controls AFAA F-2013-0011-O10000 Memorandum Report of Audit, Integrated Missile Database System Application Controls 01/15/2013 AFAA F-2013-0012-O10000 Memorandum Report of Audit, Automated Civil Engineer System - Real Property Accounting 01/23/2013 Conformance AFAA F-2013-0013-O10000 Memorandum Report of Audit, NexGen Information Technology Accounting Conformance 02/13/2013 AFAA F-2013-0014-O10000 Memorandum Report of Audit, Cargo Movement Operation System Accounting Conformance 02/13/2013 AFAA F-2013-0015-O10000 Air Force Global Logistics Support Center Unliquidated Obligations 03/08/2013 AFAA F-2013-0001-O20000 Interim Report of Audit, Creech Air Force Base, Nevada, Electric Utilities Privatization Economic 10/01/2012 Analysis AFAA F-2013-0002-O20000 Interim Report of Audit, Columbus Air Force Base, Mississippi, Electric Utilities Privatization 10/01/2012 Economic Analysis AFAA F-2013-0005-O20000 Fiscal Year 2012 Utilities Privatization Economic Analyses 10/24/2012 AFAA F-2013-0001-O40000 Unemployment Compensation Program 10/19/2012 AFAA F-2013-0004-O40000 Civilian Classification Process 11/27/2012

Health Care

Agency Report Number Report Title Date DoD IG DODIG-2013-029 TRICARE Managed Care Support Contractors Program Integrity Units Met Contract Requirements 12/05/2012 USAAA A-2013-0010-IEM Deployment Health Assessments 11/05/2012 USAAA A-2013-0012-IEM U.S. Army Medical Command Ombudsman Program 11/20/2012 USAAA A-2013-0061-IEM Initial Outfitting of Equipment at Military Treatment Facility Construction Projects, U.S. Army 03/01/2013 Medical Command AFAA F-2013-0002-O40000 Medical Aspects of Contractor Deployments 11/07/2012 AFAA F-2013-0005-O40000 Contract Medical Service Personnel 11/28/2012 AFAA F-2013-0006-O40000 Follow-up Audit, Mental Health Provider Productivity 02/20/2013

Information Assurance, Security and Privacy

Agency Report Number Report Title Date DoD IG DODIG-2013-035 Better Reporting and Certification Processes Can Improve Red Teams’ Effectiveness (Classified) 12/21/2012 DoD IG DODIG-2013-036 Improvements are Needed to Strengthen the Security Posture of USACE, Civil Works, Critical 01/14/2013 Infrastructure and Industrial Control Systems in the Northwestern Division (FOUO) DoD IG DODIG-2013-055 Improvements Needed With Wireless Intrusion Detection Systems at the Defense Logistics 03/13/2013 Agency (FOUO) DoD IG DODIG-2013-060 Improvements Needed With Tracking and Configuring Army Commercial Mobile Devices 03/26/2013 USAAA A-2013-0003-MTP Audit of Actions Taken to Implement Fort Hood Recommendations (FOUO) 10/17/2012 USAAA A-2013-0004-MTP Audit of Army Actions Taken to Implement Fort Hood Recommendations (FOUO) 11/01/2012 USAAA A-2013-0018-FMI Phoenix Eye (FOUO) 11/30/2012 USAAA A-2013-0023-FMT Audit of Army Data Center Consolidation 12/12/2012 USAAA A-2013-0025-MTP Army Headquarters-Level Actions to Implement Fort Hood Recommendations (FOUO) 12/18/2012 USAAA A-2013-0057-FMT Storage and Servicing of Army Records 03/06/2013

110 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 111 Agency Report Number Report Title Date USAAA A-2013-0063-MTP Army Protection Program at Arsenals, Depots, and Plants, U.S. Army Materiel Command (FOUO) 03/06/2013 USAAA A-2013-0065-IEO Attestation Review of Data on Child, Youth, and School Services Personnel Suitability (FOUO) 03/08/2013 USAAA A-2013-0072-FMI Foreign Language Proficiency Bonus Pilot Program 03/18/2013 NAVAUDSVC N2013-0008 United States Marine Corps Intelligence-Related Emergency and Extraordinary Expense Funds 01/11/2013 NAVAUDSVC N2013-0013 Business Process Reengineering Efforts for Selected Department of the Navy Business System 01/25/2013 Modernizations NAVAUDSVC N2013-0016 Oversight of the Legacy Systems Replacement Process 02/26/2013 AFAA F-2013-0001-O10000 Information Technology Efficiencies Initiative Commercial Satellite Communications 10/18/2012 AFAA F-2013-0005-O10000 Enterprise Information Protection Capability 10/26/2012 AFAA F-2013-0010-O10000 Printer and Multifunction Device Management 01/10/2013 AFAA F-2013-0003-O20000 Follow-up Audit, Freedom of Information Act 10/19/2012

Joint Warfighting and Readiness

Agency Report Number Report Title Date DoD IG DODIG-2012-034.4 Assessment of Afghan National Security Forces Metrics, Afghan National Army (ANA) March 02/20/2012 2012-August 2012 (Classified) DoD IG DODIG-2013-019 Defense Institution Reform Initiative Program Elements Need to Be Defined 11/09/2012 DoD IG DODIG-2013-026 Supply Support Activities in Afghanistan Could Be Managed More Effectively to Improve 11/30/2012 Inventory Accountability (FOUO) DoD IG DODIG-2013-030 Counterintelligence Screening Needed to Reduce Security Threat That Unscreened Local National 12/07/2012 Linguists Pose to U.S. Forces (FOUO) DoD IG DODIG-2013-041 Assessment of the USAF Aircraft Accident Investigation Board (AIB) Report on the F‑22A Mishap 02/06/2013 of November 16, 2010 DoD IG DODIG-2013-058 Assessment of U.S. Efforts to Develop the Afghan National Security Forces Command, Control, 03/22/2013 and Coordination System USAAA A-2013-0002-IEI Audit of Real Property Planning and Analysis System, Fort Benning 10/12/2012 USAAA A-2013-0005-MTE Army Prepositioned Stocks, Southwest Asia (FOUO) 11/07/2012 USAAA A-2013-0008-ALM Depot-Level Maintenance Workload Reporting—FY 11 10/31/2012 USAAA A-2013-0022-MTT Audit of Managing Resource Requirements for TRADOC Institutional Training 12/07/2012 USAAA A-2013-0028-MTT Training Support System Manning Models, Office of the Deputy Chief of Staff, G-3/5/7 12/20/2012 USAAA A-2013-0031-ALM Audit of Prepositioned Stock, Medical Materiel 01/15/2013 USAAA A-2013-0037-MTS Force Structure for the Adjutant General Workforce 01/15/2013 USAAA A-2013-0041-ALE Maintenance of Left Behind Equipment in Europe 01/24/2013 USAAA A-2013-0045-MTS Resource Capabilities of Financial Management Enablers 02/08/2013 USAAA A-2013-0046-MTS Audit of Financial Management—Force Structure 02/08/2013 USAAA A-2013-0048-MTE Materiel Management - Retrograde From Southwest Asia, U.S. Army Forces Command 02/01/2013 USAAA A-2013-0050-IEO Audit of Service Cost Execution Process, U.S. Army Garrison Fort Lee, Notification of Potential 02/13/2013 Antideficiency Act Violation (FOUO) USAAA A-2013-0052-MTE Foreign Excess Property Programs (FOUO) 03/04/2013 USAAA A-2013-0053-FMP Managing the Korean Service Corps Program, Eighth Army (FOUO) 02/14/2013 USAAA A-2013-0055-IEI Followup Audit of Base Realignment and Closure 2005 Construction Requirements, Armed Forces 02/25/2013 Reserve Center, Camp Bullis, Texas USAAA A-2013-0056-MTE Retrograde Sort Processes, Afghanistan (FOUO) 02/26/2013 USAAA A-2013-0058-ALS Followup of Procurement Lead Times, U.S. Army Aviation and Missile Life Cycle Management 02/27/2013 Command USAAA A-2013-0066-FMP Manning the Missile Defense Site—Fort Greely (FOUO) 03/11/2013 USAAA A-2013-0067-MTE Audit of Asset Visibility and Accountability During Retrograde (FOUO) 03/14/2013

