DOD's IG returns fire following scathing Senate report

Defense Department Inspector General Gordon Heddell has responded publicly to a report issued by Sen. Charles Grassley (R-Iowa) last week that blamed Heddell's office for overlooking fraud and straying from its core mission.

In an eight-page letter, Heddell acknowledged that some of the 12 recommendations made in Grassley's report could be helpful, but defended his office by highlighting accomplishments and clarifying its mission. Heddell added that some of the recommended corrective measures could do more harm than good.

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According to Grassley's report, DOD's IG office focuses too much on policy analysis and not enough on its core mission of detecting fraud, waste and abuse. The report called on the office to conduct “top-to-bottom, end-to-end reviews of the Defense Department’s plans and programs for modernizing its finance and accounting systems.”

Heddell countered that extensive, end-to-end contract performance and payout audits are only helpful under certain circumstances, and that most of the time the demands on manpower and resources such audits require “would exacerbate the very issues the report highlights involving timeliness.”

“Instead, we provide audit coverage of the contract process through a series of audits based on the risks associated with the specific contract segment,” Heddell responded. Parts of the contract process considered to be “riskier” may include contract administration and vendor payments, he said.

Heddell said his office is in the process of acquiring the necessary IT infrastructure for quick, end-to-end, predictive analysis and forensic auditing, as well as new, modernized accounting systems.

Grassley also accused DOD's  IG office as acting as “policy police,” with too much focus on policies and procedures and not enough contract audits.

However, Heddell argued that the policy audit reports “reduce the likelihood of future fraudulent payments and wasteful spending,” improve program performance and save money. He said one IG program review led to $3.84 billion in savings after shutting down a planned procurement of 11,500 light tactical vehicles.

Heddell also disagreed with Grassley’s recommendation that all OIG audits should include a pass/fail opinion that includes a timeline for compliance for contracts or programs that receive failing grades.

“Issuing only a ‘pass or fail opinion’ would contradict Government Auditing Standards and could be misleading,” Heddell responded. “A pass/fail grade is too limiting and would constrain auditors in providing a complete perspective in an objective and impartial manner.”

He also defended the deployment of auditors to war zones, stressing the value of "on-the-ground knowledge" and better understanding of needs, and argued against Grassley's demand that reports be completed and published in six to nine months, saying that the magnitude and complexity of DOD programs sometimes require longer periods.

Still, Heddell said he is implementing some of the recommendations. He has directed his deputy inspector general for auditing to make recommendations by Oct. 15 for ways to best implement the report to improve timeliness, focus and relevance of audit reports, he said.