DOD Excess Property: Enhanced Controls Needed for Access to Excess Controlled Property
Highlights
What GAO Found
The Defense Logistics Agency (DLA) has taken some actions and is planning additional actions to address identified weaknesses in its excess controlled property program. However, internal control deficiencies exist for, among other things, ensuring that only eligible applicants are approved to participate in the Law Enforcement Support Office (LESO) program and receive transfers of excess controlled property. DLA is establishing memorandums of understanding with participating federal agencies intended to, among other things, establish general terms and conditions for participation, revise its program application to require additional prospective participant information, and plans to provide additional online training for participating agencies that is expected to begin in late 2017. However, GAO created a fictitious federal agency to conduct independent testing of the LESO program's internal controls and DLA's transfer of controlled property to law enforcement agencies.
Through the testing, GAO gained access to the LESO program and obtained over 100 controlled items with an estimated value of $1.2 million, including night-vision goggles, simulated rifles, and simulated pipe bombs, which could be potentially lethal items if modified with commercially available items (see photos). GAO's testing identified that DLA has deficiencies in the processes for verification and approval of federal law enforcement agency applications and in the transfer of controlled property, such as DLA personnel not routinely requesting and verifying identification of individuals picking up controlled property or verifying the quantity of approved items prior to transfer. Further, GAO found that DLA has not conducted a fraud risk assessment on the LESO program, including the application process. Without strengthening DLA and LESO program internal controls over the approval and transfer of controlled property to law enforcement agencies, such as reviewing and revising policy or procedures for verifying and approving federal agency applications and enrollment, DLA lacks reasonable assurance that it has the ability to prevent, detect, and respond to potential fraud and minimize associated security risks.
Examples of Controlled Property Items Obtained
DLA maintains a public Internet site to address statutory requirements to provide information on all property transfers to law enforcement agencies. DLA's public Internet site shows all transferred property, and, as of April 2017, in response to GAO's findings, has included a definition of controlled property to distinguish for the general public what items are considered controlled.
Why GAO Did This Study
Since 1991, DOD has reported transferring more than $6 billion worth of its excess controlled and non-controlled personal property to more than 8,600 federal, state, and local law enforcement agencies through the LESO program, which is managed by DLA. According to DOD, about 4 to 7 percent of the total excess property transferred is controlled property, which typically involves sensitive equipment and items that cannot be released to the public.
The National Defense Authorization Act of 2016 included a provision that GAO conduct an assessment of DOD's excess property program. This report addresses the extent to which (1) DLA has taken actions to enhance processes, including internal controls, related to its transfers of excess controlled property; and (2) DLA has addressed the statutory requirement to maintain a public Internet site that provides transparency about controlled property transfers and about the recipients of such property. GAO reviewed DOD policies and procedures, interviewed cognizant officials, and conducted independent testing of LESO's application and DLA's transfer process.
Recommendations
GAO is making four recommendations to DLA, including strengthening internal controls over the approval and transfer of DOD excess controlled property to law enforcement agencies, and conducting a fraud risk assessment to institute comprehensive fraud prevention and mitigation measures. DOD concurred with all four recommendations and highlighted actions to address each one.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics | To enhance the department's transfer of its excess controlled property, and to strengthen LESO program internal controls for the application and enrollment of federal agencies, the Under Secretary of Defense for Acquisition, Technology and Logistics should direct the Director of DLA to review and revise policy or procedures for verifying and approving federal agency applications and enrollment. For example, such steps could include LESO supervisory approval for all federal agency applications; confirmation of the application with designated points of contact at the headquarters of participating federal agencies; or visiting the location of the applying federal law enforcement agency. |
DOD concurred with this recommendation. In response to our report, the Defense Logistics Agency (DLA) Law Enforcement Support Office (LESO) Program took corrective action in response to documented process weaknesses in our report to strengthen internal controls by revising policy and procedure by reissuing standard operating procedures in November 2017, to include a requirement for each participating federal agency to assign a Federal Coordinator (appointed by a Senior Executive in writing) as well as a requirement for each participating federal agency to sign an Memorandum of Understanding with DLA. Additionally, the DLA LESO program implemented a more comprehensive application form for federal agencies and vetting process for reinstated or new federal or state law enforcement agencies.
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| Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics | To enhance the department's transfer of its excess controlled property, and to help ensure controlled property is picked up by authorized individuals, the Under Secretary of Defense for Acquisition, Technology and Logistics should direct the Director of DLA to ensure compliance that on-site officials responsible for the transfer of items at Disposition Services' sites request and verify valid identification of the individual(s) authorized to pick up allocated property from the LESO program. |
DOD concurred with this recommendation. In response to our report, the Defense Logistics Agency (DLA) Disposition Services took corrective action in August 2017 by conducting training in the field and at Headquarters on policy and procedures for requesting and verifying valid identification of individuals authorized to picking up allocated property from the Law Enforcement Support Office (LESO) program.
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| Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics | To enhance the department's transfer of its excess controlled property, and to help ensure the accurate quantity of approved items is transferred, the Under Secretary of Defense for Acquisition, Technology and Logistics should direct the Director of DLA to issue guidance that requires DLA Disposition Services on-site officials to verify the type and quantity of approved items against the actual items being transferred prior to removal from the sites. |
DOD concurred with this recommendation. In response to our report, the Defense Logistics Agency (DLA) stated that policy was already established, but it did take corrective action by conducting additional training. Specially, DLA Disposition Services took corrective action in August 2017 by conducting training in the field and at Headquarters on policy and procedures to verify the type and quantity of approved items against the actual items being transferred prior to removal from DLA Disposition Services field sites.
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| Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics | To enhance the department's transfer of its excess controlled property, and to strengthen LESO program internal controls, the Undersecretary of Defense for Acquisition, Technology, and Logistics should direct the Director of DLA to conduct a fraud risk assessment to design and implement a strategy with specific internal control activities to mitigate assessed fraud risks for all stages relating to LESO's transfer of excess controlled property to law enforcement agencies, consistent with leading practices provided in GAO's Fraud Risk Framework. |
DOD concurred with this recommendation. In response to our report, the Defense Logistics Agency (DLA) Director tasked the DLA Office of Inspector General (OIG) to assess fraud risks relating to the Law Enforcement Support Office (LESO) transfer of excess controlled property to law enforcement agencies. The DLA OIG Investigations Division conducted a fraud risk assessment, referenced as a Crime Vulnerability Assessment, to test corrective actions taken by LESO in response to documented process weaknesses in our report. Between December 2017 and March 2018, the DLA OIG conducted seven probes to determine if corrective action was effective. According to the DLA OIG Investigative Division, their overall evaluation of the corrective action taken by LESO was that it was effective and no further action was required. A final report summarized their results and an exit briefing was conducted with senior DLA leadership.
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