110 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 111 Appendix A

Agency Report Number Report Title Date USAAA A-2013-0069-ALS Excess Spare Part Turn-In—Property Accountability Recovery Team Program 03/25/2013 USAAA A-2013-0071-ALA Army Blast Standards—Program Executive Office Ground Combat Systems and Program 03/14/2013 Executive Office Combat Support and Combat Service Support (FOUO) USAAA A-2013-0073-IEO Followup Audit of the Army Traffic Safety Training Program 03/20/2013 USAAA A-2013-0074-IEO Audit of Overseas Contingency Operations Resource Reporting—Notification of Purpose Statute 03/25/2013 Violation USAAA A-2013-0075-MTH Out of Service Debt—U.S. Army Reserve Command 03/22/2013 USAAA A-2013-0077-ALS Followup Audit of Project Manager Assets, Bradley Fighting Vehicles 03/26/2013 NAVAUDSVC N2013-0017 Followup on Security Manning Requirements Implementation Plan 03/12/2013 AFAA F-2013-0002-L20000 United States Air Forces Central Area of Responsibility Base-Level Inventory Management 02/26/2013 AFAA F-2013-0002-L30000 United States Air Forces Central Area of Responsibility Purchasing 01/23/2013 AFAA F-2013-0002-L40000 Mine Resistant Ambush Protected Vehicles 01/29/2013 AFAA F-2013-0003-L40000 Weapon System Equipment Allowance Standards 02/07/2013 AFAA F-2013-0006-L40000 Depot Due-In From Maintenance Asset Management 03/15/2013 AFAA F-2013-0001-O30000 International Aviation Partner Training 10/24/2012 AFAA F-2013-0002-O30000 Strategic Planning and Program Objective Memorandum Development (FOUO) 12/14/2012 AFAA F-2013-0003-O30000 Follow-up Audit, Pre-Positioned Mobility Bags 02/08/2013 AFAA F-2013-0003-O40000 Training and Equipping Expeditionary Airmen 11/26/2012

Equipping and Training Iraq and Afghan Security Forces

Agency Report Number Report Title Date DoD IG DODIG-2013-005 Performance Framework and Better Management of Resources Needed for the Ministry of 10/23/2012 Defense Advisors Program DoD IG DODIG-2013-040 Critical Information Needed to Determine the Cost and Availability of G222 Spare Parts (FOUO) 01/31/2013 DOD IG DODIG-2013-053 Oversight of U.S. Military and Coalition Efforts to Improve Healthcare Conditions and to Develop 03/13/2013 Sustainable Afghan National Security Forces Medical Logistics at the Dawood National Military Hospital DoD IG DODIG-2013-062 Policies and Procedures Needed to Reconcile Ministry of Defense Advisors Program 03/28/2013 Disbursements to Other DoD Agencies

Nuclear Enterprise

Agency Report Number Report Title Date USAAA A-2013-0043-MTP Audit of the Army's Nuclear Reactor and Surety Programs (FOUO) 01/29/2013

AFAA F-2013-0001-L40000 Follow-up Audit, Nuclear Weapons Related Materiel Inventory 12/14/2012

Investigative Oversight

Agency Report Number Report Title Date DoD IG DODIG-2013-033 Review of DoD Response to Noncompliant Crime Laboratory Analyses (Classified) 12/21/2012

DoD IG DODIG-2013-043 Evaluation of the Military Criminal Investigative Organizations’ Sexual Assault Investigation 02/28/2013 Training

112 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 113 Other

Agency Report Number Report Title Date DoD IG DODIG-2013-001 Management Assessment of an Under Secretary of Defense for Intelligence Special Access 10/19/2012 Program - Phase #2, (Classified) DoD IG DODIG-2013-032 Audit of FY 2012 Intelligence Commercial Activities (Classified) 12/10/2012

DoD IG DODIG-2013-039 Defense Advanced Research Projects Agency’s Ethics Program Met Federal Government Standards 01/24/2013 NAVAUDSVC N2013-0001 Prioritization and Selection Process of Department of the Navy Aviation and Operational Safety 10/12/2012 Concerns NAVAUDSVC N2013-0004 Department of the Navy’s Military Construction Projects Proposed for Fiscal Year 2004 12/14/2012 NAVAUDSVC N2013-0005 Naval Station Guantanamo Bay Human Resources Office and Local National Employee Program 12/17/2012 NAVAUDSVC N2013-0009 Bachelor Housing Department at Naval Air Station Sigonella, Italy 01/11/2013 NAVAUDSVC N2013-0011 Navy Reserve Use of Per Diem 01/15/2013 NAVAUDSVC N2013-0015 Department of the Navy’s Proposed Fiscal Year 2013 Military Construction Projects Specific to 02/13/2013 Romania NAVAUDSVC N2013-0018 Recording and Tracking of Hotline Complaints in the Naval Inspector General Hotline Tracking 03/19/2013 System NAVAUDSVC N2013-0019 Gift Acceptance at Marine Corps University 03/26/2013

▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 5(a) (6).

112 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 113 Appendix B

Reports Containing Potential Monetary Benefits

Potential Monetary Benefits Funds Put to Better Reports Issued Date Questioned Costs Use

DODIG-2013-006 Defense Logistics Agency Could Improve Its Oversight of the 10/17/2012 $200,224 N/A Maintenance, Repair, and Operations Prime Vendor Contract for Korea (FOUO)

DODIG-2013-007 Award and Administration of Multiple Award Contracts at 10/24/2012 $556,590 N/A Naval Facilities Engineering Command Specialty Centers Need Improvement DODIG-2013-015 Actions to Align Defense Contract Management Agency and 11/13/2012 N/A $249,100,000 Defense Contract Audit Agency Functions DODIG-2013-025 Accountability Was Missing for Government Property Procured on the Army's Services Contract for Logistics Support of Stryker 11/26/2012 N/A $1,100,000 Vehicles

DODIG-2013-028 Contracting Improvements Still Needed in DoD’s FY 2011 12/04/2012 N/A $338,577 Purchases Made Through the Department of Veterans Affairs

DODIG-2012-030R Contractor Compliance Varied with Classification of 01/18/2013 $98,305 N/A Lobbying Costs and Reporting of Lobbying Activities (FOUO) DODIG-2013-040 Critical Information Needed to Determine the Cost and 01/23/2012 N/A $1,030,000,000 Availability of G222 Spare Parts (FOUO) Total $855,119 $1,280,538,577

▶ Partially fulfills the requirement of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 5(a)(6) (See Appendix A).

114 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 115 Appendix C

Followup Activities

Decision status of DoD IG issued audit, inspection, and evaluation reports and dollar value of recommendations that funds be put to better use

Funds Put Status Number to Better Use 1 ($ in thousands) A. For which no management decision had been made by the beginning of the 47 $2,639,723 reporting period. B. Which were issued during the reporting period. 64 $1,281,394 Subtotals (A+B) 111 $3,921,117 C. For which a management decision was made during the reporting period. 91 $3,921,117 (i) dollar value of recommendations that were agreed to by management. - based on proposed management action - based on proposed legislative action (ii) dollar value of recommendations that were not agreed to by $3,921,1172 management.

D. For which no management decision has been made by the 20 $0 end of the reporting period.

Reports for which no management decision was made within 6 months of 23 $0 issue (as of March 31, 2013)

1. DoD IG issued audit reports during the period involving $855,119 in “questioned costs.” 2. On these audit reports management has agreed to take the recommended actions, but the amount of agreed monetary benefits cannot be determined until those actions are completed. 3. DODIG-2012-057, Guidance Needed to Prevent Military Construction Projects From Exceeding the Approved Scope of Work; and DODIG-2012-098, Controls Governing the Procurement Automated Contract Evaluation System Need Improvement had no decision as of March 31, 2013, but action to achieve a decision is in process.

▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 5(a)(8),(9), & (10).

114 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 115 Status of action on central internal audits period ending March 31, 2013

Funds Put Status Number to Better Use1 ($ in thousands)

DoD IG Action in Progress - Beginning of Period 128 $0 Action Initiated - During Period 942 $3,921,117 Action Completed - During Period 68 $932,800 Action in Progress - End of Period 154 $0 3 Military Departments Action in Progress - Beginning of Period 601 $6,007,136 Action Initiated - During Period 149 $1,741,420 Action Completed - During Period 162 $100,271 Action in Progress - End of Period 588 $6,982,012

1. DoD IG opened audit reports during the period involving $855,119 in “questioned costs.” 2. Adjusted for three re-opened reports. 3. On certain reports (primarily from prior periods) with audit estimated monetary benefits of $3.4 billion, DoD IG agreed that the resulting monetary benefits can only be estimated after completion of management action, which is ongoing.

▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 5(b) (2) & (3).

116 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 117 Appendix D

Contract Audit Reports Issued1

Dollars Questioned Examined Costs3 Funds Put to Better Use Type of Audit2 Reports Issued ($ in millions) ($ in millions) ($ in millions) Incurred Costs, Ops Audits, Special Audits 1,707 $18,473.4 $1,772.3 $8.3 4 Forward Pricing Proposals 595 $34,830.8 $0 $3,187.7 5 Cost Accounting Standards 263 $103.7 $118.6 $0 Defective Pricing 8 (Note 6) $4.1 $0 Totals 2,573 $53,407.9 $1,895.0 $3,196.0

Note 1. This schedule represents Defense Contract Audit Agency contract audit reports issued during the six months that ended March 31, 2013. This schedule includes any audits that DCAA performed on a reimbursable basis for other government agencies and the associated statistics may also be reported in other OIGs’ Semiannual Reports to the Congress. Both “questioned costs” and “funds put to better use” represent potential cost savings. Because of limited time between availability of management information system data and legislative reporting requirements, there is minimal opportunity for DCAA to verify the accuracy of reported data. Accordingly, submitted data is subject to change based on subsequent DCAA authentication. In prior semiannual reporting periods, DCAA reported the total number of assignments completed. The total number of assignments completed during the six months that ended March 31, 2013 was 5,579. Some completed assignments do not result in a report issued because they are part of a larger audit or because the scope of the work performed does not constitute an audit or attestation engagement under generally accepted government auditing standards, so the number of audit reports issued is less than the total number of assignments completed. Note 2. This schedule represents audits performed by DCAA summarized into four principal categories, which are defined as: • Incurred Costs: Audits of direct and indirect costs charged to government contracts to determine that the costs are reasonable, allocable and allowable as prescribed by the Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement and provisions of the contract. Also included under incurred cost audits are operations audits, which evaluate a contractor’s operations and management practices to identify opportunities for increased efficiency and economy; and special audits, which include audits of terminations and claims. • Forward Pricing Proposals: Audits of estimated future costs of proposed contract prices, proposed contract change orders, costs for re-determinable fixed-price contracts, and costs incurred but not yet covered by definitized contracts. • Cost Accounting Standards: A review of a contractor’s cost impact statement required due to changes to disclosed practices, failure to consistently follow a disclosed or established cost accounting practice or noncompliance with a cost accounting standards regulation. • Defective Pricing: A review to determine whether contracts are based on current, complete and accurate cost or pricing data (Truth in Negotiations Act). Note 3. Costs questioned represent costs that DCAA has questioned because they do not comply with rules, regulations, laws and/or contractual terms. Note 4. Represents recommendations associated with operations audits where DCAA has presented to a contractor that funds could be used more effectively if management took action to implement cost reduction recommendations. Note 5. Represents potential cost reductions that may be realized during contract negotiations. Note 6. Defective pricing dollars examined are not reported because the original value was included in the audits associated with the original forward pricing proposals.

▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 8(f)(1).

116 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 117 Appendix E

Status of Action on Post- Award Contracts1

Costs Questioned6 Costs Sustained7 Number of Reports ($ in millions) ($ in millions) Open Reports Within Guidelines2 487 $1,844.0 N/A8 Overage, greater than 6 months3 689 $2,084.1 N/A Overage, greater than 12 months4 541 $1,267.9 N/A In Litigation5 142 $2,202.0 N/A Total Open Reports 1,859 $7,398.0 N/A Closed Reports 459 $815.2 $508.2 (62.3 percent)9 All Reports 2,318 $8,213.2 $508.2 (6.2 percent)

1. This schedule represents the status of Defense Contract Audit Agency reports on incurred costs, defective pricing, equitable adjustments, accounting and related internal control systems, and noncompliance with the cost accounting standards as reported by DoD components. The status of action on significant post-award contract audits is reported in accordance with DoD Instruction 7640.02, Policy for Follow-up on Contract Audit Reports. Because of limited time between availability of the data and reporting requirements, there is minimal opportunity to verify the accuracy of the reported data. 2. These reports are within the time frames established by Office of Management and Budget Circular A-50, Audit Follow-up, and DoD Instruction 7640.02, as described in footnotes 3 and 4 below. 3. OMB Circular A-50 requires that audit reports be resolved within six months after report issuance. Generally, an audit is resolved when the contracting officer determines a course of action which is documented and approved in accordance with agency policy. 4. DoD Instruction 7640.02 states that audit reports are overage if not dispositioned within 12 months from date of issuance. Generally, disposition is achieved when the contractor implements audit recommendations, the contracting officer negotiates a settlement with the contractor or the contracting officer issues a final decision pursuant to the disputes clause. 5. Of the 142 reports in litigation, 41 are under criminal investigation. 6. Cost questioned represents the amount of audit exception, potential cost avoidance or recommended price adjustment in the audit report. 7. Cost sustained represent the questioned costs, potential cost avoidance or recommended price adjustment sustained by the contracting officer. 8. Not applicable. Cost sustained occurs when an audit report has been closed during the reporting period and, as a result, would not be applicable when reporting data on open reports. 9. Contracting officers sustained $508.2 million (62.3 percent) of the $815.2 million questioned as a result of significant post-award contract audits during the period. The contracting officer sustention rate of 62.3 percent represents a decrease from the sustention rate of 66 percent for the prior reporting period.

▶ Fulfills requirement of DoD Instruction 7640.02, Policy for Follow-up on Contract Audit Reports, Enclosure 2, Section (1)(d).

118 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 119 Appendix F

Status of Reports with Action Pending

Report: D-2006-077, DoD Security Clearance Process at Requesting Ac- Reason Action Not Completed: The Army has coordinated the revi- tivities, 4/19/2006 sion of policy and guidance, which is expected to be published this Description of Action: Update DoD Personnel Security Clearance Pro- year. Requested systems changes to the Logistics Modernization Pro- gram policies to include information on investigative responsibilities, gram have not been funded. security clearance systems, submission processes, levels of security Principal Action Office: Army clearances and training requirements. Reason Action Not Completed: Current DoD guidance is dated Janu- Report: D-2009-028, Organizational Structure and Managers Internal ary 1987. Office of Management and Budget has delayed publication of Control Program for the Assistant Secretary of Defense for Public Affairs DoD Instruction 5200.2 as a final rule three times since DoD’s submis- and American Forces Information Service, 12/10/2008 sion to OMB in September 2012. The most recent delay is to resolve Description of Action: Investigate potential misuse of funds, improper OMB’s categorization of the policy as a “significant rule” under Executive contracting and statutory violations. Order 12866, which requires further review, a ruling that DoD General Reason Action Not Completed: The formal Antideficiency Act Viola- Counsel is working to have reversed. Estimated completion date on tion investigations are ongoing. the related DoD Manual is 2014. Air Force guidance delayed due to in- Principal Action Office: Assistant Secretary of Defense for Public Af- creased workload supporting new personnel security efforts. Estimated fairs completion date is December 2013. Army Regulation 380-67 on hold by Army Judge Advocate General pending publication of revised DoD Report: D-2009-030, Marine Corps Implementation of the Urgent Uni- guidance. versal Needs Process for Mine Resistant Ambush Protected Vehicles, Principal Action Office: Under Secretary of Defense for Intelligence, 12/5/2008 Army, Air Force Description of Action: Report is FOUO. Reason Action Not Completed: Marine Corps action was on hold Report: D-2008-066, FY 2006 and FY 2007 DoD Purchases Made pending Joint Staff issuing revised guidance. Joint Staff issued revised Through the Department of the Interior, 3/19/2008 guidance in January 2012. Marine Corps has not yet updated their guid- Description of Action: Publish guidance/manual to address deficien- ance. cies in interagency acquisitions on the proper use of non-DoD con- Principal Action Office: Marine Corps tracts. Reason Action Not Completed: Delayed draft directive pending deci- Report: D-2009-051, Controls Over Time and Attendance Reporting at sion regarding future use of directives within the Department of Army; the National Geospatial-Intelligence Agency, 2/9/2009 reformatted draft directive as a manual/appendix to the Army’s FAR Description of Action: Revise guidance to improve internal controls Supplement; revised guidance for issuance as a principal assistant re- over time and attendance, especially the use of overtime and compen- sponsible for contracting policy alert, which is in staffing. satory time. Principal Action Office: Army Reason Action Not Completed: Awaiting the issuance of the final Na- tional Geospatial-Intelligence Agency instruction addressing time and Report: D-2008-089, Planning Armor Requirements for the Family of attendance. Medium Tactical Vehicles, 5/9/2008 Principal Action Office: National Geospatial-Intelligence Agency Description of Action: Update the capabilities documents for the FMTV to include armor kit requirements. Once these requirements are Report: D-2009-059, Air Force Management of the U.S. Government approved, document plans for issuance of the armor kits. Aviation Into-Plane Reimbursement Card® Program, 3/6/2009 Reason Action Not Completed: Although action was initiated in late Description of Action: Develop Air Force specific guidance and proce- 2008, Army has yet to establish validated armor kit requirements for dures on the use of the Aviation Into-Plane Reimbursement Card. De- the FMTV. velop a training program to ensure training for all personnel involved in Principal Action Office: Army Aviation Into-Plane Reimbursement functions. Reason Action Not Completed: Coordination and approval pending Report: D-2008-090, Controls Over Reconciling Army Working Capital from required agencies. Fund Inventory Records, 5/13/2008 Principal Action Office: Air Force Description of Action: The Army is updating its regulations, policies and procedures for performing the annual and end-of-day inventory reconciliations.

