Corruption In Iraq & World

Climategate Scandal Overview - Junk Science Used by Global Warming Supporters

You have heard reports from Al Gore and other liberals that "Global Warming is Coming, Global Warming is Coming".   First there was the UK court hearing and decision that nine major claims made by Al Gore in his "award winning" movie on global warming were incorrect, and the film should NOT be shown in schools to children without disclosures on the accuracy.

And now, recent leakages of massive emails from a global warming "leader" in Europe that the data he used was bad or could not be verified.  In other words, the data used was "corrupt".

This is called "how to lie with statistics" and was a famous book written in the 1950's about all the ways politicians and others can distort data to wrongly portray a position.  I recently ordered the book from Amazon.

So, below is a long, detailed article about Climategate, and all the data distortions used by Global Warming supporters.  It is based on research of emails between Global Warming advocates, plus descriptions of how the original data by the supporters has now been magically deleted so no one can re-verify the results published by the Global Warming Supporters.  If you go to YouTube and search on Al Gore, you can find videos where Al Gore is now publicly being challenged about the above, and his use of junk science.  And, last night I watched a movie that was made to analyze all the distortions that Al Gore used in his movie.

So, you can use junk science for awhile, but watchers will finally find out if your analysis follows proper scientific and statistical analysis procedures or not.

vj

From The Sunday Times (London Times)

November 29, 2009

The great climate change science scandal

Leaked emails have revealed the unwillingness of climate change scientists to engage in a proper debate with the sceptics who doubt global warming

Jonathan Leake, Environment Editor

The storm began with just four cryptic words. “A miracle has happened,” announced a contributor to Climate Audit, a website devoted to criticising the science of climate change.

“RC” said nothing more — but included a web link that took anyone who clicked on it to another site, Real Climate.

There, on the morning of November 17, they found a treasure trove: a thousand or so emails sent or received by Professor Phil Jones, director of the climatic research unit at the University of East Anglia in Norwich.

Jones is a key player in the science of climate change. His department’s databases on global temperature changes and its measurements have been crucial in building the case for global warming.

What those emails suggested, however, was that Jones and some colleagues may have become so convinced of their case that they crossed the line from objective research into active campaigning.

In one, Jones boasted of using statistical “tricks” to obliterate apparent declines in global temperature. In another he advocated deleting data rather than handing them to climate sceptics. And in a third he proposed organised boycotts of journals that had the temerity to publish papers that undermined the message.

It was a powerful and controversial mix — far too powerful for some. Real Climate is a website designed for scientists who share Jones’s belief in man-made climate change. Within hours the file had been stripped from the site.

Several hours later, however, it reappeared — this time on an obscure Russian server. Soon it had been copied to a host of other servers, first in Saudi Arabia and Turkey and then Europe and America.

What’s more, the anonymous poster was determined not to be stymied again. He or she posted comments on climate-sceptic blogs, detailing a dozen of the best emails and offering web links to the rest. Jones’s statistical tricks were now public property.

Steve McIntyre, a prominent climate sceptic, was amazed. “Words failed me,” he said. Another, Patrick Michaels, declared: “This is not a smoking gun; this is a mushroom cloud.”

Inevitably, the affair became nicknamed Climategate. For the scientists, campaigners and politicians trying to rouse the world to action on climate change the revelations could hardly have come at a worse time. Next month global leaders will assemble in Copenhagen to seek limits on carbon emissions. The last thing they need is renewed doubts about the validity of the science.

The scandal has also had a huge personal and professional impact on the scientists. “These have been the worst few days of my professional life,” said Jones. He had to call on the police for protection after receiving anonymous phone calls and personal threats.

Why should a few emails sent to and from a single research scientist at a middle-ranking university have so much impact? And most importantly, what does it tell us about the quality of the research underlying the science of climate change?

THE hacking scandal is not an isolated event. Instead it is the latest round of a long-running battle over climate science that goes back to 1990.

That was when the Intergovernmental Panel on Climate Change — the group of scientists that advises governments worldwide — published its first set of reports warning that the Earth faced deadly danger from climate change. A centrepiece of that report was a set of data showing how the temperature of the northern hemisphere was rising rapidly.

The problem was that the same figures showed that it had all happened before. The so-called medieval warm period of about 1,000 years ago saw Britain covered in vineyards and Viking farmers tending cows in Greenland. For any good scientist this raised a big question: was the recent warming linked to humans burning fossil fuels or was it part of a natural cycle?

