While trillions of dollars in military spending have gone unaccounted for, a record number of Pentagon whistleblowers have been retaliated against and silenced. As you will read throughout this report, the chain of accountability has been effectively dismantled. Department of Defense and Intelligence Community Inspector Generals have been caught covering-up whistleblower reprisal cases and shutting down investigations.
Prominent government insiders are speaking out. Many vital Inspector General positions have been vacated under scandalous circumstances. To make matters even worse, the C.I.A. was caught illegally and unconstitutionally surveilling Congress to interfere with whistleblower communications and investigations.
Meanwhile, political bribery and revolving door corruption have reached all-time highs. Since the Office of the Inspector General (OIG) first began reporting what is now over $21 trillion in unaccounted for spending, 12,727 government officials have gone through the revolving door with Global Military companies. In the latest example, after spending 30-years at Boeing, Patrick Shanahan recently took over as acting Defense Secretary and is now in charge of military spending.
Not surprisingly, the Pentagon has missed their deadline and is yet to brief Congress on their failed first-ever full-scope audit. As an initial audit found, “financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums [of tax money] it’s responsible for.” Thus far, the only significant change to come out of the audit: Pentagon accounting fraud has now been “legalized.”
According to people who spent their careers working for the Defense Finance and Accounting Service, the books are cooked as Standard Operating Procedure. There are thousands of accounting and financing operations throughout the Pentagon. No one even knows how many there are, let alone how much money is being spent.
Numerous government investigations, audits and reports have revealed many critical, wide-ranging accounting problems, which have been known for years, yet have never been fixed. There are hundreds of unimplemented solutions, which could save U.S. taxpayers tens of billions of dollars annually.
Editor’s Note: This report is part of an investigative series on the trillions of dollars in unaccounted for military spending. If you have not researched this issue yet, here’s a collection of evidence, including 26 Inspector General audits, government reports and extensive background information: Pentagon Audit: Evidence Proving $21 Trillion Unaccounted For – Opening Statement.
#1) Record Number of Whistleblowers Retaliated Against & Silenced, As Trillions of Dollars Unaccounted For
When it comes to reporting corruption, potential whistleblowers know that the chain of accountability has been effectively dismantled. Investigations clearly prove that the process established under PPD-19 (‘Protecting Whistleblowers with Access to Classified Information’ directive) is failing.
As PEN America reported, “Today the structural integrity of these ‘internal channels’ appears increasingly shaky…. [Whistleblowers] face three abysmal choices: use the internal channels and risk career suicide, go to the media and face potential jail time, or stay silent in the face of waste, fraud, abuse, illegality, or threats to our democracy.”
Even with such tremendous risk involved, a record numbers of whistleblowers have still attempted to come forward using the proper internal channels, only to be retaliated against and silenced.
• According to a Government Accountability Office (GAO) report, over 1000 whistleblowers have been retaliated against and silenced at the Office of the Department of Defense Inspector General (DoD IG). Over a three-year period, the DoD IG closed 1094 whistleblower retaliation cases without investigating them. A stunning 91% of whistleblower reprisal complaints formally filed at the DoD IG are shutdown without any investigation. [source one — two — three]
• On average, one whistleblower is retaliated against and silenced at the DoD IG every single day, 365 days a year. Over the time frame that the GAO investigated, DoD audits reported $6.87 trillion ($6,871,000,000,000) unaccounted for. [source four]
• According to publicly available data from the DoD IG’s semi-annual reports to Congress, from April 1, 2012 to March 31, 2016, they dismissed 86% of Military Reprisal cases, and found in favor of whistleblowers in only 0.9% of cases. Citing that data, the Project on Government Oversight (POGO) said the DoD IG “substantiated only 7 out of over 1,300 complaints received.” Over that time frame, DoD audits reported $8.58 trillion ($8,582,000,000,000) unaccounted for. [source five — six]
• The GAO report also reveals that the majority of whistleblower complaints came from Army personnel, over a time frame when DoD audits reported $6.5 trillion unaccounted for within the Army General Fund. As the GAO report states: “Among these [whistleblower complaints], civilians and contractors or subcontractors affiliated with the Army made the highest number of complaints, with 304….” A Congressional Investigation Committee should reopen these cases, which were shutdown without any investigation. [source seven — eight]
#2) Department of Defense Inspector General Caught Covering Up Corruption, Altering Audit Reports
• As scandalous as the GAO’s findings were, the DoD IG was caught manipulating case records to cover-up their whistleblower reprisal track record, which “had a significant impact on the GAO’s findings.” Therefore, the situation for whistleblowers at the DoD IG is even worse than the GAO’s report revealed. [source nine]
• Former assistant DoD IG John Crane, who was also retaliated against and fired under scandalous circumstances, has said, “key officials retaliated against whistleblowers, destroyed permanent records and altered audits under political pressure.” [source ten]
• In Congressional Testimony, the Project on Government Oversight (POGO) said they have “also heard directly from whistleblowers within DoD IG who have expressed serious concerns about the integrity of the office’s processes and investigations, including pressure to back-fill whistleblower case files for the GAO’s review. It is extremely rare to have whistleblowers from an IG shop come forward, but in this case we have a number of them.” [source eleven]
• POGO also found instances where the DoD IG sent whistleblower reprisal cases to offices where the likelihood of retaliation was high: “whistleblowers felt the IG needlessly exposed them to additional retaliation, and had they known the IG was going to refer their disclosures they would have chosen to withdraw their complaints.” [source twelve]
POGO’s Recommendations to Congress:
• “Investigate and consider for removal any senior officials found to have illegally destroyed evidence in whistleblower or other case files, improperly instructed employees to back-fill cases, or otherwise interfered with the independence and integrity of investigations;”…. [source thirteen]
• “Request a GAO or outside IG audit of the DoD IG’s reprisal investigations to ensure that investigators’ decisions to dismiss, investigate, and substantiate reprisals are proper and based on the legal requirements for examining any evidence presented;”…. [source fourteen]
• In Conclusion: “Whistleblowers who report concerns that affect our national security must be lauded, not shunned or, worse, harmed. And the law must protect them. The perceived and real failures of the DoD IG to act as a check on violations of law should be of grave concern.” [source fifteen]
#3) Intelligence Community Whistleblowers Retaliated Against, Cover-Up Attempts Reported, Key Officials Wrongfully Fired, ‘Honest Inspectors Flee,’ Prominent Insiders Speak Out, ‘There Is No Oversight’
• When it comes to cases of retaliation against whistleblowers, the Office of the Intelligence Community Inspector General (IC IG) appears to have an even worse track record than the DoD IG. An internal review of 190 whistleblower reprisal cases from six national security agencies revealed that the IC IG ruled in favor of only one whistleblower. The IC IG “ruled against 99% of intelligence community employees who claimed they were retaliated against for blowing the whistle.” [source sixteen]
• As the internal review was nearing completion, it was abruptly shutdown when the new acting head IC IG Wayne Stone, “sequestered the mountain of documents and data produced in the inspection, the product of three staff-years of work. The incident was never publicly disclosed by the office, and escaped mention in the unclassified version of the IC IG’s semiannual report to Congress.” [source seventeen]
• POGO got a leaked copy of an inspection report, which summarized the situation by saying, “A complainant alleging reprisal for making a protected disclosure has a minimal chance to have a complaint processed and adjudicated in a timely and complete manner.” ‘Its conclusion is stark:’ “The deficiencies in reprisal protections policies, procedures, and standards in the evaluated agencies are causing a failure to provide reprisal protections for individuals making protected disclosures.” [source eighteen]
• Overall, “the document produced by the Intelligence Community’s IG, which covers 17 U.S. spy agencies, found that many components are not following, ‘legally mandated… policies, procedures and standards…. Causing non-substantiation of reprisal claims, incomplete investigations, and for complaints not to be processed.'” [source nineteen]
• “As evidence, the document reports that the Intelligence Community IG substantiated ‘only one reprisal allegation’ during a six-year period stretching from fiscal year 2010 through fiscal year 2016, and that case took 742 days to complete – well beyond the 240-day limit prescribed in regulation.” [source twenty]
• To make matters even worse, Dan Meyer, the Head of Whistleblowing and Source Protection at the IC IG was abruptly fired last year under scandalous circumstances. He was “escorted out of the building while his office was ‘sealed off with crime-scene tape.'” The move was widely considered “retaliation against him for blowing the whistle… [on] ‘security infractions’ after raising concerns about a ‘systematic failure’ to implement whistleblower protections.” [source twenty one]
• Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) said Meyer “was terminated in a process marked by procedural irregularities and serious conflicts of interest” while the IC IG’s acting leadership “demonstrated a lack of support for the critical whistleblower protection mission of the office.” [source twenty two]
• At the DIA Inspector General’s Office (DIA IG), Ron Foster, former head of investigations, and David Steele, a 40-year military and intelligence veteran, blew the whistle on Kristi Waschull, the head DIA IG. They reported that she repeatedly asked them to lie and change “investigative reports about problems and crimes within the agency.” They also reported that she limited “the flow of published reports,” and “retaliated against them and several colleagues.” [source twenty three]
• Foster, Steele and a staff director were fired from the DIA IG without warning, and most of their co-workers have now left as well, as Foreign Policy reported: “Almost everyone who once worked for Steele in the Office of the Inspector General has fled the agency, or is looking to leave, an exodus he attributes to the toxic atmosphere created by the official in charge.… ‘There is no oversight,’ Steele continued. Whistleblower protection laws ‘assume the [Inspector Generals] are the good guys. What happens when your Inspector General is a bad guy?'” [source twenty four]
• The DIA IG hasn’t published “the results of any new investigations, and if the systemic issues remain unaddressed or ignored by the agency, it could lead to an intelligence community-wide ‘vulnerability,’ Steele told FP…. ‘The Inspector General is incapable of policing itself,’ he said. ‘Who’s watching the watchers?'” [source twenty five]
• Former NSA Inspector General George Ellard was fired for retaliating against a whistleblower who reported wasteful spending of taxpayer money. However, Defense Secretary Jim Mattis stepped in and shockingly reversed his termination. “The Pentagon offered no explanation as to why Mattis chose to overrule the IG External Review Panel and NSA’s current director, but the message is abundantly clear: If you work in Pentagon management and retaliate against a whistleblower, there’s a good chance you’ll keep your job….” [source twenty six]
• “Unfortunately, the Ellard case is not unique within the Pentagon. And as a series of these cases demonstrate, when the internal watchdog function breaks down at the Defense Department, not only are taxpayers ripped off, but intelligence failures costing the lives of thousands of Americans can result.” [source twenty seven]
#4) C.I.A. Caught Illegally, Unconstitutionally Spying on Congress, Using National Security Classification to Cover-Up Corruption, Routinely Retaliating Against Investigators & Whistleblowers
• The CIA has been illegally, unconstitutionally spying on Congress in their investigations and communications with whistleblowers, according to a new partially declassified report: “Thanks to information recently released by the Senate Judiciary Committee, we now have fresh, incontrovertible evidence that elements of the Intelligence Community (IC) have monitored the communications of employees or contractors seeking to report waste, fraud, abuse or potential criminal conduct by IC agencies – including communications to House and Senate committees charged with oversight of the IC.” [source twenty-eight — twenty-nine — thirty]
• “Based on the available public evidence, we also know that nobody in the IC responsible for such domestic spying [on Congress and whistleblowers] has lost their job or faced a criminal referral to the Justice Department. The implications of this are multiple and chilling.” [source thirty-one]
• “The fact that the CIA… was reading congressional staff’s emails about Intelligence Community whistleblowers raises serious policy concerns, as well as potential constitutional separation-of-powers issues that must be discussed publicly.” – Senator Grassley [source thirty-two]
• Jonathan Kaplan, a 33-year veteran investigator at the CIA IG is one of several whistleblowers to file complaints against Christopher Sharpley, the CIA’s former acting head IG and Trump’s nominee to be permanent head IG. Kaplan said “he was retaliated against because of his legally protected communications with the Senate and House Committees on Intelligence and with the Intelligence Community’s Office of the Inspector General.” [source thirty-three]
• “Kaplan says he had gone to the Committees and others with a concern that the CIA IG’s investigative and oversight capabilities were being compromised. Soon after, he said, retaliators including Sharpley placed false and derogatory information in his personal security file at the Agency, leading to the loss of his security clearance, rendering his continued CIA employment untenable. ‘Mr. Sharpley condoned retaliatory actions against CIA employees including me, indicating that ethical and professional standards are not being met,’ Kaplan said.” [source thirty-four]
• Sharpley is “named in at least three open whistleblower retaliation cases.” He first sparked controversy when he “deleted the agency’s only copy of a controversial Senate report documenting the CIA’s history of using interrogation techniques involving torture.” As The Hill reported, “both the electronic copy and a hard disk were destroyed.” [source thirty-five — thirty-six]
• In an interesting coincidence, the CIA was also caught illegally spying on Congress and violating the Constitution when Congress was creating that very same Torture Report. As Senator Mark Udall summed it up, “The CIA unconstitutionally spied on Congress by hacking into Senate intelligence committee computers. This grave misconduct is not only illegal, but it violates the US constitution’s requirement of separation of powers. These offenses, along with other errors in judgment by some at the CIA, demonstrate a tremendous failure of leadership, and there must be consequences.” [source thirty-seven]
• Many IC IG investigators have spoken out about Sharpley’s corrupt actions. “Roughly ten or more complaints were brought to an Equal Employment Opportunity Commission unit inside the CIA to consider evidence of workplace violations…” A few “memos cite a ‘hostile work environment,’ and ‘abruptly relieving certain managers and investigators of substantive investigative case work.'” [source thirty-eight]
• A CIA employee memo “cites actions featuring an element of ‘cruelty and malice’ by IG management as sweeping changes were imposed on a group of veteran investigators.” Another memo says, “The reorganization… is the latest in a series of intimidating and bullying tactics employed to move out current INV (investigation division) staff….'” [source thirty-nine]
• “One member of the INV staff told POGO that Sharpley was the office ‘enforcer.’ Another memo describes an occasion when Sharpley and a colleague summarily disbanded an INV unit – as its four senior staffers were told to join a newly-created group to investigate leaks. ‘There is only one problem,’ the memo goes on to say, ‘this OIG has no ongoing leak investigations. So, these senior special agents and managers hardly have any meaningful reasons to show up to work, except for preserving their spaces until they are graciously ushered out the door by Buckley and/or Sharpley.'” [source forty]
• Another “memo accuses CIA IG management of ‘misuse of position, abuse of resources, including unnecessary use of IG subpoenas, corruption, waste of taxpayer funds, and more. These are the very elements that an IG is expected to prevent and protect the Agency against.'” “In that context, Sharpley’s alleged acts of retaliation form part of a broader pattern plaguing America’s spy agencies….” [source forty-one]
• A Pro Publica report on Sharpley misleading Congress at his nomination hearing features several shocking quotes: “The CIA whistleblowers who suffered reprisal were trying to report some really serious criminal activity within the inspector general’s office — the fabrication of evidence in a criminal case where the people who did it were never punished,” said John Tye, an attorney for CIA IG whistleblowers. “The situation within CIA OIG is a systemic mission failure that must be corrected,” said former CIA IG Special Agent Investigator turned whistleblower Andrew Bakaj. [source forty-two]
• As Patrick Eddington from the Cato Institute summed it up: “Why has Warner, ranking member on the Senate Intelligence Committee — who is clearly aware of the gravity of these issues — not prioritized them like he has the Russia investigation? Why did Grassley dither for years in the Meyer case when he had a legal sledgehammer to cut off the salaries of out-of-control CIA bureaucrats spying on whistleblowers trying to convey their concerns to Congress?” [source forty-three]
• “There’s a world of difference between the kind of feckless, press-cycle ‘oversight’ practiced by Grassley and Warner and the kind of accountability-driven action that should be the hallmark of the committees on which both serve. Grassley, Warner, and their Senate and House colleagues have, thanks to the country’s founders, ample Article I power to aggressively protect IC whistleblowers and punish their bureaucrat retaliators. That they choose not to is precisely why the fraud, waste, corruption and criminal conduct in the IC continues apace.” [source forty-four]
#5) First-Ever Full-Scope Audit Failed, No Congressional Briefing, Accounting Fraud “Legalized”
• In December 2018, the Pentagon failed its first-ever full-scope audit, “a massive effort that was continually put off since it was first called for in a 1990 law.” They have now fallen behind schedule in fixing issues raised by the audit. “According to its most recent published timeline for completing the audit, the department was due to brief Congress on the findings and the status of its corrective action plan in January 2019. That briefing has not happened.” [source forty-five]
• Based on the limited information that was released, 16 Pentagon agencies failed their audits. The audits found “glaring shortcomings in the Department’s management of its IT systems” and overall “the Department did not have the necessary tracking systems to fully keep tabs on money flowing in and out.” (see also section 6 for more critical accounting problems) [source forty-six]
• A report summarizing Ernst & Young’s initial Defense Logistics audit said: “Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums [of tax money] it’s responsible for, the firm warned in its initial audit… as the auditors found, the agency often has little solid evidence for where much of that money is going.” [source forty-seven]
• According to people who spent their careers working for the Defense Finance and Accounting Service, the books are cooked as Standard Operating Procedure, there are thousands of transaction per month without any supporting documentation and money is spent without Congressional allocation. [source forty-eight]
• Defense Secretary Jim Mattis was a driving force behind the audit. He has suddenly resigned and his new replacement is Patrick Shannahan, who spent 30-years working for Boeing, the Pentagon’s second largest beneficiary of our tax dollars. Having Shannahan in charge of military spending and ongoing audits is an egregious conflict of interest. It is therefore not surprising that the audit has been delayed and deprioritized. * (more on revolving door corruption below) [source forty-nine]