118 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 119 Appendix F

Report: D-2009-062, Internal Controls Over DoD Cash and Other Mon- sion assignments, on the legal employment of surveillance by DoD as- etary Assets, 3/25/2009 sets providing assistance to civil authorities and on specific events for Description of Action: Improve internal controls over cash and other command and control handoff guidance. monetary assets by establishing a special control account, developing Reason Action Not Completed: Extensive time required to develop, policies and procedures, and monitoring cash usage. Develop noncash coordinate and implement the guidance. methods of payment for contingency operations. Principal Action Office: Joint Chiefs of Staff, USD(C) Reason Action Not Completed: Corrective actions cannot be implemented until coordination with the OMB and/or the Department of the Report: D-2010-024, Contracted Advisory and Assistance Services for Treasury is complete. Extensive coordination needed between DoD and the U.S. Army Future Combat Systems, 11/24/2009 its components, and with Treasury and OMB. Description of Action: Report is FOUO. Principal Action Office: USD(C), DFAS Reason Action Not Completed: Extensive time required to coordinate and issue guidance. Report: D-2009-064, FY 2007 DoD Purchases Made Through the Na- Principal Action Office: USD(AT&L) tional Institutes of Health, 3/24/2009 Description of Action: Develop mandatory training to address how Report: D-2010-026, Joint Civilian Orientation Conference Program, the rules and regulations governing multiple-award contracts differ 12/9/2009 from those governing the General Services Administration’s Federal Description of Action: Update DoD Instruction 5410.19 to clarify how Supply Schedules, including the award and administration of task and to administer and manage the Joint Civilian Orientation Conference delivery orders. program. Initiate a preliminary Antideficiency Act review of the use of Reason Action Not Completed: Updating policy and processing Fed- Joint Civilian Orientation Conference fees received since the inception eral Acquisition Regulation changes takes time. Developing training of the Miscellaneous Receipts Statute. materials to be consistent with the FAR changes also takes time. Reason Action Not Completed: Washington Headquarters Service Principal Action Office: Under Secretary of Defense for Acquisition, is appointing an investigator to conduct a formal investigation of the Technology, and Logistics reportable violation. A complete rewrite of DoD Instruction 5410.19 is underway. Report: D-2009-072, Monitoring Power Track Payments for DoD Freight Principal Action Office: Assistant Secretary of Defense for Public Af- Transportation, 4/9/2009 fairs, Washington Headquarters Services Description of Action: Use data mining to monitor problematic payments for duplicate payment indicators. Report: D-2010-028, Rapid Acquisition and Fielding of Materiel Solu- Reason Action Not Completed: Enterprise Data Warehousing and dations by the Navy, 12/15/2009 ta-mining solutions to assist with the pre-payment and post-payment Description of Action: Report is FOUO. processes will be analyzed and implemented through an internal-con- Reason Action Not Completed: Long-term corrective actions are on- trols effort sponsored by the Deputy Assistant Secretary of Defense going. (Transportation Policy) and DFAS. The estimated completion date was Principal Action Office: Navy February 2013. Principal Action Office: USD(AT&L) Report: D-2010-035, Defense Logistics Agency Contracts for M2 Ma- chine Gun Spare Parts in Support of Operations in Southwest Asia, Report: D-2009-098, Status of the Defense Emergency Response Fund 1/11/2010 in Support of the Global War on Terror, 7/30/2009 Description of Action: Evaluate the metrics used to manage the prod- Description of Action: Review the Fund for Global War on Terror obli- uct quality deficiency reporting process and update the DLA Joint Prod- gations and de-obligate all unliquidated obligations, withdraw all ex- uct Quality Deficiency Report instruction. cess funds provided to DoD components, and transfer the funds to the Reason Action Not Completed: Extensive time required to develop, Treasury. coordinate and implement the guidance. Reason Action Not Completed: Extensive time needed to coordinate Principal Action Office: DLA de-obligation of unliquidated obligations, withdrawal of excess funds and transference of funds to the Treasury. Report: D-2010-036, Controls Over Navy Military Payroll Disbursed in Principal Action Office: USD(C) Support of Operations in Southwest Asia at San Diego-Area Disbursing Centers, 1/22/2010 Report: D-2009-104, Sanitization and Disposal of Excess Information Description of Action: Develop an electronic storage capability for Technology Equipment, 9/21/2009 supporting documentation. Description of Action: DoD CIO is updating DoD Instruction 8500.01 Reason Action Not Completed: Navy plans to commence the Training and DoD Instruction 8510.01. Requirements and Information Management System implementation Reason Action Not Completed: Extended time is required for revision within the U.S. was delayed until January 2013. The newest version of of DoD guidance series. Training Requirements and Information Management System cannot Principal Action Office: DoD CIO interface with overseas activities, and there is currently no overseas implementation schedule. Report: D-2010-015, DoD Civil Support During the 2007 and 2008 Cali- Principal Action Office: Navy fornia Wildland Fires, 11/13/2009 Description of Action: Update DoD and joint guidance to add clarity Report: D-2010-043, Deferred Maintenance and Carryover on the Army to the process of staffing Federal Emergency Management Agency mis- Abrams Tank, 3/2/2010

