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Safety and security

2018 Annual report No. 27 – Operational readiness of HF radio broadcasting teams at risk: Armed Forces lack staff and high-tech equipment

Executive summary

Defence radio broadcasting engineers have systems in place for ground radio broadcasting on high frequencies. Their purpose is to maintain the command and control capability of the German Armed Forces in case other communication channels are disrupted or jammed.

 

In 2009, we found that operational readiness of the more than 500 HF radio transmission teams in the Army and the Joint Support and Enabling Service was at risk. We also stated a lack of specialist engineers for these teams. In 2010, the Ministry pledged to improve the situation. While the Armed Forces had reduced the number of teams significantly by 2017, their operational readiness was still inadequate. Rather than disposing of a large number of items no longer needed, the Armed Forces chose to store the equipment.

The Army and the Joint Support and Enabling Service chose not relying on the few operative teams in their missions abroad because advanced technology was available, the teams needed too much transport space and HF radio offers only a low data transmission rate. In our view, there is no need any longer to maintain these teams with their current equipment.

However, the Defence Ministry intends to maintain the teams until operationally ready systems capable of performing the services in a better way are available. The Ministry has begun only now to devise such successor systems. It is not yet known how many years it will take before these systems are operational.

We expect the Armed Forces

  • to take swift action to dispose of discarded assets;
  • to maintain only few teams for preserving the capacity to test the successor system;
  • to promptly develop functional requirements and initiate steps – that should have been taken earlier – for covering needs by a reliable successor system.

 

2018 Annual report No. 26 - Savings potential of €52 million or more in the procurement of ambulance vehicles for the Armed Forces

Executive summary

The Armed Forces are planning to purchase new ambulance vehicles to replace its current aging fleet. They intend to buy 240 vehicles that are not harnessed for the medical care of soldiers in Germany.

Data on capacity utilisation covering the last three years indicate a current need for 200 new vehicles only. This number also provides for a fleet reserve. We therefore recommend reducing the procurement requirements by 40.

To harness the ambulance vehicles for operation in Germany, the Armed Forces intend to rely on the same standards as for those vehicles designed for operations abroad. Ambulance vehicles that are not harnessed for missions abroad are subject to special requirements. Equipped with advanced defence technology, each of them costs €190,000 more than vehicles with basic defence equipment.

To provide adequate medical care to soldiers in Germany, vehicles need basic harness and equipment only. Such vehicles should be procured. This will enable the Armed Forces to save at least €52 million when purchasing new ambulance vehicles.

 

2018 Annual report No. 25 – Shortcomings in inventory management of the Armed Forces’ stocks of explosives

Executive summary

We found shortcomings in the Armed Forces’ inventory management of their stocks of explosives. The central explosives database does neither cover the total number of explosives nor all their locations. One major shortcoming is that the Armed Forces also failed to centrally record the stocks of an agency responsible for research and testing of explosives.

The Armed Forces have been adapting the database module used since 2016 to ensure full inventory management of explosives. It is not known when data on explosives will have a better quality. Since the overall data quality is currently inadequate, the project manager and the central ammunition control unit established at an Armed Forces technical centre can perform their duties only to a limited extent.

 

2018 Annual report No. 24 – Armed Forces jeopardise IT security at their technological and scientific agencies

Executive summary

Shortcomings in IT security have persisted for years at the technological and scientific agencies of the Armed Forces. In our opinion, this jeopardises the reliable mission performance of these agencies. One of their key tasks is to analyse and assess the assets to be used by the Armed Forces. The Federal Office of Armed Forces Equipment, Information Technology and In-Service Support that is responsible for this matter has acknowledged our findings, but has so far not made sufficient efforts to mitigate the risks we stated. The Office argued that it was lacking appropriate staff for this purpose. We expect the Ministry to promptly address the IT security shortcomings. To do so, the Ministry should make available to the agencies a sufficient number of specialist staff to address key IT security functions. The Ministry needs to ensure that such staff is adequately trained and provided with pertinent support software.

 

2017 Annual report - spring report No. 08 - Fully utilise Eurofighter simulator capacities for aviator training

According to a NATO requirement, pilots of the Eurofighter aircraft are to complete 180 flight hours each year. They can do part of these flight hours in simulation training. Although there were not enough Eurofighters available for aviator training, the Air Force did not fully utilise the training simulator capacities available. In this way, aviator skills could be developed and maintained only to a limited extent.

