Inspector General
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U.S. Department of Defense Inspector General APRIL 1, 2017 THROUGH SEPTEMBER 30, 2017 Semiannual Report to the Congress Required by Public Law 95-452 INTEGRITY EFFICIENCY ACCOUNTABILITY EXCELLENCE 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; 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, & Abuse HOTLINE Department of Defense dodig.mil/hotline|800.424.9098 Whistleblower Protection The Whistleblower Protection Ombudsman’s role is to educate agency employees about prohibitions on retaliationU.S. Department and employees’ rights of and Defense remedies available for reprisal. The DoD Hotline Director is the designated ombudsman. For more information, please visit http://www.dodig.mil/Components/Administrative-Investigations/Whistleblower- Reprisal-Investigations/Whistleblower-Protection-Ombudsman/ INSPECTOR GENERAL DEPARTMENT OF DEFENSE 4800 MARK CENTER DRIVE ALEXANDRIA, VIRGINIA 22350-1500 This report summarizes the work of the Department of Defense (DoD) Office of Inspector General (OIG) from April 1, 2017, through September 30, 2017. It identifies oversight conducted by the OIG during the past 6 months, which demonstrates the importance of our efforts to detect and deter fraud, waste, and abuse in DoD programs and operations; to seek to improve the economy, efficiency, and effectiveness of DoD programs; and to help ensure ethical conduct throughout the DoD. During the past 6 months, the OIG issued a total of 55 reports, including several significant audits and evaluations. Of particular note, the OIG issued a “Compendium of Open Office of Inspector General Recommendations to the Department of Defense,” Acting Inspector General which summarized all recommendations issued to DoD Components that remained Glenn A. Fine open as of March 31, 2017. Of the 1,298 open recommendations, 58 have associated potential monetary benefits, which if implemented, potentially could have saved the DoD billions of dollars. This compendium received significant attention throughout the DoD, and spurred corrective action on many of the open recommendations, which was its intended purpose. This reporting period, our Audit component issued 40 reports that identified $202 million in questioned costs and $3.3 million funds put to better use. Our Policy and Oversight component issued eight evaluation reports addressing its oversight of audit, investigative, and technical issues in the DoD, including a follow up evaluation of military housing inspections in Korea and Japan. Our Special Plans and Operations component issued four reports. Our Intelligence and Special Program Assessments component released three reports, all three of which were classified. Our Defense Criminal Investigative Service (DCIS) opened 468 cases, closed 465 cases, and has 1,623 ongoing investigations. These criminal cases primarily addressed allegations of procurement fraud, public corruption, product substitution, health care fraud, illegal transfer of technology, and cyber crimes. DCIS cases resulted in total receivables and recoveries of $1.1 billion. Additionally, DCIS investigations resulted in $763.7 million in civil judgments and settlements; $77.5 million in criminal fines, penalties, and restitution ordered; and $293.1 million in administrative recoveries. In our Administrative Investigations (AI) component, the DoD Hotline received 7,106 contacts, opened 4,182 cases, and closed 4,056 cases. During the reporting period, AI received 399 senior official complaints and 904 whistleblower reprisal and restriction complaints, and closed 387 senior official and 864 whistleblower reprisal and restriction complaints. We also continue our important responsibilities as the Lead Inspector General for two overseas contingency operations—Operation Inherent Resolve and Operation Freedom’s Sentinel. We work closely with our OIG partners from the U.S. Department of State and the U.S. Agency for International Development, as well as with the Special Inspector General for Afghanistan Reconstruction, to provide coordinated oversight and reporting over these contingency operations. This continuous joint oversight among Federal Inspectors General is unique in the Federal Inspector General community, and is representative of an important “whole of government” approach to oversight of overseas contingency operations. This report also includes oversight work performed by other members of the Defense Accountability Community. We thank them for their ongoing contributions toward our shared responsibilities to providing effective oversight of DoD operations. The significant work included in this Semiannual Report demonstrates our commitment to conducting independent and objective oversight throughout the DoD. Glenn A. Fine Acting Inspector General Contents CONTENTS OVERVIEW SERVING THE DEPARTMENT AND THE CONGRESS. .2 OUR MISSION ................................................................................2 OUR VISION ..................................................................................2 OUR CORE VALUES ...........................................................................2 OUR GOALS. .2 ORGANIZATIONAL STRUCTURE ..............................................................2 SUMMARY OF MANAGEMENT AND PERFORMANCE CHALLENGES WITHIN THE DOD ................5 CORE MISSION AREAS AUDIT ..............................................................................................8 ACQUISITION AND SUSTAINMENT MANAGEMENT ...........................................8 CONTRACT MANAGEMENT AND PAYMENTS .................................................12 FINANCIAL MANAGEMENT AND REPORTING ................................................20 READINESS AND CYBER OPERATIONS .......................................................22 OTHER AUDIT WORK ........................................................................26 ONGOING WORK ............................................................................27 EVALUATIONS AND INSPECTIONS .................................................................28 INTELLIGENCE ..............................................................................28 THE NUCLEAR ENTERPRISE. .28 FACILITIES INSPECTIONS ....................................................................29 OTHER EVALUATIONS .......................................................................30 ONGOING WORK ............................................................................32 DCIS INVESTIGATIONS .............................................................................34 PROCUREMENT FRAUD .....................................................................34 PUBLIC CORRUPTION .......................................................................35 PRODUCT SUBSTITUTION ...................................................................36 HEALTH CARE FRAUD .......................................................................36 ILLEGAL TECHNOLOGY TRANSFER ..........................................................38 CYBER CRIME AND COMPUTER NETWORK INTRUSION ......................................38 ASSET FORFEITURE PROGRAM ..............................................................39 DCIS INVESTIGATIONS OF CASES INVOLVING SENIOR GOVERNMENT EMPLOYEES ...........39 ADMINISTRATIVE INVESTIGATIONS ................................................................40 DOD HOTLINE ..............................................................................40 WHISTLEBLOWER PROTECTION OMBUDSMAN ..............................................47 WHISTLEBLOWER REPRISAL INVESTIGATIONS ...............................................47 INVESTIGATIONS OF SENIOR OFFICIALS .....................................................56 SENIOR OFFICIAL NAME CHECKS ............................................................57 SUBSTANTIATED OR SIGNIFICANT SENIOR OFFICIAL CASES CLOSED BY THE DOD OIG .......57 QUALITY ASSURANCE REVIEWS .............................................................58 ADMINISTRATIVE INVESTIGATIONS OUTREACH AND TRAINING ..............................58 POLICY AND OVERSIGHT ..........................................................................59 AUDIT POLICY AND OVERSIGHT. .59 INVESTIGATIVE POLICY AND OVERSIGHT ....................................................60 II │ SEMIANNUAL REPORT TO THE CONGRESS Contents LEAD INSPECTOR GENERAL .......................................................................62 LEAD IG HOTLINE ACTIVITIES ...............................................................63 OCO PLANNING AND COORDINATION ......................................................63 QUARTERLY REPORTING ....................................................................63 OCO INVESTIGATIONS ......................................................................63 SELECTED LEAD IG OVERSIGHT WORK ......................................................64 ONGOING WORK ............................................................................67 ENABLING MISSION AREAS CONGRESSIONAL TESTIMONY AND BRIEFINGS ....................................................70 HEARINGS ..................................................................................70