The researchers set to work and in 1999 a group led by Professor Michael Mann, a climatologist at Pennsylvania State University, came up with new numbers showing that the medieval warm period was not so important after all.

Some bits of the Atlantic may have been warm for a while, but the records suggested that the Pacific had been rather chilly over the same period — so on average there was little change.

Plotted out, Mann’s data turned into the famous “hockey stick” graph. It showed northern hemisphere temperatures as staying flat for hundreds of years and then rising steeply from 1900 until now. The implication was that this rise would continue, with potentially deadly consequences for humanity.

That vision of continents being hit by droughts and floods while the Arctic melts away has turned a scientific debate into a highly emotional and political one. The language used by “warmists” and sceptics alike has become increasingly polarised.

George Monbiot, widely respected as a writer on green issues, has branded doubters “climate deniers”, a phrase uncomfortably close to holocaust denial. Sceptics, particularly in America, have suggested that scientists who believe in climate change are part of a global left-wing conspiracy to divert billions of dollars into green technology.

A more cogent criticism is that there has been a reluctance to acknowledge dissent on the question of climate science. Al Gore, the former US vice-president turned green campaigner, has described the climate debate as “settled”. Yet the science, say critics, has not been tested to the limit. This is why the climatic research unit at the University of East Anglia is so significant.

Its researchers have built up records of how temperatures have changed over thousands of years. Perhaps the most important is the land and sea temperature record for the world since the mid-19th century. This is the database that shows the “unequivocal” rise of 0.8C over the last 157 years on which Mann’s hockey stick and much else in climate science depend.

Some critics believe that the unit’s findings need to be treated with more caution, because all the published data have been “corrected” — meaning they have been altered to compensate for possible anomalies in the way they were taken. Such changes are normal; what’s controversial is how they are done. This is compounded by the unwillingness of the unit to release the original raw data.

David Holland, an engineer from Northampton, is one of a number of sceptics who believe the unit has got this process wrong. When he submitted a request for the figures under freedom of information laws he was refused because it was “not in the public interest”.

Others who made similar requests were turned down because they were not academics, among them McIntyre, a Canadian who runs the Climate Audit website.

A genuine academic, Ross McKitrick, professor of economics at the University of Guelph in Canada, also tried. He said: “I was rejected for an entirely different reason. The [unit] told me they had obtained the data under confidentiality agreements and so could not supply them. This was odd because they had already supplied some of them to other academics, but only those who support the idea of climate change.”

IT was against this background that the emails were leaked last week, reinforcing suspicions that scientific objectivity has been sacrificed. There is unease even among researchers who strongly support the idea that humans are changing the climate. Roger Pielke, professor of environmental studies at the University of Colorado at Boulder, said: “Over the last decade there has been a very political battle between the climate sceptics and activist scientists.

“It seems to me that the scientists have lost touch with what they were up to. They saw themselves as in a battle with the sceptics rather than advancing scientific knowledge.”

Professor Mike Hulme, a fellow researcher of Jones at the University of East Anglia and author of Why We Disagree About Climate Change, said: “The attitudes revealed in the emails do not look good. The tribalism that some of the leaked emails display is something more usually associated with social organisation within primitive cultures; it is not attractive when we find it at work inside science.”

There could, however, be another reason why the unit rejected requests to see its data.

This weekend it emerged that the unit has thrown away much of the data. Tucked away on its website is this statement: “Data storage availability in the 1980s meant that we were not able to keep the multiple sources for some sites ... We, therefore, do not hold the original raw data but only the value-added (ie, quality controlled and homogenised) data.”

If true, it is extraordinary. It means that the data on which a large part of the world’s understanding of climate change is based can never be revisited or checked. Pielke said: “Can this be serious? It is now impossible to create a new temperature index from scratch. [The unit] is basically saying, ‘Trust us’.”

WHERE does this leave the climate debate? While the overwhelming belief of scientists is that the world is getting warmer and that humanity is responsible, sceptical voices are increasing.

Lord Lawson, the Tory former chancellor, announced last week the creation of the Global Warming Policy Foundation, a think tank, to “bring reason, integrity and balance to a debate that has become seriously unbalanced, irrationally alarmist, and all too often depressingly intolerant”.

Lawson said: “Climate change is not being properly debated because all the political parties are on the same side, and there is an intolerance towards anybody who wants to debate it. It has turned climate change from being a political issue into a secular religion.”

