In an unusual dabble in domestic spycraft, Government Accountability Office auditors set up a fake law enforcement agency and successfully persuaded the Defense Logistics Agency to transfer to its “employees” sensitive military surplus.
GAO’s derring-do effort to test agencies’ controls against improper payments, as described in a report released July 18, included the creation--using publicly available resources--of a fictitious agency website that cited a nonexistent law justifying purchases of 100 items of DLA’s controlled property totaling $1.2 million.
These items included night-vision goggles, thermal imaging equipment, specialized printers and explosive ordnance detonation robots, as well as certain high-visibility items, such as small arms, High Mobility Multipurpose Wheeled Vehicles, Mine-Resistant Ambush Protected Vehicles and aircraft, the report said. The auditors’ phony agency also ordered and took delivery on non-controlled property medical supplies, office furniture and tents. The items ranged in value from $277 to more than $600,000.
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GAO linked the successful purchases made this spring to deficiencies in DLA’s controls and verification process.
The broader Defense Department controls on sales of surplus have been the subject of GAO studies since the Pentagon in 1991 began transferring what would add up to $6 billion worth of its excess controlled and non-controlled personal property to more than 8,600 federal, state and local law enforcement agencies, the report noted.
DLA’s Law Enforcement Support Office is tasked with preventing the 4 percent to 7 percent of the total excess property deemed as controlled property from falling into the wrong hands.
The investigation was required under the fiscal 2016 National Defense Authorization Act.
Beginning in late 2016, GAO completed applications and mailed them to the LESO program office and began an email correspondence in which the DOD officials recommended adjustments to the applications.
“We provided a fictitious statute as a means to legitimize our agency, were approved to participate in the program and given access to the LESO program systems,” GAO investigators wrote. “We reviewed available controlled property and submitted requests for a variety of items located at four Disposition Service sites. After our requests for controlled property were approved, we corresponded with officials at the Disposition Service sites to arrange for pickup of the property. Our investigators visited three eastern U.S. Disposition Service sites, presented the appropriate paperwork, and obtained possession of the controlled property items.”
In addition, the sleeper purchasers, “using fictitious identification and law enforcement credentials, along with the LESO-approved documentation,” were “able to pass security checks and enter the Disposition Service warehouse sites. Personnel at two of the three sites did not request or check for valid identification of our investigator picking up the property.”
The kicker: “At no point during the application process did LESO officials verbally contact officials at the agency we created—either the main point of contact listed on the application or the designated point of contact at a headquarters’ level—to verify the legitimacy of our application or to discuss establishing” memorandum of understanding with the fictional agency.
GAO made four recommendations to address the deficient controls, acknowledging that DLA has already taken some actions, such as posting on its website precise definitions and an inventory of excess controlled property and writing memoranda of understanding with other agencies that make purchases.
But GAO found that DLA needed to strengthen controls and conduct a fraud risk assessment on the LESO program. Pentagon officials agreed.
GAO’s sting operation was cited by Linda Miller, a former GAO staffer now a director in Grant Thornton LLP’s Public Sector Fraud Risk Assessment practice, as an example of an agency that could be more “proactive” in preventing improper payments before they go out the door. She spoke at a Thursday forum of the American Council for Technology-Industry Advisory Council.
CORRECTION: This story has been corrected to reflect that the military surplus is transferred, rather than sold, to law enforcement agencies, though a fee is charged for transport costs.