NATO requires that each Eurofighter pilot completes at least 180 hours of flight hours each year. Of these, up to 40 flight hours can be done in the Eurofighter simulators. This approach is used by NATO to ensure that their pilots master the skill of mission-focused flying.

According to the assessment by the Air Force, Eurofighter simulators can almost realistically represent the complexity of the Eurofighter, the environment and the mission situation. The Air Force therefore uses simulators for aviator training of its pilots in all four Eurofighter groups.

We found that in the years 2015 and 2016, on average, no pilot had completed more than 30 flight hours in simulators. For 2017, the Eurofighter groups did not intend to fully rely in their aviator training on simulator training hours available and already paid for. Also there were not enough Eurofighters available for aviator training. As a result, pilots hardly met the NATO requirement of 180 flight hours. In this way, aviator skills could be developed and maintained only to a limited extent.

We demanded that the Defence Ministry fully utilise Eurofighter simulator capacities for aviator training. The Eurofighter groups should not at all leave unutilised simulator capacities that are available and have already been paid. In the face of insufficient Eurofighter availability, the Ministry should at least seek to provide for the 40 simulator hours annually to accumulate the level of creditable hours in line with NATO requirements.

 

2017 Annual report - spring report No. 07 - Poor project management causes serious schedule and cost overruns in the frigate modernisation effort

The German SAI found serious shortcomings in the Armed Forces’ modernisation of naval ICT systems. As a result, the modernisation was delayed for several years. The cost per ship has risen from €6 million to €30 million.

The Armed Forces use sophisticated ICT systems (delivery systems) which steer navel sensors (e.g. radar units) and weaponry on their vessels. Civilian contractors modernise these delivery systems at regular intervals. The Armed Forces committed errors in the project management for these systems:

  • They did not adequately specify the required services in the contract.
  • They did not arrange for effective quality management.
  • They agreed to test essential components of the delivery system only after acceptance.

 

Misdirected developments and additional claims delayed the project for years. Costs increased from €69 million to €120 million. Since the Armed Forces modernised only four instead of twelve ships, the cost per ship quintupled. The Armed Forces were unable to take legal steps against the contractor because it had failed to fully specify requirements in the contract.The Federal Defence Ministry largely attributed misdirected developments to poor contractor performance. However, the Ministry intends to enhance project management.

We have noted shortcomings in contractual arrangements of the Navy that are not limited to this isolated case.

We recommended that better project management be ensured in future defence projects. The services to be provided by the contractor need to be defined unambiguously and adequate quality management needs to be agreed on. Furthermore, the Armed Forces should test vessels more thoroughly before acceptance. This will also help the Armed Forces to respond more effectively in future cases of poor contractor performance.

 

2017 Annual report No. 19 - Federal Armed Forces Medical Corps: organisation of physiotherapy only gradually improved

In 2013, the Federal Ministry of Defence pledged to ensure transparency in prescribing physiotherapy and to enhance the efficiency of the Federal Armed Forces’ own physiotherapy facilities. However, the Federal Armed Forces did not take major action until we reviewed the matter again in 2016.

Military personnel of the Federal Armed Forces are offered physiotherapy under the free medical care scheme. The Federal Armed Forces run their own facilities for that purpose. Military personnel can also be treated by civilian therapists.

The cost for treatments carried out by civilian therapists amounted to €23 million in 2012. This means that the average per-capita expenditure has more than doubled since 2002. We analysed the causes for this trend in health expenditure in 2013. We objected to an excessive prescription of treatments encouraged by a lack of transparency and monitoring. We found that at the Federal Armed Forces’ physiotherapy facilities efficient organisation was lacking.

The Federal Ministry of Defence acknowledged the weaknesses. In our 2014 annual report (Bundestag printed paper 18/3300 No. 51), we recorded various actions by which the Federal Armed Forces intended to improve the prescription procedure and enhance the efficiency of their physiotherapy facilities.

In a 2016 implementation status query, we found that the Federal Armed Forces had largely not kept their promises In fact, they had not taken major action until we reviewed the matter. Even though they reduced the number of their own physiotherapy facilities, performance indicators were still lacking. Instead of being used more often, some facilities were used less than before. The annual treatment cost by civilian therapists had further increased and amounted to €25.7 million in 2016 (+11.7 per cent compared to 2012).