The public are understandably confused. A recent poll showed that 41% accept as scientific fact that global warming is taking place and is largely man-made, while 32% believe the link is unproven and 15% said the world is not warming.

This weekend many of Jones’s colleagues were standing by him. Tim Lenton, professor of earth system science at UEA, said: “We wouldn’t have anything like the understanding of climate change that we do were it not for the work of Phil Jones and his colleagues. They have spent decades putting together the historical temperature record and it is good work.”

The problem is that, after the past week, both sceptics and the public will require even more convincing of that.

Corruption in Iraq & Other Countries Blog Turned Back On Today, November 24, 2009

Nov. 24, 2009 - Mount Dora, FL:   I turned off public visibility to this FiscalRangers.com "Corruption In Iraq" blog for several months because I thought I could help reduce Afghanistan corruption through working in Afghanistan, but it didn't last.  I was in Afghanistan for two months in mid-2009 (as well as in Iraq in 2004-2006) but it didn't take in Afghanistan.  I was on a program to train various Afghan staff in internal audit techniques, but I became a liability because I was informed of various corrupt activities but did not have the authority to do anything.   They ended up halting the training program because it was too hot an issue.

But, over these recent months I have still been been posting articles here on various corruption issues.  Now, in the last two weeks in November, there have been speeches by President Obama, Hillary Clinton, the UK Prime Minister Gordon Brown, and now SecDef Robert Gates saying that funds for Afghanistan could be withheld if Afghanistan's re-elected PM Karzai doesn't tackle corruption.   That is a technique called conditionality which I have written about in the past years, and SIGIR's staff had described also in Congressional hearings.  The American public's support for Iraq and Afghanistan aid is falling, and one major component is the constant reports on corruption there.

Additionally, Transparency International (TI - at www.Transparency.org ) just published their annual Corruption Perception Index, and once again, Iraq and Afghanistan are ranked in the bottom FIVE of 180 countries.  Here is an older 2008 TI map showing corruption rankings of countries, with the dark red color being the worst. Click on the map to see a larger version.

So, maybe I won't be able to personally help either Afghanistan or Iraq reduce corruption anymore, but because of the speeches about conditionality, maybe there is hope.  However, the US and allies need to actually cut some funds to encourage Karzai (and also in Iraq) to take the concept seriously. 

To implement anti-corruption conditionality in Afghanistan, donor countries like the US need to start with reducing payment or excess salaries to hundreds of relatives of wealthy Afghans or Ministry officials who work directly for the State Dept and USAID or their contractors in Kabul.   Put a HOLD on all "education" junkets to other countries for Ministry staff.   Stop buying computers or office equipment or vehicles for Ministry staff.   Also list each State Dept or USAID employee by the amount of foreign aid and reconstruction funds they "manage or authorize" and cut that by 20% each year until corruption is reduced within their program area (such as a specific Ministry resisting anti-corruption controls or investigations).  Withhold a MINIMUM of 5% of each spending program's total funds and put it into a separate anti-corruption task force run by Blackwater, the DoD or the CIA (not State or USAID - they are diplomats or ex-PeaceCorp workers and don't have the skills to fight corruption).

That might get the country leader's attention.  It might also get the attention of USAID and State that anti-corruption is actually a priority if they have lower spending authority and fewer Afghan aids, assistants, drivers, translators and cooks. 

I would assign a Blackwater or DoD or CIA supervised US staffed anti-corruption team (not British, Indonesian or Indian staffed team - they are not concerned with loss of US funds) to each Ministry spending program receiving US funds for foreign aid, training or reconstruction.  For instance, the Ministry over any revenue collection system should get a team to ensure that all expected revenues for fees are actually collected and deposited into the Afghan treasury and are not siphoned away.  Or a Ministry constructing buildings would get a team to inspect (Like SIGIR does in Iraq) projects and stop spending while in progress if they don't meet timelines or expected work standards.  Or, a Ministry anti-corruption team would review bribery cases prepared by any investigative body and determine whether they actually resulted in prosecutions, or were dropped due to bribes paid to the prosecutors.  If those situations are not fixed, then funds for that Ministry's programs would be cut at least 20% per year. It goes on and on - the Afghans all know where the corruption exists and how it is done, but it is just that USAID and State won't get involved and Afghan investigators need TOP level support, funding and legislation.