• As The Washington Post reported: “The [audit] effort is complicated by a leadership transition at the highest levels of the Pentagon. The first audit was spearheaded by David Norquist, an accountant and longtime official who serves as comptroller and Chief Financial Officer. But after Shanahan was elevated, Norquist is now performing the duties of the Deputy Defense Secretary. Lawmakers said they are concerned that Norquist’s dual roles could draw his attention away from audit activities as the Pentagon functions without a permanent secretary. A Defense Department official speaking on the condition of anonymity… said Norquist is ‘still driving the audit’ even as he takes on new duties.” In addition, John Gibson, the Pentagon’s first-ever Chief Management Officer, who was specifically focused on finding missing money, abruptly resigned in September. The Wall Street Journal reported that he was “relieved of his duties” by Defense Secretary Mattis for “lack of performance.” [source fifty]
Accounting Fraud Legalized
• Thus far, the only significant change to come out of the Pentagon Audit was the scandalous new accounting “law” SFFAS 56, which legalizes accounting fraud by allowing unaccounted for money to be classified and redacted from public budget reports. In fact, the most recent DoD IG audit report — from the series of reports that were revealing trillions in unaccounted for spending — had all the accounting numbers redacted. [source fifty-one — fifty-two]
• The Intelligence Community, led by the CIA, in fear of being held accountable for the first time ever, was able to get this shocking wavier inserted into government accounting practices. SFFAS 56 now gives them wide-ranging legal cover to conceal how much money they are actually spending. [source fifty-three]
• As the DoD IG reported: “The guidance appears to allow entities to misrepresent their public financial statements…. This conflicts with the AICPA requirement that an auditor assess whether an entity’s financial statements can be considered a fair representation of its use of Federal resources….” [source fifty-four]
• In a report featured in Forbes, Laurence Kotlikoff and Mark Skidmore summed up the situation: “Several months after beginning the [Pentagon] audit, the Federal Accounting Standards Advisory Board (FASAB) posted a new document, which recommended that the government be allowed to misstate and move funds in order to hide expenditures if it is deemed necessary for national security purposes…. Also troubling is the fact that Standard 56 can include publicly traded corporations with significant funding and/or federal government control.” [source fifty-five]
• “With the change in accounting guidelines, which is a full departure from Generally Accepted Accounting Principles (GAAP), only a few people with high level security clearances have the authority to determine what is deemed to be an issue of national security and these same people will now be allowed to restate financial statements in order to conceal actual expenditures without any disclosure. No one but those few people would know that such modifications were made, thus making evaluation of government financial statements impossible. From this point forward, the federal government will keep two sets of books, one modified (and useless) book for the public and one true book that is hidden.” [source fifty-six]
• “The FASAB recommendation effectively institutionalizes opacity in federal financial reporting. Up till now, many aspects of federal finances have been non-transparent because the government has failed to comply with existing financial reporting laws. However, at least citizens had the laws working in their favor. Now citizens have no recourse; opacity is now the law of the land, controlled by executive branch authority and policy. Accounting rules are often thought of as boring and unimportant. In this case, it’s not the case. The new FASAB ruling has enormous and highly dangerous implications for our nation.” [source fifty-seven]
• “Seventeen years after 9/11 and we still can’t get out from under the ‘it’s for national security, don’t worry about it’ rubber-stamping of too much data and information that shouldn’t, and otherwise wouldn’t, qualify as needing to be classified,” says Mackenzie Eaglen, a defense analyst at the American Enterprise Institute. [source fifty-eight]
• As several prominent senators have repeatedly said, information is often classified to cover-up corruption. Senator Grassley (R-IA), Chairman of the Judiciary Committee, and Senator Wyden (D- Ore.), who is on the Senate Select Committee on Intelligence, have consistently expressed deep concerns over how information is often classified to cover-up corruption. Grassley and Wyden are senior Senators who have been in pivotal positions to know about classified matters for an extended period of time. [source fifty-nine]
#6) Fixable Pentagon Accounting Problems Ignored, Well-Proven, Long-Established Systemic Failure to Address Known Critical Issues
• As a Reuters investigation revealed: “A review of multiple reports from oversight agencies in recent years shows that the Pentagon also has systematically ignored warnings about its accounting practices. ‘These types of adjustments, made without supporting documentation… mask much larger problems in the original accounting data,’ the Government Accountability Office, the investigative arm of Congress, said. Plugs also are symptomatic of one very large problem: the Pentagon’s chronic failure to keep track of its money – how much it has, how much it pays out and how much is wasted or stolen.” [source sixty]
• As Reuters summed it up, “an organization that fields the most sophisticated technology in the world to fight wars and spy on enemies has come to rely on an accounting system of antiquated, error-prone computers… these thousands of duplicative and inefficient systems cost billions of dollars to staff and maintain… efforts to replace these systems with better ones have ended in costly failures… it all adds up to billions of taxpayer dollars a year in losses to mismanagement, theft and fraud.” [source sixty-one]
• Two previous Defense Secretaries have publicly acknowledged shocking fraud throughout military spending: Donald Rumsfeld summed up the Pentagon as a “black hole” where “tax dollars disappear by the trillions” and called the accounting problems “terrifying”; Robert Gates said he couldn’t even “get answers to questions such as ‘how much money are you spending?’,” let alone what it was being spent on. Gates summed up the crisis by saying that there are “unaccountable fiefdoms” operating throughout the Pentagon. [source sixty-two — sixty-three]
• No one knows how many secret financing and accounting systems there are. In an interview with Reuters, former Deputy Secretary of Defense Gordon England said, “There are thousands and thousands of systems. I’m not sure anybody knows how many systems there are.” The Pentagon once estimated that there were 2200 of them. However, a little-noticed 2012 report by the Defense Business Board estimated that there at least 5000. [source sixty-four — sixty-five]
• Subcommittee Chairman on Federal Spending Oversight Senator Rand Paul (R-KY) recently expressed his frustration with the Pentagon’s accounting crisis by saying: “The department charged with carrying out our greatest Constitutional responsibility has set the lowest possible standard for accountability.” [source sixty-six]
• William Hartung, director of the Arms and Security Project at the Center for International Policy, summed up the accountability crisis at the Pentagon by saying: “Call it irony or call it symptomatic of the department’s way of life, but an analysis by the Project on Government Oversight notes the Pentagon has so far spent roughly $6 billion on ‘fixing’ the audit problem — with no solution in sight. If anything, the Defense Department’s accounting practices have been getting worse.” [source sixty-seven]
While the Pentagon has been able to ignore the law requiring full-scope department-wide audits, the DoD IG has conducted audits of military spending where corruption has been detected, as we have seen in the reports on trillions of dollars in unaccounted spending year after year. Here are a few highlights summarizing DoD IG Audit Findings:
• “The financial management systems DOD has put in place to control and monitor the money flow don’t facilitate but actually ‘prevent DOD from collecting and reporting financial information that is accurate, reliable, and timely;'”
• “DOD managers do not know how much money is in their accounts at the Treasury, or when they spend more than Congress appropriates to them, nor does DOD ‘record, report, collect, and reconcile’ funds received from other agencies or the public;”
• “DOD tracks neither buyer nor seller amounts when conducting transactions with other agencies;”
• “DOD frequently enters ‘unsupported’ (i.e. imaginary) amounts in its books and uses those figures to make the books balance;”
• “DOD does not know who owes it money, nor how much. ‘Audit trails’ are not kept ‘in sufficient detail,’ which means no one can track the money;”
• “DOD’s ‘Internal Controls,’ intended to track the money, are inoperative. Thus, DOD cost reports and financial statements are inaccurate, and the size, even the direction (in plus or minus values), of the errors cannot be identified;”
• “DOD does not observe many of the laws that govern all this.” [source sixty-eight]
As Winslow Wheeler, who worked on national security issues for the U.S. Senate and Government Accountability Office, summed it up:
“If you have a system that does not accurately know what its spending history is, and does not know what it is now (and does not care to redress the matter), how can you expect it to make a competent, honest estimate of future costs?
It is self-evident that an operation that tolerates inaccurate, unverifiable data cannot be soundly managed; it exempts itself from any reasonable standard of efficiency….
It is as if the accountability and appropriations clauses of the U.S. Constitution were just window dressing, behind which this mind-numbing malfeasance thrives.
Technically, this is a violation of the Anti-Deficiency Act, a statute carrying felony sanctions of fines and imprisonment.” [source sixty-nine]
#7) Many Critical Cyber Vulnerabilities Ignored at Pentagon & U.S. Treasury, An Open Invitation For Criminals Worldwide
• The Treasury Department’s financial reporting system has significant security gaps that “leave the door open for online bad actors to tamper with the government’s spending data.” The Government Accountability Office discovered “eight different flaws in the system used by the department’s Bureau of the Fiscal Service to check the accuracy of the annual financial reports it publishes for every government agency.” [source seventy]
• These security gaps, in addition to “unresolved issues GAO previously identified within the bureau… ‘increase the risk of unauthorized access to, modification of, or disclosure of sensitive data and programs and disruption of critical operations.'” [source seventy-one]
• “The Fiscal Service Bureau is responsible for keeping tabs on the government’s debt and monitoring agencies’ revenue, spending, obligations and other fiscal behavior…. auditors said future inaccuracies could go undetected.” [source seventy-two]
• “Of the eight flaws revealed in the audit, four could be exploited to illegally access and change financial data and resources, three could potentially allow for unauthorized changes to hardware and software security, and one involved the bureau’s risk management system… they collectively represent ‘a significant deficiency’ in the bureau’s internal controls, GAO said….” [source seventy-three]
• “Investigators also found the bureau had yet to fully correct 15 different deficiencies GAO identified in previous audits, including some the bureau said had already been addressed.” [source seventy-four]
• A DoD IG audit recently reported that “the Pentagon had yet to correct 266 cyber vulnerabilities highlighted in numerous watchdog reports between July 2017 and June 2018. Some of the issues were identified long ago — two dated back to 2008.” [source seventy-five]
• “Auditors specifically found many shortcomings related to cyber governance, or the policies and practices that help officials monitor risk. ‘Without proper governance, the DoD cannot ensure that it effectively identifies and manages cybersecurity risk as it continues to face a growing variety of cyber threats…’ the IG wrote in the annual report on the Pentagon’s cyber posture.” [source seventy-six]
• “In the redacted report, auditors detailed a myriad of issues that had gone unaddressed over the previous year. The department, for instance, has not yet taken steps to comply with the cybersecurity framework developed by the National Institute of Standards and Technology.” [source seventy-seven]
• “Auditors also reiterated the need to put in place more controls to limit user access and monitor activity across Pentagon networks. The IG published a separate report detailing how inadequate controls left billions of dollars in annual payments potentially vulnerable to bad actors.” [source seventy-eight]
• The astounding lack of accountability and oversight concerning military spending and the hundreds of “cyber vulnerabilities” that remain unfixed year after year amount to an open invitation for every criminal element worldwide. Clearly, global intelligence agencies, military contractors and hackers have ample opportunity to exploit this system.
#8) Known Solutions – That Can Save Tens of Billions of Tax Dollars Annually – Not Implemented, As Key Gov Accountability Offices Drastically Underfunded & Understaffed
• Solutions to known problems that could save U.S. taxpayers at least $87 billion have not been implemented. “Congress is increasingly trying to force federal departments, especially the Pentagon, to quit disregarding audit recommendations on how to get more bang for billions of dollars in taxpayer bucks.” Agencies have “not implemented more than 15,000 proposals from their inspectors general that could save $87 billion – some 38 percent of that money at the Pentagon.” [source seventy-nine]
• “The Defense Department has more unheeded audit recommendations than any other agency, according to the Government Accountability Office. The Pentagon has failed to implement more than half the 1,122 recommendations that GAO has put forth to improve defense programs since fiscal 2014…. ‘It’s unacceptable that federal agencies ignore thousands of recommendations on how to become more efficient and save taxpayer dollars,” Rep. Mark Walker, R-N.C….” [source eighty]
• In addition to the GAO recommendations, “For the second year in a row, the Defense Department’s inspector general has released what it calls a ‘compendium’ of open recommendations. The document… details all of the recommendations the DOD IG has issued to the Pentagon that have been awaiting management attention for at least a year, [it] now includes 1,558 separate matters, up from 1,298 in the 2017 version. Fifty-six have been open for at least five years; seven have been open for eight years or more….” [source eighty-one]
• “The DoD OIG reported a number of open and unimplemented recommendations that appear straightforward and easy to implement, yet… have remained outstanding for years. For instance, in 2010, the DoD OIG issued a report concerning the Air Force’s time and materials contracts…. The OIG reported… this unimplemented recommendation represents a potential cost savings of over $24 million. Although the DoD OIG made the recommendation nearly six years ago, [it] has remained unimplemented and the cost savings for taxpayers remains unrealized.” [source eighty-two see page 21]
• The Pentagon is also a significant offender when it comes to improper payments, another large-scale government-wide scandal, which accounted for $144 billion in misspending in just one fiscal year, FY 2016. “A major portion of wasteful government spending is a broad category known as ‘improper payments,’ which are payments made in the wrong amount (including both overpayments and underpayments), to the wrong people, or for the wrong reason. An estimate from fiscal year 2016 showed $144 billion in misspending that year – an all-time high. These improper payments result from insufficient financial accountability, and divert dollars from where they are needed.” [source eighty-three]
• Even with all this incredible corruption being uncovered, the work of Inspector Generals, the Government Accountability Office (GAO) and Congressional Investigations Committees have been significantly undermined in many ways. They are drastically underfunded and understaffed. “Too often, the IGs suffer from inadequate or inconsistent budgets. Resource constraints can directly affect the ability of IGs to conduct effective and consistent oversight…. Congress needs to recognize the importance of proportionally funding IG oversight.” [source eighty-four]
• Due to the record-breaking corruption presently taking place, the return on investment (ROI) when it comes to funding accountability mechanisms within our government is outstanding. It is has been proven to be the best bang for our buck that we can get. Yet, this is where big cuts in funding are occurring. For an effective budgeting metric, in fiscal year 2017, the GAO uncovered over $73.9 billion in fraud and wasteful spending. For every $1 they get, they give a return of $128 dollars. [source eighty-five]
• Meanwhile, where the most corruption is taking place, where we get the least bang for our buck, that’s where funding is increasing – namely, in DoD agencies where huge sums of taxpayer money have gone unaccounted for. With budget management like that, it is no wonder we have an all-time record-breaking national debt of over $21 trillion, not to mention the additional $21 trillion in unaccounted for military spending. [source eighty-six]
• Another significant issue undermining Inspector Generals is the lack of congressionally approved leadership. “POGO firmly believes that the effectiveness of an IG office can be diminished when that office does not have permanent leadership, especially when the vacancy exists for an extended period of time, as many of the current vacancies have.” There are presently 12 vacancies in head IG positions. [source eighty-seven — eighty-eight]
• “Permanent IGs undergo significant review — especially the IGs that require Senate confirmation — before taking their position. That vetting process helps instill confidence among Congress, agency officials, whistleblowers, and the public that the office of the IG is truly independent, and that its investigations and audits are accurate and credible. In addition, a permanent IG has the ability to set a long-term strategic plan for the office, including establishing investigative and audit priorities.” [source eighty-nine]
• “An acting official… is known by all OIG staff to be temporary, which one former IG has argued ‘can have a debilitating effect on [an] OIG, particularly over a lengthy period.’… Addressing the DoD IG’s deep cultural problems — all of which predate Principal Deputy IG Fine — requires permanent leadership.” [source ninety]
• The last confirmed head DoD IG resigned shortly before an audit report revealed $6.5 trillion was unaccounted for in one fiscal year, FY 2015. Since that audit, the DoD IG office has not had a congressionally approved Inspector General, that position has been unfilled since January 2016. In addition, the CIA has not had a congressionally approved IG since 2015. [source ninety-one — ninety-two]
#9) Since 1998, $21 Trillion Unaccounted For, $2.6 Billion in Bribes and 12,727 Government Officials Through Global Military Revolving Door
• Since 1998, the Office of the Inspector General has reported over $21 trillion in unaccounted for money. Over this same timeframe, Global Military companies have spent at least $2.6 billion in known campaign contributions and lobbying activity. Beyond this shocking amount of money spent influencing politicians, the revolving door — between Global Military companies and government officials — has been a significant source of scandalously corrupt behavior. Since 1998, a stunning 12,727 government officials have gone through the revolving door with Global Military companies. [source ninety-three — ninety-four — ninety-five]
• As shocking as those political corruption statistics are, given the loosening of campaign finance laws regarding “dark money” and PACs, and numerous military-intelligence-related shell companies and aligned interests, it is impossible to account for all the money they have spent influencing legislation and the actual overall number of government officials who have gone through the revolving door to companies that benefit from the Pentagon’s lack of accountability. [source ninety-six]
#10) Classifying Corruption: Under the Guise of National Security, U.S. Treasury Looted & Constitution Rendered Null & Void
• Other than the corruptly implemented “legalized bribery” schemes referenced above, after an extensive analysis, it is evident that the National Security Act, and corresponding agencies and laws derived therefrom – with the power of secrecy that it provides – has been the primary enabler of the greatest theft of taxpayer wealth in history. [source ninety-seven]
• The National Security Act set several precedents that have severely undermined the U.S. Constitution. The National Security Act created the “National Military Establishment,” the National Security Council and the Central Intelligence Agency, thereby codifying institutional secrecy. [source ninety-eight]
• Corresponding laws, such as the State Secrets Privilege, Classified Information Procedures Act, Foreign Intelligence Surveillance Act, the PATRIOT Act, the Totten Rule, The Espionage Act and the recent Executive Order 13526, which defines rules for the classification of information, have all played a pivotal role in concealing unprecedented criminal activity. [source ninety-nine]
Based on the extensive evidence provided throughout this series of reports, it is evident that we are obligated to confront an extremely disturbing reality: under the guise of National Security, an outrageously corrupt culture of unaccountable War Profiteering has taken over the United States government. The U.S. Treasury is being looted and the Constitution has been effectively rendered null and void.
