Department of Defense Department of Defense Inspector General Inspector General 4800 Mark Center Drive 4800 Mark Center Drive Alexandria, VA 22350-1500 Alexandria, VA 22350-1500 www.dodig.mil www.dodig.mil Defense Hotline 1.800.424.9098 Defense Hotline 1.800.424.9098 INSPECTOR GENERAL DEPARTMENT OF DEFENSE 400 ARMY NAVY DRIVE ARLINGTON, VIRGINIA 22202-4704 I am pleased to present the Department of Defense Inspector General Semiannual Report to the Congress for the reporting period April 1, 2011 to September 30, 2011. DoD IG is dedicated to working on behalf of the warfighters and taxpayers to identify fraud, waste, and abuse; and to improve the efficiency and effectiveness of DoD programs and operations. In doing so, we conduct audits, investigations and inspections that provide guidance and recommendations for improvement to both the Department and Congress. Our vision is to be a model oversight organization in the federal government by leading change, speaking truth and promoting excellence. During this reporting period, we conducted 82 audits, evaluations, intelligence reviews and assessments. Auditing identified $547 million of potential funds that could be put to better use and the Defense Hotline managed 9,340 contacts. In addition, the Defense Criminal Investigative Service, working closely with other law enforcement agencies, returned $440 million in fines, restitution and recoveries to the U.S. government along with 63 arrests, 166 criminal convictions, 74 suspensions and 130 debarments. We are also pleased to recognize the 30th anniversary of DCIS. Since its creation in April 1981 by then Secretary of Defense Caspar Weinberger, DCIS has grown from a small cadre of 15 special agents to more than 350 special agents who run the criminal investigative arm of DoD IG. I am proud The Honorable Gordon to report that DCIS is responsible for returning over $19.9 billion to the U.S. government since its Heddell speaks at the inception. 2011Annual Leadership Conference. This report also includes the accomplishments of our counterpart agencies including the Army Audit Agency, Naval Audit Service, Air Force Audit Agency, Army Criminal Investigation Command, Naval Criminal Investigative Service and Air Force Office of Special Investigations. I want to express my appreciation for the collaborative efforts and hard work of DoD IG employees who carry out our crucial mission of protecting public interests; fighting corruption; reducing fraud, waste and abuse; and ensuring accountability and transparency. We thank the service members who inspire our work for their service and sacrifice. We commend the military services, defense agencies, and other members of the oversight community on their accomplishments. Finally, we appreciate the continued support of the Congress and the Department as we work toward continuous improvement and efficiency. Gordon S. Heddell Inspector General STATISTICAL HIGHLIGHTS SUMMARY OF AUDIT ACTIVITIES Reports Issued 64 Monetary Benefits Recommendations Made on Funds Put to Better Use $547 million SUMMARY OF INVESTIGATIVE ACTIVITIES Defense Criminal Investigative Service1 Total Returned to the U.S. Government $440 million Seizures and Recoveries $2.5 million Civil Judgments $98 million Criminal Judgments $24.5 million Administrative Agreements $315 million Investigative Cases Arrests 63 Indictments 195 Convictions 166 Suspensions 74 Debarments 130 Administrative Investigations Cases Received 588 Cases Closed 358 Senior Official Investigations 243 Reprisal Cases 114 SUMMARY OF POLICY AND OVERSIGHT ACTIVITIES Existing and Proposed Regulations Reviewed 213 Evaluation Reports Issued 7 Inspector General Subpoenas Issued 358 SUMMARY OF INTELLIGENCE ACTIVITIES Intelligence Reports Issued 7 SUMMARY OF SPECIAL PLANS AND OPERATIONS ACTIVITIES Assessment Reports Issued 4 SUMMARY OF DEFENSE HOTLINE ACTIVITIES Contacts 9,340 Cases Opened 1,433 Cases Closed 1,256 1 Includes investigations conducted jointly with other federal criminal investigative organizations. ii SEMIANNUAL REPORT TO THE CONGRESS CONTENTS 1. OVERVIEW MISSION AND ORGANIZATION ......................................................................................................................................2 EXECUTIVE SUMMARY ........................................................................................................................................................4 OVERSEAS CONTINGENCY OPERATIONS .....................................................................................................................7 IG HIGHLIGHTS ......................................................................................................................................................................9 HEALTH AND SAFETY OF THE WARFIGHTER ...........................................................................................9 SPARE AND SUBSTANDARD PARTS ..........................................................................................................10 IMPROPER PAYMENTS ..................................................................................................................................12 GUAM REALIGNMENT ..................................................................................................................................13 2. CORE MISSION AREAS AUDITS .................................................................................................................................................................................. 16 ACQUISITIONS AND CONTRACTING .......................................................................................................16 FINANCIAL MANAGEMENT .........................................................................................................................23 HEALTH CARE ..................................................................................................................................................26 INFORMATION ASSURANCE, SECURITY AND PRIVACY .....................................................................28 JOINT WARFIGHTING AND READINESS ..................................................................................................29 NUCLEAR ENTERPRISE..................................................................................................................................31 INVESTIGATIONS ................................................................................................................................................................ 32 PUBLIC CORRUPTION ...................................................................................................................................32 PROCUREMENT FRAUD ...............................................................................................................................33 HEALTH CARE FRAUD ...................................................................................................................................35 PRODUCT SUBSTITUTION ...........................................................................................................................36 TECHNOLOGY PROTECTION ......................................................................................................................37 INSPECTIONS ...................................................................................................................................................................... 39 HEALTH AND SAFETY.................................................................................................................................... 39 JOINT WARFIGHTING AND READINESS.................................................................................................. 40 3. ENABLING MISSION AREAS DEFENSE HOTLINE ............................................................................................................................................................ 46 WHISTLEBLOWER PROTECTION ...................................................................................................................................48 SENIOR OFFICIAL INVESTIGATIONS ............................................................................................................................ 50 CONGRESSIONAL TESTIMONY ...................................................................................................................................... 51 OUTREACH ACTIVITIES .................................................................................................................................................... 52 4. SERVICES ARMY ..................................................................................................................................................................................... 56 ARMY AUDIT AGENCY ..................................................................................................................................56 ARMY CRIMINAL INVESTIGATION COMMAND.....................................................................................61 NAVY ...................................................................................................................................................................................... 66 NAVAL AUDIT SERVICE .................................................................................................................................66 NAVAL CRIMINAL INVESTIGATIVE SERVICE ...........................................................................................72 AIR FORCE ...........................................................................................................................................................................