The same issues affect Iraq.  For instance, in Iraq, they keep assigning Baghdad Embassy "Anti-corruption liaisons" who are not EXPERIENCED professional auditors or prosecutors, and who don't have authority to delay program spending if corruption is found. There are documented congressional hearings where two of them quit and voiced complaints about lack of support from the State Dept. I expect the same to happen regarding Afghanistan and Pakistan spending in the future.

Naturally, the leadership of a foreign aid receiving country COULD reverse their corrupt image and improve their Transparency International ranking by establishing a kick ass anti-corruption agency like Hong Kong's with EXPERIENCED audit, criminal investigation and prosecution staff AND enabling legislation and legislature support, but I haven't seen it yet.  All the techniques are known, and many published on this blog.  We did it in Iraq in 2004-2005 by implementing many of Hong Kong's anti-corruption methods, but then the agency lost government support.  In the field of internal auditing, that is referred to as the "Tone at the Top", and firms where leaders support auditing and professional level work controls fully have a good "tone".   If any of you country leaders are out there and want to know how to improve your "Tone at the Top" and reverse your corruption image, let me know.  Visit www.Transparency.org, and www.SIGIR.mil and read their reports, then read my guide below as a start.  And, sign up to get RSS feeds for new posts to this blog.   Then email me at FiscalRangers@comcast.net .

PS:  See my ever growing Guide for Donor Countries on Preventing Corruption in Foreign Aid Recipient Country Spending Programs HERE (also listed in the "Pages" section in the right column of this blog). 

vj

USAID Fails to Ensure Accountability for Major RTI Contract in Pakistan

Here we go again with a Time.com article about USAID failures to implement safeguards and oversight to ensure American Foreign Aid funds are properly controlled.  This time it was in Pakistan, where I am reading lots of rumors about out of control spending.

- An Inspector General Audit report on an RTI contract said they failed to collect evidence that spending actually was for measurable improvements:

"North Carolina–headquartered RTI (also known as Research Triangle Institute), claims to have "positively impacted" more than 400,000 students (out of 70 million school-age kids) through strengthening policy and planning, teacher and school-administrator training, and youth and adult literacy. But when USAID's inspector general sent a team over in August 2007 to check on the progress, it could not validate the claims because the USAID mission in Islamabad "did not require RTI to adhere to reporting requirements critical to monitoring the program performance." The problem was serious enough for RTI, which derived close to 40% of its $710 million in revenues last year from USAID, to be disqualified from follow-on contracts on this particular project."

Read the article below, and weep for your tax funds...

vj

My Congressman, Alan Grayson, Grilling Inspector General of Fed about Investment Losses

I recently talked to Congressman Grayson at a local open house at his new Lake County, FL office near my house.  Before his recent election, Democrat Grayson ran a law firm that supported whistleblower lawsuits against the Federal government, including fraud in Iraq reconstruction programs.   Recently, I believe, one of his pending cases was decided in favor of his client.

Here we see a Salon article with a YouTube video of Grayson grilling the Inspector General, Elizabeth Coleman, for the Federal Reserve about off the books investments and potential losses.  Very interesting.  Her responses indicated a lack of confidence.  She either is new in the position, or isn't assertive enough to have already asked the same questions internally and have an answer.  Some government auditors just follow old CPA type checklists and do "compliance", "yellow book" or regulatory audits, and don't really go outside the box to identify major new risks (think Enron) and review them before they are a problem.

Even though I am Republican and he is a Democrat, on oversight, we agree.  Go Getem Grayson!
vj

http://www.salon.com/opinion/greenwald/2009/05/07/oversight/

President Obama Issues Executive Order on Ethics & Transparency

On his first day as President, President Obama signed an Executive order emphasizing increased transparency of government records and an appointee ethics pledge regarding lobbying.  These are good steps, but as the article says, it opens many Bush Administration records to public records requests, which may yield interesting investigations by the media (which might the reason for it). 

You can see the executive orders on the Whitehouse.gov website HERE.

"The transparency and ethics moves were set forth in two executive orders and three presidential memorandums; Mr. Obama signed them at the swearing-in ceremony with a left-handed flourish."

Below are the seven criteria that would be in an ethics pledge statement that will be signed by all staff.  Go to the website to see more details including definitions and administrative procedures.  This "pledge" is mainly focused on lobbying and restrictions lobbying after leaving Federal employment.  There really isn't anything related to financial disclosure and other components of other ethics statements I have seen.

