The report, dated June 1 but released Monday, summarizes Grassley's staff's reviews of 113 unclassified Defense IG general audits from fiscal 2010, of which only 15 were found to be "good to very good."
The grading criteria were based on five questions: whether the audits were aligned with the core IG mission; whether they "connected all the dots in the transactions from contract to payments;" whether they "verified the scope of alleged fraud and waste using primary source accounting records;" whether recommendations were "tough and appropriate;" and whether they were completed quickly.
"Audits are the tip of the inspector general's spear," said Grassley, who has long relied on what he acknowledges as "the talents" of the IGs. But "a good spear always needs a finely honed cutting edge. Right now, the point of that spear is dull."
Defense Inspector General Gordon Heddell said in a statement that he agreed with Grassley's comment that his office is "capable of producing quality reports" and he believes "that the quality of our audit reports is significantly better than what is reflected in [Grassley's] report card." In fiscal 2010, Defense IG "auditors achieved $4.30 billion in monetary benefits -- which equals over $6.1 million per employee in the Office of Audit -- and another $4.35 billion in potential savings," Heddell said. The Pentagon IG, "in addition to detecting and deterring fraud and waste, has also focused on health and safety issues to protect the warfighter." As examples he cited issues related to the procurement of body armor, ambush-protected vehicles and systems to defeat improvised explosive devices.
The IG report Grassley assigned the lowest score is titled "Defense Contract Management Agency Acquisition Workforce for Southwest Asia." It received an F score in every category across-the-board. The highest grade was awarded to the audit titled "Foreign Allowances and Differentials Paid to DoD Civilian Employees Supporting Overseas Contingency Operations."
Grassley's report lists nine "audit roadblocks" that allegedly stand between "lackluster audits and quality audits." Remedies the senator recommends include less focus on policy compliance and more on financial benefits to taxpayer; staying "on the money trail" detecting waste and fraud 24 hours a day; strengthening IG recommendations; greater follow-up on audits in terms of recovering stolen money and holding officials accountable; and revamping the Defense Department accounting system.
Nick Schwellenbach, director of investigations for the nonprofit Project on Government Oversight, said in a statement to Government Executive that Grassley's report "provides more evidence that the Pentagon's top watchdog needs to up its game. There may be problems with the Office of Inspector General's focus. The comparison of the Department of Defense IG with other IGs builds the case that the DoD IG could be much more effective. Based on Grassley's report, POGO has concerns with auditor productivity, cost-effectiveness of the OIG overall, the focus of DoD IG auditing resources, and the average experience levels of DoD IG auditors."
But the POGO spokesman faulted Grassley's analysis for failing "to assess the average cost impact of each audit report" and comparing it with their average resulting savings to taxpayers. Also, "the overall grades for all the audit reports Grassley reviewed are seriously dragged down by their bad grades for lack of timelines," Schwellenbach said. "For many of the so-called `good' audits that would have otherwise received an A or B, they received a B- or C because the inspector general took a long period of time to complete them. But they may have been good reports with solid findings on potential waste."
Finally, POGO said, Grassley should consider that many of the reports are required by Congress.
Grassley released a similar report in September 2010, saying the Defense IG reports for fiscal 2009 cost taxpayers $100 million a year and calling the IG's general audit capabilities "gravely impaired."
In a floor speech June 6, Grassley did say he saw "a ray of hope" that the next Defense IG reports will improve. He also criticized the Council of the Inspectors General on Integrity and Efficiency, a statutory IG crossagency professional body, as "just another toothless wonder."