From warfighter to crimefighter – the US 1033 program and the risk of corruption and misuse of funds

Relative calm has returned to Ferguson, Missouri after weeks of protests and rioting following the death of Michael Brown, a teenager shot by a police officer earlier this month. As the suburb of St. Louis struggles with frayed community ties and race relations, the unrest has triggered an unexpected nationwide debate over a US federal program that provides state and local police departments with surplus military equipment designed for war.

Media images from Ferguson showed heavily-armored local police officers toting assault rifles and patrolling the small town in a vehicle designed to protect US soldiers against land mines and improvised explosive devices. The military equipment came to the small US town through the 1033 program, overseen by the Department of Defense (DoD).

According to the Washington Post, Missouri law enforcement has received more than $17 million in military gear – for free. The Ferguson Police Department is only one of 8,000 agencies across the country that have been granted access to excess DoD property through the 1033 program.

Initiatives to channel surplus US military equipment to police forces free of charge have existed in some form since 1990, but the 1033 program officially began through the National Defense Authorization Act in 1997. The amount and value of equipment transferred to local agencies has increased dramatically over the years, from $1 million in 1990 to $324 million in 1995 to nearly $450 million in 2013. Since the project’s inception, it has provided over $5.1 billion in military property to local and state law enforcement agencies, according to a Department of Defense spokeswoman.

Proponents of the 1033 program argue that the equipment it provisions helps to protect law enforcement, while reusing gear that might otherwise be costly to warehouse or dispose of.

In the wake of the Ferguson protests, however, a growing number of critics have raised questions over the program’s oversight and accountability, as well as the support it receives from elected officials who receive large contributions from defense industry contractors.

Opponents of 1033 point to analysis from advocacy groups, recent incidents of fraud, and the program’s own statistics to suggest that the militarization of US police forces may be vulnerable to corruption, waste and abuse.

Incidents of fraud and misuse raise questions on program’s integrity

While 1033 received relatively little public attention until recently, concerns over its potential for fraud and abuse are not new. In June 2012, the Department of Defense temporarily suspended the program, ordering each law enforcement agency to provide exact records on each piece of equipment obtained from 1033. The audit came after several agencies were found to be abusing the program, most notably the Pinal County Sheriff’s Office in Arizona, which was found to be redistributing equipment to other non-police government agencies and had plans to sell off equipment to boost its own budget.

Police departments were barred from getting any equipment until they submitted the records in alignment with compliance standards, and the DLA announced it would implement a new system to track gear received through the program.

Other incidents of misuse and outright corruption tied to the program have arisen since then. Earlier this week, the Maricopa County Sheriff’s Office in Arizona revealed that it could not account for several weapons it had received through the program. Last year, an official in charge of managing firearms distributed through the program in North Carolina was found to have stolen M-16 and M-14 assault rifles and sold them on eBay. Two recent cases have seen police officers defrauding the program on a larger scale, for their own personal benefit.

The police department of Rising Star, Texas is one of the participants in the 1033 program. Earlier this year, following the yearly compliance check that each agency must submit to the DLA, a machine gun went missing from the local police department, triggering an investigation that unraveled a multi-million dollar fraudulent scheme.

William Kelcy, the former Chief of the Rising Star Police Department, was indicted in February for theft of government property. According to the two-count indictment, Kelcy obtained more than $4 million worth of property and equipment from the 1033 program while he was police chief, and fraudulently gave away, sold, bartered, or disposed of high-value military surplus equipment.

The investigation was conducted by Defense Criminal Investigative Services (DCIS), an arm of the Office of the Inspector General of the DoD, and assisted by the Texas Department of Public Safety

Another investigation by the same agency, in cooperation with the FBI and the Columbus, Ohio Division of Police found that a former police officer had misappropriated and sold over $250,000 worth of “heavy equipment” and other property received through the surplus program, including vehicles, construction equipment and diesel generators. Officer Steven Edward Dean pleaded guilty in February 2014 to the charges of embezzlement and theft of public property. Dean was ordered to forfeit the value of the equipment or return it.

Millions in equipment flows to small departments, rural areas

Advocacy groups and an increasing number of elected officials have focused their scrutiny on the war gear available through 1033, but the lengthy list of items accessible to police departments stretches far beyond military vehicles and firearms. Kelcy, the former chief of Rising Star, obtained televisions, meat slicers, playground equipment and a pool table through the program, all free of charge.

According to a 2013 analysis of 1033 distributions by the Associated Press, much of the gear flow to police forces in small towns or rural areas, whose few officers and typically low crime rates make their ability to use the equipment questionable. The 700-person town of Morven, Georgia has collected more than $4 million worth of items from the program, including a decontamination machine, treadmills, and bayonets. In Alabama, the Oxford police department has received more than $10 million in equipment for a town of under 22,000 residents, including a $1.5 million night vision system for a helicopter the department doesn’t have.

The Project on Government Oversight (POGO) is an investigative effort that started out in 1981 by exposing military spending on items like a $7,600 coffee maker and a $436 hammer. POGO expanded its investigative work in the 1990s to include waste, fraud and abuse throughout the federal government.