120 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 121 Description of Action: Report is FOUO. sistance. ACC-Aberdeen Proving Ground and White Sands Missile Range Reason Action Not Completed: The proposed change has been incor- will review contracts and task orders. DCAA will conduct incurred-cost porated into the revised Financial Management Regulation, which is audits on the contractor for FY 2006 and FY 2007. ACC will pursue a expected this summer. refund from the contractor, if appropriate. Principal Action Office: USD(C) Reason Action Not Completed: Army Contracting Command and DCAA have not completed reviews of task orders and audits of incurred Report: D-2010-048, DoD Methodology for the Valuation of Excess, Ob- costs. solete, and Unserviceable Inventory and Operating Materials and Sup- Principal Action Office: Army plies, 3/25/2010 Description of Action: Develop methodologies for estimating net real- Report: D-2010-086, Utility Tax Relief Program in Germany, 9/29/2010 izable value of excess, obsolete, and unserviceable inventory, operating Description of Action: Develop regulatory guidance requiring eligible material and supplies, munitions, and missiles. civilian personnel to participate in the Utility Tax Avoidance Program in Reason Action Not Completed: Reorganization within the office and Germany and develop a standard form to prove participation or ineligi- developing methodologies for different assets takes time to complete. bility for the program. Principal Action Office: USD(C) Reason Action Not Completed: Long-term corrective actions are pro- gressing. Report: D-2010-051, Defense Contract Management Agency Acquisi- Principal Action Office: Under Secretary of Defense for Personnel and tion Workforce for Southwest Asia, 4/8/2010 Readiness Description of Action: Revise DoD Instruction 5000.66 to require military departments and defense agencies to develop guidance to iden- Report: D-2011-020, DoD Controls Over Information Placed on Publicly tify acquisition, technology and logistics workforce requirements in ac- Accessible Web Sites Require Better Execution, 11/29/2010 cordance with other DoD instructions and the Financial Management Description of Action: Expand distribution of operations security and Regulation. threat assessment reports on DoD publicly accessible Web sites to the Reason Action Not Completed: Extensive time required to revise and DoD CIO and Office of the Under Secretary of Defense for Intelligence. coordinate instructions/guidance. Reason Action Not Completed: Extensive time required to revise and Principal Action Office: USD(AT&L) coordinate the Joint Web Risk Assessment Cell Report. Principal Action Office: Defense Information Systems Agency Report: D-2010-065, Validity and Security of Selected DoD Civilian Em- ployee Accounts (U), 5/25/2010 Report: D-2011-028, Contract Oversight for the Broad Area Maritime Description of Action: Report is Classified Surveillance Contract Needs Improvement, 12/23/2010 Reason Action Not Completed: Extensive time required to review and Description of Action: Develop an agency improvement policy that validate potentially invalid accounts and apply corrections. will require all letters of delegation be modified to include necessary Principal Action Office: DFAS surveillance and inspection requirements. Reason Action Not Completed: Extensive time required to develop Report: D-2010-069, Central Issue Facility at Fort Benning and Related and coordinate guidance. Army Policies, 6/21/2010 Principal Action Office: DCMA Description of Action: Improve the process for recovering organizational clothing and individual equipment items from civilians and con- Report: D-2011-037, Marine Corps Response to Nonlethal Laser Dazzler tractor employees on completion of their mission. Urgent Request, 2/9/2011 Reason Action Not Completed: Long-term corrective actions are on- Description of Action: Perform a review of the circumstances that led going. to the purchase of the 28 Compact High Power Laser Dazzlers and initi- Principal Action Office: USD(AT&L) ate administrative action, if appropriate. Reason Action Not Completed: Competing management priorities. Report: D-2010-078, Air Force Use of Time-and-Materials Contracts in Principal Action Office: Navy Southwest Asia, 8/16/2010 Description of Action: Air Force Center for Engineering and the Envi- Report: D-2011-043, Improvements Needed on the Fleet Industrial ronment will review invoices for time-and-materials task orders; will re- Supply Center, Sigonella, Ship Maintenance Contracts in Southwest quest DCAA audit assistance; and will obtain reimbursements for incor- Asia, 2/22/2011 rect charges with attention to $24.3 million for labor charges invoiced Description of Action: Develop a standard operating procedure that by the contractors but not authorized by the task orders. will stipulate the surveyor/contracting officer’s representatives’ respon- Reason Action Not Completed: The Air Force Center for Engineer- sibilities to include organization and required documentation of sur- ing and the Environment has not received funds they requested from veyor files. U.S. Forces- Iraq to conduct the review. Defense Contract Audit Agency Reason Action Not Completed: Extensive time required to finalize work is ongoing. guidance. Principal Action Office: Air Force Principal Action Office: Navy

Report: D-2010-081, Army Use of Time-and-Materials Contracts in Southwest Asia, 8/27/2010 Description of Action: The Army Contracting Command will establish a plan for reviewing invoices for 18 contracts and will request DCAA as-

120 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 121 Appendix F

Report: D-2011-047, Improvements Needed in Contract Administration Description of Action: Develop a training program to inform contract- of the Subsistence Prime Vendor Contract for Afghanistan, 3/2/2011 ing personnel of the suspension and debarment program and the pro- Description of Action: DLA will modify contracts to incorporate fair cess for referring poorly performing contractors. and reasonable prices, compute and recover overpayments, and cor- Reason Action Not Completed: Long-term corrective actions are in rect a fiscal year appropriations billing error. process. Reason Action Not Completed: Corrective actions are on schedule. Principal Action Office: USD(AT&L) Principal Action Office: DLA Report: D-2011-089, Reducing Vulnerabilities at the Defense Informa- Report: D-2011-060, Marine Corps Inventory of Small Arms Was Gener- tion Systems Agency Defense Enterprise Computing Centers, 7/22/2011 ally Accurate but Improvements Are Needed for Related Guidance and Description of Action: Report is FOUO. Training, 4/22/2011 Reason Action Not Completed: Extensive time required to coordinate Description of Action: Update Marine Corps Order 8300.1C to include and implement corrective actions. additional guidance for small arms accountability. Principal Action Office: Defense Information Systems Agency Reason Action Not Completed: Extensive time required to update, review and issue guidance. Report: D-2011-090, Cost War Data for Marine Corps Contingency Op- Principal Action Office: Navy erations Were Not Reliable, 7/22/2011 Description of Action: Update Marine Corps Order 7300.21A, Marine Report: D-2011-061, Excess Inventory and Contract Pricing Problems Corps Financial Management Standard Operating Procedure Manual, Jeopardize the Army Contract with Boeing to Support the Corpus Chris- Oct. 2, 2008. ti Army Depot, 5/3/2011 Reason Action Not Completed: Extensive time required to update, re- Description of Action: Perform an annual review of a sample of high- view, and issue guidance. risk, high-dollar parts to validate the individual prices before exercis- Principal Action Office: Navy ing follow-on orders. Issue policy memorandum reminding contracting officers to use fixed-price incentive contracts in accordance with FAR Report: D-2011-096, Improvements Are Needed to the DoD Informa- 16.403(b). tion Assurance Vulnerability Management Program, 8/12/2011 Reason Action Not Completed: Long-term corrective actions are still Description of Action: Report is FOUO. ongoing. Reason Action Not Completed: Extensive time required to coordinate Principal Action Office: USD(AT&L), Army and issue final policy guidance. Principal Action Office: DoD CIO, Joint Chiefs of Staff, U.S. Strategic Report: D-2011-071, U.S. Air Force Academy Could Have Significantly Command Improved Planning, Funding, and Initial Execution of the American Re- covery and Reinvestment Act Solar Array Project, 6/16/2011 Report: D-2011-099, Additional Actions Needed to Mitigate Risks of Description of Action: Determine accountability for the categoriza- Unsuitable life Insurance Sales to Junior Enlisted service Members, tion of Recovery Act solar array project costs as a utility company con- 8/23/2011 nection charge. Description of Action: Military services to update financial training in Reason Action Not Completed: An Air Force Antideficiency Act inves- an effort to increase junior enlisted service members’ awareness regard- tigation delayed referral of the case to the OUSD(C) for a decision on ing the need for, and value of, filing complaints for deceptive or abusive whether or not a reportable Antideficiency Act violation occurred. life insurance marketing practices and unsuitable insurance products. Principal Action Office: Air Force Reason Action Not Completed: The services are strengthening training to highlight filing complaints for deceptive or abusive life insurance Report: D-2011-077, Improved Management Can Reduce Costs of the marketing practices. Maintenance, Repair, and Operations Prime Vendor Contract for the Re- Principal Action Office: Under Secretary of Defense for Personnel and public of Korea, 6/24/2011 Readiness Description of Action: Report is FOUO. Reason Action Not Completed: Several amendments to the contract Report: D-2011-101, Controls Over Army Deployable Disbursing Sys- were required and additional processing time was needed. tem Payments Need Improvement, 8/19/2011 Principal Action Office: DLA Description of Action: Publish guidance on how to properly document and control changes to DoD databases. Report: D-2011-080, DoD and DoS Need Better Procedures to Moni- Reason Action Not Completed: Additional time required to coordi- tor and Expend DoD Funds for the Afghan National Police Training Pro- nate and issue guidance. gram, 7/7/2011 Principal Action Office: USD(C) Description of Action: DCAA will conduct audit work to verify that DynCorp did not double-bill claimed costs under DoD and Department Report: D-2011-104, Pricing and Escalation Issues Weaken the Effec- of State contracts from Dec. 30, 2010, through July 15, 2011. tiveness of the Army Contract With Sikorsky to Support the Corpus Reason Action Not Completed: Corrective actions are on schedule. Christi Army Depot, 9/8/2011 Principal Action Office: DCAA Description of Action: Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics will issue guidance emphasiz- Report: D-2011-083, Additional Actions Can Further Improve the DoD ing cost analysis. DCMA will identify the Sikorsky purchasing system as Suspension and Debarment Process, 7/14/2011 high risk and perform a review to determine improvements that can be made. Army will improve contracting procedures for pricing and pro-

