U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

i 

26–741 2018

[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 
(II) 

SUBCOMMITTEE ON READINESS 

JOE WILSON, South Carolina, Chairman 

ROB BISHOP, Utah 

AUSTIN SCOTT, Georgia 

STEVE RUSSELL, Oklahoma 

MIKE ROGERS, Alabama 

VICKY HARTZLER, Missouri 

ELISE M. STEFANIK, New York 

MARTHA MCSALLY, Arizona, Vice Chair 

SCOTT DESJARLAIS, Tennessee 

TRENT KELLY, Mississippi 

MIKE GALLAGHER, Wisconsin 

MADELEINE Z. BORDALLO, Guam 

JOE COURTNEY, Connecticut 

TULSI GABBARD, Hawaii 

CAROL SHEA-PORTER, New Hampshire 

A. DONALD MCEACHIN, Virginia 

SALUD O. CARBAJAL, California 

ANTHONY G. BROWN, Maryland 

STEPHANIE N. MURPHY, Florida 

RO KHANNA, California 

ANDREW WARREN, Professional Staff Member 

BRIAN GARRETT, Professional Staff Member 

JODI BRIGNOLA, Clerk 
(III) 

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.] 

(1) 

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 
2 

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. 
3 

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. 
4 

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. 
5 

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 
6 

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 
7 

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 
8 

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 
9 

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. 
10 

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? 
11 

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, 
12 

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? 
13 

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 
14 

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. 
15 

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 
16 

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 ap-
17 

proved 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. 
18 

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.] 
A P P E N D I X 

JULY 27, 2017 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

JULY 27, 2017 

(23) 

Statement of the Honorable Joe Wilson 

Chairman, Readiness Subcommittee 

"Continued Oversight of the Transfer of Excess Military Equipment to 

Civilian Law Enforcement Agencies" 

July 27,2017 

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 ofthe Transfer of Excess Military Equipment to 

Civilian Law Enforcement Agencies" to order. 

One of the objectives of this subcommittee is to bring attention to 

matters that impact the overall readiness ofthe Department of Defense. This 

includes programs or activities which face management challenges, present 

budget implications, or could be administered more efficiently. Whatever the 

root causes, 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 placed 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 report highlighting deficiencies 

found with the management and operation of the Law Enforcement Support 

Office (LESO) within the Defense Logistics Agency. The LESO is 

responsible for the "1 033 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 counter-narcotics, counter-terrorism, 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 of $1.2 million. This revealed deficiencies in the process for 

verification and approval of federal law enforcement agency 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 pro-active approach to 
24 

addressing the shortfalls and immediately acknowledging the problems 

identified. 

I look forward to hearing what progress DLA has 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 ofthe GAO 

report as well as the actions taken by DLA to correct identified deficiencies. 

I now turn to my colleague, Ranking Member Madeleine Bordallo, for 

introductory remarks. 
25 

For Release on Delivery 

Expected at 10 a.m. ET 

Thursday, July 27, 2017 

GA0-17-781T 

United States Government Accountability Office 

Testimony 

Before the Subcommittee on Readiness, 

Committee on Armed Services, House 

of Representatives 

DOD EXCESS 

PROPERTY 

Enhanced Controls 

Needed for Access to 

Excess Controlled 

Property 

Statement of Zina D. Merritt, Director, Defense 

Capabilities and Management 

Wayne A McElrath, Director, Forensic Audits and 

Investigative Service 
26 

Chairman Wilson, Ranking Member Bordallo, and Members of the 

Subcommittee: 

Thank you for the opportunity to be here today with my colleague, Wayne 

McElrath, with whom I am jointly providing this statement. Today, we will 

discuss our July 2017 report on the Department of Defense (DOD) Law 

Enforcement Support Office (LESO) program, also known as the 1033 

program in reference to the section of the law authorizing it. 1 Under this 

authority, DOD can transfer excess personal property to federal, state, 

and local law enforcement agencies. 2 The Defense Logistics Agency 

(DLA) Disposition Services administers the LESO Program for DOD. 