Section 1.  Ethics Pledge.  Every appointee in every executive agency appointed on or after January 20, 2009, shall sign, and upon signing shall be contractually committed to, the following pledge upon becoming an appointee:

"As a condition, and in consideration, of my employment in the United States Government in a position invested with the public trust, I commit myself to the following obligations, which I understand are binding on me and are enforceable under law:

"1.  Lobbyist Gift Ban.  I will not accept gifts from registered lobbyists or lobbying organizations for the duration of my service as an appointee.

"2.  Revolving Door Ban    All Appointees Entering Government.  I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.

"3.  Revolving Door Ban    Lobbyists Entering Government.  If I was a registered lobbyist within the 2 years before the date of my appointment, in addition to abiding by the limitations of paragraph 2, I will not for a period of 2 years after the date of my appointment:

 (a)  participate in any particular matter on which I lobbied within the 2 years before the date of my appointment;

 (b)  participate in the specific issue area in which that particular matter falls; or

 (c)  seek or accept employment with any executive agency that I lobbied within the 2 years before the date of my appointment.

"4.  Revolving Door Ban    Appointees Leaving Government.  If, upon my departure from the Government, I am covered by the post employment restrictions on communicating with employees of my former executive agency set forth in section 207(c) of title 18, United States Code, I agree that I will abide by those restrictions for a period of 2 years following the end of my appointment.

"5.  Revolving Door Ban    Appointees Leaving Government to Lobby.  In addition to abiding by the limitations of paragraph 4, I also agree, upon leaving Government service, not to lobby any covered executive branch official or non career Senior Executive Service appointee for the remainder of the Administration.

"6.  Employment Qualification Commitment.  I agree that any hiring or other employment decisions I make will be based on the candidate's qualifications, competence, and experience.

"7.  Assent to Enforcement.  I acknowledge that the Executive Order entitled 'Ethics Commitments by Executive Branch Personnel,' issued by the President on January 21, 2009, which I have read before signing this document, defines certain of the terms applicable to the foregoing obligations and sets forth the methods for enforcing them.  I expressly accept the provisions of that Executive Order as a part of this agreement and as binding on me.  I understand that the terms of this pledge are in addition to any statutory or other legal restrictions applicable to me by virtue of Federal Government service."

Click the link below to see articles about the Executive Order:

vj

Thanksgiving List of Staffing Selection Bungles by Current Administration

So, I am a Republican, but it is significant when you look at the linked list below that describes all the public officials or applicants for Federal appointments in the Bush Administration who resigned or were refused appointments for various criminal or ethical lapses.  I wonder if the list at the end of Clinton's term or Obama's term would be shorter or longer?

Click the link below to see the very long list.   I personally met three of them while in Iraq, and you can find them mentioned in earlier posts on this blog.  All three were Inspector Generals appointed by Bush, and they were ATTORNEYS, not experienced auditing professionals.  Which is one of my hot buttons.  IG appointments in the Federal government need to be for professional auditors that are certified internal auditors or CPAs who have an ethics policy, and not attorney friends who make the department into a political entity and not an oversight entity.  Here are quotes from the list below.

* Howard “Cookie” Krongard - former State Department inspector general — accused of not properly investigating State Department contractor fraud in Iraq and Afghanistan; of retaliating against whistleblowers in his own office; and of not telling the truth about his knowledge of his brother’s ties with Blackwater, a State Department contractor. Faced with a possible perjury investigation, Howard Krongard resigned on December 7, 2007.  (I met Krongard once in Iraq to get acqauinted, and he didn't know much about auditing, and rarely let any of his staff audit operations in Iraq.  I knew one of his staff and they said he wouldn't let them do audits in iraq that they considered important. - vj)

* Stuart Bowen - Special Inspector General for Iraq Reconstruction (SIGIR) - was once admired for his successes while investigating allegations of waste and fraud in Iraq, but now employee allegations have prompted four government investigations into the Office of the Special Inspector General for Iraq Reconstruction (SIGIR). ( but the list below is out of date on him - the charges against him were dropped, and they were considered by insiders to have been instigated by Bush staff who were angry at SIGIR reporting so many frauds in Iraq reconstruction spending -   CLICK HERE to see the GovExe.com story explaining that a Grand Jury probe of Bowen was ended without any indictments -  Although Bowen was an attorney, his staff and reports were the most professional in Iraq so I don't have a quibble with him or SIGIR - vj)

* Joseph Schmitz - Inspector General, Defense - Resigned amid charges he personally intervened to protect top political appointees.  (There is a picture of Schmitz on this blog when he was shaking hands with Iraqi Inspector Generals. If the DoD IG had been doing their job in Iraq, many of the procurement frauds later reported by SIGIR and recently by DoD IG's after Congressional requests would have been detected earlier or prevented. - vj)

vj

US Health Dept Fails to Detect Medicare Errors, Losing "billions"

The internet is full of news articles today about a new report from the Inspector General for the US Dept. of Health & Human Services (HHS) that Medicare officials used incomplete audit procedures that missed a high number of improper payments for Medicare equipment.