The fact that these issues have not been covered in the mainstream media, the subject of significant congressional investigations, and a primary focus of political representatives calls into serious question the integrity and legitimacy of all leadership and responsible parties.
In light of the information contained within this investigative series, a Congressional Investigation Committee needs to take immediate action. As a top National Security priority, Congress must urgently begin wide-scale investigations into the epidemic of systemic corruption throughout the Pentagon.
* Consider sending this report to your congressional representatives. Please help spread the word & share it widely. SHARE HERE
Whistleblowers: The New ‘Insider Threat’
Source: Just Security, Cato Institute
Thanks to information recently released by the Senate Judiciary Committee, we now have fresh, incontrovertible evidence that elements of the Intelligence Community (IC) have monitored the communications of employees or contractors seeking to report waste, fraud, abuse or potential criminal conduct by IC agencies—including communications to House and Senate committees charged with oversight of the IC.
And based on the available public evidence, we also know that nobody in the IC responsible for such domestic spying has lost their job or faced a criminal referral to the Justice Department. The implications of this are multiple and chilling, but first, some background.
On November 1, Sen. Chuck Grassley (R-Iowa), chairman of the Senate Judiciary Committee, issued a press release announcing that the CIA had monitored communications between whistleblowers and congressional staff in 2014. Grassley said it took him more than four years to get the incidents declassified—itself a statement about the anemic state of congressional oversight of the IC.
The targets of the monitoring included IC whistleblowers and Dan Meyer, the person in the office of the IC Inspector General (IC IG) charged with taking their complaints and trying to shield them from retaliation. His title at the time was executive director of whistleblowing and source protection. Apparently, Meyer’s communications with congressional investigators were also monitored….
In his March 28 notification to HPSCI and SSCI leadership, [then-IC IG Charles] McCullough admitted he was ‘concerned about the potential compromise to whistleblower confidentiality and the consequent ‘chilling effect’ that the present CI monitoring system might have on Intelligence Community whistleblowing.’ But he did not ask the Intelligence Committees to provide any additional legislative protection for such communications. Interestingly, there was already a law on the books that likely made the monitoring illegal….
Grassley clearly knew about the notifications for years, which raises the question: Why didn’t he use this section of the law to go after the CIA officials responsible for what appears to be illegal monitoring of Meyer’s communications with Congress? Why didn’t he call out McCullough for ignoring the law itself?
IC officials have been gunning for Meyer for years. In late 2017, Meyer was placed on administrative leave “with no explanation.” When that became public earlier this year, Grassley told GovExec.com that if Meyer was facing retaliation for communicating with Congress, it would be “unacceptable.” But Grassley appears to have accepted it. Meyer was officially fired by the IC IG in March 2018, just months after he filed his own whistleblower complaint.
Grassley is hardly the only member of Congress to take a less-than-aggressive approach to Meyer’s case, specifically, and the threats to IC whistleblowers more generally.
As Jenna McLaughlin reported earlier this year, Senators Mark Warner (D-Va.), Ron Wyden (D-Ore.), Susan Collins (R-Maine) and Grassley asked the Government Accountability Office (GAO) to conduct “a far-reaching review” of IC whistleblower protections. Yet just months before the Senate quartet made the request to GAO, the agency published a damning assessment of the state of the Defense Department’s IG office—the very office where Meyer had worked—and been retaliated against—years earlier.
GAO found that between fiscal years 2013 and 2015, the DoD IG closed without investigation 1,094 of 1,197 whistleblower complaints it received—a whopping 91 percent of them. In commenting on GAO’s findings, the Project on Government Oversight (POGO) noted that the report raised “questions about whether the office can fairly and appropriately handle those who come forward with allegations of misconduct.”
That’s something of an understatement, given what I’ve found in my own investigation of how the DoD IG has handled previous IC (specifically NSA) whistleblower complaints.
Why has Warner, ranking member on the Senate Intelligence Committee—who is clearly aware of the gravity of these issues—not prioritized them like he has the Russia investigation? Why did Grassley dither for years in the Meyer case when he had a legal sledgehammer to cut off the salaries of out-of-control CIA bureaucrats spying on whistleblowers trying to convey their concerns to Congress?
As Loch Johnson, a former senior staffer on the Church Committee, told me years ago, “There’s no substitute for member engagement.” I worked for an engaged House member, so I knew what Johnson meant—introducing and pushing for passage of legislation, getting agency or department heads on record in writing about problems and their optimal solutions, and in the Senate, using the power to hold up nominations to force key executive branch documents out into the open. But there’s a world of difference between the kind of feckless, press-cycle “oversight” practiced by Grassley and Warner and the kind of accountability-driven action that should be the hallmark of the committees on which both serve.
Grassley, Warner, and their Senate and House colleagues have, thanks to the country’s founders, ample Article I power to aggressively protect IC whistleblowers and punish their bureaucrat retaliators. That they choose not to is precisely why the fraud, waste, corruption and criminal conduct in the IC continues apace.”
~ Patrick G. Eddington was a congressional senior policy advisor for over 10 years. He is a Policy Analyst in Homeland Security and Civil Liberties at the Cato Institute. Prior to his career on Capitol Hill, he served as a military imagery analyst at the CIA’s National Photographic Interpretation Center for almost nine years. He received numerous accolades for his analytical work, including letters of commendation from the Joint Special Operations Command, the Joint Warfare Analysis Center and the CIA’s Office of Military Affairs.
Watchdog Finds Majority of Pentagon Whistleblowers Out of Luck
Source: Center for Defense Information, citing GAO report
While DoD IG appears to be the place Department of Defense whistleblowers who experience retaliation should go, DoD IG declines to pursue the vast majority of the complaints they receive….
From fiscal year 2013 to fiscal year 2015 DoD IG dismissed without investigation 91 percent of the civilian, contractor, and subcontractor complaints it received. The GAO found a number of significant weaknesses in DoD IG’s processes for declining cases. Interviewing complainants is key and a best practice, since most whistleblowers never thought they would become whistleblowers and consequently don’t know the standards and evidence necessary to show they have a potential reprisal case. Yet, the GAO found DoD IG declined 63 percent of the cases for which they are the primary investigative body (which GAO refers to as “nondiscretionary”) without interviewing the whistleblower. Moreover, a quarter of the declined cases the GAO reviewed “were declined for reasons inconsistent with DODIG guidance and the reasons DODIG officials told us may warrant a case being declined.”
The number of cases declined by DoD IG has been an ongoing concern for the Project On Government Oversight, and raises questions about whether there is effective and fair enforcement of whistleblower protections….
There remain concerns about the independence of reprisal investigations. A 2015 GAO report found DoD IG’s military reprisal investigations did not have an adequate process for monitoring potential conflicts of interest, which meant DoD IG could not ensure decisions regarding the independence of investigations was appropriate. GAO found similar weaknesses for the IG’s civilian investigations. In addition to a lack of process, 8 of the 28 investigators and supervisory investigators GAO interviewed raised concerns about bias in investigations. “Investigators stated examples of perceived bias that, if true, indicate a climate that may not be consistently favorable to independent and objective investigations,” the GAO wrote.
Incomplete case files also remain an issue, raising questions about both the accuracy and completeness of reprisal investigations. DoD IG’s internal policy requires case files be complete upon closure. The 2015 GAO report found key documents were uploaded after the IG closed the case in 77 percent of cases completed in fiscal year 2013. POGO obtained emails that showed the case management system was such a mess investigators had to “stand down” to fix the records, further delaying other investigative work. There has been improvement, but GAO still found that half of the fully investigated case files had documents uploaded more than 30 days after the case was closed, with the average change occurring 228 days after closure.
The report also highlights one of the challenges of whistleblowers seeking to raise allegations anonymously. Many whistleblowers who choose to report waste, fraud, or abuse anonymously do so because they fear they may be retaliated against if they report allegations under their own name. In the case of DoD IG, some whistleblowers have also raised concerns that the office would reveal their identity to their managers and subject them to additional retaliation.
Finally, the GAO had concerns about DoD IG’s ability to oversee the reprisal investigations conducted by intelligence component IGs…. Despite requirements for component IGs to provide timely notification to DoD IG of every reprisal allegation they receive, GAO found the NSA IG and DIA IG only reported investigations they were pursuing, and in several cases the notification was provided months after an investigation had been initiated. The shortfalls identified by the GAO thus far have actually made some of the intelligence component IGs consider reducing their reporting on reprisals to DoD IG.
Skeptics of whistleblowers, including some DoD IG officials, claim most whistleblower allegations are about personal problems. GAO’s review of the disclosures received by DoD IG found yet again this was not the case, and that 72 percent of the cases closed alleged a violation of law, rule, or regulation.
Whistleblowers go to IGs expecting them to be honest brokers of the law, particularly for laws designed to protect sources who advance their investigations. Unfortunately this report doesn’t give them much confidence their allegations about waste, fraud, and abuse will ever receive due consideration.
Congressional Testimony on Oversight of Department of Defense Inspector General’s Military Whistleblower Reprisal Investigations
POGO has also heard directly from whistleblowers within DoD IG who have expressed serious concerns about the integrity of the office’s processes and investigations, including pressure to back-fill whistleblower case files for the GAO’s review. It is extremely rare to have whistleblowers from an IG shop come forward, but in this case we have a number of them.
Concerns raised by individual whistleblowers are also echoed in OPM Survey data, which showed that 26.5 percent of DoD IG employees surveyed responded that they did not feel they could “disclose a suspected violation of any law, rule, or regulation without fear of reprisal.” Forty-five percent of DoD IG employees also disagreed that their senior leadership maintains high standards of honesty and integrity….
Alleged retaliation by DoD IG’s General Counsel against the agency’s former Assistant Inspector General and the former Director of Whistleblowing and Transparency only raises additional concerns about the perilous environment for whistleblowers. We believe this reflects deep cultural problems that must be remedied in order for whistleblowers to believe this office should be trusted as willing and able to protect whistleblowers and to hold accountable those who illegally retaliate against them.
POGO raised concerns about the integrity of military reprisal investigations, timeliness, toxic culture, and transparency in a letter to Principal Deputy IG Glenn Fine in March….
Ensuring the fairness of military reprisal investigations is particularly important because military whistleblowers still have a higher burden of proof to show illegal retaliation than other federal whistleblowers….
Fixing these deep cultural problems will require more than the tweaks to policies and training sessions the DoD IG has instituted thus far. It must include changes in leadership in the offices of General Counsel and Administrative Investigations….
POGO is concerned because the DoD IG has dismissed without full investigation 86 percent of the military cases it has received since pledging to make reforms in 2011. The IG’s rate of dismissal is particularly striking because it is more than double that of Service IGs, who many consider to be less independent. For purposes of comparison, during the same time period the DoD IG dismissed an even higher percentage of civilian and contractor reprisal cases, substantiating only 7 out of over 1,300 complaints received.
And for another comparison, the DoD IG’s investigative rates for civilian reprisals are about half of what we have seen for federal employee whistleblowers at the Office of Special Counsel. The DoD IG’s low investigation and substantiation rates create the appearance that the office is focused on closing, rather than investigating, the cases it receives….
Failing to talk to whistleblowers may also be contributing to whistleblowers feeling betrayed by the DoD IG. POGO has found several instances in which the DoD IG referred whistleblower disclosures back to entities that are not sufficiently independent to conduct the investigation. In some of those instances whistleblowers felt the IG needlessly exposed them to additional retaliation, and had they known the IG was going to refer their disclosures they would have chosen to withdraw their complaints. …
A 2011 Internal Review Team report questioned substantiation rates, disagreeing with the DoD IG’s own decisions in 47 percent of the cases they reviewed. In those instances in which the DoD IG declined to investigate, the reviewers disagreed 68 percent of the time….
Misconduct within the DoD IG [‘systemic practice of improperly interfering with and undermining investigations’]
One of the major issues raised by the GAO review was problems with the DoD IG’s case management system. Specifically, the GAO found that the IG uploaded key case documents after it had closed the case in 77 percent of cases closed in fiscal year 2013, and altered case variables for 83 percent of cases closed in fiscal year 2014. Case variables that were changed after the fact included information used to evaluate timeliness of investigations and investigative outcomes, including “changes to the date the service member filed the complaint and the organization that conducted the investigation, as well as the result code, which indicates whether the case was fully investigated.”
Case files were such a mess that IG management instructed investigators to “stand down” on other work in September 2013 in order to add additional records to closed cases in the case management system. Emails shared with POGO said personnel could also apply for overtime to work on or amend the information in their own and others’ old cases.
Internal instructions by DoD IG management to staff that were shared with POGO provide evidence of efforts to improperly influence the GAO’s findings, including advising staff to add information to files that were specifically within the scope of the GAO’s review.
Management’s instructions raise serious concerns about those DoD IG officials and the cases processed by the Administrative and Whistleblower Reprisal Investigations teams, since changing these records likely had a significant impact on the GAO’s findings.
We are concerned that the DoD IG has only seen this as a compliance exercise and does not understand the gravity of trying to mislead GAO investigators.
Since sending our letter, additional whistleblower allegations that IG General Counsel Henry Shelley improperly destroyed files in a whistleblower case have been referred to the DoD IG by the Office of Special Counsel for investigation.
Principal Deputy IG Fine in turn referred the allegations to the Department of Justice Inspector General for an independent investigation, and we applaud him for doing so. But we are troubled because this is only the latest allegation of many that Shelley engages in a systemic practice of improperly interfering with and undermining personnel investigations….
