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Pentagon Says Its Auditors Saved Taxpayers Money

December 4, 1985

WASHINGTON (AP) _ Defense Department auditors completed studies in the last half of fiscal 1985 that could save taxpayers $1.08 billion, according to a newly released Pentagon report, which also noted an increase in actions against fradulent defense contractors.

Department officials have already authorized corrective steps that will save roughly $668 million of that amount, the report said Tuesday. Whether the remaining $408 million is saved will depend upon ″management responses″ to the auditors’ findings, it said.

The semi-annual report, required by Congress and prepared by Defense Inspector General Joseph H. Sherick, also said the number of defense contractors or contractor employees suspended or barred from receiving Pentagon business soared by almost 47 percent.

While the report made no claims about the relative significance of the cases or the size of the companies involved, it said 346 suspensions or debarments were approved between April 1 and Sept. 30, compared to 236 during the first six months of the fiscal year.

″The Defense Department criminal investigative organizations opened 8,304 cases and closed 8,604 cases during this period,″ the report added. By comparison, 7,527 cases were opened during the first six months and 7,639 closed.

Criminal probes in the latter half of the year produced 502 indictments or convictions, up 7 percent compared to 468 in the first six months, the report said.

The investigations resulted in more than $88.6 million in fines, penalties or restitutions during the six-month period, Sherick reported, versus $37.3 million recovered during the first half of the year.

Pentagon employees are also making greater use of a confidential Hot Line installed for reporting suspected waste, fraud or abuse, the report said.

During the first six months of the fiscal year, the Hot Line logged 3,806 calls, producing 830 ″substantive″ referrals to audit and investigative units. In the second half of the year, 5,020 calls were received, producing 1,043 substantive referrals.

Release of the report came one day after the indictment of the General Dynamics Corp. and four of its current or former executives on fraud charges for allegedly overcharging the Army for the Sgt. York air-defense gun.

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