UPCOMING REPORTS

Significant reports expected to be issued within the next 30 days include:

F-35 Engine Quality Assurance Inspection.  This inspection determines conformity to the contractually required AS9100C, “Quality Management System,” statutory and regulatory requirements, DoD policies, and internal quality processes and procedures. 

Summary of DoD Office of Inspector General Spare-Parts Pricing Audits.  This audit provides DoD information on contracting problems with spare-parts pricing that the DoD Office of Inspector General previously identified and reported.

Summary of DoD Office of Inspector General Inventory Audits.  This audit provides DoD information on contracting problems with spare-parts inventory that the DoD Office of Inspector General previously identified and reported.

Contingency Contracting:  A Framework for Reform - 2015 Update.  This report provides DoD field commanders and contract managers with information on contracting issues related to contingency operations that the DoD Inspector General identified and reported on from April 1, 2012 through December 31, 2014.  This report will be an update to the two previous contingency contracting summary reports from 2010 and 2012.

RECENTLY ISSUED REPORTS OF INTEREST (to view report, if available, please click on title)

Small Business Contracting at Regional Contracting Office-National Capital Region Needs Improvement (Report No. DODIG-2015-095). This audit determined that the Marine Corps Regional Contracting Office-National Capital Region contracting officials did not hold large prime contractors accountable for meeting small business subcontracting goals. Contracting officials generally provided small businesses an adequate opportunity to compete for prime contracts. However, contracting officials delayed competition by awarding seven bridge contracts, valued at $91.1 million, to large business incumbents to provide continuation of services until competitive contracts could be awarded.

Independent Review of the DFAS FY 2012 Working Capital Fund Financial Statement Audit (Report No. DODIG-2015-091). This post-audit review determined that, other than not meeting audit documentation requirements, no other instances were identified in which CliftonLarsonAllen, LLP (CLA) did not comply with standards when auditing the statement of budgetary resources, statement of net costs, statement of changes in net position, and the balance sheet.

Navy Controls Over the Requirements Development Process for Military Construction Projects in the Kingdom of Bahrain Need Improvement (Report No. DODIG-2015-088). This audit determined that Navy officials could not always provide documentation to fully support the projects’ scope of work and costs. Navy officials overscoped the Ship Maintenance and Support Facility project, and the U.S. Navy Forces Central Command Ammunition Magazine Project was significantly delayed. Therefore, the Navy cannot use $89.3 million authorized for the project and $91.8 million could be used for other military construction projects.

Delinquent Medical Service Accounts at Naval Medical Center Portsmouth Need Additional Management Oversight (Report No. DODIG-2015-087). This audit determined that Naval Medical Center Portsmouth (NMCP) did not effectively manage delinquent medical service accounts. As of July 2014, NMCP had 1,533 outstanding accounts, valued at $817,399. The accounts were more than 180 days delinquent but had not been transferred to the U.S. Treasury. The medical center missed opportunities to collect delinquent payments that could have been used for other valid needs.

Air Force is Developing Risk-Mitigation Strategies to Manage Potential Loss of the RD-180 Engine (Report No. DODIG-2015-086). This audit determined that the Air Force did not specifically implement all recommendations made in the RD-180 Availability Risk-Mitigation Study; however, they developed risk-mitigation strategies to manage the potential loss of the RD-180 engine. The RD-180 is a rocket engine designed and built in Russia and is a critical component to the success of the DoD’s Evolved Expendable Launch Vehicle program.

Evaluation of Aircraft Ejection Seat Safety When Using Advanced Helmet Sensors (Report No. DODIG 2015-090).  This evaluation determined that the overall risk of ejection is remote and the addition of helmet-mounted displays and/or night vision goggles does not significantly increase the risk of major injury if the aircrew is following proper ejection procedures described in the flight manual.  Additionally, the Joint Service Specification Guide, “Crew Systems, Emergency Egress Handbook,” dated October 1998 has not been updated in accordance with DoD policy.  This evaluation was conducted in response to a requirement in the House report to accompany the FY 2015 National Defense Authorization Act.

