[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
.
[H.A.S.C. No. 115-56]
HEARING
ON
NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 2018
AND
OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS
BEFORE THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
SUBCOMMITTEE ON READINESS HEARING
ON
CONTINUED OVERSIGHT OF THE
TRANSFER OF EXCESS MILITARY
EQUIPMENT TO CIVILIAN LAW ENFORCEMENT AGENCIES
__________
HEARING HELD
JULY 27, 2017
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
SUBCOMMITTEE ON READINESS
JOE WILSON, South Carolina, Chairman
ROB BISHOP, Utah MADELEINE Z. BORDALLO, Guam
AUSTIN SCOTT, Georgia JOE COURTNEY, Connecticut
STEVE RUSSELL, Oklahoma TULSI GABBARD, Hawaii
MIKE ROGERS, Alabama CAROL SHEA-PORTER, New Hampshire
VICKY HARTZLER, Missouri A. DONALD McEACHIN, Virginia
ELISE M. STEFANIK, New York SALUD O. CARBAJAL, California
MARTHA McSALLY, Arizona, Vice Chair ANTHONY G. BROWN, Maryland
SCOTT DesJARLAIS, Tennessee STEPHANIE N. MURPHY, Florida
TRENT KELLY, Mississippi RO KHANNA, California
MIKE GALLAGHER, Wisconsin
Andrew Warren, Professional Staff Member
Brian Garrett, Professional Staff Member
Jodi Brignola, Clerk
C O N T E N T S
----------
Page
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Bordallo, Hon. Madeleine Z., a Delegate from Guam, Ranking
Member, Subcommittee on Readiness.............................. 2
Wilson, Hon. Joe, a Representative from South Carolina, Chairman,
Subcommittee on Readiness...................................... 1
WITNESSES
Merritt, Zina, Director, Defense Capabilities and Management,
Government Accountability Office; and Wayne McElrath, Director,
Forensic Audits and Investigative Service, Government
Accountability Office.......................................... 3
Scott, Mike, Deputy Director of Logistics Operations, Defense
Logistics Agency; and Mike Cannon, DLA Disposition Services,
Defense Logistics Agency....................................... 5
APPENDIX
Prepared Statements:
Merritt, Zina, joint with Wayne McElrath..................... 25
Scott, Mike, joint with Mike Cannon.......................... 40
Wilson, Hon. Joe............................................. 23
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
[There were no Questions submitted during the hearing.]
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
CONTINUED OVERSIGHT OF THE TRANSFER OF
EXCESS MILITARY EQUIPMENT TO CIVILIAN
LAW ENFORCEMENT AGENCIES
----------
House of Representatives,
Committee on Armed Services,
Subcommittee on Readiness,
Washington, DC, Thursday, July 27, 2017.
The subcommittee met, pursuant to call, at 10:37 a.m., in
room 2118, Rayburn House Office Building, Hon. Joe Wilson
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. JOE WILSON, A REPRESENTATIVE FROM
SOUTH CAROLINA, CHAIRMAN, SUBCOMMITTEE ON READINESS
Mr. Wilson. Good morning. This hearing will come to order.
Ladies and gentlemen, I welcome you all here today and call
this hearing of the House Armed Services Committee, Readiness
Subcommittee, on ``Continued Oversight of the Transfer of
Excess Military Equipment to Civilian Law Enforcement
Agencies'' to order.
I would like to begin by recognizing the dedicated service
of our Readiness Subcommittee clerk, Ms. Brignola. This will be
Jodi's last official event for our subcommittee and I want to
personally thank her for her contributions to our efforts over
the past year. I wish her the best of luck as she moves forward
in her future endeavors.
[Applause.]
One of the objectives of this subcommittee is to bring
attention to matters that impact on the overall readiness of
the Department of Defense. This includes programs or activities
which face management challenges, present budget implications,
or could be administered more efficiently. Whatever the root
cause, it is our goal to provide necessary oversight in order
to ensure our Armed Forces achieve the highest levels of
readiness possible.
Given the current threats facing our Nation and the
budgetary pressure place on the Department of Defense,
accountability is paramount and every dollar counts. Vigorous
oversight can help ensure that mistakes don't happen and when
they inevitably do, we learn lessons from these missteps.
For this reason, I am pleased to convene this hearing today
on the recent Government Accountability Office [GAO] report
highlighting deficiencies found with the management and
operation of the Law Enforcement Support Office, LESO, within
the Defense Logistics Agency [DLA].
The LESO is responsible for the ``1033 Program'' which has
provided tremendously valuable resources to our Federal, State,
and local law enforcement agencies since 1991. These necessary
items have contributed to law enforcement's ability to conduct
counternarcotics, counterterrorism, and border security
missions throughout the United States and ensure that items
already paid for by the taxpayer continue to ``protect and
serve'' the citizens of the United States.
Earlier this month, the GAO report stated that the DLA-
managed LESO program inappropriately assigned more than 100
controlled items with an estimated value at $1.2 million. This
revealed deficiencies in the process for verification and
approval of Federal law enforcement applications and in the
transfer of controlled property. The Department of Defense,
DLA, and the LESO program must improve its monitoring,
management, and administration of this critical program. I read
the GAO recommendations very carefully and applaud DLA for
taking a very proactive approach to addressing the shortfalls
and immediately acknowledging the problems identified.
I look forward to hearing what progress DLA has been made
in continuing to remedy these various deficiencies. Our
oversight intends to ensure taxpayer dollars are used
responsibly, security is maintained for sensitive items, and
accountability of equipment is never taken for granted.