122 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 123 curement, and obtain refunds from Sikorsky for pricing and excessive Report: DODIG-2012-006, Counter Narcoterrorism Technology Pro- escalation. gram Office Task Orders Had Excess Fees, and the Army Was Incorrectly Reason Action Not Completed: Long-term corrective actions are on- Billed, 11/1/2011 going. Description of Action: Deputy Assistant Secretary of the Army for Pro- Principal Action Office: USD(AT&L), DCMA, Army curement will conduct a review of the contracting officers who oversaw Counter Narcoterrorism Technology Program Office contracts and Report: D-2011-106, The Department of the Navy Spent Recovery Act allowed excess fees to the contractor. The U.S. Army Space and Missile Funds on Photovoltaic Projects That Were Not Cost-Effective, 9/22/2011 Command contracting office will meet with the contractor who re- Description of Action: Develop comprehensive policy for planning, ceived excess fixed fees in the amount of $77,014 to negotiate a return prioritizing, selecting, and executing cost-effective shore energy proj- of the funds. ects in accordance with DoD and federal requirements. Reason Action Not Completed: The Office of the Deputy Assistant Reason Action Not Completed: The Navy and the Marine Corps are Secretary of the Army for Procurement has not yet conducted a review developing planning and implementation guidance. of the contracting officers who oversaw Counter Narcoterrorism Tech- Principal Action Office: Navy, Marine Corps nology Program Office contracts and allowed excess fixed fees to the contractor. The U.S. Army Space and Missile Command contracting of- Report: D-2011-107, Improvements Needed in Procedures for Certify- fice has not yet modified contracts to correct billing fees. ing Medical Providers and Processing and Paying Medical Claims in the Principal Action Office: Army Philippines, 9/9/2011 Description of Action: Assistant Secretary of Defense (Health Affairs) is Report: DODIG-2012-007, Acquisition of the Multi-Platform Radar implementing recommendations to improve the certification of medi- Technology Insertion Program Needs Transparency and Accountability, cal providers and the claims payment process in the Philippines. 4/11/2012 Reason Action Not Completed: Policy manual needs to be updated. Description of Action: Direct the Air Force to update the Acquisition Principal Action Office: Assistant Secretary of Defense (Health Affairs) Strategy before Milestone C, submit a capability production document in the acquisition decision memorandum, and update the Multi-Plat- Report: D-2011-108, Geothermal Energy Development Project at Naval form Radar Technology Insertion Program/Global Hawk Block 40 Test Air Station Fallon, Nevada, Did Not Meet Recovery Act Requirements, and Evaluation Master Plan. 9/19/2011 Reason Action Not Completed: Corrective actions are on schedule. Description of Action: Establish a timeline for project completion and Principal Action Office: USD(AT&L) then determine if the project is still a valid use of Recovery Act funds. Reason Action Not Completed: Corrective actions are on schedule. Report: DODIG-2012-017, U.S. Naval Academy Officials Did Not Adhere Principal Action Office: Navy to Contracting and Gift Policies, 11/7/2011 Description of Action: The U.S. Naval Academy will revise guidance, Report: D-2011-111, Guidance for Petroleum War Reserve Stock Needs improve controls, and implement computer software systems covering Clarification (U), 9/27/2011 in-kind gifts and sponsorship funds Description of Action: Report is Classified. Reason Action Not Completed: Corrective actions are being imple- Reason Action Not Completed: Corrective actions are on schedule. mented on schedule. Principal Action Office: USD(AT&L), Joint Chiefs of Staff Principal Action Office: Navy

Report: D-2011-115, DoD Cannot Ensure Contractors Protected Report: DODIG-2012-023, Management Improvements Needed Controlled Unclassified Information for Weapon Systems Contracts, in Commander’s Emergency Response Program in Afghanistan, 9/30/2011 11/21/2011 Description of Action: Report is FOUO. Description of Action: Develop guidance to ensure the local com- Reason Action Not Completed: Extensive time needed to analyze mands continue to pursue debt collection and conduct investigations public comments and issue a final rule. on contractor debt pertaining to Commander’s Emergency Response Principal Action Office: USD(AT&L) Program projects. Reason Action Not Completed: Additional time required to coordi- Report: DODIG-2012-004, Changes Are Needed to the Army Contract nate and issue revised guidance. With Sikorsky to Use Existing DoD Inventory and Control Costs at the Principal Action Office: U.S. Central Command Corpus Christi Army Depot, 11/3/2011 Description of Action: Army will develop a plan to improve use of ex- Report: DODIG-2012-026, Air Force Can Improve Controls Over Base isting inventory and source of supply; will obtain refunds from Sikor- Retail Inventory, 11/23/2011 sky for a materiel cost reduction incentive and for excessive profits on Description of Action: Improve oversight on the completion of re- purchases from Defense Logistics Agency; and contracting personnel quired physical inventories, documentation supporting inventory ad- will improve contracts related to materiel cost reduction incentives and justments and storage practices. purchases from DLA to prevent Sikorsky from making excessive profits. Reason Action Not Completed: Long-term corrective actions are pro- Reason Action Not Completed: Long-term corrective actions are on- gressing. going. Principal Action Office: Air Force Principal Action Office: Army

122 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 123 Report: DODIG-2012-036, DoD Needs to Improve Accountability and Description of Action: Report is FOUO. Identify Costs and Requirements for Non-Standard Rotary Wing Air- Reason Action Not Completed: Multiple systems and configuration craft, 1/5/2012 processes that are needed are ongoing. Description of Action: Report is FOUO Principal Action Office: U.S. Cyber Command, Defense Information Reason Action Not Completed: Corrective actions are on schedule. Systems Agency Principal Action Office: USD(AT&L) Report: DODIG-2012-058, Distribution of Funds and Mentoring of Report: DODIG-2012-039, Summary Report on DoD’s Management of Finance Officers for the Afghanistan National Army Payroll Need Im- Undefinitized Contractual Actions, 1/13/2012 provement, 2/29/2012 Description of Action: Develop a transparent means to document in- Description of Action: Develop control procedures for the payroll pro- curred costs and reduced cost risk related to substantial incurred costs cess and for Afghan National Army payroll auditing and mentoring. during undefinitized periods. Reason Action Not Completed: Ongoing discussions with DFAS to re- Reason Action Not Completed: The original Defense Federal Acqui- view payroll controls and determine which controls are applicable and sition Regulation Supplement case has been subsumed under a new can be effectively adopted. Defense Federal Acquisition Regulation Supplement case to address a Principal Action Office: U.S. Central Command broader effort to review and modify the Department’s profit guidelines. Principal Action Office: USD(AT&L) Report: DODIG-2012-064, Vulnerability and Risk Assessments Needed to Protect Defense Industrial Base Critical Assets, 3/13/2012 Report: DODIG-2012-049, Improvement Needed With Identifying Description of Action: Report is FOUO Operating Costs Assessed to the Fleet Readiness Center Southwest, Reason Action Not Completed: Corrective actions are on schedule. 2/2/2012 Principal Action Office: USD(P) Description of Action: DLA Aviation San Diego and DLA Finance will collaborate with Fleet Readiness Center Southwest to establish a sup- Report: DODIG-2012-066, General Fund Enterprise Business System port agreement to clearly define DLA Aviation San Diego roles and Did Not Provide Required Financial Information, 3/26/2012 responsibilities: supply, storage, and distribution services to be per- Description of Action: Implement corrective actions to address the formed; as well as cost associated with the agreed-on services. Standard Financial Information Structure gaps as reported in the Gen- Reason Action Not Completed: Support agreement is being finalized eral Fund Enterprise Business System. and signature is expected by April 30, 2013. Reason Action Not Completed: Corrective actions are on schedule. Principal Action Office: DLA Principal Action Office: Army

Report: DODIG-2012-050, Improvements Needed With Host-Based In- trusion Detection Systems, 2/3/2012 ▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix 3, Section 5(b)(4).

124 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 125 Appendix G

Contract Audits with Significant Findings

DoD IG

Audit Report No. DODIG-2013-025 Date: Nov. 30, 2012 Subject: Accountability Was Missing For Government Property Procured on the Army’s Services Contract for Logistics Support of Stryker Vehicles Report: $1.1 Million in Funds Put to Better Use DoD IG identified government property (Army-owned inventory), valued at about $892.3 million, that was not being valued or traced in Army property accountability systems or on the financial statements. The Program Management Office for Stryker Brigade Combat Team inappropriately treated the inventory as contractor-acquired property instead of government property. As a result, Program Management Office for Stryker Brigade Combat Team officials did not comply with DoD and Army regulations on fiduciary responsibility over government property and statutory requirements for improving inventory management practices. Additionally, the review of 21 high-dollar parts, valued at $85.1 million, showed that 16 parts had excess Stryker inventory of $72.7 million that could be either disposed of ($58.0 million) or potentially used on other contracts ($14.7 million). During the audit, DoD IG identified 170 empty engine containers, valued at $1.1 million, that the contractor determined could be used to store a different engine, thereby reducing future requirements.