F-35 Lightning II Program Quality Assurance and Corrective Action Evaluation (Report No. DODIG-2015-092). This evaluation determined that the F-35 Program generally conformed to requirements and showed improvement in its quality management system performance with respect to the previous DoD IG evaluation, Report No. DODIG 2013-140, “Quality Assurance Assessment of the F-35 Lightning II Program,” September 30, 2013. However, challenges still remain, as evidenced by 57 nonconformities to the contractually required Aerospace Standard (AS)9100, “Quality Management Systems – Requirements for Aviation, Space and Defense Organizations.”

Quality Control Review of the Defense Information Systems Agency Audit Organization (Report No. DODIG-2015-099). This review tested the DISA OIG audit organization’s system of quality control used on audits for thereview period ended May 31, 2014.  In the DoD IG’s opinion, the DISA OIG audit organization’s system of quality control for audits was suitably designed in accordance with quality standards established by GAGAS; however, the DoD IG identified significant deficiencies that existed in the audit organization’s compliance with its system of quality control.  Accordingly, the DoD IG, as a result of the significant deficiencies noted, issued a fail opinion on the DISA OIG audit organization’s system of quality control used on audits for the review period ended May 31, 2014

Evaluation of Military Criminal Investigative Organizations’ Adult Sexual Assault Investigations (Report No. DODIG-2015-094). This evaluation found that 99 percent of MCIO investigations (532 of 536 cases) met investigative standards or had only minor investigative and/or administrative deficiencies.  This reflects a 10 percent improvement from the previous DoD IG review of adult sexual assault investigations with adult victims closed in 2010 (Report No. DODIG-2013-091, July 9, 2013).

Assessment of DoD Voting Assistance Programs (FVAP) for Calendar Year 2014 (Report No. DODIG-2015-098). Although the overall ongoing evaluation of the FVAP system showed much progress from last year, this assessment determined that voting assistance officers’ performance was not always commented on in their performance evaluations in accordance with Section 1566, title 10, United States Code.  Furthermore, the services need to update their checklists or report compliance with given guidance.

Summary of DoD Office of Inspector General Reports on Iraq and Afghanistan (Report No. DoDIG-2015-093). This evaluation determined five systemic challenges and problem areas with related lessons learned from the DoD IG body of work in Iraq and Afghanistan during the years 2008 – 2015. Two of these areas are logistics sustainment and U.S. contract management. 

Withdrawal of DoD Inspector General Report No. DODIG-2014-028, “Independent Auditor’s Report on the United States Marine Corps Schedule of Current Year Budgetary Activity for FY 2012,” December 20, 2013. On March 23, 2015, Report No. DODIG-2014-028 was withdrawn. Subsequently discovered facts identified during the FY 2014 audit raised questions on the completeness of the information on which the audit opinion was based. Therefore, the FY 2012 United States Marine Corps Schedule of Current Year Budgetary Activity is not to be relied upon.

DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DoJ press release, if available, please click on title)

Two Former Civilian Military Employees and One Military Contractor Convicted in Bribery Scheme at Georgia Military Base. On March 3, 2015, Shawn McCarty and Bradford Newell, former employees at the Marine Corps Logistics Base, Albany, Georgia, and Christopher Whitman, co-owner of United Logistics, were convicted of honest services wire fraud and bribery. In addition, McCarty and Whitman were convicted of obstructing justice, and Newell and Whitman were convicted of theft of government property. Whitman paid more than $800,000 in bribes to obtain commercial trucking business from the base and approximately $200,000 in bribes for help in stealing more than $1 million in surplus equipment. Five other defendants previously pleaded guilty for their roles in this scheme. This was a joint investigation with the Naval Criminal Investigative Service, Defense Logistics Agency Office of Inspector General (OIG), and the Department of Labor OIG.

Former U.S. Air Force Captain Pleads Guilty to Violating Conflict of Interest Laws and Making a False Statement. On March 11, 2015, Adam J.J. Pudenz, a former Air Force captain, pleaded guilty to violating federal conflict-of-interest laws and to making a false statement. Pudenz served in Afghanistan where he administered U.S. government contracts with an Afghan company. Prior to departing Afghanistan in December 2010, he began employment negotiations with the Afghan company that held the contracts he administered, a fact that he later lied about during an investigation. While employed by the Afghan company, Pudenz violated the conflict of interest laws by lobbying U.S. government officials on matters directly related to the contracts he had previously administered. In a separate civil action, Pudenz agreed to surrender a residence he purchased with money received from his unlawful employment. This was a joint investigation with the FBI, the Special Inspector General for Afghanistan Reconstruction, and Army Criminal Investigation Division Command (CID).