Since 1991, DOD has reported transferring more than $6 billion worth of 

its excess personal property to more than 8,600 federal, state, and local 

law enforcement agencies. According to DOD, about 4 to 7 percent of the 

total excess property transferred is controlled property, which typically 

involves sensitive equipment and items that cannot be released to the 

public. Examples of controlled items available include night-vision 

goggles, thermal imaging equipment, specialized printers, and explosive 

ordnance detonation robots, as well as certain high-visibility items, such 

as small arms, High Mobility Multipurpose Wheeled Vehicles (HMMWVs), 

Mine-Resistant Ambush Protected Vehicles (MRAPs), and aircraft. LESO 

program data shows that during calendar years 2013 through 2015, 

approximately $1.1 billion of excess controlled property was transferred to 

federal, state, and local law enforcement agencies. Approximately twothirds of the 388,000 DOD excess controlled property items had been 

transferred to state and local agencies, and one-third had been 

transferred to federal agencies. 

Over the past 15 years, we have examined DOD's excess property 

reutilization program and reported deficiencies, including unauthorized 

parties obtaining excess controlled property and internal control 

breakdowns with regard to the security of sensitive excess military 

equipment. 3 We have made over 20 recommendations aimed at 

1

GAO, DOD Excess Controlled Property: Enhanced Controls Needed for Access to 

Excess Controlled Property, GA0-17-532 (Washington, D.C.: July 18, 2017). 

2000 defines personal property as all DOD property except real property, records of the 

federal government, and certain naval vessels. 

3!nternal control is a process used by management to help an entity achieve its objectives. 

See GAO, Standards for fntemal Control in the Federal Government, GA0-14-704G 

(Washington, D.C.: September 2014). 

Page 1 GA0-17-781T DOD Excess Property 
27 

enhancing internal controls over DOD's disposal and accountability of its 

excess property and improving the overall economy and efficiency of the 

reutilization program. The department has implemented most of the 

recommendations. Likewise, the DOD Office of Inspector General has 

reported on internal control deficiencies, such as the distribution of 

excess property to law enforcement agencies without the accountability 

necessary to ensure that the released property had the proper 

authorization. The Inspector General has made recommendations, which 

the department has also implemented. 

Our testimony today summarizes key findings from our July 2017 report 

on DOD excess property. Accordingly, our testimony addresses (1) how 

federal, state, and local law enforcement agencies reported using and 

benefiting from excess controlled property transferred to them through the 

LESO program; and (2) the extent to which DLA has taken actions to 

enhance processes, including internal controls, related to its transfers of 

excess controlled property. 

To conduct our work, we reviewed DOD policies and procedures, 

interviewed and surveyed cognizant officials, and conducted independent 

testing of LESO's application and DLA's transfer process. Specifically, we 

conducted a survey of 15 participating federal law enforcement agencies 

as well as 53 state coordinators who had controlled property transferred 

to their offices through the LESO program during calendar years 2013, 

2014, and 2015 to gain an understanding of their use of the LESO 

program. 4 Also, we conducted non-generalizable case studies of five 

states: Arizona, Georgia, Maryland, Michigan, and Texas. We interviewed 

federal, state, and local law enforcement officials in each of the selected 

states to gain an understanding of how property is transferred to them, 

including how they screen for, obtain, and dispose of DOD excess 

controlled property. 

Additionally, our investigators created a fictitious federal agency to 

conduct independent testing of the LESO program's internal controls and 

DLA's transfer of controlled property to law enforcement agencies. We 

4State coordinators are Governor-appointed positions to manage LESO program 

responsibilities in their respective state or U.S. territory. As of September 2016, all states, 

with the exception of Hawaii, had a state coordinator, and the following territories had 

state coordinators: Guam, Northern Marianas Islands, Puerto Rico, and U.S. Virgin 

Islands. For purposes of this statement, when we reference state coordinators, we are 

referring to state coordinators from states and U.S. territories. 

Page 2 GA0-17-781T DOD Excess Property 
28 

Law Enforcement 

Agencies Reported 

Various Uses and 

Benefits from the 

Transfer of the DOD 

Excess Controlled 

Property 

also compared DLA and LESO practices to those identified in GAO's A 

Framework for Managing Fraud Risks in Federal Programs (hereafter 

cited as the Fraud Risk Framework). 5 Issued in July 2015, GAO's Fraud 

Risk Framework is a comprehensive set of leading practices that serves 

as a guide for program managers to use when developing efforts to 

combat fraud in a strategic, risk-based manner. Further details on our 

scope and methodology are included in our report. The work on which 

this statement is based was conducted in accordance with generally 

accepted government auditing standards and our investigative work was 

performed in accordance with the Council of Inspector General on 

Integrity and Efficiency standards for investigations. 

