| From the DoD IG ... | December 2011 |
On December 24, 2011, I will step down as the Department of Defense Inspector General after almost 43 years of public service, including 3 ½ years with the DoD IG. It has been a great honor and privilege to support our men and women in uniform as well as the Defense civilian workforce. It has been an honor as well to work with the outstanding team of professionals who comprise the DoD IG.  UPCOMING TESTIMONY On December 6, 2011, the Deputy Inspector General for Administrative Investigations will testify before the Subcommittee on Contracting Oversight of the Senate Committee on Homeland Security and Governmental Affairs at a hearing entitled, “Whistleblower Protections for Government Contractors.” On December 7, 2011, the Inspector General will testify before the Subcommittee on National Security, Homeland Defense, and Foreign Operations of the House Committee on Oversight and Government Reform at a hearing that will address the oversight of taxpayer dollars spent in Afghanistan and Iraq. UPCOMING REPORTS Significant reports expected to be released within the next 30 days include:
RECENTLY RELEASED REPORTS OF INTEREST Independent Engineering Assessment of the Army's Transportation Plan for BRAC Recommendation #133 Project Fort Belvoir - Mark Center, Virginia. This review was required by the FY 2011 National Defense Authorization Act. The assessment concluded that traffic studies used to develop the Army Transportation Plan were based on faulty base data; therefore the findings and conclusions presented in the Transport Plan are unreliable. To see the report, click here. Management Improvements Needed in Commander’s Emergency Response Program in Afghanistan (Report No. 2012-023). We reported that U.S. Central Command (USCENTCOM) and USFOR-A controls over CERP contract payments and reporting were not adequate. USCENTCOM and USFOR-A did not maintain and report reliable and meaningful CERP data, de-obligate at least $16.7 million of unused CERP project funds, identify or prevent $1.7 million of improper payments, identify or prevent at least 30 unauthorized advance payments ( totaling $3.4 million), and did not mitigate the risk of overpayments and underpayments because of currency rate fluctuations. As a result, USFOR-A had potentially up to $38.4 million in outstanding unliquidated obligations, improper payments, and a high risk for currency exchange rate fraud. To see the report, click here. U.S. Naval Academy Officials Did Not Adhere to Contracting and Gift Policies (Report No. 2012-017). We performed this audit in response to a request from staff of the Senate Armed Services Committee. U.S. Naval Academy officials improperly contracted for the production of a short motion picture and television commercials and wasted about $3.5 million on the contract. In addition, they allowed the acceptance of in-kind gifts without proper authorization, did not properly record all in-kind gifts, inappropriately accepted $343,208 in corporate sponsorship funds, and accepted monetary gifts without reviewing for prohibited sources. To see the report, click here. Changes Are Needed to the Army Contract With Sikorsky to Use Existing DoD Inventory and Control Costs at the Corpus Christi Army Depot (Report No. 2012-004). Army Aviation and Missile Life Cycle Management Command (AMCOM) did not effectively use DoD inventory before procuring the same items from Sikorsky. We identified $47.5 million to $58.7 million of excess inventory that AMCOM could use to satisfy Corpus Christi Army Depot (CCAD) contract requirements. We also reported that AMCOM made an unjustified incentive payment of $11.8 million to Sikorsky for reducing material costs and that AMCOM officials did not use the most cost effective source of supply for consumable items purchased on the contract. The Defense Logistics Agency (DLA) had sufficient inventory to satisfy annual contract requirements for 3,267 items, and the Sikorsky contract price for those items was $7.6 million, or 85.1 percent, higher than the DLA price. In addition, from 2008 through 2010, Sikorsky was allowed to make excessive profit of about $930,760 by procuring items from DLA that it then sold to CCAD. This report is marked “For Official Use Only.” To see the public version of the results in brief, click here. Review of Matters Related to the Office of the Assistant Secretary of Defense (Public Affairs) Retired Military Analyst Outreach Activities (Report No. 2012-025). The report addresses concerns of congressional members about the Retired Military Analysts (RMA) outreach activities raised in an April 2008 New York Times article, "Behind TV Analysts, Pentagon's Hidden Hand." The report states that the RMA outreach activities were consistent with relevant DoD directives and regulations. However, it identified a need for internal guidelines or plans for groups such as the RMAs that clearly define the outreach group, including its purpose, its make-up, and the nature of its activities. To see the report, click here.
Company sentenced for violating arms trafficking laws. On November 15, 2011, New Jersey defense contractor Swiss Technologies, Inc. was sentenced to pay $1.1 million in restitution to the U.S. Department of Defense and serve two years of probation for the company's role in violating international arms trafficking laws and compromising the U.S. military's supply chain. Between 2004 and 2009, the company entered into contracts with the U.S. Department of Defense to manufacture components for military small arms rifles and other weapon systems. Rather than manufacture the parts themselves, Swiss Technology instead provided sensitive export controlled schematics and sample parts to a company in the People's Republic of China. By its actions Swiss Technology not only compromised the integrity of military controlled weapons designs, it also introduced substandard components into rifles used by American service members overseas. The DoD IG issued inter-service safety-alerts to the military departments potentially affected by these non-conforming parts. The Defense Criminal Investigative Service conducted this investigation jointly with the Department of Homeland Security's Immigration and Customs Service, with assistance from the Air Force Office of Special Investigations and the U.S. Army Criminal Investigation Division.
Audit of Enterprise Resource Planning Systems Within the Department of Defense. We are conducting this audit in response to a congressional request. Our objective is to evaluate the Enterprise Resource Planning (ERP) systems identified as necessary for the Department of Defense to produce auditable financial statements. Specifically, we will determine:
Audit of the Cybersecurity Requirements for the Defense Information System for Audit of DoD Compliance With the Improper Payments Elimination and Recovery Act Requirements. This audit is required by Public Law 111-204, “Improper Payments Elimination and Recovery Act of 2010,” July 22, 2010. Our objective is to determine whether DoD is in compliance with Public Law 107-300, “Improper Payments Information Act of 2002,” November 26, 2002, as amended by Public Law 111-204. Audit of the Afghanistan Rotary Wing Transport Contracts for the U.S. Transportation Command. We will be performing a series of audits relating to Afghanistan rotary wing transport contracts to determine whether U.S. Transportation Command officials are properly managing and administering the contracts in accordance with Federal Acquisition Regulation and DoD guidance while contracting for services performed in a contingency environment. For this audit we will determine whether contracting officials have adequate controls over the transportation of supplies, mail, and passengers in Afghanistan. ____________________________________________________ |
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Sea Star Line LLC pleaded guilty and agreed to pay a $14.2 million fine. On November 17, 2011, Sea Star Line LLC agreed to pay a $14.2 million criminal fine subsequent to pleading guilty to conspiring to fix prices. Sea Star Line contracts with a variety of commercial and government entities, to include the Department of Defense, to transport a variety of cargo shipments such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico. Additionally an indictment was returned against Frank Peake, the former president of Sea Star Line. According to the one count indictment, Peake engaged in a conspiracy to fix rates and surcharges for water transportation of freight between the continental U.S. and Puerto Rico. These charges arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct that is being conducted by the Defense Criminal Investigative Service and various law enforcement partners.
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