Army Contracting Official Pleads Guilty in Pentagon Bribery Scheme. On March 12, 2015, James Glenn Warner pleaded guilty to soliciting a $500,000 bribe from company executives on a Pentagon contract that he managed. In October 2014, Warner met with two company executives at a restaurant. Warner passed a menu to the two executives which contained a bribe and extortion solicitation, suggesting that if their company paid $500,000 it would secure a contract renewal from the Army and alleged damaging information about the company would be destroyed. The executives declined, reported the conduct and began cooperating with law enforcement agents. Warner faces a maximum penalty of 15 years in prison, up to a $1.5 million fine and mandatory forfeiture of criminal proceeds. This was a joint investigation with the FBI and Army CID.

Owner of Virginia-Based Company Sentenced For Providing Gratuities to Federal Contracting Official. On March 12, 2015, Harry I. Martin, Jr., the owner, president and chief executive officer of Intelligent Decisions, Inc., was sentenced to three years of probation with six months home confinement, a fine of $250,000 and 500 hours of community service for providing illegal gratuities to In Seon Lim, a former contracting official with the Army, in return for preferential treatment and government contracts. Martin and Intelligent Decisions spent more than $8,000 on expenses for Lim. In exchange, Intelligent Decisions was awarded two subcontracts: one for $525,000 and one for $67,294. Martin provided Lim with additional benefits resulting in modifications to the subcontracts increasing their values to $3.2 million and $1.3 million. Martin is among 20 individuals, along with Intelligent Designs and one corporation, to plead guilty in this domestic bribery and bid-rigging investigation. In addition, a South Korean-based corporation entered into a deferred prosecution agreement and agreed to pay a $500,000 criminal penalty. The United States has recovered approximately $28 million as a result of this investigation. This was a joint investigation with the FBI, Internal Revenue Service-Criminal Investigation, the Small Business Administration OIG, and Army CID.

RECENTLY ANNOUNCED PROJECTS (to view the announcement letters, click on the title)

Summary of the Navy’s Management of Operational Test Waivers and Deferrals for Weapon Acquisition Programs. The objective of this audit is to evaluate the Space and Naval Warfare Systems Command process to justify, review, and approve requests for waiver of criteria to certify readiness for operational testing and deferral of operational testing requirements.

Audit of DoD’s Progress to Effectively Consolidate Data Centers.  The objective of this audit is to determine whether selected DoD components are effectively consolidating their data centers in accordance with the Federal Data Center Consolidation Initiative.  The DoD IG will verify the status of the consolidations and determine whether the actual efficiencies gained met the estimated efficiencies reported to the Office of Management and Budget.

Agreed-Upon Procedures for Reviewing the FY 2015 Civilian Payroll Withholding Data and Enrollment Information. The objective of this audit is to assist the Office of Personnel Management in assessing whether health, life insurance, and retirement benefits withholdings, contributions, and enrollment information submitted by the Defense Finance and Accounting Service for FY 2015 were reasonable and accurate.

Evaluation of DoD Nuclear Enterprise Governance. The objective of this evaluation is to determine the alignment of responsibilities and authorities for nuclear weapons, nuclear weapons systems, and the existing DoD nuclear command and control within the offices of the Secretary of Defense, the Joint Staff, and ad hoc/statutory committees.  

Evaluation of the Integrated Tactical Warning and Attack Assessment Ground Based Radars. The objective of this evaluation is to determine whether the materiel condition of the ground based radar sites is adequate to perform and sustain their required capabilities.   

Assessment of DoD/CENTCOM and Coalition Plans/Efforts to Train, Advise, and Assist the Iraqi Army to Defeat ISIL. The objective of this assessment is to determine whether DoD/CENTCOM and Coalition goals, objectives, plans guidance, operations, and resources to train, advise, and assist the Iraqi Army to defeat ISIL are operationally effective to initiate and sustain successful combat operations.