Our panel will address the findings and recommendations of
the GAO report as well as the actions taken by DLA to correct
identified deficiencies.
I now turn to our very valued ranking colleague,
Congresswoman Madeleine Bordallo of Guam, for her introductory
comments.
[The prepared statement of Mr. Wilson can be found in the
Appendix on page 23.]
STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE FROM GUAM,
RANKING MEMBER, SUBCOMMITTEE ON READINESS
Ms. Bordallo. Thank you very much, Mr. Chairman, for
calling this important hearing on the recent GAO report on the
DOD [Department of Defense] Excess Property Program, also known
as the 1033 Program. And thank you also to our four witnesses
for being with us today for what I expect to be an insightful
discussion.
Let me begin by stating that I understand the value of the
1033 Program. It allows Federal, State, and local law
enforcement agencies to fill critical equipment shortfalls at
little to no additional cost to the taxpayer, leveraging excess
DOD property. Now many of these items are noncontrolled, can be
purchased at any office supply or furniture store, and help
alleviate budgetary stress, particularly on local agencies.
However, this equipment can also be controlled property,
items that are sensitive in nature and cannot be released to
the general public, such as firearms and military-grade imagery
technologies.
And that is what makes the GAO report particularly
concerning. Not only does it highlight the negligence with
which DLA treated property procured with taxpayer dollars, but
it demonstrates a dangerous vulnerability that could compromise
the safety of the American people.
So I am particularly appreciative that GAO conducted this
operation and delivered this report because it brings to light
these vulnerabilities and allows us to conduct critical
oversight on the handling of equipment to ensure reforms are in
place to better secure the transfer program.
I am deeply disturbed, however, by the prospect that a
malicious individual or organization could procure DOD
property, especially controlled items. Understanding that this
is likely a result of a combination of issues, including
inadequate protocols and safeguards, insufficient training, and
potential cultural errors, I expect to dig down on how this
program needs to be reformed.
So I do look forward to the discussion here this morning
and hope that we can come away with clear objectives and steps
forward to ensure this program has the proper safeguards and
accountability in place.
Mr. Chairman, I thank you again for holding this important
meeting, and I yield back.
Mr. Wilson. Thank you, Congresswoman Bordallo.
We are pleased to recognize our witnesses today. I want to
thank them for taking time to be with us. We have Ms. Zina
Merritt, Director of Defense Capabilities and Management of the
Government Accountability Office; Mr. Wayne McElrath, the
Director of Forensic Audits and Investigative Services of the
Government Accountability Office; Mr. Mike Scott, who is the
Deputy Director of Logistics Operations of the Defense
Logistics Agency; and Mr. Mike Cannon, the Director of the
Defense Logistics Agency Disposition Services.
We will begin with statements from each organization. We
will begin, very appropriately, with the Government
Accountability Office.
Mr. Wilson. Ms. Merritt.
STATEMENT OF ZINA MERRITT, DIRECTOR, DEFENSE CAPABILITIES AND
MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; AND WAYNE
McELRATH, DIRECTOR, FORENSIC AUDITS AND INVESTIGATIVE SERVICE,
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Merritt. Chairman Wilson, Ranking Member Bordallo, and
members of the subcommittee, thank you for the opportunity to
be here today with my colleague, Wayne McElrath.
Our testimony today summarizes key findings from our July
2017 report on DOD excess controlled property, and addresses
one--how Federal, State and local enforcement agencies reported
using and benefiting from the transferred property.
And two--the extent to which Defense Logistics Agency, or
DLA, has taken actions to enhance processes, including internal
controls, related to the transfers of such property.
DOD has the authority to transfer excess personal property
to Federal, State, and local enforcement agencies. DLA
Disposition Services administers the Law Enforcement Support
Office, or LESO program, for DOD. During calendar years 2013
through 2015, DOD has reported transferring approximately $1.1
billion of excess controlled property to law enforcement
agencies.
Controlled property typically involves sensitive equipment
and items that cannot be released to the public, such as
detonation robots, small arms, and Mine-Resistant Ambush
Protected vehicles, or MRAPs. Law enforcement officials that we
surveyed and interviewed cited a number of ways in which they
had benefited from the program, with several reporting that the
transfers of controlled property allowed them to save money.
The reported uses included enhancing counterdrug and
counterterrorism activities, search and rescue, natural
disaster response, and police training.
DLA has taken actions to enhance processes for the program
in response to past recommendations made by GAO, as well as DOD
and DLA offices of Inspector General. DLA has taken some steps
to address previously identified weaknesses and its processes
and procedures mostly at the State and local levels. In our
July report, we noted weaknesses at the Federal participant
level in three areas: one, verifying and approving
applications; two, transferring property; and three, the
assessment of risk.
Through creating a fictitious Federal agency, we gained
access to the 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 if modified with commercially available
items. Images of these items are pictured on the graphic boards
here in the hearing room today.
Specific weaknesses highlighted in our report include DLA's
internal controls for verifying and approving Federal agency
applications and enrollment in the program were not adequate;
specifically, LESO's reliance on electronic communications
without verification does not allow it to properly vet
applicants.
Second, our testing identified deficiencies in the transfer
of controlled property, such as DLA personnel not routinely
requesting and verifying identification of individuals picking
up property.
Third, while DLA has taken some steps to address identified
deficiencies in the program, DLA lacks a comprehensive
framework for instituting fraud prevention and mitigation
measures at all stages of the process. DLA officials
acknowledge that they have not conducted a fraud risk
assessment.
