Pentagon IG responding to critical Grassley report

Defense Department Inspector General Gordon Heddell is defending his office’s efforts in auditing of defense contracts in response to a strongly critical report this week from Sen. Charles Grassley (R-Iowa).

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Grassley released a 73-page investigative report Sept. 8 claiming that the DOD Office of Inspector General has “strayed far from the money trail” and is no longer performing effective audits of contracts. He blamed the problem on a dysfunctional recordkeeping system and other management practices and policies.

“DOD’s broken accounting system is incapable of generating accurate financial records,” Grassley wrote in the report. “The situation is so bad that OIG senior managers readily admit that existing audit teams are no longer able to conduct full-scope, end-to-end contract audits.”

“Instead of searching for fraud on the ‘money trail,’ OIG auditors have strayed far from the core mission,” Grassley added. “Discovering that the DOD IG no longer does genuine contract audits was a startling revelation but one that helps to explain why 765 OIG auditors could not document any measurable fraud in FY 2009. Continuing the status quo is unacceptable.”

Heddell responded to Grassley’s report in a letter to the Project on Government Oversight watchdog group dated Sept. 9.

“I am in the process of transforming the Department of Defense Office of Inspector General," Heddell wrote in the statement to the watchdog group. "The observations and recommendations made by Senator Grassley are relevant — and important — but they are only one piece of a much bigger transformation that I embarked upon well over a year ago when I was confirmed by the Senate as IG.”

Mary Ugone, the Pentagon's deputy inspector general for auditing, also issued a written statement to the watchdog group.

“This year alone, our auditors have saved the department $4.1 billion," Ugone wrote. "We have placed significant emphasis on life and safety issues affecting our men and women in uniform such as testing body armor and the acquiring counter-IED devices. The work of audit is not just about dollars, it’s about protecting the warfighter.”