We noted with concern that the Federal Armed Forces were reluctant to implement the promised improvements in prescribing physiotherapy. We hold that a period of more than three years for implementing a new prescription form is unacceptable. We expect the Federal Armed Forces to take rigorous action to address the problems stated.

 

2017 Annual report No. 17 - Federal Armed Forces: efficient fuel supply to ships

Contrary to the promises made by the Federal Ministry of Defence in 2012, the Federal Armed Forces continued to not efficiently supply fuel to their ships. They also tolerated avoidable expenditure on processing fuels and disposing of other liquids.

The Navy requires fuel for operating its ships and boats. As from 2015, we reviewed whether the Navy addressed earlier shortcomings in managing marine fuels. In doing so, we again found several shortcomings.

The Federal Armed Forces could have ensured more competition by stipulating different lots in transport contracts for fuels. Since only one supplier for one lot remained after excluding one offer, the Federal Armed Forces needed to have checked whether the invitation to tender achieved good value for money. It might have been necessary to have the invitation to tender cancelled. Since the Federal Armed Forces did not resort to collective transportation (simultaneous supply of several ships in one port and supply of several locations in a “round trip”) and tolerated unnecessary long transportation routes, they incurred avoidable expenditure.

When the Federal Armed Forces were looking for a supplier of waste management services, they inadmissibly restricted competition by requesting an own pier – that is a longer landing place extending into the sea – even though this was unnecessary. The Federal Armed Forces also acted inefficiently when they repeatedly tolerated the contamination of large quantities of fuels.

Therefore, we recommend that:

  • the contracts for the transportation of marine fuel and waste management services be terminated as soon as possible;
  • the need of the Federal Armed Forces for these services be determined;
  • the services be properly put out to tender; and
  • attention be paid to an efficient approach when using services.

 

2017 Annual report No. 20 - No good value for money provided by Armed Forces aircraft maintenance cooperation arrangement

The Federal Ministry of Defence did not assess whether the joint maintenance of some types of helicopters and airplanes carried out by the Federal Armed Forces and companies provided the expected benefits and good value for money. Such cooperation arrangements have existed for more than a decade. The Federal Armed Forces did not reasonably deploy their military personnel in the cooperation arrangements and thus could only develop and maintain the skills needed to a limited extent.

The Federal Armed Forces cooperate with companies in servicing, inspecting, repairing and improving (maintaining) the Tornado and Eurofighter combat aircraft and the UH Tiger and NH 90 helicopters. In these cooperation arrangements, military personnel perform maintenance work under the guidance of companies. By doing so, the Federal Armed Forces seek to identify and remove damage to helicopters and airplanes to a large extent on their own, in particular in missions abroad. Furthermore, they intend to be able to better identify and assess what is needed for operating and further developing the helicopters and airplanes.

Some cooperation arrangements have existed for more than a decade and are of increasing importance for the Federal Armed Forces. Nevertheless, the Federal Armed Forces failed to check whether the cooperation arrangements served to meet their targets. Thus, the Federal Ministry of Defence lacks key data for measuring the performance of cooperation arrangements and for developing them.

The Federal Armed Forces did not define the tasks their personnel were expected to perform in detail in order to build and maintain the skills needed for the maintenance. They did not always provide cooperation arrangements with appropriate military personnel. As a result, the Federal Armed Forces did not fully contribute to the maintenance work and could build and maintain the skills needed to a limited extent only.

The Federal Ministry of Defence admitted that it did not fully check the joint work for their benefits and efficiency. Even though the Ministry announced to have the benefits and efficiency of individual cooperative efforts checked, it had not submitted any results so far. The Ministry confirmed that the cooperation schemes were not always appropriately staffed. However, it did not believe target achievement to be jeopardised.

We expect the Federal Ministry of Defence to promptly develop consistent principles and criteria to measure performance of cooperation arrangements. On this basis, the Federal Armed Forces is expected to check the benefits and efficiency of cooperation arrangements. Moreover, the Federal Ministry of Defence needs to ensure that the Federal Armed Forces organise cooperation arrangements as required and provide adequate staffing.

 

2017 Annual report No. 18 - Federal Armed Forces equipment not used as provided for

The German Federal Armed Forces procured transport and storage containers for mobile satellite reception systems and has not used them for that purpose for five years. The containers will likely not be used for transport purposes in the future. In many cases, we have already objected to the Federal Armed Forces procuring equipment without a stated need.