Audit Report No. DODIG-2013-040 Date: Jan. 31, 2013 Subject: Critical Information Needed to Determine the Cost and Availability of G222 Spare Parts Report: $1.03 Billion in Funds Put to Better Use DoD obligated about $486.1 million on G222 aircraft that support the Afghan Air Forces. The NATO Training Mission-Afghanistan/Combined Security Transition Command-Afghanistan and G222 Program Management Office officials did not effectively manage the G222 program and did not determine the cost or availability of spare parts to sustain the aircraft. As a result, NATO Training Mission-Afghanistan/Combined Secu- rity Transition Command-Afghanistan and G222 Program Management officials may spend about $200 million in Afghanistan Security Forces Funds on spare parts for an aircraft that may not be sustainable. Subsequently the Air Force decided that once the sustainment support contract expired in March 2013, no action would be taken to issue a new delivery order, ending the G222 program. According to the G222 Program Man- agement Office officials, the program would have required an additional $830 million if continued through March 2022, as originally planned, to include a significant amount for spare parts.

DCAA

Audit Report No. 09731-2010F17100910 Date: Oct. 26, 2012 Subject: Independent Audit of Termination Proposal Prepared For: Defense Contract Management Agency Report: $36.7 Million Questioned Cost The audit of the termination settlement proposal questioned $36.7 million due to (i) proposed costs incurred after the termination date that were included in a separate pricing action; (ii) lack of supporting documentation; (iii) proposed expenses exceeding the actual costs incurred; and (iv) proposed costs not in compliance with various FAR provisions.

Audit Report No. 03321-2004K10100002 Date: Oct. 31, 2012 Subject: Independent Audit of Contractor Fiscal Year 2004 Corporate Home Office and Intermediate Home Offices Certified Final Indirect Cost Proposal Prepared For: Defense Contract Management Agency 124 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 125 Appendix G

Report: $59.2 Million Questioned Cost The audit of the indirect cost proposal questioned $59.2 million, including the following significant items: $19.5 million of claimed residual expenses that should have been separately allocated to segments; $17.8 million of consultant costs that were not adequately supported with work products, agreement details, or vendor invoices; $14.8 million of employee benefit costs which were not adequately supported with actual cost information or calculations; and $3.7 million due to the contractor’s failure to include a credit to rent expense in its submission.

Audit Report No. 03321-2004K10100001 Date: Nov. 5, 2012 Subject: Independent Audit of Contractor Fiscal Year 2004 Incurred Cost Submission Prepared For: Defense Contract Management Agency Report: $1.2 Billion Non-Compliant Cost The audit of the incurred cost submission resulted in identification of $1.2 billion of non-compliant costs with FAR and Cost Accounting Stan- dards, including the following significant items: $1 billion of subcontract costs and $100 million of other direct costs such as travel, freight, and employee benefits.

Audit Report No. 03191-2007O10100002 Date: Nov. 14, 2012 Subject: Independent Audit of FY 2007 Incurred Costs Prepared For: Defense Contract Management Agency Report: $44.5 Million Questioned Cost The audit of the incurred cost proposal questioned $44.5 million including $43.7 million of prior period time and material labor; and $.8 million of misclassified or out of period material, direct manufacturing and professional costs, and unallowable indirect costs.

Audit Report No. 02191-2012G17100001 Date: Dec. 14, 2012 Subject: Independent Audit of Termination Settlement Proposal Prepared For: Defense Contract Management Agency Report: $78.0 Million The audit of the termination settlement proposal questioned $78.0 million, including the following significant items: $73 million of inadequately supported “other costs” which appears to be calculated lost profit; $3.6 million of labor costs not allocable to the contract or overstated due to overstated labor rates.

Audit Report No. 03701-2010B17100005 Date: Dec. 20, 2012 Subject: Independent Audit of Termination Settlement Proposal Prepared For: DCMA Terminations Division Report: $57.3 Million Questioned Costs The audit of the termination settlement proposal questioned $57.3 million, including the following significant items: $17 million of unabsorbed overhead not recoverable on the terminated contract; $7.8 million of severance costs allocable to other contracts, or not required by law or agreement; $11.1 million due to an inadequate subcontract settlement proposal; and $4.1 million of consulting costs not directly allocable to the terminated contract in accordance with the contractor’s disclosed cost accounting practices.

Audit Report No. 06501-2007C10100001 Date: Dec. 20, 2012 Subject: Independent Audit of 2007 Incurred Cost Proposal Prepared For: Defense Contract Management Agency Report: $17.3 Million Questioned Costs The audit of the incurred cost proposal questioned $17.3 million, including the following significant items: $3.3 million of costs for which no or inadequate supporting documentation was provided; $3.8 million of pre-paid software maintenance costs not allocable to the period under audit; $2.0 million of legal fees not allocable to the period or contractor segments under audit, or unallowable fees relating to bid protest or anti- trust actions; and $1.1 million of construction expenses that should have been capitalized instead of expensed when incurred.

126 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 127 Audit Report No. 01291-2005H10100007 Date: Jan. 15, 2013 Subject: Independent Audit of Fiscal Year 2005 Incurred Costs Prepared For: Defense Contract Management Agency Report: $25.4 Million Questioned Costs The audit of the incurred cost proposal questioned $25.4 million, including the following significant items: $5.4 million of excessive lease costs for equipment leased from a related company; $5.8 million of subcontract costs questioned in an assist audit; and $10.5 million of subcontract costs due to inadequate cost/price analysis or sole source justification, lack of supporting documentation, costs not in compliance with subcontract terms, or duplicated costs.

Audit Report No. 02191-2012C17100001 Date: Feb. 1, 2013 Subject: Independent Audit of Termination for Convenience Settlement Proposal Prepared For: U.S. Army Corps of Engineers Report: $11.4 Million Questioned Cost The audit of the termination settlement proposal questioned $11.4 million, including the following significant items: $4.3 million of direct labor and associated overhead without adequate support for the amounts actually paid to employees; $3.0 million of indirect costs based on indirect rates that were improperly computed using contract values as allocation bases instead of actual costs and which were not computed on a fiscal year basis; and $3.3 million of subcontract costs for which detailed invoices were not provided and for which the contractor did not provide sole source justification or evidence that the subcontracts were awarded competitively.

Audit Report No. 06391-2008D10100001 Date: Feb. 1, 2013 Subject: Independent Audit of Corporate Final Indirect Cost Allocations, Segment Executive Compensation, and Central Office Payments for Fiscal Year 2008 Prepared For: Defense Contract Management Agency Report: $22.8 Million Questioned Cost The audit of the corporate allocations questioned $22.8 million, including the following significant items: $15.1 million for costs related to a divested commercial segment that are unrelated to government contracts; $4.1 million of compensation and associated costs for employees who performed unallowable activities (such as lobbying or organization activities); and $1.2 million for costs that should be allocated directly to segments or for which adequate supporting documentation was not provided.

Audit Report No. 06321-2011T17900001 Date: Feb. 4, 2013 Subject: Independent Audit of Subcontract Costs for Period of Jan. 1, 2009 through end of the Subcontract Jan. 20, 2011 Prepared For: U.S. Department of State Report: $30 Million Questioned Cost The audit of the billed subcontract costs questioned $30 million due to the difference between the amount billed for the subcontractor using the prime contractor’s time and material labor rates and the amount of subcontract costs actually incurred by the prime.

Audit Report No. 03311-2011C17900003 Date: Feb. 11, 2013 Subject: Independent Audit of Direct Costs Prepared For: Naval Air Systems Command Report: $93.4 Million Questioned Cost The audit of the claimed direct costs questioned $93.4 million, including the following significant items questioned because the contractor failed to obtain written contracting officer approval prior to incurring the costs as required by the contract: $43.8 million of subcontract costs, $44.1 million of material and other costs; and of $5.5 million of travel expenses.