Overall, we concluded in our report that DLA's internal
controls did not provide reasonable assurance in preventing
fraud. Therefore, we made four recommendations to DLA.
One, review and revise policy or procedures for verifying
and approving applicants.
Two, ensure Disposition Services officials verify that
persons picking up items have valid credentials.
Three, issue guidance that requires Disposition Services
officials to verify the quantities and types of items being
picked up beforehand.
And, lastly, conduct a fraud risk assessment to design and
implement a strategy with specific internal control activities
to mitigate assessed fraud.
DOD concurred with all of our recommendations and
highlighted actions to address each one. Chairman Wilson,
Ranking Member Bordallo, and members of the subcommittee, that
concludes my prepared statement.
My colleague and I would be happy and pleased to respond to
any questions that you may have.
[The joint prepared statement of Ms. Merritt and Mr.
McElrath can be found in the Appendix on page 25.]
Mr. Wilson. Thank you very much, Ms. Merritt, and indeed,
your professionalism is very, very impressive.
Mr. McElrath, would you like to make a presentation?
Mr. McElrath. Sir, I have provided a combined statement.
Mr. Wilson. Thank you very much, and we now proceed to the
Defense Logistics Agency, Mr. Scott.
STATEMENT OF MIKE SCOTT, DEPUTY DIRECTOR OF LOGISTICS
OPERATIONS, DEFENSE LOGISTICS AGENCY; AND MIKE CANNON, DLA
DISPOSITION SERVICES, DEFENSE LOGISTICS AGENCY
Mr. Scott. Chairman Wilson, Ranking Member Bordallo,
distinguished committee members, thank you for the opportunity
to be here today to discuss the Defense Logistics Agency's
administration and execution of the 1033 Program, also known as
the Law Enforcement Support Office program, or LESO program.
I am Mike Scott, Deputy Director, DLA Logistics Operations.
With me today is Mr. Mike Cannon, the Director of DLA
Disposition Services. We appreciate the opportunity to discuss
the July 2017 GAO report on Department of Defense excess
property and to advise you of the actions we have taken to
further strengthen our processes.
DLA Disposition Services, a field activity of DLA, is
responsible for the final disposition of excess property
received from the military services. DLA Disposition Services
also administers and executes the 1033 Program through their
LESO. About 7,500 Federal and State law enforcement agencies
across 50 States and U.S. territories actively participate in
the program.
Thirty Federal agency headquarters are currently enrolled.
These are the higher headquarters to the 345 Federal law
enforcement activities participating in the program. DLA has
worked extensively over the last several years to improve the
State and local side of the program, which is 96 percent of
total participation.
While the GAO's recent review did validate enhancements
made in the State and local program, it also highlighted
vulnerabilities in the Federal program. DLA takes the findings
very seriously, and is actively addressing and correcting the
deficiencies.
In September 2015, DLA began a focused improvement effort
to strengthen our Federal program. We have implemented robust
controls in our Federal program, which already exist in our
State program. Specifically, we have addressed our--revised our
procedures for verifying and approving Federal agency
applications for enrollment.
First, DLA now requires an executive level representative
in the Federal agency designate a point of contact in writing.
This POC will serve as the agency's Federal coordinator, who
will validate and endorse all enrollment applications and all
equipment requests for their field activities.
Second, DLA now requires the POC to sign a memorandum of
understanding, outlining and accepting their responsibilities
for management of their program. We have sent all 30 current
Federal agency headquarters this MOU and 12 agencies have
already signed and returned the MOU.
Third, DLA will visit each Federal agency headquarters and
meet with their POC to confirm eligibility. As of today, DLA
has visited 22 Federal agency headquarters.
Additionally, DLA has strengthened the internal approval
process for enrolling Federal agencies.
First, we have designated a Federal LEA [law enforcement
agency] liaison to manage the application process. Second, DLA
will utilize the FBI's [Federal Bureau of Investigation's]
National Crime Information Center, or NCIC, database to verify
the legitimacy of all organizations. Finally, the LESO program
manager is now required to approve all Federal applications as
a second-level internal review.
With regard to the GAO findings on process weakness for
verification of customer identity and the type and quantity of
property issued, we have taken the following actions.
First, we immediately conducted remedial training at the
sites GAO visited. Second, we mandated reinforcement training
at all 103 of our disposition sites. We are 50 percent complete
on this aggressive effort, and are on track to finish 2 months
ahead of schedule. Third, we added this topic as an emphasis
item to our existing compliance program, which includes, among
other things, no-notice spot inspections, and a DLA
headquarters management review.
In response to the GAO recommendation to conduct a fraud
risk assessment as outlined in GAO's fraud risk framework, DLA
headquarters, specifically, our DLA Inspector General Office
and my Logistics Operations directorate, will lead this effort
with participation by DLA Disposition Services.
DLA has made significant enhancements to improve its
policies, procedures, and internal controls in the 1033
Program. We remain committed to continuous process improvement
to ensure we provide the best possible support to law
enforcement agencies and their critical mission.
Chairman Wilson, Ranking Member Bordallo, and members of
the committee, we thank you for the opportunity to discuss this
important issue here today, and are prepared to answer any
questions you have.
[The joint prepared statement of Mr. Scott and Mr. Cannon
can be found in the Appendix on page 40.]
Mr. Wilson. And, Mr. Cannon.
Mr. Cannon. Sir, Mr. Scott spoke on behalf of the agency.
Mr. Wilson. Thank you, and I want to--it really is
remarkable that an agency acknowledges that an error occurred
and has taken a positive response, so we appreciate your
service.