Federal law enforcement agencies and state coordinators in our surveyas well as officials we interviewed from federal, state, and local law 

enforcement agencies-reported various uses of DOD excess controlled 

property for law enforcement activities. The reported uses included 

enhancing counterdrug, counterterrorism, and border-security activities. 

Also, law enforcement agencies reported using DOD's excess controlled 

property for other law enforcement activities, such as search and rescue, 

natural disaster response, surveillance, reaching barricaded suspects, 

police training, and the serving of warrants. 

Federal, state, and local agencies cited a number of ways in which they 

had benefited from LESO program, with several reporting that the 

transfers of controlled property allowed them to save money. For 

example, a local law enforcement official in Texas reported that 96 

percent of the department budget goes to salaries and that the LESO 

program helped the department acquire items that it would otherwise not 

be able to afford, saving the department an estimated $2 million to $3 

million. Additionally, agencies provided examples of how property they 

received through the LESO program have been used. For example, the 

Bureau of Indian Affairs officials reported they have used vehicles to 

support their Office of Justice Services' drug unit during marijuana 

eradication and border operations by providing transport to agents over 

inhospitable terrain in mountainous and desert environments. In another 

example, Texas law enforcement officials reported that the San Marcos 

and Hays County police departments used their issued Mine Resistant 

5 GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO~ 15-593SP 

(Washington, D.C.: July 28, 2015). 

Page 3 GA0-17-781T DOD Excess Property 
29 

DLA Has Taken Some 

Actions to Address 

Weaknesses in Its 

Excess Controlled 

Property Program, 

but Deficiencies Exist 

in Key Processes 

DLAActions to Address 

Weaknesses in LESO 

Program 

Ambush Protected (MRAP) vehicles to rescue more than 600 stranded 

people from floodwaters in October 2015. Moreover, the Los Angeles 

County Sheriffs Department reported that it used a robot to remove a rifle 

from an attempted murder suspect who had barricaded himself. 

DLA has taken some steps to address previously identified weaknesses 

in its processes for transferring and monitoring its excess controlled 

property through revisions to its policy and procedures on the 

management, oversight, and accountability of the LESO program. Such 

revisions were made, in part, because of recommendations made by the 

DOD and DLA Offices of Inspector General. The DOD and DLA Offices of 

Inspector General conducted four audits of the LESO program between 

2003 and 2013 that identified more than a dozen recommendations, such 

as developing and implementing written standard operating procedures 

for the approval and disapproval of law enforcement agency property 

requests and issuance, transfer, turn-in and disposal of LESO property. In 

our July 2017 report, we found the department had taken the following 

actions to enhance its transfer process through revisions to policy and 

procedures: 

transitioned full management responsibility of the LESO Program to 

DLA Disposition Services in 2009; 

developed LESO Program Standard Operating Procedures in 2012 

and updated them in 2013; 

Page4 GA0~17-781T DOD Excess Property 
30 

DLA Has Deficiencies in 

Its Processes for Verifying 

and Approving 

Applications and 

Transferring Property and 

Has Not Conducted a Risk 

Assessment 

transitioned to a new data system in 2013 after identifying that the old 

system was not capable of post-issue tracking; 6 

revised the DLA instruction that provides policy, responsibility, and 

procedures for DLA's management responsibilities of the LESO 

program in 2014 and 2016; 7 and 

revised LESO program processes in 2016 to incorporate 

recommendations made by the Federal Interagency Law Enforcement 

Equipment Working Group, 8 such as defining executive order 

controlled property or prohibiting schools K-12 from participating in the 

program. 

In addition, DLA is in the process of developing additional training on 

LESO program policies and procedures, and is establishing 

memorandums of understanding with federal law enforcement agencies 

on the general terms and conditions of participating in the program, 

including the restrictions on the transfer and sale of controlled property. 

We found weaknesses in three areas: (1) verifying and approving 

applications, (2) transferring property, and (3) the assessment of risk. 

First, our independent testing of the LESO program's internal controls 

identified deficiencies in the processes for verification and approval of 

federal law enforcement agency applications. Specifically, our 

investigators posing as authorized federal law enforcement officials of a 

fictitious agency applied and were granted access to the LESO program 

in early 2017. In late 2016, we emailed our completed application to the 

LESO program office. Our application contained fictitious information 

including agency name, number of employees, point of contact, and 

physical location. In early 2017, after revising our application at the 

direction of LESO officials we were notified that our fictitious law 

enforcement agency was approved to participate in the LESO program. 