Audit Report No. 06281-2005H10100001 Date: Feb. 28, 2013 Subject: Independent Audit of FY 2005 Incurred Cost Submission Prepared For: Defense Contract Audit Agency Report: $98.5 Million Questioned Cost

126 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 127 The audit of the incurred cost submission questioned $98.5 million, including the following significant items: $55.2 million of pension costs incorrectly claimed at the corporate level; $2.2 million of pension administrative expenses that were out of period, inadequately supported, or not allocable to government segments; $9.1 million of health insurance premiums for employee dependents due to lack of evidence of the eligibility of the dependents for coverage; $6.2 million of out of period business insurance costs; and $4.3 million of other charges because the contractor did not provide the basis for allocating the costs to segments.

▶ Fulfills requirements of the National Defense Authorization Act for FY 2008 Section 845.

128 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 129 Appendix H

Results of Peer Reviews

Peer Review of Department of Defense IG by U.S. Department of Housing and Urban Development Office of the Inspector General The Department of Housing and Urban Development Office of the Inspector General, conducted an external peer review of DoD IG Office of Audit and issued a final report Nov. 13, 2012. DoD IG received a peer review rating of pass (with a scope limitation). There are no outstanding recommendations. A copy of the external quality control review report can be viewed at www.dodig.mil/pubs/reviews.html

Quality Control Review of the Defense Finance and Accounting Service Audit Organization DoD IG conducted a review of the Defense Finance and Accounting Service audit organization covering a one year period ending June 30, 2011, and issued a report Feb. 28, 2013. DoD IG identified significant deficiencies in the DFAS audit organization’s compliance with its system of quality control, including the failure to exercise sufficient professional judgment. As such, DFAS was issued a fail opinion on its audit organization’s system of quality control. Federal audit organizations can receive a rating of pass, pass with deficiencies, or fail. DoD IG review concluded that the DFAS audit organization did not comply with generally accepted government auditing standards and their system of quality control for audits for the review period ended June 30, 2011. DoD IG determined that the system of quality control did not provide reasonable assurance that DFAS audit personnel were following established guidance, policies, procedures, and applicable audit standards. Thirteen recommendations were made to correct the noted deficiencies. DFAS concurred with 12 of the 13 recommendations.

▶ Fulfills requirements of the Inspector General Act of 1978, as amended, 5 U.S.C., Appendix, Section 5(a)(14),(15),(16) and Section 8(c)(10).

128 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 129 Appendix I

Acronyms

ACC-APG Army Contracting Command–Aberdeen DPAP Defense Procurement and Acquisition Policy Proving Ground E2C2 Export Enforcement Coordination Center ADA Antideficiency Act E2/C2 E-2 Hawkeye/C-2 Greyhound Program AFAA Air Force Audit Agency EBS Enterprise Business System AFCEE Air Force Center for Engineering and the ERP enterprise resource planning Environment FAR Federal Acquisition Regulation AFIS Armed Forces Information Services FBI Federal Bureau of Investigation AFOSI Air Force Office of Special Investigations FDA Food and Drug Administration AMC Army Materiel Command FFP firm fixed price ANA Afghan National Army FIAR Financial Improvement and Audit Readiness ANSF Afghan National Security Forces FMTV family of medium tactical vehicles ARNG Army National Guard FOIA Freedom of Information Act ASA(FM&C) Office of Assistant Secretary of the Army FOUO for official use only (Financial Management And Comptroller) GAGAS generally accepted government auditing ATF Bureau of Alcohol, Tobacco, Firearms, and standards Explosives GAO General Accountability Office C2 command and control GSA General Services Administration CA ARNG California Army National Guard HHS Department of Health and Human Services CCMR Center for Civil-Military Relations HUBZones historically underutilized business zones CFO Chief Financial Officer HME homemade explosions CIGIE Council of the Inspectors General on Integrity ICE Immigration and Customs Enforcement and Efficiency IED improvised explosive device CIO chief information officer IG Inspector General CIOC Command Intelligence Operations Center IMCOM U.S. Army Installation Management Command CITF Criminal Investigation Task Force INN International Nephrology Network (renamed CODIS Combined DNA Index System Integrated Nephrology Network) CONUS continental United States INTERPOL International Criminal Police Organization COR contracting officer representative IRS-CI Internal Revenue Service-Criminal DA Department of the Army Investigation DAGR Defense Advanced GPS Receiver ISAF International Security Assistance Force DARPA Defense Advanced Research Projects Agency IT information technology DASD PSO Deputy Assistant Secretary of Defense for JTFR joint federal travel regulations Partnership Strategy and Stability Operations LEP law enforcement professionals DCAA Defense Contract Audit Agency MAC multiple-award contract DCIS Defense Criminal Investigative Service MCIO military criminal investigative organizations DCMA Defense Contract Management Agency MEDCOM U.S. Army Medical Command DDO deputy disbursing officer MHE mental health evaluation DEA Drug Enforcement Administration MILCON military construction DFAS Defense Finance and Accounting Service MILPERS military personnel DIRI Defense Institution Reform Initiative MOA memorandum of agreement DIA Defense Intelligence Agency MoDA Ministry of Defense Advisors DLA Defense Logistics Agency NADCAP National Aerospace and Defense Contractors DNA deoxyribonucleic acid Accreditation Program DoD Department of Defense NAF Nonappropriated Fund DoD IG Department of Defense Inspector General NAFI Nonappropriated Fund Instrumentality DOE Department of Energy NASA National Aeronautics and Space Administration DON Department of the Navy NASNI Naval Air Station North Island

130 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 131 NATO North Atlantic Treaty Organization SBA Small Business Administration NAVAUDSVC Naval Audit Service SES senior executive service NAVFAC Navy Facilities Engineering Command SFIS Standard Financial Information Structure NAVSUP Naval Supply Systems Command SDVOSB Service-disabled veteran-owned small business NAVSUP WSS Naval Supply Systems Command Weapons SOF Special Operations Forces System Support SSA Supply Support Activities NDAA National Defense Authorization Act TMA TRICARE Management Activity NCIS Naval Criminal Investigative Service TRADOC U.S. Army Training and Doctrine Command NJTTF National Joint Terrorism Task Force TSS Training Support System NMH National Military Hospital USAAA U.S. Army Audit Agency NTM-A/CSTC-A NATO Training Mission – Afghanistan/ USACE U.S. Army Corps of Engineers Combined Security Transition Command – USACE TAN U.S. Army Corps of Engineers Transatlantic Afghanistan District-North NWRM nuclear weapons related material USACIDC U.S. Army Criminal Investigation Defense OBT (Army) Office of Business Transformation Command OSHA Occupational Safety and Health Administration USACIL U.S. Army Criminal Investigation Laboratory Personnel USAMMA U.S. Army Medical Materiel Agency OCONUS outside the continental United States U.S.C. U.S. Code OIG Office of Inspector General USD(AT&L) Under Secretary of Defense for Acquisition, OMB Office of Management and Budget Technology, and Logistics OPM Office of Personnel Management USD(C) Under Secretary of Defense (Comptroller) OPTEMPO operating tempo USMA U.S. Military Academy PARC principal assistant responsible for contracting USTRANSCOM U.S. Transportation Command PEO program executive officer VA Veterans Affairs PMO Program Management Office WPO Whistleblower Protection Ombudsman PMO Stryker Project Management Office for Stryker Brigade WERS Worldwide Environmental Remediation Combat Team Services PV prime vendor WRI whistleblower reprisal investigation QA quality assurance

130 SEMIANNUAL REPORT TO THE CONGRESS OCTOBER 1, 2012 TO MARCH 31, 2013 131

Whistleblower Protection

The Whistleblower Protection Enhancement Act of 2012 requires the InspectorU.S. General Department to designate a Whistleblowerof Defense Protection Om- budsman to educate agency employees about prohibitions on retaliation, and rights and remedies against retaliation for protected disclosures. The designated ombudsman is the DoD IG Director for Whistleblowing & Transparency. For more information on your rights and remedies against retaliation, go to the Whistleblower webpage at www.dodig.mil/programs/whistleblower.

For more information about DoD IG reports or activities, please contact us: C ongressional Liaison [email protected]; 703.604.8324 DoD Hotline 800.424.9098 Media Contact [email protected]; 703.604.8324 Monthly Update [email protected] Reports Mailing List [email protected] T witter twitter.com/DoD_IG DoD 1, -October IG Congress 2012 the Report Semiannual to 31, - March 2013

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