I am really grateful, today we have really talented members
of the subcommittee here, people who are really dedicated to
the American people and so many are here that we are going to,
very strictly, follow the 5-minute rule. And we have somebody
very talented, Drew Warren, who is going to keep the 5-minute
rule beginning with me. And so we will proceed right away.
Ms. Merritt or Mr. McElrath, could you--how did you
determine the specific vulnerabilities you assessed that led to
the decision that the LESO control measures by using a
fictitious agency? How did you determine that? Again, we
appreciate you being proactive.
Ms. Merritt. I will start the response.
While we were actually conducting some of our fieldwork in
some of the States, we were reviewing the names of the
applicants. And, as we were reviewing the names of those
particular applicants, we noticed one applicant that had a
title that did not seem to be a legitimate agency.
While doing that, we questioned DLA, and they acknowledged
that that was an entity in which they had been investigating--
and continues to investigate. So, that was one of the key
triggers for this, as well as, we had made a number of
recommendations over the years to tighten controls. And so we
wanted to ensure that some of these recommendations were
properly implemented.
My colleague probably will have a little bit to add to that
response.
Mr. McElrath. Based on the information that we received
from our defense capabilities team, we actually formulated a
plan to develop a false or fictitious law enforcement entity
and created an online presence.
After that, we submitted an application to DLA for
approval. We went through their online enrollment process and
then actually went on their online ordering system to actually
acquire goods.
Mr. Wilson. And that is amazing, but I appreciate again,
your being--we all appreciate you being proactive.
Additionally, how do you assess the Defense Logistic Agency's
current administration of the 1033 Program, and how does this
compare to what you initially found during the beginning of
your investigation last year in 2016?
Ms. Merritt. As noted, we briefed DLA continuously on the
progress of our work, including their Inspector General's
Office. In May, we had a formal meeting with them where we
fully disclosed our findings to them. At that point in time,
they told us about some respective actions that they had
started relating to the application.
For example, they had modified their application. As the
review continued, they also had begun developing the
memorandums of understanding at that time. So, in short, a
number of actions were already commencing as we continued and
got closer to the end, and they realized that we had, in fact,
posed as a fictitious organization and obtained items.
Then, they also noted that there were additional actions
that they were going to take in order to close those particular
gaps in their processes.
Mr. Wilson. Thank you.
And for Mr. Scott, your service for security of the
American families is very important with the 1033 Program. What
is the process for a law enforcement agency to obtain
controlled items? What additional steps in the authorization
process for obtaining the items has been considered in light of
the Government Accountability's Office investigation?
Mr. Scott. So, Chairman, as the GAO said, our process
previous to finding out what they were able to accomplish
required that Mr. Cannon's organization work directly with the
Federal law agencies. There was an application that had to be
filed; they had to provide statutes of authority; special
agents, senior agents in charge had to sign those applications
to be able to get into the program.
But as you have heard that our controls were not adequate.
We recognize that. We had started our efforts to improve the
Federal program prior to the GAO starting their effort. And, I
will say, immediately, I think the first meetings we had with
them were in March of 2017, when we learned of what they were
able to do in their investigation, by April 3rd we had
implemented those additional things that you have heard about.
And those include now that we get an executive level
sponsorship from the Federal agency. We have a POC identified
going forward. We visit those organizations to validate. We are
now going to use the FBI database to ensure that their
organization is correctly loaded there and they are legitimate.
Those are all things we have added, and we believe those
processes will prevent this from happening in the future,
Chairman.
Mr. Wilson. And they are very responsible safeguards. I
believe there were three recommendations; there is still one
pending, is that being acted upon?
Mr. McElrath. Yes, it is. As Mr. Scott mentioned, they are
scheduling with the OIG [Office of Inspector General) and my
headquarters to do the fraud risk assessment.
Mr. Wilson. Thank you very much.
Congresswoman Bordallo.
Ms. Bordallo. Thank you, Mr. Chairman.
Mr. Cannon and Mr. Scott, the GAO recommendations included
strengthening internal controls and reviewing identification
authorization protocols. Now, given what we know now, what is
your level of confidence that such a violation will not happen
again?
And, secondly, recognizing that only 4 to 7 percent of
transfers are controlled, should DLA temporarily suspend the
transfer program for controlled items until the problems are
fixed? You state that changes have already been made, but then
we wouldn't be here if there wasn't still a problem. So, will
it happen again, or should we suspend the program until changes
have been made?
Mr. Cannon. Ma'am, I will take that.
First of all, the control measures that we have in place I
am confident will preclude this from happening again. As Mr.
Scott alluded to or mentioned, we now require a very similar to
the tight controls we had implemented in the State and local
procedures, a Federal executive appointment of their POC, a
face-to-face visit to ensure that they are compliant, and then,
as a backup, a national--the NCIC database check to verify they
are a valid agency.
With those controls in place, I am confident that this
won't happen again.
Ms. Bordallo. All right, second part of my question?
Mr. Cannon. Yes, ma'am.
In March, when we got an out-brief and discussed this with
the GAO, I immediately suspended release of all property to
Federal agencies until we could put these controls in place.
Those controls included a memorandum of understanding which
we had began developing over a year ago. That memorandum of
understanding was finalized in DLA in December of 2016. And
until the agencies complete the new requirements, I do not
release any additional property.
Ms. Bordallo. So, you don't think you--the program should
be suspended? Is that what, in essence, what you are saying?
All right, Mr. Cannon, DOD responded to GAO recommendations
number two by stating that, and I quote, ``DLA currently has
policy requiring on-site officials to request and verify
identification from all customers.''