Once again, we find that no one in government is apparently walking through the work process to detect problems and fix them, but instead they wait until huge losses occur, then do an "after the fact" audit.  The losses to the Federal Government (and the TAXPAYER, which is YOU) might be "billions".   Apparently Medicare hired a private firm to do quality control audits of Medicare claims to detect claims lacking proper documentation, but they didn't require the auditors to ensure full, required documentation existed for the claims, resulting in a lower "error" rate than the possible actual error rate.

If that is all confusing, join the club.  It means the hired auditor only found a 7.5% error rate in Medicare equipment insurance claims resulting in $700-million in losses, when the actual error rate and losses may be much higher.

Either way, a good business would have walked through the system and PREVENTED payments of such undocumented insurance claims at the beginning of the payment process, rather than pay undocumented claims then tried to get the money back later.

Several people in HHS and the department responsible for accurate payments need to be FIRED over this fiasco.  Additionally, medical providers who files incomplete claims and were paid need to be fined and maybe jailed if they don't return the funds.   Provider contracts need to be revised to require a mandatory 20% recovery penalty fee for any claims that are filed without required proper documentation and are paid.  (I assume that the system required the providers to have evidence in their files, and when the final audit was done, they didn't have the required documentation.)  Thus they should be required to pay back the amount paid PLUS the 20% recovery fee, AND the provider should be removed from the provider list for a penalty period like 3-months.  That would establish an incentive to only file insurance claims with full documentation.

The article didn't say how or whether the Feds had a plan to recover the improper payments.  That is another trend I see is that audit reports will find problems, but then there isn't much follow up action to recover improper payments.

Additionally, the GAO issued a separate audit report about another large fraud control program where a responsible department had not implemented programs to prevent fraud in the $39-billion prescription drug reimbursement process as required by law, and it is described in the second article below from Kaiser.  Yes, that means they created the program, and implemented providers, but didn't ensure a fraud prevention program was part of the process.
vj

Defense Contract Audit Agency Failures Skewered in GAO Audit

Updated 7/27 - I added a DoD press release at the bottom of the link below where DCAA leadership has asked the DoD Inspector General to review the issues described in this posting. vj

7/23 - The Defense Contract Audit Agency (DCAA) is supposed to actually audit defense contractors on behalf of the Federal Government to ensure propriety and compliance with contracts.

However, the GAO (Government Accountability Office) just reviewed some DCAA audits and found that the DCAA was hiding or covering up audit findings, and limiting audit work of defense contractors in agreements with them.

THIS IS A HUGE RED FLAG TO ME AS AN EXPERIENCED AUDITOR.

There is enough information in the three articles (Washington Post, Reuters and AP) below to indicate the DCAA leadership and audit standards need to be reviewed.  There is no excuse for the practices described below. In the past, I have had contractors try to limit my access to information or people, and as long as senior management was backing us, we got what we needed to ensure the contracts were properly managed by our people and the contractor.  You WANT auditors to ask tough questions, and should expect yelling and complaints from the auditee if they are trying to hide something.

A full investigation of DCAA professional audit practices and standards, relations with contractors, and adherence to indpendent audit practices needs to be implemented.  If DCAA cannot be relied upon to produce comprehensive, factual audits without limitations, changes are needed.

You can read the summary, or the entire audit report HERE.

Important quote from the Forbse.com/AP article:

Sen. Claire McCaskill, D-Mo., a member of the Senate Armed Services committee, on Wednesday sent letters to both Defense Secretary Robert Gates and head of the DCAA, April G. Stephenson, demanding answers and assurances that appropriate parties will be held accountable.

 

"Somebody needs to be fired for this," said McCaskill. "As a former auditor, I read this GAO report with a mixture of disbelief and anger. This is completely unacceptable."

