Audit: Defense officials misused S&S for contracts

Audit: Defense officials misused S&S for contracts
By Jeff Schogol, Stars and Stripes
Stars and Stripes online edition, Friday, December 12, 2008

Read the inspector general's report here.

ARLINGTON, Va. — Defense officials “inappropriately” used Stars and Stripes to transfer $9.2 million to finance America Supports You, a report by the Defense Department Office of the Inspector General said.

Auditors concluded that Department officials’ decision to use the newspaper as a funding mechanism for America Supports You violated both an Army regulation and a Defense Department instruction. It recommends that officials look into whether to launch a formal investigation into the matter.

The audit looked into how Department officials used Stripes’ contracting office and “nonappropriated funds” — which are not allocated by Congress — to pay for America Supports You expenses.

The findings come after an 18-month investigation into America Supports You, a Defense Department public affairs program that gives publicity to nonprofit groups that support U.S. troops.

Stripes receives funding support from the Department of Defense but is editorially independent. The investigation did not involve any allegations of improprieties or interference with the paper’s independence.

The newspaper’s relationship with America Supports You did not affect its mission to provide information to servicemembers, said Robert Hastings, principal deputy assistant secretary of Defense, public affairs.

“I have not seen any evidence that has been compromised whatsoever,” Hastings said on Friday.

Acting Stripes publisher Max Lederer declined to comment on the substance of the report, but he noted that he ended the newspaper’s relationship with America Supports You when questions of impropriety emerged in fall 2007.

Friday’s report comes on the heels of a separate audit released Thursday which found problems with the internal controls separating Defense Department public affairs activities from American Forces Information Service, Stripes’ now defunct parent organization.

Until recently, both AFIS and America Supports You fell under the purview of Allison Barber, former deputy assistant secretary of Defense for internal communications and public liaison.

Because AFIS did not have a director for seven years, public affairs officials also served as AFIS managers, and that led to AFIS funding going toward public affairs programs, the audit found.

Friday’s report said that of the money that went toward America Supports You, $8.8 million was spent on the public relations firm Susan Davis International to promote the program.

“We believe that spending funds for a public affairs program that is not part of the nonappropriated fund instrumentality’s purpose represents a ‘misuse or waste of soldier’s dollars,’ ” the report said.

Overall, America Supports You was run in a “questionable and unregulated manner,” according to the audit. Investigators said public affairs officials did not have enough oversight over the America Supports You contract to Susan Davis International — which at one point was managed by Stripes’ contracting office.

Also, the auditors found that representatives from Stripes “failed to perform their fiduciary responsibilities” to ensure funds were managed properly.

Hastings, who took over his post this year — several months after the audit was launched — said his office has already initiated a number of changes to comply with most of the audit’s recommendations.

In May, they issued a new contract to Susan Davis that met applicable contracting guidelines, he said. Later, the Defense Department took over the work being done by Susan Davis and stopped payments to the firm.

“I believe all of our activities today are in full compliance with all directives and policies and guidance that would be appropriate,” Hastings said.

America Supports You has also returned to its original mission of communicating support for U.S. troops and their families, Hastings added. “You won’t find any of us out there building or driving that activity; we’re simply communicating.”

Ellie