What, if any, disciplinary actions have been taken against
the individuals and the supervisors responsible for oversight
and training who approved the fictitious application for
enrollment in the Law Enforcement Support Office program,
approved the request to property, or conducted the transfer of
the property, without following proper procedures? How is DLA
determining who is responsible?
Mr. Cannon. Ma'am, we are looking at our records to
determine the type--the property that was released and where it
was released, so we can determine, as best we can, the
individual or individuals responsible.
Prior to that, as soon as we identified the locations that
the property came from, we immediately conducted remedial
training for every person at that site for the control measures
we already had in place that were not followed.
Since then, we have also added additional emphasis on our
controls when we do our semiannual self inspection, when we do
our biannual compliance reviews, when I do my no-notice site
visits, and when the headquarters comes down to do their
visits, as well.
Any time an individual is found who is, either behavior or
performance, is not up to standards, we take appropriate
corrective actions, depending on the circumstances.
Ms. Bordallo. What kind of disciplinary action would you
take? Are you releasing the people? Changing their positions,
or what?
Mr. Cannon. I have a range of actions I could take,
depending on the circumstances and the situation, and I have
taken actions for infractions everywhere from a letter of
counseling, to dismissal. So the range is open, depending on
the situation, ma'am.
Ms. Bordallo. Okay, I have one quick question.
Ms. Merritt, while the majority of your report focused on
the application approval and transfer of excess property, can
you provide insight into what you observed with respect to
accountability and tracking of controlled property, both at the
disposition sites, as well as once transferred to a Federal,
State, or local law enforcement agency? And I don't have much
time left.
Ms. Merritt. Sure. At the Federal level, we did observe one
case in which one Federal organization, in DC, was not aware of
how much property had been transferred to that agency or to its
respective activities in the field. That was quickly remedied
when they contacted LESO, they were able to obtain a list, and
they temporarily halted any approvals at that time.
At the local and State sites themselves, that actually went
pretty well because they had a State coordinator. A lot of the
processes were being double-checked. And so, unlike the Federal
level, there were more checks and balances at the State and
local level.
Ms. Bordallo. Thank you. Thank you very much, and I yield
back.
Mr. Wilson. Thank you, Congresswoman Bordallo.
We now proceed to Congressman Austin Scott, of Georgia.
Mr. Scott of Georgia. Thank you, Mr. Chairman. My questions
are predominately for the DLA. You said that you recognized the
problem prior to the GAO examinations, is that correct?
Mr. Scott. That is correct.
Mr. Scott of Georgia. When did you first recognize the
problem?
Mr. Scott. We first started our efforts to improve the
Federal program in September of 2015. We began by bringing in
Federal agencies for more training to ensure they knew how to
properly work with the program, and that quickly led to the
beginning of the development of the memorandum of
understanding.
And, at the point when we heard in March of 2017 the
investigative--what had happened, as you heard, we quickly
moved to implement additional procedures.
Mr. Scott of Georgia. But you said your efforts began in
2015. When did you first recognize that you had a problem?
Mr. Cannon. Sir, we recognized that the control measures in
place for the Federal agencies were not as robust as those for
the State and local agencies in late 2015. As we discussed
the----
Mr. Scott of Georgia. Okay so it was----
Mr. Cannon [continuing]. The program with the Federal
agency participants.
Mr. Scott of Georgia. Okay, so you first recognized the
problem in 2015?
Mr. Cannon. Late 2015.
Mr. Scott of Georgia. You were taking corrective actions,
but you did not expedite those actions until the GAO report?
Mr. Cannon. Correct.
Mr. Scott of Georgia. So, most of the items that are on
these boards are not lethal items. Would the controls have been
different if they had been firearms or a lethal item?
Mr. Cannon. We have additional application process in place
for items such as weapons, and for armored vehicles and
aircraft, so there is a more thorough application process that
they would have had to gone through for those items.
Mr. Scott of Georgia. So the difference in the threshold,
is it based on the lethality or the cost of the item? What
leads to the additional measures?
Mr. Cannon. When we did our risk analysis, internally, we
determined, in conjunction with guidance from the White House
Committee and the White House Review Permanent Working Group,
that extra controls were in place. We have always had extra
controls in place for weapons and armored vehicles and
aircraft. So, it is based on the type of equipment and the
potential use of that equipment.
Mr. Scott of Georgia. Okay, and so it would be--potentially
somebody used something fake to obtain something from the
government and then turn around and sell it on eBay or at a
pawn shop or something along those lines? Do we have any idea
what happened to the items or the value of the items?
Mr. Cannon. The items from the GAO report, sir?
Mr. Scott of Georgia. No, the ones that occurred prior to
you recognizing that--something happened for you to recognize
that you had a problem. Did items go to--was there a
misrepresentation, was there a theft of items----
Mr. Cannon. No, sir.
Mr. Scott of Georgia [continuing]. Effectively, through
misrepresentation?
Mr. Cannon. As we looked at our control measures in place
for the Federal program, we noticed they were not as stringent
as the control measures we had in place for the State and local
program. So our efforts were to make the programs more similar
in the levels of control, not that anything had gone out, but
to prevent things from going out, sir.
Mr. Scott of Georgia. But you do not believe that anybody
misrepresented something to obtain something for free, or at a
discount, from the Federal Government and then turn around and
sell it for profit?
Mr. Cannon. I have no knowledge of that happening.
Mr. Scott of Georgia. Do we know where the items are?
Mr. Cannon. We know where all the items from the GAO report
are, yes, sir.