In 2012 and 2013, the German Federal Armed Forces procured 20 transport and storage containers for mobile satellite reception systems for €450,000. These containers have their own power supply, light and heating.

In 2016 and 2017, we found that the Federal Armed Forces did not use the containers at all at some of the locations and at others they did only use them as storage containers. They had never been used for transport purposes. According to the justification provided by the Federal Armed Forces, the transport capacity to the mission areas was limited.

Thus, the Federal Armed Forces procured equipment without justified need as in many cases in the past. The Public Accounts Committee of the Budget Committee of the German Parliament has already repeatedly requested that the Federal Ministry of Defence first analyse its needs in future, while taking into account what is technically feasible.

We expect the Federal Armed Forces not to procure equipment in the future unless there is a real need.

 

2016 Annual report Volume II No. 24 - Armed Forces intend to cut 17 posts for the maintenance of the PATRIOT Air Defence Guided Missile System

Following our recommendations, the Armed Forces will cut 17 posts for the maintenance of the PATRIOT Air Defence Guided Missile System up to 2018.

The Armed Forces operate the ground-based PATRIOT Air Defence Guided Missile System to intercept aircraft, cruise missiles and intermediate-range missiles in low to very high altitudes.

We pointed out that the Armed Forces overestimated the input needed for the maintenance of the PATRIOT systems. As a consequence, it made excessive assessment of personnel needs. The personnel assigned were not used to full capacity.

We recommended that the Armed Forces reassess the personnel needs for the maintenance of the PATRIOT Air Defence Guided Missile System.

The Federal Ministry of Defence followed our recommendations. It had personnel needs reassessed and now intends to cut 17 posts.

 

2016 Annual report Volume II No. 04 - When awarding contracts for towing services for the Navy, Armed Forces service centres infringed applicable law

Although the Ministry had promised in 2013 that contracts for civilian towing services would in future be awarded in compliance with applicable legal provisions, the Armed Forces service centres again infringed procurement law. This resulted in contracts providing poor value for money. The Ministry must ensure compliance with procurement law without delay by means of improving technical oversight.

In 2011 and 2012, we had already found considerable shortcomings in the awarding of contracts for civilian towing services by the Navy. We informed the Ministry of this in a management letter dated October 2012. The Ministry acknowledged the shortcomings and promised that it would ensure compliance with procurement law by enhancing technical oversight.

In 2016, we audited the awarding of contracts for civilian towing services once again. We found that, contrary to the Ministry’s promise, the service centres still did not comply with procurement law. As before, numerous infringements resulted in contracts providing poor value for money which led to excessive federal spending. The Ministry had failed to communicate our management letter of 2012 to the Federal Office responsible for technical oversight.

The Ministry acknowledged that shortcomings in contract award procedures and technical oversight continued to exist, adding that it intended to significantly step up technical oversight by the Federal Office by means of organisational and staffing measures.

However, we continued to doubt that such corrective action can be reasonably expected. Up to now, the Ministry has not ensured that existing framework agreements were terminated and that civilian towing services would be awarded in a way complying with procurement law and providing good value for money.

We will therefore monitor whether the Ministry takes adequate steps to ensure compliance.

 

2016 Annual report Volume II No. 22 - Armed Forces develop strategy for the purchase of small arms

The Armed Forces have developed a strategy for the purchase of small arms, e.g. pistols and rifles. The strategy is to improve the decision-making process. The Armed Forces aim at avoiding investment errors.

In the 1990’s, the Armed Forces began to replace their obsolescent small arms, e.g. pistols and rifles, by new ones. Since then, they purchased about 244,000 handguns at a cost of more than €210 million. There was no sound planning for the purchase of the new handguns. The Armed Forces had only few selection criteria for deciding which handguns to buy. Moreover, the criteria were often not measurable. The Armed Forces’ leeway for stipulating in the contracts the requirements the handguns had to meet were thus limited.

We demanded the purchase of small arms to be soundly planned and, in particular, measureable selection criteria to be defined. The Armed Forces need to take due regard to the requirements the handguns have to meet during missions.

In 2015, the Federal Ministry of Defense promulgated a strategy for the purchase of handguns that takes all our recommendations into account. In future procurement projects, measurable selection criteria for small arms are to be defined. These criteria are to be decisive for the choice of weapons to be procured and for the contractual obligations to be complied with by the manufacturer.

We shall monitor compliance of the Armed Forces with the provisions stipulated in the strategy.