The Problem of Acting Inspector Generals
POGO views IGs as an essential component of a well-functioning federal government, and over the past few years we have undertaken a number of efforts to study and improve the IG system. One of those efforts is to draw attention to the large number of IG offices that are operating without permanent leadership. POGO firmly believes that the effectiveness of an IG office can be diminished when that office does not have permanent leadership, especially when the vacancy exists for an extended period of time, as many of the current vacancies have.
In addition, a permanent IG has the ability to set a long-term strategic plan for the office, including setting investigative and audit priorities. An acting official, on the other hand, is known by all OIG staff to be temporary, which one former IG has argued “can have a debilitating effect on [an] OIG, particularly over a lengthy period.”
While the DoD IG does not hold the record for the longest vacancy, we believe that filling this position should be a priority for the next administration. Addressing the DoD IG’s deep cultural problems—all of which predate Principal Deputy IG Fine—requires permanent leadership….
[Congressional Investigation] Recommendations
The DoD IG should:
Investigate and consider for removal any senior officials found to have illegally destroyed evidence in whistleblower or other case files, improperly instructed employees to back-fill cases, or otherwise interfered with the independence and integrity of investigations;
Request a GAO or outside IG audit of the DoD IG’s reprisal investigations to ensure that investigators’ decisions to dismiss, investigate, and substantiate reprisal are proper and based on the legal requirements for examining any evidence presented;
Whistleblowers who report concerns that affect our national security must be lauded, not shunned or, worse, harmed. And the law must protect them. The perceived and real failures of the DoD IG to act as a check on violations of law should be of grave concern.
GAO Whistleblower Protection Report: Opportunities Exist for DOD to Improve Reprisal Investigations
Opportunities Exist for DOD to Improve the Timeliness and Quality of Civilian and Contractor Reprisal Investigations
United States Government Accountability Office
Report to Congressional Requesters
Source: GAO-17-506 PDF
[We conducted this performance audit from February 2016 to September 2017 in accordance with generally accepted government auditing standards… we obtained data on all civilian and contractor whistleblower reprisal cases closed by DODIG and appropriated-fund DOD civilian cases closed by the Office of Special Counsel from October 1, 2012, through September 30, 2015, and on all DODIG cases open as of September 2016. We selected data from this period because they constituted the most complete and recent data available in DODIG’s and the Office of Special Counsel’s case-management systems during the time we were doing our analysis.]
Whistleblowers play an important role in safeguarding the federal government against waste, fraud, and abuse, and their willingness to come forward can contribute to improvements in government operations. However, whistleblowers also risk reprisal, such as demotion, reassignment, and firing. Congress and the former administration had established a statutory and policy framework to protect whistleblowers from reprisal for disclosing information concerning, among other things, fraud, waste, and abuse to designated persons such as an inspector general (IG).
Under this framework and its implementing directives, the Department of Defense Office of Inspector General (DODIG) is responsible for investigating and overseeing the investigation of complaints alleging reprisal against certain DOD civilian employees and for conducting investigations of complaints alleging reprisal against DOD contractor employees. Specifically, DODIG is the primary investigative authority for reprisal complaints involving Department of Defense (DOD) civilian non-appropriated-fund instrumentality (NAFI) employees, and DOD contractor, subcontractor, grantee and subgrantee employees.
DODIG may also investigate, on a discretionary basis, reprisal complaints it receives from DOD civilian appropriated-fund employees. Finally, DODIG is responsible for investigating reprisal complaints involving DOD civilian employees under the Defense Civilian Intelligence Personnel System (DCIPS), overseeing the investigation of such complaints by the defense intelligence components, and investigating reprisal complaints involving actions affecting DOD civilian and contractor employees’ access to classified information.
In recent years, members of Congress have expressed concerns regarding the timeliness and integrity of DODIG’s reprisal investigations, along with its interpretation of statutory protections for contractor employees, among other things. In February 2012 and May 2015, we reported that DOD faced challenges in overseeing the military services’ whistleblower reprisal investigations and made 18 recommendations to help improve the timeliness of military servicemembers’ whistleblower reprisal investigations and to improve investigation and oversight processes, among other things.
For example, we reported that DODIG was not consistently or accurately recording key dates to track the length of investigations, did not report the timeliness of its investigations to Congress, and had outdated guidance about the investigation process….
You asked us to examine DODIG’s conduct and oversight of whistleblower reprisal investigations involving DOD civilian and contractor employees. This report examines the extent to which DODIG has: (1) met and taken steps to achieve key timeliness goals for civilian and contractor whistleblower reprisal investigations; (2) established processes to ensure that civilian and contractor whistleblower reprisal cases are handled independently and thoroughly; (3) conducted oversight of civilian reprisal cases handled by the defense intelligence components; and (4) developed performance measures to assess the timeliness and quality of its investigations.
For the first objective, we obtained data on all civilian and contractor whistleblower reprisal cases closed by DODIG and appropriated-fund DOD civilian cases closed by the Office of Special Counsel from October 1, 2012, through September 30, 2015, and on all DODIG cases open as of September 2016. We selected data from this period because they constituted the most complete and recent data available in DODIG’s and the Office of Special Counsel’s case-management systems during the time we were doing our analysis. Using these data, we calculated the timeliness of DODIG and Office of Special Counsel cases in relation to time frames prescribed by statute and internal DOD goals, and assessed other characteristics including case type and rates of substantiation.
We assessed the reliability of DODIG and Office of Special Counsel data by administering questionnaires, interviewing cognizant officials, and reviewing system documentation and quality-assurance procedures. For DODIG data, we also compared electronic data to fiscal year 2015 casefile documentation and conducted internal checks….
DODIG Generally Did Not Meet Timeliness Goals between Fiscal Years 2013 and 2015 and Has Not Collected Key Workload Data or Reported Regularly to Congress….
In Fiscal Years 2013–2015, DODIG Generally Did Not Meet Statutory and Internal Goals for Civilian and Contractor Reprisal Cases….
DODIG Does Not Regularly Report to Congress on the Timeliness of Civilian and Contractor Whistleblower Reprisal Cases….
When Declining Cases for Review, DODIG Does Not Always Follow Its Intake Process….
DODIG’s Case files Were Missing Some Key Documentation
Our review of case files closed by DODIG in fiscal year 2015 found that some documentation was consistently present, but that some other key documentation or data were missing or were not uploaded to DODIG’s case-file system in a timely manner. This documentation and these data are needed to demonstrate compliance with or execution of investigative, quality-assurance, and internal controls processes, including the internal controls checklist — which we found did not include checks for some key documentation and required investigative events. Further, our interviews with the 24 investigators from investigative teams showed that some steps required to help ensure thoroughness during the investigative process are not routinely followed….
Approximately 48 percent of the cases that were fully investigated included documents that were modified or were newly uploaded at least 30 days after case closure. These changes related to documents such as the final report of investigation, closure letters, evidence of legal review, the investigative plan, congressional correspondence, and interview transcripts….
DODIG’s internal policy required that case files be complete upon case closure and the most recent change occurred on average 228 days (median 148 days) after case closure, far exceeding the internal policy and the prior practice of completing internal controls checklists on a quarterly basis….
Two out of three fully investigated cases with congressional inquiries were missing correspondence to the Member of Congress providing a summary of the findings, as required by DODIG’s 2012 investigations manual….
Approximately 81 percent of the 413 testimony transcripts and voice recordings we reviewed did not address one or more points of the standard read-in/read-out process. This process consists of a series of questions and statements at the beginning and end of each interview intended to ensure that all witnesses are treated equally and that they are afforded the proper notifications of authorities and due process….
16 of the 24 investigators stated that the pre-subject-interview roundtables occur infrequently or not at all, and 19 of the 24 investigators stated that post-subject-interview roundtables occur infrequently or not at all….
DODIG officials acknowledged, that DODIG’s internal controls checklist does not capture the full range of key case-file documentation and required investigative events, including documentation of (1) an intake worksheet, (2) required roundtable discussions, and (3) the program analyst for quality assurance review.97 Without a checklist that captures the full range of key case-file documentation and data associated with required investigative steps, DODIG will be limited in its ability to ensure compliance with CIGIE standards related to thoroughness and adequacy of case-file documentation, as well as the currency, accuracy, and completeness of data maintained in its case-management system….
DODIG and the defense intelligence components have not fully addressed requirements related to DODIG’s review of all DCIPS employee allegations, determinations, and investigations handled by the component IGs. DOD Directive-Type Memorandum 13-008—which implements Presidential Policy Directive 19 (PPD-19)—requires that DODIG provide oversight of reprisal allegations involving DCIPS employees that are handled by the defense intelligence component IGs, and that the component IGs correspondingly furnish information to DODIG….
DODIG has not established processes with the defense intelligence component IGs—such as standard operating procedures—to ensure that the components provide the allegation notifications, determinations to not investigate, and investigations prescribed by Directive-Type Memorandum 13-008. As the principal advisor for DOD IGs, DODIG is to assist the defense IGs—including the IGs of the defense intelligence components—by coordinating and clarifying DOD policy, issuing implementing instructions, and resolving conflicting or inconsistent IG policy involving defense IG duties, responsibilities, and functions.
Without a process to fully implement the requirements of Directive-Type Memorandum 13-008 that includes (1) receiving notification of all allegations received by the defense intelligence component IGs, (2) reviewing their determinations to not investigate allegations, and (3) reviewing all investigations that they conduct, DODIG and the defense intelligence components will continue to not fully adhere to the prescribed roles related to the oversight of component determinations and investigations, as defined in agency directives….
DODIG’s Timeliness Performance… Lacks Measures to Assess the Quality of Investigations and Oversight Reviews….
DODIG does not have performance measures to assess the quality of its investigations and oversight reviews for fiscal year 2017 and beyond. Prior to fiscal year 2017, DODIG had developed several different timeliness and quality performance measures, but these measures were inconsistently documented and reported….
DODIG did not provide baselines for its fiscal year 2017 whistleblower reprisal timeliness performance measures, and it has not consistently reported on all of its past timeliness performance measures, as discussed below, thus inhibiting baseline and trend analysis….
DODIG’s fiscal year 2017 timeliness measures… do not address the unit’s priority of conducting thorough investigations that adhere to CIGIE standards….
DODIG’s fiscal year 2017 timeliness measures are focused on the agency’s priority to improve the timeliness of its reprisal investigations and oversight reviews, and do not address the quality of investigations. Without addressing the government-wide priority of quality, an overemphasis on timeliness could undermine quality. In addition, DODIG’s suite of timeliness measures does not address the efficiency or cost of service associated with investigations and oversight reviews.
Although DODIG has not developed performance measures for fiscal year 2017 to specifically assess the quality of its reprisal investigations and oversight reviews, DODIG officials stated in April 2017 that they were in the process of doing so. Prior to fiscal year 2017, DODIG had developed several performance measures to assess both the timeliness and quality of its reprisal investigations, but the evaluation of these measures was inconsistently documented and reported, and some measures changed over time….
Maintaining a timely, independent, and thorough process for investigating whistleblower reprisal complaints is essential to executing DODIG’s mission…. However, without regularly reporting on the timeliness of all civilian and contractor investigations, decision makers’ ability to effectively oversee the whistleblower reprisal program is limited. DODIG also does not have key workload data that would enable it to more fully assess its personnel requirements in support of its planned steps to improve timeliness….
Enhancements are also needed for existing processes designed to help ensure the independence and thoroughness of DODIG’s investigations. By documenting investigators’ recusals and conflicts of interest—and evaluating these and other threats in the aggregate—DODIG will have increased institutional awareness of threats such as bias, thereby better enabling it to fully evaluate such threats.
Also, by establishing and clearly communicating a declination policy for nondiscretionary cases, DODIG will have better assurance that these complainants are afforded the same due process as those whose cases are routed through the intake process.
Additionally, developing an internal controls checklist that captures the full range of key case-file documentation and data associated with required investigative steps will help DODIG ensure compliance with CIGIE standards related to the thoroughness and adequacy of case-file documentation.
Moreover, it will be better positioned to withstand scrutiny by outside authorities, and address concerns expressed by members of Congress regarding the integrity of its investigations.
Another area in which DODIG’s process can be improved is in its oversight of cases involving DCIPS employees that are handled by the defense intelligence component IGs. While DODIG is reviewing investigations conducted by some of the defense intelligence component IGs, it has not established processes with the defense intelligence component IGs that fully address requirements to receive notification of all allegations involving DCIPS employees that are received by the components, review component determinations to not investigate allegations, and review all the investigations the components conduct.
Without a process for doing so, DODIG and the defense intelligence components are unable to fulfill their prescribed roles related to the oversight of component determinations and investigations. Moreover, without fully executing its oversight responsibilities, DODIG cannot achieve its vision of being the model whistleblower-protection program in the federal government.
Finally, given… the anticipated increase in cases — it is important that there be a reliable means by which to gauge progress in the timeliness and quality of both investigations and oversight reviews…. DODIG has not developed measures for quality for fiscal year 2017 and beyond….
Recommendations for Executive Action
We are making the following seven recommendations to the Department of Defense Office of Inspector General (DODIG):
· The DOD Inspector General should assess the feasibility of collecting additional workload data, such as the amount of direct and indirect labor hours associated with each case, and including such data in future personnel requirements assessments, as appropriate. (Recommendation 1)
· The DOD Inspector General should report regularly to Congress on the timeliness of civilian and contractor investigations, including those contractor and subcontractor cases exceeding the 180-day timeliness requirement. (Recommendation 2)
· The DOD Inspector General should implement a process to document employee recusals and impairments to independence and incorporate such information into an aggregate-level evaluation of threats to DODIG’s independence. (Recommendation 3)
· The DOD Inspector General should establish and clearly communicate a declination policy for nondiscretionary cases in the AI Investigations Manual or other guidance, and align this policy with the intake policy. (Recommendation 4)
· The DOD Inspector General should revise the existing internal controls checklist to include all key case-file documentation and required investigative events. (Recommendation 5)
· The DOD Inspector General should work in coordination with the Secretary of Defense, the Under Secretary of Defense for Intelligence, and the inspectors general of the defense intelligence components to establish a process to fully implement the requirements of DirectiveType Memorandum 13-008 so that DODIG (1) receives notifications of all allegations received by the components, (2) reviews all component determinations to not investigate allegations, and (3) reviews all investigations conducted by the components. (Recommendation 6)
· The DOD Inspector General should develop quality performance measures and enhance existing timeliness performance measures to reflect key attributes of successful performance measures. At minimum, these measures should be clear, quantifiable, and objective, and they should include a baseline assessment of current performance. (Recommendation 7)
Case Dispositions for Complaints Closed in Fiscal Year 2013 through Fiscal Year 2015
The majority of civilian and contractor and subcontractor complaints closed by DODIG in fiscal year 2013 through fiscal year 2015 — 1,094 of 1,197, or about 91 percent — were closed without investigation, while 103, or about 9 percent, were fully investigated….
Our analysis of data from DODIG’s case-management system showed that the overall number of declined cases — those that do not go through the intake process — as a proportion of total closed civilian and contractor cases rose from fiscal year 2013 to fiscal year 2015….
Whistleblower Reprisal Complaints Received by DODIG in Fiscal Year 2013 through Fiscal Year 2015
In fiscal years 2013 through 2015, DODIG received a total of 1,208 complaints from appropriated-fund civilians; NAFI civilians; contractors, subcontractors, grantees, and subgrantees; and DCIPS employees or employees with eligibility for access to classified information alleging whistleblower reprisal….
Of the 1,208 complaints, 758, or 63 percent, were filed by civilians and contractors or subcontractors affiliated with the military services. Among these, civilians and contractors or subcontractors affiliated with the Army made the highest number of complaints, with 304; the Air Force had 219; the Navy had 189; and the Marine Corps had 46. Defense agencies had another 203, and the rest were spread across the combatant commands, joint commands, and other entities.
Nowhere To Turn: The Weak State of ‘Internal Channels’ For Intelligence Community Whistleblowers
Source: PEN America
Intelligence community employees who consider blowing the whistle face three abysmal choices: use the internal channels and risk career suicide, go to the media and face potential jail time, or stay silent in the face of waste, fraud, abuse, illegality, or threats to our democracy….