Mr. Scott of Georgia Okay. With that said, Mr. Chairman,
that pretty much answers the questions that I had. I am happy
that we know where all of the items are, and certainly
appreciate the additional measures that are being put in place;
it is an important program.
I will tell you, I know a lot of the discussions around the
program revolve around some of the larger equipment. I happen
to know a sheriff's deputy, fairly well, that stepped out of a
BearCat, and as he stepped out of it buckshot hit the window,
and had it not--had he been in a normal squad car, he wouldn't
be with us today, so I hope that we will continue this program,
and making sure that we get our law enforcement officers the
equipment they need to do their job.
Mr. Wilson. Thank you very much, Congressman Scott, for
your insight and your personal view, too, which I agree with.
Thank you.
And we are grateful now to proceed to Congressman Anthony
Brown, of Maryland.
Mr. Brown. Thank you, Mr. Chairman, and I appreciate that
you and the ranking member have convened this hearing and to
look into this very important issue.
My question really goes to a little bit of a broader look
at the 1033 Program. In response to protests in Ferguson,
following the killing of Michael Brown, President Obama issued
an executive order that included the creation of a DOD and
Justice Department working group to ensure oversight of this
program.
According to the Constitution Project, that group is not
meant--has not met since January of this year with the new--or
under the new administration. In fact, President Trump has
indicated that he intends to rescind the previous
administration's executive order that ensured vital training
for equipment acquisition, and that is of concern to me.
I am also concerned that the transfer of armored vehicles
and high-powered firearms, as well as many other controlled
items, makes our police stations look more like forward
operating bases. It would unsettle me to see Mine-Resistant
Ambush Protected armored vehicles patrolling the streets of
Prince George's and Anne Arundel County.
I do get the importance of the program; it is all about
proportionality. So my question is, does the agency take into
account the actual or potential threat that a community faces
prior to delivering these military style equipment?
Mr. Scott. So, Congressman, we actively support that
permanent working group for DLA; our vice director of the
agency is our lead on that group. As you may know, that group
looked very closely at the categorization of items: which
things would be prohibited, which things should be controlled.
They completed another look at that in September of 2016,
going into this fiscal year, and we take that very seriously.
When we get the applications, we apply the decisions that were
made from that permanent working group on what is allowed for
us to execute, we execute the program.
But that group, when they made those determinations in
those categories, they brought in a number of different folks
to have those discussions that included experts on the use of
those type of weapons.
It included civil liberties leaders, it included law
enforcement leaders, folks from all----
Mr. Brown. If I can just jump in because I don't have too
much time. Can the small city of Seat Pleasant in Prince
George's County with, I don't know, 12,000 residents, acquire
the same type equipment that the city of Baltimore can obtain?
Or do you do some sort of--again, risk assessment,
potential threat, training, capabilities of the local
enforcement agency?
Mr. Scott. So all requirements have to first pass through a
State coordinator, then Mr. Cannon's group also reviews that.
They review it also against the size of that force and the
number of items that they are allowed to have.
The training for the items is--that goes back on the law
enforcement community, DOD does not provide the, kind of, use
of training for what is issued.
Mr. Brown. Do you require the training though?
Mr. Scott. We require that they show and state that they
have done that training. Yes, sir.
Mr. Brown. Thank you. A follow-up, I just have a little bit
of time left. What efforts, if any, I think you may have
touched on this, is the DLA taking to work not only with local
law enforcement, but also alongside community members, I heard
you mention community members in your response, through the
1033 transfer process.
Mr. Cannon. Sir, one of the requirements that we have
levied on the program for the State and local agencies is that,
before they receive property from us, before they enroll in the
program, they must be approved by their governing body.
So, whether that is the State or county, but whoever
oversees that body, must approve not only their participation
in the program, but their withdraw of property.
Mr. Brown. So, like the Seat Pleasant city council?
Mr. Cannon. Correct.
Mr. Brown. Okay.
Mr. Cannon. If Seat Pleasant is in the program.
Mr. Brown. Right.
Mr. Cannon. They would have----
Mr. Brown. One final follow-up. Are there any restrictions
on transferring equipment, under the 1033 Program, when the
local enforcement agency is under investigation by the DOJ
[Department of Justice] for any violation of civil rights? And
is that addressed in consent orders--that the handful that are
currently in place?
Mr. Cannon. We coordinate with the Department of Justice,
and anytime they have concerns with the department, we restrict
the transfer of property to that department until they tell us
otherwise.
Mr. Brown. So, it is not a--you evaluate whether it ought
to be restricted or if there is a violation, you restrict?
Mr. Cannon. DOJ evaluates and then advises us to restrict.
Mr. Brown. Thank you, Mr. Chairman. I yield back.
Mr. Wilson. And thank you, Congressman Brown.
And we now proceed to Congresswoman Vicky Hartzler, of
Missouri.
Mrs. Hartzler. Hi. I appreciate both--the good work from
the GAO as well as the DLA in addressing this real issue here.
So, please discuss the process for a law enforcement agency to
obtain controlled items.
What other steps, in the authorization process for
obtaining these items, are being considered in light of the
GAO's investigation?
Mr. Cannon. The process that we have in place for our
States and locals is a similar process we have already
implemented for the Federal Government. But anytime somebody
wants to withdraw a piece of controlled property, first that
has to go through their State or Federal coordinator to approve
that they need it.
We also have some apportionment rules. We do give
preference to counterdrug, counterterrorism, and border patrol
responsibilities, but for things like MRAPs, we also look at a
local ability for law enforcement agencies that provide mutual
support. And if there is mutual support available from another
close-by law enforcement agency, we won't apportion them, for
example, an MRAP.