LESO officials also emailed us to request confirmation of our agency's 

Brhis new system, managed by the Forest Service, allows state and local law 

enforcement agencies to complete their annual inventories and certification and manage 

their own property book. 

7

DLA Instruction 8160.01, Law Enforcement Support Office (July 21, 2014), and DLA 

Instruction 4140.11. Department of Defense 1033 Program (Dec. 22, 2016). 

81n 2015, the President issued Executive Order 13688, Federal Support for Local Law 

Enforcement Equipment Acquisition, which established a Federal Interagency Law 

Enforcement Equipment Working Group to support oversight and policy development 

functions for controlled equipment programs. 

Page 5 GA0-17-781T DOD Excess Property 
31 

authorizing statute; in response, our investigators submitted fictitious 

authorizing provisions as provisions in the U.S. Code. At no point during 

the application process did LESO officials verbally contact officials at the 

agency we created-either the main point of contact listed on the 

application or the designated point of contact at a headquarters' level-to 

verify the legitimacy of our application or to discuss establishing a 

memorandum of understanding with our agency. 

DLA's internal controls for verifying and approving federal agency 

applications and enrollment in the LESO program were not adequate to 

prevent the approval of a fraudulent application to obtain excess 

controlled property. Specifically, LESO's reliance on electronic 

communications without actual verification does not allow it to properly 

vet for potentially fraudulent activity. For example, DLA did not require 

supervisory approval for all federal agency applications, or require 

confirmation of the application with designated points of contact at the 

headquarters of participating federal agencies. Additionally, at the time 

we submitted our application, DLA officials did not visit the location of the 

applying federal law enforcement agency to help verify the legitimacy of 

the application. After our briefing of DLA officials in March 2017 on the 

results of our investigative work, DLA officials stated they took immediate 

action, and in April 2017 visited 13 participating federal law enforcement 

agencies. However, at this time DLA has not reviewed and revised the 

policy or procedures for verifying and approving federal agency 

applications and enrollment in the LESO program. 

Second, our independent testing also identified deficiencies in the transfer 

of controlled property, such as DLA personnel not routinely requesting 

and verifying identification of individuals picking up controlled property or 

verifying the quantity of approved items prior to transfer. Our 

investigators, after being approved to participate in the LESO program, 

obtained access to the department's online systems to view and request 

controlled property. We subsequently submitted requests to obtain 

controlled property, including non-lethal items and potentially-lethal items 

if modified with commercially available items. In less than a week after 

submitting the requests, our fictitious agency was approved for the 

transfer of over 1 00 controlled property items with a total estimated value 

of about $1.2 million. The estimated value of each item ranged from $277 

to over $600,000, including items such as night-vision goggles, reflex 

(also known as reflector) sights, infrared illuminators, simulated pipe 

bombs, and simulated rifles. Our investigator scheduled appointments 

and obtained the controlled property items, such as those shown in the 

photos below. 

Page 6 GA0-17-781T DOD Excess Property 
32 

Night-vision goggle Simulated M-16A2 rifle Pipe Bomb Trainer 

Source: GAO photos of DOD excess controlled property items obtained. ! GA0~17-781T 

Using fictitious identification and law enforcement credentials, along with 

the LESO-approved documentation, our investigator was able to pass 

security checks and enter the DLA Disposition Service warehouse sites. 

Personnel at two of the three sites did not request or check for valid 

identification of our investigator picking up the property. According to DLA 

guidance, direct pickup of allocated property may be made by an 

individual with valid identification and the appropriate DOD authorization 

form that is signed by the authorized individual listed in the letter. 9 

DLA has not taken steps to reasonably ensure that onsite officials 

routinely request and verify valid identification of the individual(s) 

authorized to pick up allocated property from the LESO program, as 

required by the guidance. DLA officials acknowledged they could take 

additional steps to ensure compliance with the requirements in the 

handbook. Furthermore, although we were approved to receive over 100 

items and the transfer documentation reflects this amount, we were 

provided more items than we were approved to receive. The discrepancy 

involved one type of item-infrared illuminators. We requested 48 infrared 

9DLA, Disposition Services Customer Handbook (2016). According to program 

documentation, when an application to participate in the LESO program is approved, an 

Authorization Letter for Property Screening is generated and forwarded to the state 

coordinator or federal agency. The letter of authorization includes participant information 

such as telephone number and address that can be used by a DLA Disposition Services' 

site to contact an agency, if needed, to coordinate the direct pickup of property. 