Today the structural integrity of these “internal channels” appears increasingly shaky. A prime example is that of the PPD-19 or “Protecting Whistleblowers with Access to Classified Information” directive….
Recent developments show that the process established under PPD-19 is failing to protect intelligence community whistleblowers. A 2017 draft report by the IC IG’s office reviewed 190 whistleblower reprisal complaints in 6 national security agencies and revealed that the agencies found in favor of only 1 whistleblower. In other words, the government ruled against 99% of intelligence community employees who claimed they were retaliated against for blowing the whistle.
The Project on Government Oversight obtained a leaked copy of a memo used to draft this report, which stated that many parts of the intelligence community are failing to follow “policies, procedures and standards. . . . Causing non-substantiation of reprisal claims, incomplete investigations, and for complaints not to be processed.” The author concludes, “These deficiencies are significantly undermining the intent of PPD-19 and strongly suggest that there has been no impact by PPD-19 to protect whistleblowers in the evaluated agencies.”….
Under Trump, the CIA responded that PPD-19 is not a statute and therefore whistleblowers have no right to challenge the agency’s failure to enforce it. The judge agreed and dismissed the case, leaving Pars vulnerable. Pars was subsequently terminated.
Ongoing turmoil in the Intelligence Community Whistleblowing & Source Protection (ICW&SP) directorate may also be jeopardizing protections for national security whistleblowers. In 2013 the directorate was created to help promote whistleblowing as an internal function. Former whistleblower Dan Meyer was appointed as ICW&SP’s executive director, a selection that was praised by civil society groups. But in November 2017, Meyer was placed on administrative leave and escorted from his office. In March, Meyer was fired for undisclosed reasons in a process that was—in the words of two U.S. senators—“marked by procedural irregularities and serious conflicts of interest.”
There are concerns about other national security inspector generals’ offices as well. President Trump’s nominee for the CIA inspector general has at least three open whistleblower retaliation cases against him. The NSA’s Inspector General, George Ellard, was actually fired for retaliating against a subordinate who reported wasteful spending, before the Department of Defense stepped in to reverse Ellard’s termination.
In this atmosphere, is it any wonder that some intelligence community whistleblowers feel unsupported by the government when they report wrongdoing, and therefore consider going to the press? To correct this, Congress should pass a law that protects national security whistleblowers from retaliation, as an unenforceable presidential policy directive is not sufficient. Until then, politicians cannot, in good faith, claim that national security whistleblowers should use internal channels rather than going to the media, as those channels are apparently insufficient to protect whistleblowers from retaliation.
Fired Pentagon Whistleblower Goes Public in Attack on IG’s Office
Source: Gov Exec
John Crane, 60, who spent 25 years in government before he was fired as an assistant Defense Department inspector general in 2013, went public with a series of accusations that key officials in the watchdog’s office retaliated against whistleblowers, destroyed permanent records and altered audits under political pressure.
He has filed those charges with the Office of Special Counsel, which so far has referred one to the Justice Department for detailed investigation, though others may soon follow….
U.S. Intelligence Shuts Down Damning Report on Whistleblower Retaliation
Source: The Daily Beast
A top watchdog investigated 190 cases of alleged retaliation against whistleblowers — and found that intelligence bureaucrats only once ruled in favor of the whistleblower.
The nation’s top intelligence watchdog put the brakes on a report last year that uncovered whistleblower reprisal issues within America’s spy agencies, The Daily Beast has learned. The move concealed a finding that the agencies—including the CIA and the NSA—were failing to protect intelligence workers who report waste, fraud, abuse, or criminality up the chain of command.
The investigators looked into 190 cases of alleged reprisal in six agencies, and uncovered a shocking pattern. In only one case out of the 190 did the agencies find in favor of the whistleblower — and that case took 742 days to complete. Other cases remained open longer. One complaint from 2010 was still waiting for a ruling.
But the framework was remarkably consistent: Over and over and over again, intelligence inspectors ruled that the agency was in the right, and the whistleblowers were almost always wrong.
The report was near completion following a six-month-long inspection run out of the Intelligence Community Inspector General office. It was aborted in April by the new acting head of the office, Wayne Stone…. Stone also sequestered the mountain of documents and data produced in the inspection, the product of three staff-years of work. The incident was never publicly disclosed by the office, and escaped mention in the unclassified version of the IC IG’s semiannual report to Congress….
The affair casts serious doubt on the intelligence agencies’ fundamental pact with the rank and file: that workers who properly report perceived wrongdoing through approved channels won’t lose their job or, worse, their security clearance, as a result. It also adds another layer of controversy to the Intelligence Community Inspector General office, already under fire for cuts to its whistleblower protection program and the unexpected sacking of the program’s executive director in December. In a confirmation hearing last month, Trump’s pick to head the watchdog agency acknowledged the apparent chaos in the office….
Stone shut down the whistleblowing inspection just days after taking over for Charles McCullough III, who’d served as the intelligence community inspector general from the day the office was founded in 2010 until his retirement in March of last year.”…
The inspectors general at the six agencies had received 190 allegations of reprisal from 2010 through 2016, according to unclassified memoranda from the inspection seen by The Daily Beast. Less than half, 61 complaints, had been investigated, and of those 57 were ruled unsubstantiated.
The NSA had received 56 of the retaliation complaints and investigated 12; the CIA got 62, investigated 13 and shunted 21 to other offices, primarily Equal Employment Opportunity. The Defense Intelligence Agency, or DIA, received 50 complaints, and investigated 19. In the entire batch of 190 cases, only once did an OIG find in favor of the whistleblower. That was in a DIA case that took 742 days to complete. Other cases remained open longer. One complaint from 2010 was still waiting for a ruling….
Beyond the numbers, the inspectors found endless obstacles to effective whistleblower protection in the spy agencies, according to documents from the prove. There was no clear standard for conducting reprisal investigations; even the standard of proof — probable cause? preponderance of the evidence? — was murky to the OIGs. The investigation manuals at most agencies gave retaliation probes only cursory attention….
In March the inspection moved into the final stage and the team was preparing the official report, earmarked for Donald Trump’s newly confirmed director of national intelligence, Daniel Coats. Copies would have gone to all the intelligence IGs, as well, according to Johnson, and probably to Congress. A public release was also on the table.
Instead, it went nowhere….
Though the whistleblower report never appeared, last October the nonprofit Project on Government Oversight got ahold of a leaked copy of one of the inspection memos. They quoted from it in an article. “A complainant alleging reprisal for making a protected disclosure has a minimal chance to have a complaint processed and adjudicated in a timely and complete manner.”
Calling the language “stark,” Dianne Feinstein brought up the memo the next day in a tense exchange at the Senate confirmation hearing for Christopher Sharpley, the acting CIA inspector general and Trump’s pick for the permanent position.
“I would ask that you provide a copy of that document to our office, the Intelligence Committee’s office,” she told Sharpley.
“Senator, I am unfamiliar with that document,” said Sharpley, seemingly taken aback. “I am not aware of its contents… The IC IG did not make me aware of it as acting IG at CIA. This is the first I’m hearing of this particular program.”
Key Intel Whistleblower Official Fired as Spy Agencies Face Oversight Crisis
The lead staffer dedicated to protecting Intelligence Community employees who internally report misconduct was terminated earlier this month, despite protests from Senators and the whistleblower advocacy community, Government Executive reported last week.
The firing of Dan Meyer, who led the Whistleblowing and Source Protection Program at the Office of the Intelligence Community Inspector General, or IC IG, may have wide repercussions. He was forced out of the pivotal job at a time when whistleblowers may already be wary of trusting that their jobs will be safe due to allegations of misconduct involving the handling of whistleblower complaints by inspectors general in other intelligence agencies. It’s now not clear who, if anyone, is doing his job….
In fact, Meyer even lodged his own complaint at one point, alleging he was punished for disclosing misconduct earlier in his career while working at the Defense Department Office of Inspector General.
By last fall, trouble was brewing for Meyer again. He was essentially banned from actually doing his job, Foreign Policy reported in October:
“Meyer, whose job is to talk to intelligence community whistleblowers, can no longer talk to whistleblowers. He has been barred from communicating with whistleblowers, the main responsibility of his job as the executive director for intelligence community whistleblowing and source protection. He is currently working on an instructional pamphlet for whistleblowers, and he will have no duties to perform after he’s completed that work.
He can also no longer brief the agencies or the congressional committees on his work as he’s done in the past, send out his whistleblower newsletter, or conduct outreach. And he has no deputy or staff.”
Then in November, Meyer was suspended and escorted out of the building while his office was “sealed off with crime-scene tape,” according to Government Executive.
Meyer maintains this was retaliation against him for blowing the whistle again. In a January statement, Meyer said that he had received a poor performance review and was accused of “security infractions” after raising concerns about a “systematic failure” to implement whistleblower protections….
His position was left without key protections against retaliation because he remained categorized as a probationary employee due to an error by the previous management of the office, Meyer told POGO. “No whistleblowing advocate managing a program with integrity can serve in such a status, especially if it handles internal and external allegations against senior officials,” he said.
In a letter to Director of National Intelligence Dan Coats—whose office houses the Intelligence Community Inspector General—earlier this month, Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) stated that Meyer “was terminated in a process marked by procedural irregularities and serious conflicts of interest” while the agency’s acting leadership “demonstrated a lack of support for the critical whistleblower protection mission of the office.”…
The gap left by Meyer’s ouster is particularly troubling because whistleblower retaliation concerns are so pervasive in the U.S. intelligence community that they even have infected the offices that are supposed to be a safe haven for those who report abuse.
In 2016, POGO first reported that the National Security Agency’s then-Inspector General, George Ellard, was placed on leave after a review panel composed of three inspectors general determined he had retaliated against a whistleblower. (Another review found Ellard did not retaliate; he still works at NSA in a different role.) In another case, the acting CIA Inspector General appears to have misled Congress about pending reprisals claims against him in his own confirmation hearing; news of those claims was initially reported by POGO. The Inspector General Office at the Defense Intelligence Agency, the military’s primary spy shop, is also reportedly in chaos….
Grassley Wins Declassification of CIA Documents on Monitoring Whistleblowers
Source: Gov Exec
After a four-and-a-half year wait, one of the Senate’s key whistleblower advocates succeeded in arranging the declassification of documents he says show that the CIA inappropriately monitored congressional staff correspondence with whistleblowers.
Sen. Chuck Grassley, R-Iowa, on Thursday released a pair of “congressional notifications” from 2014 just delivered to him by newly installed inspector general for the Intelligence Community Michael Atkinson.
To trained eyes, the notifications and an accompanying, limited-distribution report show that “during the Obama administration, the Central Intelligence Agency obtained congressional communications about pending and developing whistleblower complaints,” said Grassley. His years-long pursuit of the documents dovetails with his more recent interest in obtaining disclosures of more documents pertaining to the termination of Dan Meyer, who for years was the ombudsman for the Intelligence Community.
One of the documents, written by then-IC Inspector General Chuck McCullough, expressed concern that the CIA’s role creates “a chilling effect” on whistleblower disclosures….
“The information contained in the two [congressional notifications] raises serious policy implications as well as potential constitutional separation-of-powers issues,” Grassley said in a release.
“The CNs do not appear to contain any information about sources or methods, and there is a strong public interest in their content. I do not believe they need to be classified at all and they should be released in their entirety. Even if the IC IG disagrees, and believes some portion of the information does need to remain classified, it is still obligated to conduct a line-by-line analysis as part of the declassification review process and segregate all information that can be released.”
CIA Inspector General Nominee Has Three Open Whistleblower Retaliation Cases Implicating Him
One of the whistleblowers who has complained about Sharpley is Jonathan Kaplan, a recently retired 33-year veteran investigator at the Agency. He alleges that he was retaliated against by Sharpley and others because of his legally protected communications with the Senate and House Committees on Intelligence and with the Intelligence Community’s Office of the Inspector General.
Kaplan says he had gone to the Committees and others with a concern that the CIA IG’s investigative and oversight capabilities were being compromised. Soon after, he said, retaliators including Sharpley placed false and derogatory information in his personal security file at the Agency, leading to the loss of his security clearance, rendering his continued CIA employment untenable. “From my personal observation and experience, Mr. Sharpley condoned retaliatory actions against CIA employees including me, indicating that ethical and professional standards are not being met,” Kaplan said.
In that context, Sharpley’s alleged acts of retaliation form part of a broader pattern plaguing America’s spy agencies, a pattern cited in a document obtained by POGO that was also supplied to Congress.
The document dated February 2017, appears on the official letterhead of the Office of the Inspector General of the Intelligence Community and details what it describes as serious flaws in procedures used to investigate retaliation cases across the Intelligence Community. Bearing the title, “Evaluation of Reprisal Protections Pertaining to Whistleblowers with Access to Classified Information,” it is unclassified. The author’s name is redacted.
Its conclusion is stark: “The deficiencies in reprisal protections policies, procedures, and standards in the evaluated agencies are causing a failure to provide reprisal protections for individuals making protected disclosures.” In the context of the document, “protected disclosures” refer to legally sanctioned revelations of alleged wrongdoing by intelligence employees to their superiors or others in the government designated to receive the information.
The document states that, “A complainant alleging reprisal for making a protected disclosure has a minimal chance to have a complaint processed and adjudicated in a timely and complete manner….”
In response to damaging leaks, then-President Obama issued Presidential Policy Directive 19 (PPD-19), parts of which were enacted into law, establishing procedures under which whistleblowers could report waste, fraud, and abuse without fear of retaliation.
But the document produced by the Intelligence Community’s IG, which covers 17 U.S. spy agencies, found that many components are not following, “legally mandated … policies, procedures and standards…. Causing non-substantiation of reprisal claims, incomplete investigations, and for complaints not to be processed.” The document says “these deficiencies are significantly undermining the intent of PPD-19 and strongly suggest that there has been no impact by PPD-19 to protect whistleblowers in the evaluated agencies.”
As evidence, the document reports that the Intelligence Community IG substantiated “only one reprisal allegation” during a six-year period stretching from fiscal year 2010 through fiscal year 2016, and that case took 742 days to complete—well beyond the 240-day limit prescribed in regulation. The document does not mention the substantiated retaliation case against Ellard, the NSA IG, whose termination was subsequently overturned.
Turmoil In CIA Investigations
Sharpley’s alleged acts of retaliation appear to spring from a little-known period when an investigation unit of the CIA’s Office of Inspector General was experiencing unusual turmoil.
According to a series of memoranda and other records obtained by POGO, including some documents previously posted by the website GovernmentAttic.org, the conflict began following then-President Obama’s appointment of David Buckley, a former Congressional staffer, as CIA Inspector General in 2010. Buckley recruited Sharpley as his deputy, and the pair executed wide-ranging personnel and management changes in the office’s investigation division, then staffed with more than 30 people. Among other things, the changes were designed to introduce criminal investigation techniques in which many staff were untrained.
One employee’s memo from October 2012 cites actions featuring an element of “cruelty and malice” by IG management as sweeping changes were imposed on a group of veteran investigators, many of whom were over 40, a fact that later led to charges of age discrimination. Beyond that, some memos cite a “hostile work environment,” and “abruptly relieving certain managers and investigators of substantive investigative case work.” At another point, the memo says, “The reorganization … is the latest in a series of intimidating and bullying tactics employed to move out current INV (investigation division) staff members and make room for new hires.”
One member of the INV staff told POGO that Sharpley was the office “enforcer.” Another memo describes an occasion when Sharpley and a colleague summarily disbanded an INV unit —as its four senior staffers were told to join a newly-created group to investigate leaks. “There is only one problem,” the memo goes on to say, “this OIG has no ongoing leak investigations. So, these senior special agents and managers hardly have any meaningful reasons to show up to work, except for preserving their spaces until they are graciously ushered out the door by Buckley and/or Sharpley.”
At another point, the memo accuses CIA IG management of “misuse of position, abuse of resources, including unnecessary use of IG subpoenas, corruption, waste of taxpayer funds, and more. These are the very elements than an IG is expected to prevent and protect the Agency against.”
Buckley and his management team, including Sharpley, were well aware of their employees’ discontent. Roughly ten or more complaints were brought to an Equal Employment Opportunity Commission unit inside the CIA to consider evidence of workplace violations, but did not return findings that supported the claims. In 2014, Buckley and Sharpley referred some of the matters to the Council of the Inspectors General on Integrity and Efficiency (CIGIE)—a federal government-wide group comprised of all Inspectors General created by law. It declined to look into the matter, but brought in an outside examiner to do a report. That report found only minor deficiencies.