Read the articles in the link below...
vj

Army Requests Five new Procurement Generals to Improve Foreign Procurement Systems

WE have periodically reported on contracting fraud in Iraq, and not long ago, the Army initiated a heavy duty investigation into contract fraud in the Army's procurement office in Kuwait.

Now the Army is asking for five new General positions to focus on procurement, and at least initially, they were turned down by the White House's budget arm, the OMB. I think they have a good idea, and maybe the OMB thinks they should take some existing generals out of the existing pool and make them procurement specialists.

This request came after a recent testimony by the DoD IG's office before Congressman Waxman's oversight committee about billions in undocumented payments for Iraq purchases.

When I was in Iraq, the reconstruction contracting operation there was run (and probably still is) by the PCO, Purchasing & Contracting Office, which focused mostly on the big construction projects, and not the work process for $4-billion in materials ordered by reconstruction project managers.

The article below says the Army does not have any procurement oriented Generals, but when I was in Iraq, they assigned a Brigadier General to run the contracting office (not PCO, which manages the contracts) which negotiates and approves vendors and who gets the contract. That BG lived in the other end of my two man trailer, and he was always working LONG HOURS on big contract negotiations, and I could hear some of their phone discussions in my work site in the Palace when they had to use the speaker phone. Later his group moved to the PCO compound, and his group was expanded to be a "Command" over Iraq and Afghanistan contracting. Compared to most generals, who were focused on battle unit operations, he seemed to be a very competent professional.

But, I agree with the article below, the Military is no matrix operation, but hierarchical, and they all follow rank. If you don't have a general on your side, you end up deferring to the side of the one that does. In my attempts to get improvement in reconstruction procurement systems, I tried going through our own two star Major General in the reconstruction office to get contract quality control improvements in the above mentioned contracting office, but he balked when I gave him a list of all the evidence and backlash I had received from Lt. Colonels and Colonels in PCO and in the Contracting office. The MJ was focused on reconstruction implementation in Falujah, etc. and didn't want to spend time on bureaucratic issues. That is part of the problem - the Military seems to require any Colonel who wants to move up to get a Master's degree, but they don't get it in business or professional areas (except engineering, which the Corps of Engineers pushes). Thus, even someone with my 20 years of experience in accounting controls can't get a general to understand business systems and needed improvements so they would back improvements and reduce the horrendous number of frauds, corruption and mismanagement losses in Iraq.

The military also doesn't seem to rely upon or expect 21st century management control systems over processes AND productivity. The ONLY item they seemed to track in the Iraq reconstruction procurement office was number of contracts processed per month. There were no reports to evaluate QUALITY of the contract data (wrong emails, phones, etc.) and NO REPORTS to determine average and target processing time. There also were no reports tracking whether the number of procurement requests completed by the preceding finance group matched the number entered into their system (thus many contracts "sat" in the Finance system and didn't get processed at all.

Not long ago, I read where the military has realized the officer corps does not have expertise in business systems, and they are starting to send officers to business related short courses at major business schools. In my opinion, they may need more MBA's and fewer engineers. Most military are used to structured business systems, but Iraq was unstructured, so they didn't have anyone who could recognize missing controls and implement them.

Lessons Learned to Fix the Broken Military Procurement Systems in Foreign Countries

1) The DoD needs to focus on improving business systems by mandating some generals have business (MBA) and professional degrees and focusing on those areas, rather than just working in such areas for short times "to get experience". They probably need to go OUTSIDE and hire some heavily experienced civilians and MAKE them Generals if the current Generals won't learn business systems.

2) DoD needs to create a specialized unit that focuses on building unstructured business systems like reconstruction programs and procurement systems in foreign countries where they have to integrate information from different systems and work with local nationals and civilians and NGO's to get things done. The unit should be VERY skilled in building unstructured systems that may not use military processes, software or forms, but still need to include professional level controls and management reports to measure productivity and detect problems.

3) DoD needs to develop quality control processes and productivity benchmarks for all procurement processes and ensure the reports are printed and reviewed each week to detect problems. This should be done for the ENTIRE procurement process from point of customer purchase requests to final delivery of materials and payments.

vj

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from THIS source

White House denies Army's pitch for more brass

By RICHARD LARDNER – 2 hours ago

WASHINGTON (AP) — The Army's march to overhaul its tarnished contracting system has been slowed by an unlikely foe: the White House.

The Office of Management and Budget, President Bush's administrative arm, has shot down a service plan to add five active-duty generals who would oversee purchasing and monitor contractor performance.