Page 7 GA0-17-781T DOD Excess Property 
33 

illuminators but onsite officials at one Disposition Services site provided 

us with 51 infrared illuminators in 52 pouches, of which one pouch was 

empty. Additionally, we found that one DLA Disposition Services site had 

a checklist as a part of their transfer documentation for their personnel to 

complete. The checklist required manual completion of several items, 

including quantity, date, and who fulfilled the order. The other two DLA 

Disposition Services sites, including the site that transferred the wrong 

quantity, did not include this checklist with the transfer documentation we 

received. DLA guidance states that accountability records be maintained 

in auditable condition to allow property to be traced from receipt to final 

disposition. 10 We concluded that without guidance that specifically 

requires DLA Disposition Services' on-site officials to verify the type and 

quantity of approved items against the actual items being transferred prior 

to removal from the sites, DLA will lack reasonable assurance that the 

approved items transferred are appropriately reflected in their inventory 

records. 

Third, while DLA has taken some steps, mostly in early 2017, to address 

identified deficiencies in the LESO program, DLA lacks a comprehensive 

framework for instituting fraud prevention and mitigation measures. 

During the course of our review, DLA revised the LESO program 

applications by requiring applicants to sign an attestation that the agency 

that they represent is a legitimate law enforcement agency. Further, DLA 

officials stated they are more carefully reviewing the legitimacy of some 

information on the application such as email addresses and physically 

visiting federal agencies that enter into memorandums of understanding 

with the LESO program. 

However, as previously discussed, we identified internal controls 

weakness in the policy and procedures for verifying and approving federal 

agency applications and enrollment as well as weakness throughout the 

process from approval to the actual transfer of the items to the agencies, 

which indicates that DLA has not examined potential risks for all stages of 

the process. According to GAO's Fraud Risk Framework11 , effective fraud 

risk managers collect and analyze data on identified fraud schemes, use 

these lessons learned to improve fraud risk management activities, and 

plan and conduct fraud risk assessments that are tailored to their 

10DOD Manual 4160.01, vol.1, Defense Materiel Disposition: Disposal Guidance and 

Procedures (October 22, 2015). 

11 GA0-15-593SP (Washington, D.C.: July 28, 2015). 

Page 8 GA0-17w781T DOD Excess Property 
34 

programs. The framework states there is no universally accepted 

approach for conducting fraud risk assessments since circumstances 

among programs vary. However, per leading practices, assessing fraud 

risks generally involves five actions: (1) identifying inherent fraud risks 

affecting the program, (2) assessing the likelihood and effect of those 

fraud risks, (3) determining fraud risk tolerance, (4) examining the 

suitability of existing fraud controls and prioritizing residual fraud risks, 

and (5) documenting the program's fraud risk profile. 

DLA has begun to examine some fraud risks associated with the LESO 

program. However, DLA officials acknowledged during our March 2017 

meeting that they have not conducted a fraud risk assessment on the 

LESO program to include the application process, and as such, has not 

designed or implemented a strategy with specific control activities to 

mitigate risks to the program. We concluded that conducting such an 

assessment could have program-wide improvements, including 

strengthening the controls to verify the legitimacy of applicants. 

Overall, we concluded in our July 2017 report that DLA's internal controls 

did not provide reasonable assurance in preventing fraud. Therefore, we 

made four recommendations for DLA to: 

review and revise policy or procedures for verifying and approving 

federal agency applications and enrollment; 

ensure compliance that DLA Disposition Services on-site officials 

transferring controlled property verify that persons picking up items 

have valid identification and are authorized to pick up allocated 

property from the LESO program; 

issue guidance that requires DLA Disposition Services on-site officials 

to verify the type and quantity of approved items against the actual 

items being transferred prior to removal from the sites; and 

conduct a fraud risk assessment to design and implement a strategy 

with specific internal control activities to mitigate assessed fraud risks. 

DOD concurred with all of our recommendations and highlighted actions 

to address each one. 

Chairman Wilson, Ranking Member Bordallo, and Members of the 

Subcommittee, this concludes our prepared statement. My colleague, Mr. 