A spokesman for POGO, Joe Newman, said that while the center has not dedicated a special investigation to the 1033, there are lots of questions raised on how the equipment is tracked and who is conducting oversight on the inventory.

“We see corruption all the time when it comes to government contracting – like what happened in Afghanistan – bribes and things not ending up where they’re supposed to be,” Newman said.

“When you’re dealing with this number of weapons and vehicles, and as spread out as it is across the country, you would think there would be some misappropriations,” Newman said about the 1033 program.

Decentralized patchwork of state coordinators oversees 1033 program

While the 1033 program is funded and ultimately overseen at the federal level, equipment in the 1033 program is funneled through a patchwork of state agencies. Each law enforcement agency applies for the program through the Defense Logistics Agency’s Law Enforcement Support Office (LESO), based in Battle Creek, Michigan.

Oversight of the program once weapons, gear, equipment and vehicles are disbursed is handled by a different agency in each state, headed by a state coordinator appointed by the governor, according to a DLA spokesperson.

Applications for 1033 equipment from police forces are then screened and approved by each state coordinator.  In some states, all the screening and acquisition of property is performed at the state level, and management of the program varies widely from state to state. In Alabama, for example, the state coordinator sits within the Department of Economic and Community Affairs, while in Arizona, the program is overseen by a local police department detective. See the list of state coordinators here: http://www.dispositionservices.dla.mil/leso/Pages/StateCoordinatorList.aspx#Florida

In Missouri, where the Ferguson protests took place, the Department of Public Safety (DPS) is the delegated agency that oversees the program. (See the application to join the program in Missouri here). Mike O’Connell, the Communications Director of the Missouri DPS said that police departments in Missouri which participate in the 1033 program follow compliance procedures like record keeping and bi-annual visits for compliance review to look at records, property and usage. Each law enforcement agency is responsible for keeping accurate and certified inventory records each year and submitting it to the State Coordinator each fiscal year.

If a police department is suspended from participation due to compliance infractions, O’Connell said that the Department of Defense would reclaim the property, unless it is missing.

He told ACFCS that two county police departments in the state had been suspended from the program, one because they “failed to meet the inventory requirements” upon the annual inventory check. O’Connell said the other suspension was being investigated by the Department of Defense’s Office of the Inspector General, and therefore could not be discussed.

Defense industry at high risk for corruption proceeds, says FATF

Issues with fraud and abuse tied to defense spending are not unique to 1033 program, nor the United States. A 2012 report from the Financial Action Task Force (FATF) called “Specific Risk Factors in Laundering the Proceeds of Corruption” designates the defense contracting industry at high-risk for corruption. The report notes that less transparency in the field due to the sensitive nature of national security makes it difficult to identify the source or destination for funds.

The report also states that the nature of the goods in the defense industry is highly specialized and therefore more difficult to control under contracting procedures, increasing the risk of corruption in procurement. As with other industries that often use agents and intermediaries, the possibility of bribery between a corrupt contractor and government officials is more likely in the defense industry.

Newman, from POGO, said that as long as the program is active, more police departments are getting accustomed to using military vehicles, weapons and gear – something that in the long term, may benefit defense industry contractors.

“What is the benefit of the defense industry to incentivize this program?” Newman asks hypothetically.

“It’s like getting someone hooked on a drug,” he said. “You give it to them for free but then they become addicted.” Newman explained that the 1033 program only pays for the equipment in its current form – not for maintenance or replacement.

“When there’s no war, where does the defense industry get profits?”

A recent American Civil Liberties Union (ACLU) report called “War Comes Home: The Excessive Militarization of American Policing” discovered that 36 percent of the equipment transferred under the program is brand new. The report notes that the Defense Logistics Agency (DLA) can “purchase property from an equipment or weapons manufacturer and transfer it to a local law enforcement agency free of charge.”

Elected officials question 1033 program as White House announces review

The program has received criticism in the past from politicians who are looking to partially defund the program. In June, the House of Representatives voted on an amendment on a Department of Defense Appropriations Bill.

The amendment, proposed by Rep. Alan Grayson, a Democrat from Florida, sought to partially defund the 1033 program and prevent the distribution of some heavy weapons and vehicles to local police departments, like the ones that have been deployed in Ferguson, Mo. recently. The amendment failed on a bipartisan vote of 62-355.

But in response to the criticism of the situation in Ferguson, Washington is reconsidering the program’s effect on US local and state police departments and the citizens that they serve to protect.  US President Barack Obama has ordered a review of the distribution of military hardware to state and local agencies in light of the increased violence during racially charged protests in Missouri.

The Senate Homeland Security and Governmental Affairs Committee and subcommittee on Financial and Contracting Oversight will lead a hearing in September on the police use of military-style equipment. The White House-led review will inquire on the status of the program, inventory record-keeping and essentially where the property is going, according to White House officials.

Democrat Hank Johnson from Georgia plans to introduce a bill that bars the distribution of armored vehicles and large-caliber weaponry to police forces. The proposed legislation would also create an annual accountability system, verify that officers are trained in using it, and remove references to fighting the war on drugs from the policy.

Following the same trail, Sen. Carl Levin, a Michigan Democrat and chairperson of the Senate Armed Services Committee, said the committee will determine if the military property is being used appropriately through a new program.