However, some of these same matters involving Sharpley, POGO has been told, are still being reviewed by the Intelligence Community IG as part of still-open retaliation complaints against him. One case involving Sharpley is slated to be reviewed by an administrative judge of the Equal Employment Opportunity Commission.
Underscoring the stakes, Senator Angus King (I-ME) said in a Senate Intelligence Committee hearing last year that the inspector general is “one of the most important positions in government, particularly in the intelligence agencies, which don’t have the oversight that other more public agencies do.”
Administration’s Nominee for CIA Watchdog Allegedly Misled Congress
Source: Pro Publica
“The documents from Bakaj and Kaplan reveal a conflict between the CIA inspector general’s office and the Office of the Intelligence Community Inspector General. Established in 2010, the latter considers appeals of decisions made by the inspector general offices of the various intelligence agencies and coordinates broad investigations.
Both men, who were special agents/investigators at the CIA inspector general’s office, say their supervisors retaliated against them after they cooperated with inquiries into the office in 2014. Kaplan provided information about withholding of material evidence in a criminal case and was interviewed by staffers for congressional oversight committees, according to his complaint.
Bakaj, who is also an attorney and specialized in whistleblower reprisal investigations, wrote in his complaint that he spoke with an investigator from the intelligence community’s inspector general about improper whistleblower investigations at the CIA. He also wrote that he was instrumental in directing and protecting people coming forward with information about misconduct in the same case in which Kaplan cooperated.
“The CIA whistleblowers who suffered reprisal were trying to report some really serious criminal activity within the inspector general’s office — the fabrication of evidence in a criminal case where the people who did it were never punished,” said John Tye, an attorney who represents both men and is a founder of the nonprofit Whistleblower Aid law firm.
As a CIA official, Bakaj had authored the CIA’s rules of whistleblower protection and reprisal investigation in 2013 and 2014. Those rules say, among other things, that senior management can’t change the security clearance of employees because they assist in investigations. In his case, he contends, those policies weren’t followed.
Less than a month after he cooperated with the investigation, his security clearance was suspended and he was placed on administrative leave. He left the agency about a year later.
Bakaj wrote in his complaints that he was told the reason for his punishment was that he had mishandled classified information when he cooperated with the intelligence community inquiry and that he had misused computers by searching his department’s database for terms related to the inquiry.
Senior officials told him there was a “war” between the CIA’s inspector general and the intelligence community inspector general, and that CIA IG staff were “prohibited from cooperating” with the broader agency, Bakaj wrote.
“The situation within CIA OIG is a systemic mission failure that must be corrected,” he wrote.
Like Bakaj, Kaplan alleges he ultimately lost his security clearance after searching for terms in a computer system. He conducted the search in order to facilitate a meeting with the House Intelligence Committee staff about misconduct at the CIA inspector general’s office, he wrote.
Bakaj’s matter was referred to the Department of Homeland Security’s inspector general’s office because intelligence investigators had a conflict of interest. The CIA IG’s office had originally reviewed his complaint against itself and sent Bakaj a brief letter saying it had determined the matter “did not satisfy the requirements for a whistleblower retaliation claim,” but he appealed that decision to the intelligence community IG. DHS did not respond to a request for comment about the complaint.
Rob Johnson, former deputy inspector general of the intelligence community who left the office this part March, said it was highly unusual for an inspector general to review a complaint against its own office. “An IG shouldn’t be investigating themselves,” he said. He added that the intelligence community inspector general’s office had encountered pushback from other intelligence IGs soon after it was formed in 2010….
Kaplan said he was “deeply concerned” about Sharpley’s nomination and that the office under his direction was “toxic, oppressive and totally dysfunctional.”
CIA Watchdog ‘Accidentally Destroyed’ Copy of ‘Torture Report’
Source: The Hill
The CIA’s inspector general has accidentally deleted its only copy of a controversial Senate report about the agency’s history of brutal interrogation techniques, opening a new front in the long battle over the document….
But at some point last summer, both the electronic copy and a hard disk were destroyed, the watchdog told Congress.
Sen. Dianne Feinstein (D-Calif.), the driving force behind the 2014 report, sent letters to the CIA and Justice Department on Friday confirming that the spy agency’s inspector general “has misplaced and/or accidentally destroyed” its copy of the report….
Still, the episode is a humiliating one for the CIA inspector general and has inflamed human rights advocates hoping to make the report public. Cori Crider, a director with the international rights group Reprieve, called it “stunning,” and suggested that it is part of a broader effort to erase the practices from history.
“One worries that no one is minding the store,” Crider said in a statement. The Senate report on so-called enhanced interrogation techniques, such as waterboarding and sleep deprivation, has been at the center of a years-long battle on the Intelligence Committee….
The Justice Department has told agencies not to open the report’s file, presumably to prevent it from coming under the scope of the Freedom of Information Act, which does not apply to documents of Congress. Last week, a federal appeals court panel blocked an effort to reveal the full 6,700-page report under the open records law, claiming that it “always has been a congressional document.”…
But Feinstein — the top Democrat on the Intelligence Committee — is pushing for the CIA inspector general to obtain a new copy of the report to replace the one that disappeared.
“Your prompt response will allay my concern that this was more than an ‘accident,’” Feinstein told CIA Director John Brennan in Friday’s letter. “The CIA IG should have a copy of the full study because the report includes extensive information directly related to the IG’s ongoing oversight of the CIA.””
CIA Affirms It Spied on Senate Panel
Source: NY Times
“The CIA unconstitutionally spied on Congress by hacking into Senate intelligence committee computers. This grave misconduct is not only illegal, but it violates the US constitution’s requirement of separation of powers. These offenses, along with other errors in judgment by some at the CIA, demonstrate a tremendous failure of leadership, and there must be consequences.” – Senator Mark Udall
An internal investigation by the C.I.A. has found that its officers penetrated a computer network used by the Senate Intelligence Committee in preparing its damning report on the C.I.A.’s detention and interrogation program.
The report by the agency’s inspector general also found that C.I.A. officers read the emails of the Senate investigators and sent a criminal referral to the Justice Department based on false information, according to a summary of findings made public on Thursday. One official with knowledge of the report’s conclusions said the investigation also discovered that the officers created a false online identity to gain access on more than one occasion to computers used by the committee staff.
The inspector general’s account of how the C.I.A. secretly monitored a congressional committee charged with supervising its activities touched off angry criticism from members of the Senate and amounted to vindication for Senator Dianne Feinstein of California, the committee’s Democratic chairwoman, who excoriated the C.I.A. in March when the agency’s monitoring of committee investigators became public….
The C.I.A. officials penetrated the computer network when they came to suspect that the committee’s staff had gained unauthorized access to an internal C.I.A. review of the detention program that the spy agency never intended to give to Congress. A C.I.A. lawyer then referred the agency’s suspicions to the Justice Department to determine whether the committee staff broke the law when it obtained that document. The inspector general report said that there was no “factual basis” for this referral, which the Justice Department has declined to investigate, because the lawyer had been provided inaccurate information. The report said that the three information technology officers “demonstrated a lack of candor about their activities” during interviews with the inspector general.
The dispute brought relations between the spy agency and lawmakers to a new low, as the two sides traded a host of accusations — from computer hacking to violating constitutional principles of separation of powers….
Senator Harry Reid of Nevada, the majority leader, called the C.I.A.’s actions “appalling.” Senator Angus King of Maine, an independent, said that the spy agency’s actions violated both the spirit and the letter of the constitutional separation of powers.
As he put it: “How do we do our oversight if we can’t believe what is being represented to us in our committee?”
CIA’s ‘Surveillance State’ is Operating Against Us All
Source: The Hill
Maybe you once thought the CIA wasn’t supposed to spy on Americans here in the United States.
That concept is so yesteryear…. The latest outrage is found in newly declassified documents from 2014. They reveal the CIA not only intercepted emails of U.S. citizens but they were emails of the most sensitive kind — written to Congress and involving whistleblowers reporting alleged wrongdoing within the Intelligence Community.
The disclosures, kept secret until now, are two letters of “congressional notification” from the Intelligence Community inspector general at the time, Charles McCullough. He stated that during “routine counterintelligence monitoring of government computer systems,” the CIA collected emails between congressional staff and the CIA’s head of whistleblowing and source protection.
McCullough added that he was concerned about the CIA’s “potential compromise to whistleblower confidentiality and the consequent ‘chilling effect’ that the present [counterintelligence] monitoring system might have on Intelligence Community whistleblowing.”
“Most of these emails concerned pending and developing whistleblower complaints,” McCullough stated….
The only reason we know any of this now is thanks to Sen. Chuck Grassley (R-Iowa), whose staffers were among those spied on. Grassley says it took four years for him to get the shocking “congressional notifications” declassified so they could be made public. First, Grassley says, Clapper and Brennan dragged their feet, blocking their release. Their successors in the Trump administration were no more responsive. Only when Grassley recently appealed to current Intelligence Community Inspector General Michael Atkinson, who was sworn in on May 17, was the material finally declassified.
“The fact that the CIA under the Obama administration was reading congressional staff’s emails about Intelligence Community whistleblowers raises serious policy concerns, as well as potential constitutional separation-of-powers issues that must be discussed publicly,” wrote Grassley in a statement.
Legal or not, there was a time when this news would have so shocked our sensibilities — and would have been considered so antithetical to our Constitution by so many — that it would have prompted a swift, national outcry.
But today, we’ve grown numb. Outrage has been replaced by a cynical, “Who’s surprised about that?” or the persistent belief that “Nothing’s really going to be done about it,”… in part to keep them — and us — from learning about and digging into an even bigger scandal: our Intelligence Community increasingly spying on its own citizens, journalists, members of Congress and political enemies for the better part of two decades, if not longer.
A Crisis of Leadership at the Military Intelligence Agency’s Watchdog Office
Source: Foreign Policy
Since two whistleblowers stepped forward two years ago, morale at the Defense Intelligence Agency Office of the Inspector General has plummeted.
Sitting in the lobby of a hotel near the Pentagon’s intelligence agency headquarters, David Steele, a nearly 40-year military and intelligence veteran, took out a list of the members of the unit he once led and highlighted name after name until it was nearly all bright yellow.
They were the names of people who’ve left their jobs at the Defense Intelligence Agency, or who have been trying to find new ones in the last two years. Almost everyone who once worked for Steele in the Office of the Inspector General has fled the agency, or is looking to leave, an exodus he attributes to the toxic atmosphere created by the official in charge.
“They’re all fleeing like rats,” Ron Foster, former head of investigations at the intelligence agency’s Inspector General’s Office, told Foreign Policy during the same interview. Foster, also a longtime military and intelligence employee, with experience in the FBI, said investigations and law enforcement are his bread and butter. He brought to the meeting a carefully wrapped stack of gold medals in wooden frames, awards he’s received for outstanding service.
Both Steele and Foster said Kristi Waschull, the inspector general of the Defense Intelligence Agency and a former manager at the human resources department at the DIA, repeatedly asked him and his team to soften language in inspection and investigative reports about problems and crimes within the agency, lied, stanched the flow of published reports, and retaliated against them and several colleagues when they challenged her ability to conduct independent investigations of agency management.
Waschull did not respond directly to a request for comment….
Steele and Foster can’t discuss some of the details of their investigations and inspections, because that information is classified. But they were cleared to discuss the broad strokes of their ongoing saga.
Foster and Steele were fired, or involuntarily reassigned, along with the staff director on the same day with no warning, according to descriptions and emails provided to FP. Now, Waschull’s employees live in perpetual fear that if they cross her, they could be next, Steele and Foster said, after having spoken with a number of current and former employees.
Waschull has come up with different reasons, like career opportunity and poor performance, for why she forced Steele and Foster out. They have meticulously documented her allegations and why she is wrong, they said.
Yet their complaints have languished for over two years now, and in the meantime, no one is policing the Defense Intelligence Agency.
“There is no oversight,” Steele continued. Whistleblower protection laws “assume the [inspectors general] are the good guys. What happens when your inspector general is a bad guy?”….
They ultimately escalated the disclosures to the Department of Defense Inspector General, where it has stalled, and the Intelligence Community Inspector General, which is responsible for acting as an objective third party in cases of potential retaliation across the intelligence community. Some of the disclosures have made it to Congress.
While the Intelligence Community Inspector General was originally responsive to Steele, that office has gone through its own turmoil in recent months. The official in charge of whistleblowing at that office, Dan Meyer, has since been suspended pending investigation, as FP previously reported.
“Ever since they neutered Dan Meyer, the program is ineffective,” Steele said.
The DIA Inspector General’s Office, while declining to elaborate on privileged personnel information and matters still under review, told FP the issue was resolved last year, when employee complaints were referred to a body known as the Council of the Inspectors General on Integrity and Efficiency….
However, according to Foster and Steele, the council did not investigate the matter because it said it did not have jurisdiction over intelligence retaliation complaints, and the council never actually spoke to Foster or Steele.
“How are you going to close [the investigation] by talking to the subject and no one else? Where’s the report?” Foster told FP….
In 2016, the agency didn’t publish the results of any new investigations, and if the systemic issues remain unaddressed or ignored by the agency, it could lead to an intelligence community-wide “vulnerability,” Steele told FP.
The inspector general serves a critical role, Steele argues. “We’re the consciousness of the agency, we’re independent,” he said. “We have no dog in this fight.”
As the office stands now, however, it’s not performing that role effectively.
“The inspector general is incapable of policing itself,” he said. “Who’s watching the watchers?”
Why is Mattis Declaring War on Whistleblowers?
Source: American Conservative
Is Secretary of Defense James Mattis creating a hostile workplace for Defense Department whistleblowers? Or is he simply carrying on an anti-whistleblower organizational tradition at the Pentagon that stretches back decades? An examination of recent events and the historical record suggests it’s both, and the implications for taxpayers and American national security are stark.
As the Project on Government Oversight first reported in December 2016, a three-member interagency Inspector General External Review Panel concluded in May 2016 that the then-Inspector General of the National Security Agency (NSA), George Ellard, had, according to POGO, “himself had previously retaliated against an NSA whistleblower[.]” This apparently occurred during the very same period that Ellard had claimed that “Snowden could have come to me.” The panel that reviewed Ellard’s case recommended he be fired, a decision affirmed by NSA Director Mike Rogers.
But there was a catch: the Secretary of Defense had the final word on Ellard’s fate. Outgoing Obama administration Defense Secretary Ash Carter, apparently indifferent to the magnitude of the Ellard case, left office without making a decision.
In the months after Donald Trump became president, rumors swirled inside Washington that Ellard had, in fact, escaped termination. One source, who requested anonymity, reported that Ellard had been seen recently on the NSA campus at Ft. Meade, Maryland. That report, it turns out, was accurate….
The Pentagon offered no explanation as to why Mattis chose to overrule the IG External Review Panel and NSA’s current director, but the message is abundantly clear: If you work in Pentagon management and retaliate against a whistleblower, there’s a good chance you’ll keep your job. And if you are a prospective whistleblower, the message is equally clear: You blow the whistle at your own risk.
Unfortunately, the Ellard case is not unique within the Pentagon. And as a series of these cases demonstrate, when the internal watchdog function breaks down at the Defense Department, not only are taxpayers ripped off, but intelligence failures costing the lives of thousands of Americans can result….
The IG report also noted that Hayden had ignored multiple internal reviews that showed THINTHREAD superior to his moribund TRAILBLAZER, and that he delayed deployment of THINTHREAD to multiple NSA collection sites, in violation of Congressional direction to do so (p. 4). Hayden’s mismanagement of NSA and insubordination with Congress cost taxpayers hundreds of millions of dollars and arguably the lives of nearly 3,000 Americans on 9/11.
Sadly, the misconduct of Pentagon officials didn’t end with the publication of that DoD IG report over a decade ago…. In 2016, OSC concluded that DoD IG officials engaged in evidence destruction during Drake’s trial….
As the foregoing post-9/11 history of the Pentagon demonstrates, Ellard’s misconduct is just the latest example of the culture of corruption at NSA that Ellard’s nominated replacement, Robert Storch, will have to end if NSA employees are to believe that fraud or criminal complaints can be reported without fear of retaliation.