McElrath, and I would be pleased to respond to any questions that you 

may have at this time. 

Page 9 GA0-17-781T DOD Excess Property 
35 

Contacts and 

Acknowledgments 

(102200) 

For questions about this statement, please contact Zina D. Merritt at (202) 

512-5257 or merrittz@gao.gov or Wayne A. McElrath at (202) 512-2905 

or mcelralhw@gao.gov. In addition, individuals making significant 

contributions to this statement include: Marilyn Wasleski, Assistant 

Director; Laura Czohara, Martin de Alteriis, Barbara Lewis, Felicia Lopez, 

Maria McMullen, George Ogilvie, Richard Powelson, and Samuel Woo. 

Page 10 GA0-17-781T DOD Excess Property 
36 

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38 

Zina Dache Merritt 

Director, Defense Capabilities and Management Team 

United States Government Accountability Office 

Zina Dache Merritt is a Director in the U.S. Government Accountability Office's (GAO) 

Defense Capabilities and Management team, Washington, DC. She has worked in the 

national security and international affairs arena since 1989 when she joined GAO after 

working briefly for the Department of the Army in Fort Hood, Texas, where she began her 

federal career. Her national security and international affairs expertise spans a variety of 

issue areas. Recent bodies of work that she directed have focused on issues relating to 

defense logistics, infrastructure, human capital management, warfighter support, and 

counterterrorism. She has directed a number of high profile efforts including supporting 

GAO's High Risk List Update Series through reviews of the Department of Defense's 

Supply Chain Management and Approach to Business Transformation high risk areas. Ms. 

Merritt also served as the Director for GAO's 2012 statutory reporting requirement that 

mandates GAO to identify and report to Congress on federal programs, agencies, offices, 

and initiatives, either within departments or governmentwide, which have duplicative goals 

or activities. She was the co-lead of GAO's American Recovery and Reinvestment Act 

oversight team for the state of Florida. 

Ms. Merritt completed the Harvard John F. Kennedy School of Government Senior 

Executives National and International Security program. She received a B.S. degree in 

Business Administration and a M.S. degree in Computer Information Systems. 
39 

Wayne A. McElrath 

Director of Investigations, Forensics Audits and Investigative Services 

United States Government Accountability Office 

Mr. Wayne A. McElrath serves as GAO's Director oflnvestigations. Specifically, he 

manages a small but select group of criminal investigators and investigative research 

analysts who perform special investigations, controls testing, and vulnerability 

assessments, as well as process and investigate allegations of fraud, waste, and abuse 

pursuant to GAO's broad investigative authority granted under Title 31 of the United 

States Code. Mr. McElrath has over 20 years of federal law-enforcement experience. This 

experience includes investigative positions with the Defense Criminal Investigative 

Service; United States Customs Service (forerunner of Homeland Security Investigations); 

United States Postal Service, Office of Inspector General (OlG); and Environmental 

Protection Agency, OIG. 

Mr. McElrath is also a graduate of the University of Missouri-St. Louis; the Harvard 

Senior Executive Fellows program; and the Federal Executive Institute. He is a former 

United States Marine and Army Reservist, and is a member of several prestigious 

professional law enforcement-centric organizations, such as the Association of Certified 

Fraud Examiners, Association oflnspectors General, National Association of Chiefs of 

Police, and National Internal Affairs Investigators Association. 
40 

WRITTEN STATEMENT OF 

MR. MIKE SCOTT 

DEPUTY DIRECTOR, LOGISTICS OPERATIONS 

DEFENSE LOGISTICS AGENCY 

BEFORE THE 

HOUSE ARMED SERVICES COMMITTEE 

JULY 27, 2017 

FOR OFFICIAL USE ONLY 

UNTIL RELEASED BY THE 

HOUSE ARMED SERVICES COMMITTEE 
41 

Chairman Wilson, Ranking Member Bordallo, distinguished committee members, thank 

you tor the opportunity to appear here today to discuss the Defense Logistics Agency's (DLA) 

administration and execution of Section 1033 ofthe National Defense Authorization Act for 

Fiscal Year 1997, also known as LESO. I am Mike Scott, Deputy Director, DLA Logistics 

Operations. 10 USC 2576a authorizes the Secretary of Defense to transfer excess Department 

of Defense equipment to federal and state law enforcement agencies, or LEAs. The 1033 

Program provides law enforcement agencies around the country and U.S. Territories with an 

avenue to receive DOD excess items to support their law enforcement duties. 