So we won't give the county and the city both an MRAP if
they are in the same location. For weapons, we authorize one
per paid officer, and for vehicles, it is typically one vehicle
unarmored, or like a Humvee, for every three officers.
Mrs. Hartzler. Okay. That is very good. Given the GAO
created a fictitious law enforcement agency that was approved
for the program, how does DLA plan to review and revalidate the
law enforcement agencies that are currently enrolled in the
program to ensure each enrollment is verified as being
legitimate and an eligible law enforcement agency, and how long
will this process take? And what impact will it have on
approving new applications?
Mr. Scott. So, for the Federal side of the program as we
discussed earlier, all of those are suspended until they come
forward and comply with our new procedures with the MOU, the
POC, our visit to see them, and our confirming their identities
in the FBI database.
We think those requirements are both sound, to ensure
integrity to the program, and they are also reasonable for a
Federal agency to comply with.
On the State side of the program, we also intend to be
proactive and go back and retroactively look at every single
one of those organizations against that FBI database, as well,
just to ensure that we don't have anything else there.
Mrs. Hartzler. Great. And the GAO report mentions an annual
training conference for State coordinators, and Representative
Brown talked about the training and that the State coordinator
take this training within the State.
If this training is provided, why are law enforcement
agencies reporting the need for more training on LESO program
policies, and why did you feel the need to develop an online
training tool? Why does this training vary within the States?
Mr. Cannon. So, we do an annual conference, it is actually
next month in Norfolk, Virginia, where we train and advise the
State coordinators on the policy, and then the State
coordinators are responsible to train the trainer--to train
their LEAs.
Some States do that better than others. To augment that, we
have developed some online training to assist the LEAs. We
offer over-the-phone or Skype-based training if an LEA needs
training on how to--how to get into the program, how to work
the program, how to account for property. We also have what we
call job aids, which are basically checklists to help them do
the step-by-step procedures.
As we do our program compliance review, we go to--every
other year to every State to review their program, and to
inventory a large number of their property. We provide training
as required, as requested, while we happen to be there visiting
that LEA.
Mrs. Hartzler. Will the online training qualify to replace
the additional--the training that the State may have? Is it
either/or, or is it just supplement?
Mr. Cannon. It is to supplement, ma'am.
Mrs. Hartzler. Okay.
Mr. Scott. I think, Congresswoman, we are also going to
take when we conduct the fraud risk assessment, this is--we
noted the number of LEAs that asked for more training. We are
going to make that part of what we look at, under that review,
as well, and go to the furthest extent of DOD's capability to
provide additional training.
Mrs. Hartzler. Very good. Thank you very much, sounds like
you are taking very proactive steps, and we appreciate you
doing that. I yield back.
Mr. Wilson. Thank you very much, Congresswoman Hartzler.
We now proceed to Congresswoman Carol Shea-Porter, of New
Hampshire.
Ms. Shea-Porter. Thank you very much.
I am deeply concerned, like everybody is here, about this,
but I am also very puzzled, because it seems to me--excuse me--
there is more red tape to open up a donut shop than there is to
get this equipment or that there was.
And I am puzzled as to how the rules and regulations could
have been so loose that they were able to create this
fictitious agency to receive this material. So, can you please
walk me back to the beginning? Who drafted these regulations
that allowed?
Because as I listen to you now and you say and I am--you
know, I am glad that you are doing that, that now you have
identified a point of contact and you have all these steps
there. But common sense says they should have been there at the
beginning.
And so, I would like you to walk me back to the very
beginning. Who drafted this? Obviously, with so many holes in
it, that it was possible for the GAO to do this and who knows
who else. And I also would like to see that the people who
drafted this clearly are not competent enough to handle this
work.
And so, I am not comfortable with the answer of, well, you
know, we are going to go back and we have several
possibilities. This is a question of competence; this was a
serious job, and they failed the people of this country. And
so, I would appreciate your comments on that.
Mr. Cannon. The 1033 Program management was transferred to
Defense Logistics Agency's Disposition Services in very late
2008, through--and we completed the transfer in 2009. And we
are following procedures from there, I--the procedures that we
had in place requiring the LEAs to complete a thorough
application, to have a regional special agent in charge
required to sign the application, and have the statute of
authority, was identified as being insufficient by the GAO, and
we have since made improvements.
As a note, the application wasn't immediately approved;
there was some back and forth between GAO and my staff, and it
took several months before the application was approved, but it
was, in fact, approved, and should not have been. We have
tightened up those procedures since then.
Mr. Scott. And I will add, Congresswoman, again, we view it
just as seriously. The other things that have been reviewed
here, and again, our view of those controls was that, with Mr.
Cannon's group working directly with those Federal
organizations and the things he went through, that we did have
the controls in place.
That clearly is not the case. But the program has also been
reviewed by other external folks, as well. There have been
previous GAO reports. We have had an independent review of the
program by the RAND Corporation.
It doesn't make it any better, but the external reviews
also did not identify these deficiencies. Now that we know
them, we are all over it to make sure it never happens again.
Ms. Shea-Porter. I appreciate your honesty in your comment,
but it still doesn't cover the basic problem here. Now, I read
something about now they are going to have to show an ID. So
can you tell me what was meant by that, that they didn't have
to show an ID?
Mr. Cannon. Ma'am, when someone comes to a Disposition
Services site to pick up property, to--they are not an employee
of Disposition Services, everyone is required to present an ID
and follow proper sign-in procedures.