The boost in brass was a key recommendation from a blue-ribbon panel that last fall criticized the Army for contracting failures that undermined the war effort in Iraq and Afghanistan, wasted U.S. tax dollars, and sparked dozens of procurement fraud investigations.

As the Army's contracting budget ballooned — from $46 billion in 2002 to $112 billion in 2007 — it had too few experienced people negotiating and buying equipment and supplies, according to the panel. Worse still, there wasn't a single Army general in a job with contracting responsibilities. That meant the profession had little clout at a critical time.

Senior officers are needed to make sure past mistakes are not repeated, said the panel, chaired by former Pentagon acquisition chief Jacques Gansler.

"If a contracting person has to say to a general that they have to follow the rules, it's easier if you have your own general who will back you up," says David Berteau, a panel member and a former Defense Department official.

Having generals in contracting jobs also will build the talent pool by showing junior soldiers that contracting is a promising career path.

The increase would generate a modest $1.2 million per year in personnel costs. But the Army already has more than 300 full-time generals, enough, it's been told, to handle any new demands.

The panel called for two major generals and three brigadier generals. One of the major generals, who wear two stars, would run a newly established Army Contracting Command. Formation of the command was another of the Gansler panel's recommendations.

The second two-star general would be assigned to a senior staff position at the Pentagon.

Two of the brigadier generals, who wear a single star, would also be assigned to the contracting command while the third would become chief of contracting at the Army Corps of Engineers.

According to a May 28 report to Congress on the status of the recommendations, Army Secretary Pete Geren said a proposal for five extra generals was submitted in March to OMB for approval. The office's role is to ensure proposed budgets and legislation are consistent with the administration's policies.

On May 12, the Army learned its proposal had been rejected. The report does not say why. A week after the rejection, the Army appealed OMB's decision.

OMB spokeswoman Corinne Hirsch said Wednesday the office is "internally deliberating" the proposal and would not discuss the reasons for the initial rejection.

Lt. Col. Martin Downie, an Army spokesman, said Thursday that communications between the Army and OMB are "pre-decisional and not releasable to the public at this time."

Generals are carefully controlled commodities; federal law prescribes how many each military branch may have. The Army has 306 generals leading nearly 525,000 troops. More than 240 of those are one- and two-star officers.

Adding a brigadier general to the ranks costs roughly $217,000 a year in pay, benefits and retirement contributions; a major general costs $261,000 annually.

The Army opened the Contracting Command three months ago. Jeffrey Parsons, a senior Army civilian official with heavy contracting experience, was picked to run it. Parsons will be in charge "until an appropriately skilled and experienced (major general) is available to assume command," the Army's report to Congress said.

The Army is also adding 1,400 military and civilian employees to its contracting work force. A purchasing office in Kuwait that had been identified as a hub of corruption has been revamped.

In the complex world of military acquisition, contracting is a specialized occupation. Contracting personnel negotiate with vendors, translate jargon-filled requirements for equipment and services into sensible descriptions, and oversee the deals to be sure the Army gets what it ordered.

The war in Iraq exposed major flaws in the Army's contracting abilities, particularly when the buying was done outside the United States. An overworked, under-experienced, and short-handed Army contracting staff was unable to meet the fast-paced demands for supplies and services. Bad deals were made and procurement fraud cases mounted in an environment prone to abuse.

Defense contractors, frequently criticized for war profiteering, complained of being pushed to accept flat-fee arrangements in high-risk combat zones where expenses could soar and confusion existed over what U.S. laws and regulations applied.

Collectively, the shortcomings created a "perfect storm," according to the panel.

Since 2005, the Army Criminal Investigation Command has opened 168 investigations related to contract fraud in Iraq, Kuwait and Afghanistan, according to spokesman Chris Grey. Ninety-five of those cases are ongoing. Of the 73 that have been closed, the subjects were indicted, the allegations turned out to be false, or the inquiry ended because of a lack of evidence.
On the Net:

* http://www.army.mil/

US House Oversight Committee to Review Defense Base Act Insurance Scam in Iraq

Contractors in Iraq apparently were billing the US for employee insurance payments when two Tikrit, Iraq based contractors were NOT actually paying for the insurance. Thus the US House Committee on Oversight and Government Reform, chaired by Democrat Henry Waxman is holding hearings. I will add transcripts later if they are of interest, and my specific experience with US Contractors for the Oil Pipeline in Alaska using insurance reserves as hidden profits is in the next paragraph.
vj