With me today is Mr. Mike Cannon, the Director ofDLA Disposition Services. We 

appreciate the opportunity to discuss the 1033 program and the July 2017 GAO report on DOD 

Excess Property and to inform you of the actions we have taken to improve our processes. 

The Defense Logistics Agency, is responsible for providing worldwide logistics support 

to the military departments and the combatant commands under conditions of both peace and 

war, as well as providing support to other DoD components and federal agencies and, when 

authorized by law, state and local government organizations, foreign governments, and 

international organizations. 

DLA provides virtually every consumable item that America's military forces require for 

combat readiness, emergency preparedness, or day-to-day operations. This includes food, fuel, 

medical supplies, clothing and textile items, construction and baiTier materiel, and more than 85 

percent of the repair parts for their weapon systems. We directly support the materiel readiness 

and sustainment of military equipment and weapon systems and the personnel who operate and 
42 

maintain them worldwide. 

The Defense Logistics Agency is also responsible for the disposal of excess personal 

property received rrom the military services. This is the primary mission for DLA Disposition 

Services. They are part ofDLA's worldwide presence, serving in 16 foreign countries, 2 U.S. 

territories, and 41 states. With a workforce of approximately I ,500 people, Disposition Services 

is responsible for the reutilization, transfer, donation, sale, demilitarization, and control of both 

excess and surplus Department of Defense equipment. Additionally, DLA Disposition Services 

administers and executes the I 033 program through their Law Enforcement Support Otlice 

(LESO). 

Government agencies whose primary function is enforcement of applicable Federal, 

State, local laws, and whose compensated law enforcement officers have powers of arrest and 

apprehension, are eligible to participate in the I 033 program. Under the 1033 program, each 

State/U.S. territory is required to sign a Memorandum of Agreement with the Defense Logistics 

Agency that identifies regulatory guidance and assigned roles/responsibilities. Currently, more 

than 7,400 federal and state law enforcement agencies across 50 states and 3 U.S. territories are 

active participants in the program. DLA cun·ently has 30 Federal Departments and Agencies 

enrolled. These are the higher headquarters to the 345 Federal Law Enforcement Activities 

(Federal Field Activities) enrolled in the program. 

DLA has worked extensively over the last several years to improve the state/local side of 

the program. A key to its success is the governor-appointed state coordinator who acts as the 

liaison with the LESO and must sign a Memorandum of Agreement with DLA and have a plan 

of action detailing how they will remain compliant with the program. State coordinators approve 

and certify the participating law enforcement agencies in their states and each property request 
43 

prior to those requests coming to LESO for approval. They also work closely with the LEAs to 

provide training, assist with tracking property and program compliance reviews, and help 

coordinate corrective action plans if LEAs are non-compliant and suspended from the program. 

While the GAO's recent review validated enhancements made in the state/local LEA side 

of the program, it highlighted vulnerabilities in the federal LEA side of the program, which 

accounts for about four percent of the total LEA enrollment. 

Previously, LESO worked directly with federal LEAs on program participation and 

validation. Now, LESO is working more closely with a higher headquarters coordinator who will 

act in a role similar to a state coordinator and will validate and approve applications and property 

requests. 

I will now focus on the findings and recommendations from the GAO report. We 

recognize the issues identified in the report and concur with their recommendations. The 

GAO identified deficiencies in the processes for verification and approval of Federal law 

enforcement agency applications and in the transfer of controlled property. 

DLA takes the findings very seriously, and is actively addressing and correcting 

deficiencies to resolve breakdowns in the application and validation processes to ensure 

appropriate property allocations to legitimate federal LEAs. Substantive program 

improvements have been implemented to provide assurance of program compliance. These 

improvements include: 

Revising the procedures for verifying and approving federal agency applications for 

enrollment. All federal law enforcement agencies now require approval of any requests from the 

headquarters ofthe agency. Once approved by the federal law enforcement agency's 

headquarters point of contact, DLA LESO supervisory personnel will review the application for 
44 

approval of enrollment. DLA now requires participating federal agency headquarters' to assign a 

point of contact (POC) and to sign a memorandum of understanding (MOU) acknowledging 

participation and accountability requirements for excess DoD property. These federal agency 

POC's or their designees will approve all applications for enrollment and all requests for 

equipment. The MOU was established in January, 2017 and was sent to federal agencies between 

February and April, 2017. Currently !2 of the 30 enrolled federal departments and agencies have 

signed an MOU. DLA is conducting site visits with the federal agency headquarters POC's for 

the federal agencies enrolled in the 1033 Program. As of the date of this report, DLA has visited 

and validated 22 federal agencies headquarters. Additionally, DLA is updating policy to reflect 

the revised procedural changes regarding federal law enforcement agency applications. 