We have always had those measures in place. In this case,
those measures were not adequately followed. So, what I have
done since then, is I immediately, at the three locations
because I don't know the specifics because the GAO report
didn't identify them, but we were able to figure out the
locations they went to.
We immediately conducted remedial training on everybody
there to ensure they were following the protocols that are
already in place. And then since--and then we started, I
actually brought my six field leaders to Battle Creek,
Michigan, to my headquarters, to talk to them about this face-
to-face in the first--second week of July and gave them 30 days
to train every single individual, every single employee in
Disposition Services, on following the proper procedures for
identification of personnel and kind count and condition of
property.
We have about 50 percent of our sites complete, and we will
be complete next month, retraining everybody and emphasizing
the need to follow the established procedures.
Ms. Shea-Porter. And I appreciate that, but again these are
not toys, and these were rules and regulations that were
violated and could have wound up in a very serious outcome
here. And so, I think just speaking to them is not enough; they
had a responsibility to follow this protocol which was weak
enough as it was.
And so, I still want to know what happens besides you guys
shouldn't have done that?
Mr. Scott. So the moment Mr. Cannon is able to identify who
those individuals are, our agency and his organization have a
precedent and are prepared to take the appropriate
administrative disciplinary action. And that can be anything
from suspensions without pay to removal from the position.
Ms. Shea-Porter. Okay, thank you. And I yield back.
Mr. Wilson. Thank you, Congresswoman Shea-Porter, we
appreciate your service.
And we now proceed to Congressman Don McEachin, of
Richmond.
Mr. McEachin. Thank you, Mr. Chairman.
Many of my questions have been touched on so I am going to
ask one that might be a little bit more nuanced. And that is
this, when you-all dispose of controlled property, such as the
ones--such as the items that we have been talking about, do
you--and let's assume that you are going to--local law
enforcements requested it.
Do you take into consideration what is going on in that
area at the time? For instance, if there are tensions between
the local citizens and the police department, or anything like
that, or do you just, sort of, dispose of the property in
accordance with whatever guidelines you have in place?
Mr. Cannon. If we have a request from a law enforcement
agency, that request for property has to be first approved by
their local governing body--so the State, city council--then
that has to go to a State coordinator who has to approve the
request.
And then when that request comes to us, we will issue
property, if the property is available. If property is not
issued to the Department of Defense, who has first priority,
and to our special programs who have second priority, and it is
controlled property, then that equipment is demilitarized and
destroyed.
Mr. McEachin. Let me follow up on that and ask the question
maybe a slightly different way. Assuming that it has been
approved by the governing body then submitted to you by the
State liaison, are there any circumstances in which you say
nope, you know, City of Richmond you are just not going to get
this property for whatever reasons?
Mr. Cannon. We give priority of property to counterdrug,
border protection, and counterterrorism. So, if there are
multiple requests, that will determine which LEA gets it; but
we also, if the FBI tells us that they have concerns with an
LEA, and advises us, then we do not issue to that LEA.
Mr. Scott. The other thing, Congressman, is we also have
allocation limits, too, so that in terms of the quantity of
those types of items that they can have that we look at the
size of that organization. That is another thing that can limit
how much of these controlled items a unit can get.
Mr. McEachin. Right, thank you.
And Mr. Chairman, I yield back.
Mr. Wilson. Thank you very much, Congressman McEachin.
We now have a final question from Congresswoman Bordallo.
Ms. Bordallo. Thank you very much, Mr. Chairman.
Ms. Merritt, we have heard the DLA describe the actions
that they have taken, and that they believe they have taken
appropriate actions to fix the problem.
Now, my question to you is, how would you assess DLA's
actions, both in response to your recommendations and other
steps that they have taken?
Ms. Merritt. We have assessed those actions as positive
steps in the right direction. However, we can't emphasize
enough that we believe that top leadership and senior level
leadership at DLA is imperative in order for those
recommendations to be implemented.
At GAO, we continuously follow up on the implementation of
those recommendations, and we will do so, at this point in
time, and oftentime, in our reporting on programs we do include
those status reports. Those statuses is also published on our
public website, as well, so you, as well as the public at
large, have the opportunity to look at the progress that is
being made by DLA on those recommendations.
Ms. Bordallo. So I take it that you are satisfied with what
they are doing now, but you are going to be closely monitoring
it in the future, is that correct?
Ms. Merritt. Yes, the steps that we have asked them, as it
relates to the four recommendations that we have, are all steps
that we have proposed and they agreed to. They also established
timelines in their comments to us on the report, so that is
also very important as to whether or not they meet those
milestones, and hopefully those will be immediate milestones.
And so, with respect there, we do continue to follow, as I
said, and if there are problems, we duly note that.
Ms. Bordallo. Good. Thank you, Ms. Merritt.
And I yield back. Thank you.
Mr. Wilson. Thank you very much, Congressman Bordallo, and
as we conclude, the 1033 Program is so important to help
provide security for American families.
Mr. Scott, could you tell the American people, that is--how
many State, local, Federal agencies that you work with, what is
the value of the surplus equipment that you provide?
Mr. Scott. So again, we have 8,621 agencies in the program.
We have the property, on the books of those folks through the
program, is over 1.5 million pieces of equipment valued over
$2.4 billion in original acquisition value. That is the--the
good that we are providing to those law enforcement agencies.
Mr. Wilson. Well again, thank you for restating that. It is
so important that the American people know this, and again, the
GAO, we appreciate the Government Accountability Office, your
success in working with the DLA.
We are at this time, we shall adjourn, and we thank all of
you for being here today.
[Whereupon, at 11:31 a.m., the subcommittee was adjourned.]
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