At Storch’s all-too-brief confirmation hearing last week before the Senate Intelligence Committee, he was not asked about the status of Drake’s case or the misconduct of his predecessor — amazing omissions by one of NSA’s chief Congressional oversight bodies. Unless Congress invests the time to thoroughly investigate, in open session, these past episodes of whistleblower retaliation and programmatic misconduct, we risk still more of the same — more taxpayer money squandered, and more Americans needlessly killed in avoidable intelligence failures.
Holding U.S. Treasurys? Beware: Uncle Sam Can’t Account For $21 Trillion
Source: Forbes, Laurence Kotlikoff & Mark Skidmore
Several months after beginning the [Pentagon] audit, the Federal Accounting Standards Advisory Board (FASAB) posted a new document, which recommended that the government be allowed to misstate and move funds in order to hide expenditures if it is deemed necessary for national security purposes….
Also troubling is the fact that Standard 56 can include publicly traded corporations with significant funding and/or federal government control.
With the change in accounting guidelines, which is a full departure from Generally Accepted Accounting Principles (GAAP), only a few people with high level security clearances have the authority to determine what is deemed to be an issue of national security and these same people will now be allowed to restate financial statements in order to conceal actual expenditures without any disclosure.
No one but those few people would know that such modifications were made, thus making evaluation of government financial statements impossible.
From this point forward, the federal government will keep two sets of books, one modified (and useless) book for the public and one true book that is hidden.
The FASAB recommendation effectively institutionalizes opacity in federal financial reporting. Up till now, many aspects of federal finances have been non-transparent because the government has failed to comply with existing financial reporting laws.
However, at least citizens had the laws working in their favor. Now citizens have no recourse; opacity is now the law of the land, controlled by executive branch authority and policy.
Accounting rules are often thought of as boring and unimportant. In this case, it’s not the case. The new FASAB ruling has enormous and highly dangerous implications for our nation.”
The Pentagon’s New Stealth Bookkeeping
Pulitzer-prize winning National Security Analyst Mark Thompson didn’t pull any punches in this report for the Project On Government Oversight and the Center for Defense Information:
Cleaner Financial Books Apparently Require Some Dirtier Numbers
The Defense Department’s finances have been an unauditable black hole for decades. But as the military has struggled mightily in recent years to remove the cobwebs and fog from its books, it has run into another problem: where to hide its work on classified programs?
Not to fear: where there’s a will, there’s a waiver.
That’s why the Pentagon (and CIA) have asked the U.S. government’s accounting overlords to let them fudge their costs in the name of national security. Think of it as the latest in fiscal transparency: while the U.S. military struggles to make its accounts finally auditable, it needs new nooks and crannies to mask spending. Only U.S. national-security apparatchiks would plead for future budget secrecy to justify past budget sloppiness.
And they have received… approval for the change from the Federal Accounting Standards Advisory Board (FASAB), which sets the so-called “generally accepted accounting principles” for federal bean-counters. Government accountants may “modify” spending levels, the accounting agency says, and allow spending “to be excluded from one reporting entity and consolidated into another reporting entity” to keep work on classified programs secret….
The push for better bookkeeping leavened with lying wasn’t unanimous. The Pentagon Inspector General warned the change would represent a “major shift” in federal fiscal management while doing little to “effectively protect classified information.” The change “jeopardizes the financial statements’ usefulness and provides financial managers with an arbitrary method of reporting accounting information,” the IG said in its filing opposing the new math. “We do not agree that incorporating summary-level dollar amounts in the overall statements will necessarily result in the release of classified information.”
Outside experts agreed. Gordon Adams, who oversaw national-security spending at OMB during the Clinton Administration, says the change represents a new kind of “duck and cover,” the Cold War exercise where schoolchildren would crawl under their desks to avoid nuclear fallout. “The goal is to duck the need for public reporting by concealing—covering—the numbers somewhere else,” Adams says. “They don’t provide details or examples, probably because that would give the game away, but the goal is to conceal the classified data by hiding it in plain sight in some other number.”
Congressional budget veterans find the proposal unsettling, especially given what they say is the weaker oversight lawmakers now give to national-security spending. “Lots of CIA spending used to be hidden in the Pentagon budget, and it’s still there — but we can’t find it anymore,” says one Capitol Hill budget hawk who has spent decades spelunking military spending. Speaking anonymously, he fears the proposed accounting tweak will give the Pentagon free rein to use its so-called “unsupported adjustments” — known colloquially as “plugged figures” — that have long been used to mask Pentagon spending, dubious and otherwise.
U.S. defense and intelligence agencies have long argued that revealing too much budgetary information can harm national security. They secretly spent more than $50 billion on their “black budget” in 2013, according to a tally intelligence contractor Edward Snowden provided to the Washington Post. But the Pentagon also hides spending on well-publicized programs like its fledgling B-21 bomber….
“Seventeen years after 9/11 and we still can’t get out from under the ‘it’s for national security, don’t worry about it’ rubber-stamping of too much data and information that shouldn’t, and otherwise wouldn’t, qualify as needing to be classified,” says Mackenzie Eaglen, a defense analyst at the American Enterprise Institute. “The problem with this rubber-stamping is regular folks like us can’t get to the core, or raw, data to better question or shine light on the final decision. We can only pooh-pooh the outcome weakly.”
Massive Pentagon Agency Lost Track of Hundreds of Millions of Dollars
Source: Politico, citing Ernst & Young audit
A damning outside review finds that the Defense Logistics Agency has lost track of where it spent the money.
Ernst & Young found that the Defense Logistics Agency failed to properly document more than $800 million in construction projects, just one of a series of examples where it lacks a paper trail for millions of dollars in property and equipment. Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums [of tax money] it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.
The audit raises new questions about whether the Defense Department can responsibly manage its $700 billion annual budget — let alone the additional billions that Trump plans to propose this month. The department has never undergone a full audit despite a congressional mandate — and to some lawmakers, the messy state of the Defense Logistics Agency’s books indicates one may never even be possible.
“If you can’t follow the money, you aren’t going to be able to do an audit,” said Sen. Chuck Grassley, an Iowa Republican and senior member of the Budget and Finance committees, who has pushed successive administrations to clean up the Pentagon’s notoriously wasteful and disorganized accounting system.
The $40 billion-a-year logistics agency is a test case in how unachievable that task may be. The DLA serves as the Walmart of the military, with 25,000 employees who process roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a host of other federal agencies — for everything from poultry to pharmaceuticals, precious metals and aircraft parts.
But as the auditors found, the agency often has little solid evidence for where much of that money is going. That bodes ill for ever getting a handle on spending at the Defense Department as a whole, which has a combined $2.2 trillion in assets.
In one part of the audit, completed in mid-December, Ernst & Young found that misstatements in the agency’s books totaled at least $465 million for construction projects it financed for the Army Corps of Engineers and other agencies. For construction projects designated as still “in progress,” meanwhile, it didn’t have sufficient documentation — or any documentation at all — for another $384 million worth of spending.
The agency also couldn’t produce supporting evidence for many items that are documented in some form — including records for $100 million worth of assets in the computer systems that conduct the agency’s day-to-day business.
“The documentation, such as the evidence demonstrating that the asset was tested and accepted, is not retained or available,” it said.
The report, which covers the fiscal year that ended Sept. 30, 2016, also found that $46 million in computer assets were “inappropriately recorded” as belonging to the Defense Logistics Agency. It also warned that the agency cannot reconcile balances from its general ledger with the Treasury Department.
Response to First Full Pentagon Audit Delayed Amid Staff Shake-Up
Source: Washington Post
The Defense Department had planned to brief Congress on the results of its department-wide financial audit in January 2019. Instead, it asked for more time.
Last year the Pentagon completed its first department-wide financial audit, a massive effort that was continually put off since it was first called for in a 1990 law. Whether it becomes an annual tradition remains to be seen; the department has already missed a January 2019 deadline to brief Congress on the status of reform efforts related to its first audit, and it faces a November 2019 deadline to complete the next one.
The effort is complicated by a leadership transition at the highest levels of the Pentagon. The first audit was spearheaded by David Norquist, an accountant and longtime official who serves as comptroller and chief financial officer. But after Shanahan was elevated, Norquist is now performing the duties of the deputy defense secretary.
Lawmakers said they are concerned that Norquist’s dual roles could draw his attention away from audit activities as the Pentagon functions without a permanent secretary. A Defense Department official speaking on the condition of anonymity to discuss internal staffing issues said Norquist is ‘still driving the audit’ even as he takes on new duties…
On the whole, the Pentagon received a failing grade: Only five [out of 21] Defense Department agencies received clean opinions. It found glaring shortcomings in the Department’s management of its IT systems, possibly making military information systems vulnerable to hackers. And it found that the Department did not have the necessary tracking systems to fully keep tabs on money flowing in and out….
The department has fallen behind its schedule for fixing issues raised by the last audit. According to its most recent published timeline for completing the audit, the department was due to brief Congress on the findings and the status of its corrective action plan in January 2019. That briefing has not happened….
Watchdog groups questioned whether audit activities are still on track.
‘I’m keeping my fingers crossed that this isn’t a delay tactic to try to put this off indefinitely,’ said Dan Grazier, a former Marine Corps captain who is a military fellow at the Project On Government Oversight, a watchdog group. ‘Time will only tell based on the past performance of the Pentagon trying to avoid this process.’”
Our Man From Boeing
Source: Center for Defense Information
Has the Arms Industry Captured Trump’s Pentagon?
The way personnel spin through Washington’s infamous revolving door between the Pentagon and the arms industry is nothing new. That door, however, is moving ever faster with the appointment of Patrick Shanahan, who spent 30 years at Boeing, the Pentagon’s second largest contractor….
No secretary of defense in recent memory has had such a long career in the arms industry and so little experience in government or the military. For most of that career, in fact, his main focus was winning defense contracts for Boeing, not crafting effective defense policies. While the Pentagon should be focused on protecting the country, the arms industry operates in the pursuit of profit, even when that means selling weapons systems to countries working against American national security interests….
Shanahan’s new role raises questions about whether what is in the best interest of Boeing—bigger defense budgets and giant contracts for unaffordable and ineffective weaponry or aircraft—is what’s in the best interest of the public….
There is already evidence, however, that he will do anything but refrain from overseeing, and so promoting, his old firm. Take Boeing’s F-15X, for example. Against the wishes of the Air Force, the Pentagon decided to invest at least $1.2 billion in that fighter aircraft, an upgraded version of the Boeing F-15C/D, which had been supplanted by Lockheed Martin’s questionable new F-35. There have been reports that Shanahan has already trashed Lockheed, Boeing’s top competitor, in discussions inside the Pentagon. According to Bloomberg News, the decision to invest in the F-15X was due, in part at least, to “prodding” from him, when he was still deputy secretary of defense….
In addition, Shanahan will be developing policies and programs sure to directly affect that company’s bottom line. Among them, he’ll be setting the DoD’s priorities when it comes to addressing perceived threats. His initial message on his first day as acting secretary, for instance, was summarized as “China, China, China.” ….
“I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product.” – THEN-CANDIDATE DONALD TRUMP…
He’s advocated, for example, giving the Space Development Agency, the body that will be charged with developing military space assets, authority “on steroids” to shove ever more contracts out the door. As a producer of military satellites, Boeing is a major potential beneficiary of just such a development.
Then there’s missile defense, another new presidential favorite. Shanahan presided over Boeing’s missile defense division at a time when one of the systems being developed was the Airborne Laser, meant to zap launched nuclear missiles with lasers installed on Boeing 747 aircraft. The project, a dismal failure, was cancelled after more than $5 billion in taxpayer funds had been sunk into it. The Pentagon’s latest “Star Wars”-style anti-missile technology, whose development was just announced by President Trump, calls for a major investment in an equally impractical set of technologies at a price that Joseph Cirincione of the Ploughshares Fund suggests could reach $1 trillion in the decades to come.
Among Boeing’s current missile-defense programs is the Ground-Based Midcourse Defense System, an array of land-based interceptor missiles that has already failed the majority of its tests. It’s unlikely that it will ever function effectively in a situation in which incoming warheads would be accompanied by large numbers of decoys. The Congressional Budget Office has identified the cancellation of the program as one obvious decision that could save significant sums. But what chance is there that Shanahan would support such a decision, given all those years in which he advocated for that missile-defense system at Boeing?…
Or take nuclear policy. His former company is one of two finalists to build a new intercontinental ballistic missile (ICBM)…. ICBMs are the most dangerous and unnecessary leg of the U.S. nuclear triad…. Even some of their supporters have questioned the need for a brand-new ICBM when older ones could be upgraded. Nuclear hawks might eventually be persuaded to adopt such a position, too, since the cost of the Pentagon’s across-the-board $1.5 trillion “modernization” of the U.S. nuclear arsenal (including the production of new nuclear bombers, missiles, and warheads) will otherwise begin to impinge on department priorities elsewhere. But how likely is Shanahan to seriously entertain even such modest critiques when they threaten to eliminate a huge potential payday for Boeing?
Finally, there is the issue of U.S. support for the brutal war launched by Saudi Arabia and the United Arab Emirates (UAE) in Yemen nearly four years ago. Boeing’s combat planes, bombs, and attack helicopters have played a central role in that conflict, which has killed tens of thousands of civilians, while a Saudi blockade of the country has put millions more at risk of famine. In addition, Boeing continues to benefit from a $480 million contract to service the F-15s it has supplied to the Royal Saudi Air Force.
Here, President Trump is firmly in that company’s corner. “Boeing, Lockheed, Raytheon… I don’t wanna hurt jobs,” he told 60 Minutes. “I don’t wanna lose an order like that [from the Saudi government].” Before his resignation, Secretary of Defense James Mattis was regularly called upon to comment on the Saudi war and help craft U.S. policy towards both that country and the UAE. Where will Shanahan stand on a war significantly fueled by the products of his former company?
There is, in fact, a grim precedent for Shanahan’s present situation. The Intercept and the Wall Street Journal have both reported that State Department Acting Assistant Secretary for Legislative Affairs Charles Faulkner, a former lobbyist for Raytheon, advocated giving Saudi Arabia a clean bill of health on its efforts to avoid hitting civilians in its air strikes in Yemen, lest Raytheon lose a lucrative bomb deal. So much for draining the swamp.
The Revolving Door Spins Both Ways
Shanahan and Faulkner are far from the only former defense executives or lobbyists to populate the Trump administration. Secretary of the Air Force Heather Wilson is a former lobbyist for Lockheed Martin. Ellen Lord, who heads procurement at the Pentagon, worked at Textron, a producer of bombs and military helicopters. Secretary of the Army Mark Esper — rumored as a possible replacement for Shanahan as secretary of defense — was once a top lobbyist at Raytheon. Undersecretary of Defense for Policy John Rood was a senior vice president at Lockheed Martin. And the latest addition to the club is Charles Kupperman, who has been tapped as deputy national security advisor. His career includes stints at both Boeing and Lockheed Martin. (His claim to fame: asserting that the United States could win a nuclear war.)
All of the above, including Patrick Shanahan, spun through that famed revolving door into government posts, but so many former DoD officials and top-level military officers have long spun in the opposite direction. In 1969, for example, Wisconsin Democratic Senator William Proxmire, a legendary Pentagon watchdog, was already describing the problem this way:
“The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation.
It is a real threat to the public interest because it increases the chances of abuse…. How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at of over 2,000 fellow officers doing well on the outside after retirement?”
Or, as a 1983 internal Air Force memo, put it, “If a colonel or a general stands up and makes a fuss about high cost and poor quality, no nice man will come to see him when he retires.”
As a presidential candidate, Donald Trump appeared to recognize the obvious problem of the revolving door and proposed a five-point ethics reform plan to slow it down, if not shut it down entirely. Unfortunately, the ethics executive order he put in place once in office fell wildly short of his campaign ambitions, leaving that revolving door spinning madly. A new report from the Project On Government Oversight has documented 645 cases in 2018 alone in which former government officials held jobs at the top 20 Pentagon contractors. The leader among them? You probably won’t be surprised to learn that it’s Boeing, with 84 such hires.
Retired Vice Admiral Jeffrey Wieringa, who led the Pentagon’s arms sales office, is a case in point. In that role, he helped promote sales of U.S. weaponry globally. Perhaps as a result, he “earned” himself a position as president for global services and support at Boeing less than a year after he retired. He’s far from alone. Retired Rear Admiral Donald Gaddis, a program officer for Navy air systems, also joined the company, as did retired Air Force Major General Jack Catton, Jr., who served as the director of requirements for the Air Combat Command before moving to Boeing. Retired Vice Admiral Mark Harnitchek, the former head of the Defense Logistics Agency, charged with managing $35 billion in goods and services across the DoD annually, similarly became a vice president at Boeing.