Additionally, current DLA policy requires on-site officials to request and verify 

identification from all customers, LESO customers included, that are authorized to pick-up 

property. DLA will conduct additional training regarding requesting and validating 

identification of customers picking up allocated property from all DLA Disposition Services 

Field Sites by October I, 2017. Additionally, DLA will ensure compliance during our ongoing 

and regular inspection of field sites through Operational EtTectiveness Reviews. 

Further, DLA is reinforcing our policy requiring on-site officials to verify the type and 

quantity of approved items being transferred, prior to removal from sites. DLA will conduct 

additional training on the process to all DLA Disposition Services Field Sites by October I, 

2017. 

Finally, DLA will conduct a fraud risk assessment and implement a strategy with 

specific internal control activities to mitigate assessed risks for all stages relating to 

DLA's transfer of controlled excess property to law enforcement agencies, consistent with 
45 

leading practices provided in GAO's Fraud Risk Framework. The estimated completion date for 

this recommendation is April!, 2018. 

DLA has made significant enhancements to improve its policies, procedures and internal 

controls to correct deficiencies in the I 033 program. We recognize the importance of providing 

support to the LEAs and their important mission and our oversight role. 

Chairman Wilson, Ranking Member Bordallo, and members of the committee, I am 

grateful for the opportunity to discuss this important issue here today. 
46 

Michael D. Scott 

Deputy Director, DLA Logistics Operations (J3) 

Michael D. Scott, a member of the Senior Executive Service, is the deputy director, DLA 

Logistics Operations. DLA Logistics Operations is responsible for the end-to-end supply 

chain management of DLA's nine supply chains, providing logistics and materiel process 

management policy, guidance, oversight and monitoring of supply chain performance. 

DLA Logistics Operations oversees the daily operation of DLA's field activities 

supporting 2,400 weapon systems and engages customers around the world to maximize 

readiness and logistics combat power by leveraging an enterprise solution. He became the 

deputy director in May 2014. 

Prior to his current position, Scott was the deputy commander of DLA Energy from 

January 2013 to Apri12014. DLA Energy is a DLA field activity responsible for providing 

the Department of Defense and other government agencies with comprehensive energy 

solutions in the most effective and efficient manner possible. He was the executive director 

ofDLA Energy from February 2011 to January 2013. 

Scott has worked at DLA since 1986, both at DLA Headquarters and the former Defense 

Supply Center Columbus, Ohio, now DLA Land and Maritime. His previous positions 

include executive director for the Material Policy Process and Assessment Directorate, 

deputy director and director for strategic planning and enterprise transformation, Business 

Systems Modernization organizational alignment chief, DLA demand and supply planning 

process owner, DLA demand and supply planning process lead, Headquarters DLA 

Requirements Team chief, DSCC deputy director of enterprise business systems, DSCC 

acquisition and materiel management chiet: DSCC Program Support Unit chiet: DSCC 

Logistics Programs Division branch chief, DSCC Systems Development Team Chief, 

DSCC distribution systems analyst, DSCC requirements systems analyst and DSCC item 

management specialist. 

Scott holds a bachelor of science degree in marketing from The Ohio State University. He 

is a graduate of the U.S. Air Force's Air War College and completed the Harvard 

University Kennedy School of Government Executive Leadership Series. 

Over his career, Scott has received many awards, including the DLA Director's Award for 

Organizational Excellence, the DLA Scissors Award, the Federal Executive Association 

Reinvention Recognition Award, the Joint Meritorious Unit Award, the DoD Honorary 

Value Engineering Achievement Award, the DLA Productivity Achievement Award, 

Finalist/Nominee for the President's Council on Management Improvement Award, the 

Defense Superior Management A ward, the Interagency Committee on Information 

Resource Management Award, 17 Special Acts of Service Awards and 10 Sustained 

Superior Performance A wards. 
47 

Æ