Grassley: DoD IG's lax oversight results in fraud

Wednesday - 9/8/2010, 4:37pm EDT

By Olivia Branco and Julia Ziegler
Federal News Radio

Billions of taxpayer dollars could be at risk due to a lack of in-depth audits from the Pentagon's Inspector General, according to an investigative report written by Senator Chuck Grassley's staff (R-Iowa).

According to Reuters, the report "concludes that the Defense Department's Office of Inspector General has focused instead on less important types of audits, and that its productivity has plunged in recent years." It issued 113 reports in 2009, which was the lowest in the past 20 years according to Grassley.

The report says the IG did not audit any "major or non-major weapons contract or contractor" in fiscal 2009. In addition, it accuses the IG of failing to follow up "even when it finds evidence of serious misdeeds."

Reuters cites one example from 2007 where auditors discovered that the Pentagon had neglected to record $1 billion in its financial statements from the sale of closed military bases. Of that money, auditors discovered that $107 million was missing. Auditors recommended an investigation be launched but senior officials turned it down and the IG's office never followed up.

"Discovering that the (inspector general) no longer does genuine contract audits was a startling revelation but one that helps to explain why 765 Office of the Inspector General auditors could not document any measurable fraud in FY 2009," Grassley said in a letter to Gates about the forthcoming report, as reported by Reuters.

The report also places blame on the Pentagon's accounting systems, saying they are in disarray and that many payment records are missing, making it hard for auditors to do their jobs.

The Grassley report says annual payments to contractors has grown to $390 billion, up from $154 billion in 2001.

Gary Comerford, a spokesman for the inspector general's office, tells Reuters that it hasn't seen the report. "We haven't read it and there's really nothing we can say until we've had an opportunity to take a look at it."

This report follows continued examples in Iraq and Afghanistan of corruption and mismanagement of millions of dollars.

Stuart Bowen, the Special Inspector General for Iraq Reconstruction, told Federal News Radio in June that he estimates four to five billion dollars have been lost to waste over the last six years.

In addition to the Iraq reconstruction problems, there has also been ongoing confusion over the roles that the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) play.

In an interview with Federal News Radio in November 2009, Shay Assad, Director of Defense Procurement and Acquisition Policy, said his department has already been outlining changes "ensuring the government speaks with one voice to contractors and that we have standards in place where it's clear to contractors in terms of what they need to do to ensure that their business systems are in fact acceptable to the government."

The Grassley report also comes on the heels of the Department of Defense promising to cut its use of outside contractors by 10 percent in 2011 and 30 percent overall by 2013.

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