 

2016 Annual report Volume II No. 22 - Armed Forces intend to address grave security shortcomings in the operation of an IT system relevant for payments

Following our advice, the Federal Office for Armed Forces Equipment, Information Technology and In-Service Support has promised to address grave security shortcomings in the operation of an IT system relevant for payments. As a consequence of remedial action, the system would be better protected against abusive and unintentional changes of data relevant for payment.

We audited an Armed Forces IT system relevant for payments. The Federal Office for Armed Forces Equipment, Information Technology and In-Service Support used this system to effect payments of €8 million annually, especially for defence projects.

We found shortcomings in the operation of the IT system:

• Inadequate provisions on access authorisation: The Federal Office had not promulgated adequate provisions about who was to have access to what extent.

• Lack of control: The Federal Office had not stipulated which instances of access to the system were to be recorded.

• Too generous access authorisations: Especially the administrators in charge of providing technical support for the use of the IT system had excessive access authority

We considered these facts grave security shortcomings. In particular, we drew the Federal Office’s attention to the fact that staff could abusively or unintentionally change data relevant for payment without this being noticed.

The Federal Office intends to eliminate the security deficiencies.

 

2016 Annual report Volume II No. 03 - Armed Forces tolerate the loss of duty hours equivalent to several thousand personnel posts due to health courses

Effective from 2016, the units and agencies of the Armed Forces may permit their civilian and military personnel to attend health courses during duty hours for up to two hours a week. For soldiers, these health courses take place in addition to their standard physical training. The Ministry does not have comprehensive data on the loss of duty hours caused by the attendance at the health courses. It has not resolved the question as to whether and how it can compensate for the loss of duty hours which is equivalent to several thousand full-time posts. Moreover, the Ministry has not considered other options for promoting personnel health by means of other measures providing better value for money.

We found that the Ministry did not ascertain the volume of duty hours lost by attending the health courses and the related costs. If only one in five staff members attended the health courses offered, this would imply the loss of about 103,000 normal duty hours per week. This would be equivalent to 3,300 full-time posts. Without any cost calculation, there is no way to reliably assess whether health courses are the most efficient option for promoting personnel health and enhancing the Armed Forces’ attractiveness as an employer.

The Ministry commented that it would take our suggestion and consider the organisational possibilities for recording the duty hours spent on attending the health courses. It did not make any statement as to how it intended to compensate for the loss of duty hours amounting to several thousand full-time equivalents. In our opinion, merely recording the duty hours lost is not sufficient. Before continuing to permit attendance of health courses credited as duty hours, the Ministry should ascertain whether and how it can compensate for the loss of duty hours. Moreover, it should consider other options for achieving its goals more efficiently.

 

2016 Annual report Volume I No. 45 - Inadequate apportionment of revenues and costs incurred for private medical care in military hospitals

The Federal Ministry of Defence has for 20 years failed to revise its regulations on the provision of private medical care by medical specialists in military hospitals. The regulations still in force do not ensure that the related revenues and costs are fairly apportioned between the Federal Government and the Medical Corps officers. In response to our audit, the Ministry promised to adjust its regulations. Nevertheless, it does not intend to take up our key recommendations.

Many Medical Corps specialists in military hospitals are allowed to treat private patients for their own account. In the years 2012-2014, the medical fees charged for private treatment totalled €66 million. The Armed Forces permit such side-line occupation in order to recruit and retain qualified medical officers. However, such side-line occupation must not encroach upon the interests of the military service. Therefore, it is subject to statutory restrictions stipulating e.g. a ceiling for the income generated by the treatment of private patients. Moreover, the medical specialists must reimburse the costs of the hospital facilities used by them for providing private medical treatment.

The Armed Forces’ regulations on the treatment of private patients by Medical Corps officers have remained unchanged for 20 years. They are no longer appropriate in the light of the cost structures of today’s high-tech medicine. The Armed Forces did not check whether the medical specialists complied with the statutory restrictions of their side-line occupation. In one military hospital, more than half of the medical specialists exceeded the statutory ceiling for the income from private treatment. At the top end of the scale, fees earned by the provision of private treatment were twice as high as the annual salaries. Where the medical specialists drew on the assistance of subordinate physicians for their private medical work, they sometimes did not share their extra income from fees with the assisting physicians or did so only to a minor extent. One military pharmacist made large private profits from preparing medicines for private patients by purchasing the needed active ingredients at the medicines at the wholesale prices conceded to the Armed Forces. The Ministry had for years been aware of this dissatisfactory practice.