Candidate Donald Trump saw the revolving door between government and industry as a problem. “I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product,” he said. As the continuing flow of officials through it suggests, however, as president, he’s done anything but drain that swamp….
Under current law, lobbying restrictions on such former officials can be circumvented if they label themselves “consultants” or “business development executives.” Similarly, former Pentagon officials can go to work for an arms maker they once awarded a contract to as long as they’re hired by a different division of that company. In addition, while Congress requires that the Pentagon track whoever’s moving through that revolving door, the database that does so is both incomplete and not available for public viewing.
Candidate Trump was onto something. However, rather than curbing the blatant conflicts inherent in the revolving door — the ultimate symbol of the military-industrial complex in action — President Trump is actually accelerating them. America is indeed great again, if you happen to be one of those lucky enough to be moving back and forth between plum jobs in the Pentagon and the weapons industry.
Security Gaps Could Let Hackers Edit Government Spending Data, Watchdog Says
Source: NextGov, citing GAO report
A number of security gaps in the Treasury Department’s financial reporting system could leave the door open for online bad actors to tamper with the government’s spending data, a congressional watchdog found.
The Government Accountability Office uncovered eight different flaws in the system used by the department’s Bureau of the Fiscal Service to check the accuracy of the annual financial reports it publishes for every government agency.
The new flaws, when combined with a handful of unresolved issues GAO previously identified within the bureau, could “increase the risk of unauthorized access to, modification of, or disclosure of sensitive data and programs and disruption of critical operations,” investigators wrote in a report published Tuesday.
The Fiscal Service Bureau is responsible for keeping tabs on the government’s debt and monitoring agencies’ revenue, spending, obligations and other fiscal behavior…. auditors said future inaccuracies could go undetected.
Of the eight flaws revealed in the audit, four could be exploited to illegally access and change financial data and resources, three could potentially allow for unauthorized changes to hardware and software security, and one involved the bureau’s risk management system. While no one glitch amounted to a major threat on its own, they collectively represent “a significant deficiency” in the bureau’s internal controls, GAO said.…
Investigators also found the bureau had yet to fully correct 15 different deficiencies GAO identified in previous audits, including some the bureau said had already been addressed. The watchdog gave 10 recommendations for fixing new and existing issues in a separate report that was not made public.”
The Pentagon Has More than 250 Cyber Gaps in Its Networks, Watchdog Says
Source: NextGov, citing DoD IG report
The Defense Department has a lot of work to do to remedy some years-old cyber issues.
More than 250 cybersecurity vulnerabilities, some more than a decade old, remain unaddressed in the Defense Department’s networks, according to an internal watchdog….
The Defense Department Inspector General found the Pentagon had yet to correct 266 cyber vulnerabilities highlighted in numerous watchdog reports between July 2017 and June 2018. Some of the issues were identified long ago — two dated back to 2008 — but the majority were only discovered in the last year, which auditors acknowledge had given the agency little time to fix them.
Most of the vulnerabilities revolved around the agency’s approach to identifying potential gaps in its cyber posture and proactively defending against those threats. Auditors specifically found many shortcomings related to cyber governance, or the policies and practices that help officials monitor risk.
“Without proper governance, the DoD cannot ensure that it effectively identifies and manages cybersecurity risk as it continues to face a growing variety of cyber threats from adversaries, such as offensive cyberspace operations used to disrupt, degrade, or destroy targeted information systems,” the IG wrote in the annual report on the Pentagon’s cyber posture.
In the redacted report, auditors detailed a myriad of issues that had gone unaddressed over the previous year.
The department, for instance, has not yet taken steps to comply with the cybersecurity framework developed by the National Institute of Standards and Technology….
Auditors also reiterated the need to put in place more controls to limit user access and monitor activity across Pentagon networks. The IG on Tuesday published a separate report detailing how inadequate controls left billions of dollars in annual payments potentially vulnerable to bad actors.”
Congress Fed Up With DOD, Other Agencies Disregarding Audits
Source: Roll Call, citing GAO report
Departments have not implemented proposals that could save $87 billion…
Congress is increasingly trying to force federal departments, especially the Pentagon, to quit disregarding audit recommendations on how to get more bang for billions of dollars in taxpayer bucks.
Across the government, departments and agencies had not implemented more than 15,000 proposals from their inspectors general that could save $87 billion — some 38 percent of that money at the Pentagon, according to a 2016 report from two Senate committees, Judiciary and Homeland Security.
Two years later, it turns out, the Defense Department still leads the way in shelving auditors’ ideas.
The Defense Department has more unheeded audit recommendations than any other agency, according to the Government Accountability Office. The Pentagon has failed to implement more than half the 1,122 recommendations that GAO has put forth to improve defense programs since fiscal 2014, the auditors told the Armed Services Committees in a report this week….
“It’s unacceptable that federal agencies ignore thousands of recommendations on how to become more efficient and save taxpayer dollars,” Rep. Mark Walker, R-N.C., told CQ in a statement….
The GAO’s report said that 595 of the 1,122 recommendations for defense programs issued since fiscal 2014 were not implemented, or just over half of them.
That was at least a slight improvement over the previous year, GAO said.
The GAO considered 68 of these recommendations to be “priority” proposals. Yet nearly half of even those more important solutions were also unimplemented.”
Pentagon IG Highlights More Than 1,500 Open Recommendations, Some Dating Back a Decade
Source: Federal News Network, citing DoD IG report
“For the second year in a row, the Defense Department’s inspector general has released what it calls a ‘compendium’ of open recommendations.
The document, which details of all the recommendations the DOD IG has issued to the Pentagon that have been awaiting management attention for at least a year, now includes 1,558 separate matters, up from 1,298 in the 2017 version. Fifty-six have been open for at least five years; seven have been open for eight years or more….
This year’s version singles out 33 recommendations that the IG says could save the department $2.3 billion if DoD implemented each of them.”
Congress Taking Aim at Waste and Fraud
A major portion of wasteful government spending is a broad category known as “improper payments,” which are payments made in the wrong amount (including both overpayments and underpayments), to the wrong people, or for the wrong reason. An estimate from fiscal year 2016 showed $144 billion in misspending that year—an all-time high.
These improper payments result from insufficient financial accountability, and divert dollars from where they are needed….
Also, the Pentagon admitted that, in fiscal year 2016, it made more than $100 million in overpayments to commercial vendors, and more than $400 million in overpayments when reimbursing individuals for travel costs. [A DoD IG audit of the Defense Finance and Accounting Service Commercial Pay Program for FY 2017 found $958 million in improper payments.]
The Watchdogs After Forty Years: Recommendations for Our Nation’s Federal Inspectors General
One of the most glaring problems that needs to be addressed is IG vacancies. Some IG positions remain vacant for years. Our recommendations emphasize the importance of the President and Congress making it a priority to fill these positions. Both must be committed to nominating and vetting qualified candidates who are willing and able to address the nation’s major issues.
Too often, the IGs suffer from inadequate or inconsistent budgets. Resource constraints can directly affect the ability of IGs to conduct effective and consistent oversight…. Congress needs to recognize the importance of proportionally funding IG oversight.
Special Report: Behind the Pentagon’s Doctored Ledgers, a Running Tally of Epic Waste
In this series, Reuters will delve into how an organization that fields the most sophisticated technology in the world to fight wars and spy on enemies has come to rely on an accounting system of antiquated, error-prone computers; how these thousands of duplicative and inefficient systems cost billions of dollars to staff and maintain; how efforts to replace these systems with better ones have ended in costly failures; and how it all adds up to billions of taxpayer dollars a year in losses to mismanagement, theft and fraud.
Linda Woodford spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense’s accounts….
[S]he says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio, office of the Defense Finance and Accounting Service, the Pentagon’s main accounting agency. Using the data they received, Woodford and her fellow DFAS accountants there set about preparing monthly reports to square the Navy’s books with the U.S. Treasury’s – a balancing-the-checkbook maneuver required of all the military services and other Pentagon agencies.
And every month, they encountered the same problem. Numbers were missing. Numbers were clearly wrong. Numbers came with no explanation of how the money had been spent or which congressional appropriation it came from.
“A lot of times there were issues of numbers being inaccurate,” Woodford says. “We didn’t have the detail … for a lot of it.”…
For those, Woodford and her colleagues were told by superiors to take “unsubstantiated change actions” – in other words, enter false numbers, commonly called “plugs,” to make the Navy’s totals match the Treasury’s.
Jeff Yokel, who spent 17 years in senior positions in DFAS’s Cleveland office before retiring in 2009, says supervisors were required to approve every “plug” – thousands a month. “If the amounts didn’t balance, Treasury would hit it back to you,” he says.
After the monthly reports were sent to the Treasury, the accountants continued to seek accurate information to correct the entries. In some instances, they succeeded. In others, they didn’t, and the unresolved numbers stood on the books.
At the DFAS offices that handle accounting for the Army, Navy, Air Force and other defense agencies, fudging the accounts with false entries is standard operating procedure, Reuters has found. And plugging isn’t confined to DFAS. Former military service officials say record-keeping at the operational level throughout the services is rife with made-up numbers to cover lost or missing information.
A review of multiple reports from oversight agencies in recent years shows that the Pentagon also has systematically ignored warnings about its accounting practices. “These types of adjustments, made without supporting documentation … can mask much larger problems in the original accounting data,” the Government Accountability Office, the investigative arm of Congress, said in a December 2011 report.
Plugs also are symptomatic of one very large problem: the Pentagon’s chronic failure to keep track of its money – how much it has, how much it pays out and how much is wasted or stolen.
This is the second installment in a series in which Reuters delves into the Defense Department’s inability to account for itself. The first article examined how the Pentagon’s record-keeping dysfunction results in widespread pay errors that inflict financial hardship on soldiers and sap morale. This account is based on interviews with scores of current and former Defense Department officials, as well as Reuters analyses of Pentagon logistics practices, bookkeeping methods, court cases and reports by federal agencies.
As the use of plugs indicates, pay errors are only a small part of the sums that annually disappear into the vast bureaucracy that manages more than half of all annual government outlays approved by Congress….
In its investigation, Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known. And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies.
The consequences aren’t only financial; bad bookkeeping can affect the nation’s defense…. The main reason is rooted in the Pentagon’s continuing reliance on a tangle of thousands of disparate, obsolete, largely incompatible accounting and business-management systems….
“AMALGAM OF FIEFDOMS”
No one can even agree on how many of these accounting and business systems are in use. The Pentagon itself puts the number at 2,200 spread throughout the military services and other defense agencies. A January 2012 report by a task force of the Defense Business Board, an advisory group of business leaders appointed by the secretary of defense, put the number at around 5,000.
“There are thousands and thousands of systems,” former Deputy Secretary of Defense Gordon England said in an interview. “I’m not sure anybody knows how many systems there are.”
In a May 2011 speech, then-Secretary of Defense Robert Gates described the Pentagon’s business operations as “an amalgam of fiefdoms without centralized mechanisms to allocate resources, track expenditures, and measure results. … My staff and I learned that it was nearly impossible to get accurate information and answers to questions such as ‘How much money did you spend’ and ‘How many people do you have?’”
The Pentagon has spent tens of billions of dollars to upgrade to new, more efficient technology in order to become audit-ready. But many of these new systems have failed, either unable to perform all the jobs they were meant to do or scrapped altogether – only adding to the waste they were meant to stop.
Mired in a mess largely of its own making, the Pentagon is left to make do with old technology and plugs – lots of them…. However, a source with knowledge of the Pentagon’s accounting processes said that because the report and others like it aren’t audited, they may conceal large amounts of additional plugs and other accounting problems….
“The Pentagon can’t manage what it can’t measure, and Congress can’t effectively perform its constitutional oversight role if it doesn’t know how the Pentagon is spending taxpayer dollars,” Coburn said in an email response to questions. “Until the Pentagon produces a viable financial audit, it won’t be able to effectively prioritize its spending, and it will continue to violate the Constitution and put our national security at risk.”…
“We have about $14 billion of inventory for lots of reasons, and probably half of that is excess to what we need,” Navy Vice Admiral Mark Harnitchek, the director of the DLA, said at an August 7, 2013, meeting with aviation industry executives, as reported on the agency’s web site.
And the DLA keeps buying more of what it already has too much of. A document the Pentagon supplied to Congress shows that as of September 30, 2012, the DLA and the military services had $733 million worth of supplies and equipment on order that was already stocked in excess amounts on warehouse shelves. That figure was up 21% from $609 million a year earlier….
The Air Force’s Expeditionary Combat Support System was intended to provide for the first time a single system to oversee transportation, supplies, maintenance and acquisitions, replacing scores of costly legacy systems…. The system “has cost $1.03 billion … and has not yielded any significant military capability,” the Air Force said…. Fixing the system would cost an additional $1.1 billion, it said, and even then, it would do only about a quarter of the tasks originally intended, and not until 2020….
The Air Force’s Defense Enterprise Accounting and Management System was supposed to take over the Air Force’s basic accounting functions in 2010. To date, $466 million has been spent on DEAMS, with a projected total cost of $1.77 billion to build and operate it, an Air Force spokeswoman said. The system lacks “critical functional capabilities,” and its “data lacks validity and reliability,”…
In 2000, the Navy began work on four separate projects to handle finances, supplies, maintenance of equipment and contracting…. GAO said: “These efforts were failures…. $1 billion was largely wasted.”…
Now in use, the Navy ERP relies on data fed to it from 44 old systems it was meant to replace. “Navy officials spent $870 million … and still did not correct” the system’s inability to account for $416 billion in equipment, the Pentagon inspector general said….
[T]he Center for Strategic and International Studies said that while the Defense Department was spending “in excess of $10 billion per year on business systems modernization and maintenance, (o)verall the result is close to business as usual.” Defense Secretary Gates shut it down….
Over the past 10 years, the Defense Department has signed contracts for the provision of more than $3 trillion in goods and services. How much of that money is wasted in overpayments to contractors, or was never spent and never remitted to the Treasury, is a mystery. That’s because of a massive backlog of “closeouts” – audits meant to ensure that a contract was fulfilled and the money ended up in the right place….
At the end of fiscal 2011, the agency’s backlog totaled 24,722 contracts worth $573.3 billion, according to DCAA figures. Some of them date as far back as 1996. The individual military services close out their own contracts, and the backlogs have piled up there, too. The Army’s backlog was 450,000 contracts…. The Navy and Air Force did not have estimates of their backlogs.
“This backlog represents hundreds of billions of dollars in unsettled costs,” the GAO report said. Timely closeouts also reduce the government’s financial risk by avoiding interest on late payments to contractors.
To trim its backlog, the DCAA last year raised to $250 million from $15 million the threshold value at which a contract is automatically audited…. Still, hundreds of thousands of contracts that would eventually have been audited now won’t be.
“Having billions of dollars of open, unaudited contracts stretching back to the 1990s is clearly unacceptable, and places taxpayer dollars at risk of misuse and mismanagement,” Senator Thomas Carper, a Delaware Democrat and chairman of the Homeland Security and Governmental Affairs Committee, said in an email response to questions. “We must make sure that the Department of Defense is actively assessing risks and making sure that contractors who fall underneath the threshold remain accountable for their work.”
Spotty monitoring of contracts is one reason Pentagon personnel and contractors are able to siphon off taxpayer dollars through fraud and theft – amounting to billions of dollars in losses, according to numerous GAO reports. In many cases, Reuters found, the perpetrators were caught only after outside law-enforcement agencies stumbled onto them, or outsiders brought them to the attention of prosecutors….
In its 2007 audit-readiness plan, the Defense Department called on DFAS to eliminate plugs by June 2008. That hasn’t happened.
In its financial report for 2012, the Army said each month it “adjusts its Fund Balance With Treasury to agree with the U.S. Treasury accounts.” In its 2012 annual report, the Defense Logistics Agency said it does the same. “On a monthly basis, DLA’s (Fund Balance With Treasury) is adjusted to agree with the U.S. Treasury accounts.”
The Navy, in a footnote in its 2012 financial report, “acknowledges that it has a material internal control weakness in that it does not reconcile its” numbers with the Treasury’s. The footnote said the Navy inserts inaccurate numbers in its monthly reports so that they agree with the Treasury’s….
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