From the U.S. Government Accountability Office, www.gao.gov Transcript for: An Investigation into DOD's Transfers of Excess Equipment Description: The Department of Defense has a program that transfers some of its excess equipment--such as night vision goggles and simulated rifles--to law enforcement agencies. Transfer of this equipment is supposed to be tightly controlled, because many of these items are weapons or could easily be converted into weapons. But could a fictitious federal agency gain access to the program and obtain these controlled items? Related GAO Work: GAO-17-532: DOD Excess Property: Enhanced Controls Needed for Access to Excess Controlled Property Released: July 2017 [ Background Music ] [ Zina Merritt ] In our view, one of these items getting in the wrong hands is one too many. [ Background Music ] [ Sarah Kaczmarek ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Sarah Kaczmarek. Since 1991, the Department of Defense reported transferring more than $6 billion worth of its excess equipment to more than 8,600 federal, state, and local law enforcement agencies. This equipment includes militarized controlled items, things like night vision goggles, simulated rifles, and simulated pipe bombs. I sat down with Zina Merritt, a director in our Defense Capabilities and Management team and Wayne McElrath, our director of investigations in our Forensic Audit and Investigative Services team to talk about this program. So first I asked Zina to explain, how this program to transfer property is supposed to work. [ Zina Merritt ] We have law enforcement agencies who can be potential recipients of DOD excess property like militarized property, such as rifles and simulated pipe bombs and other things that have been used for training purposes that DOD no longer needs. Essentially, they are able to apply and if they're approved, they're given a unique code in which they're allowed to go online, view the items, and "bid" on them. If they win the items, what they do is they're allowed to actually go to the warehouses where they're located, and pick up the items either physically or they can have the items shipped to them. However, all the items are free; the only cost that they may incur is with transportation costs if they actually have them shipped to them. [ Sarah Kaczmarek ] And not just anybody is supposed to be able to get access to the program, right? [ Zina Merritt ] That's correct. [ Sarah Kaczmarek ] Okay, so Wayne how did you go about testing how you can get access to the program? [ Wayne McElrath ] The way that we tested the controls relative to this program is that we established a fake law enforcement organization as Zina indicated, we then submitted our application and bidded on those items. [ Sarah Kaczmarek ] And what were you able to obtain? [ Wayne McElrath ] Well, we actually had access to the full range of excess surplus military items that were available but we chose or bid on training rifles, simulated pipe bombs, scopes, night vision goggles, things that weren't exactly legal. [ Sarah Kaczmarek ] And tell me about the total amount that you were able to get a hold of. [ Wayne McElrath ] We were able to obtain approximately 100 items that totaled a value of approximately 1.2 million. [ Sarah Kaczmarek ] And these were things that you shouldn't have been able to get as a fake law enforcement agency. [ Wayne McElrath ] As a private individual, we should not have had access to these items. [ Sarah Kaczmarek ] Zina, earlier you told me how this program is supposed to work and clearly it's not working that way. What would you say are the main problems here? [ Zina Merritt ] The biggest problem is that DLA's internal control processes for this program were really broken. We found, for example, that when we applied for the program as a fake organization, no one ever even called us to verify information. They didn't attempt to come out to the location to visit us. Secondly, when the investigators went to the location, they were actually able to get the items without presenting the proper identification. Third, they were able to get a quantity of items that wasn't consistent with what we bid for, actually we got more items. And fourth, we found that they just don't have a framework in order to do fraud mitigation at all stages of the program. Essentially, that puts any organization at risk of this happening again. [ Background Music ] [ Sarah Kaczmarek ] Given these problems, I wondered how DOD can ensure it's actually transferring property to the law enforcement agencies and not others posing as law enforcement. So I asked Zina to walk me through the recommendations in the report. [ Zina Merritt ] The first recommendation centers around just improving internal controls. We found that if they were to just take extra steps to verify who the applicants are, visit their locations, this would definitely help with that first stage of the process. They did start verification while we were doing our review, so that's a good sign but they still have more to do. Secondly, at the actual disposition sites where you pick up the items or the warehouses themselves, they have guidelines in which people are supposed to present their identification and it's supposed to be checked, so if they were to actually maybe do more spot checks of the personnel working there to ensure that they are doing this that would help. The third recommendation centers around just simple accounting. If they were actually look at what's requested, compare it when they're packing the items before the individual shows up to make sure they don't have less of a quantity or more of a quantity or the right items, that would also help them. Lastly, what we're suggesting is that they implement a comprehensive framework for fraud risk mitigation. [ Sarah Kaczmarek ] So finally, I want to ask both of you what you see as the bottom line here. Wayne, I'll turn to you first. [ Wayne McElrath ] Well, we're hoping that our efforts will make it more difficult for these items to end up in the wrong hands. They could potentially end up in the hands of terrorists, criminals, or also be sold to other unauthorized individuals. We definitely want to prevent that from happening. Then also through our effort, DLA should be more efficient and effective at preventing, deterring, and detecting fraud, waste, and abuse as well as security issues associated with this program. [ Sarah Kaczmarek ] And finally Zina, the last word to you. [ Zina Merritt ] Sure. I just can't reiterate enough what Wayne just said because in our view one of these items getting in the wrong hands is one too many. [ Background Music ] [ Sarah Kaczmarek ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on ITunes. For more from the congressional Watchdog, the U.S. Government Accountability Office, visit us at gao.gov.