The Ministry has promised that it will revise its regulations on the provision of private medical treatment by Medical Corps officers. Nevertheless, it is not willing to take up key recommendations made by us. Therefore, the fair apportionment of revenues and costs generated by the treatment of private patients in military hospitals is not yet ensured.

 

2016 Annual report – spring report No. 08 - Primary armament of the corvettes becomes mission ready with several years delay and high subsequent costs

The Armed Forces spent €60 million on missiles without adequately checking mission readiness. Subsequently, it paid several millions of euros for an additional operational suitability test (OST).

In 2005, the Armed Forces purchased 30 guided missiles at a cost of €60 million to serve as primary armament of their corvettes. As early as in 2004, we had drawn attention to high technical and time-related risks of the project.

The contractor supplied the guided missiles in 2011-12 and the Armed Forces paid for them completely. In 2013, the guided missiles were tested on a corvette. This OST failed; two guided missiles crashed. This was due to technical errors on the part of the contractor. The Armed Forces were therefore unable to use the missiles. The Armed Forces repeated the OST in 2015. As a result, the missiles can be used against see targets but not against land targets. The repeated OST cost the Federal Government several millions of euros. Based on the contract terms, the Armed Forces did not see any possibility to make the contractor pay part of these costs.

The missiles have to be technically checked only four years. The Armed Forces initially planned to contract out the technical checks to industry. Following our recommendation, they changed their intention and now plan for the checks to be carried out by own personnel. This will enable them to save €66 million during the missiles’ in-service life. Germany held discussions with another nation about potential cooperation in the use and maintenance of the missiles. The Armed Forces could save another €16 million by means of such cooperation.

The Defence Ministry was of the opinion that the Armed Forces had not incurred high technical and time-related risks with the purchase contract. It stated that preparations were being made for the technical checks of the missiles by Armed Forces personnel and that talks about cooperation with another nation were not on the agenda.

We demanded that the Ministry ensure that the missiles will be made capable of being used also against land targets as soon as possible. In future, contract terms should be stipulated so as to adequately take development risks into account and to ensure that consequential costs are apportioned in accordance with the causation principle. Moreover, we expect the Armed Forces to complete the preparations for the technical checks to be carried out by their own personnel as soon as possible and to consider options for cooperation.

 

2016 Annual report – spring report No. 07 - Armed Forces maintain expensive collection of specimens without a viable strategy

According to their own assessment, the Armed Forces have not maintained their Scientific Collection of Defence Engineering Specimens in a regular and state-of-the-art manner. Maintaining the collection cost at least €3.7 million annually. As early as in 2010, the Public Accounts Committee of the Budget Committee of the German Parliament had requested the Federal Ministry of Defence to decide whether there is a need for the collection of specimens and whether it should be continued.

The Armed Forces have maintained a Scientific Collection of Defence Engineering Specimens for more than 50 years. The collection consists of more than 22,000 items related to defence technology, weapons and equipment. A small portion of this is presented in an exhibition to which the public also has access. Meanwhile, the collection of specimens belongs to the Federal Office of Armed Forces Equipment, Information Technology and In-Service Support. In October 2015, the Federal Office confirmed that the collection of specimens was no longer maintained in a state-of-the-art manner. The collection gave the impression of a “walk-in depot”. The Federal Office estimates that the liquidation of the collection would take seven years and cost €30.9 million.

However, the Federal Office advised the Ministry to continue the maintenance of the collection of specimens, arguing that it was indispensable and that a feasibility study had proved its exceptional character. The Federal Office advocated a new strategy to realign the collection with such goals as promoting the integration of the Armed Forces into civil society and supporting recruitment and knowledge management of the Armed Forces and that it was necessary to work out details concerning the substantive and didactic design of the collection and the exhibition. The same applies to organisation, operation and human resources management. Furthermore, they perceived the need for erecting a new exhibition building and to triplicate the number of staff. The Federal Office estimates that the costs of maintaining the collection of specimens during the next seven years will total at least €68.3 million, including one-off costs of at least €34.9 million. The subsequent annual operating costs would amount to €4.8 million.

In our opinion, the collection of specimens can be dispensed with. We criticise that it is still maintained without viable strategy. The Federal Office’s estimate of additional costs of €37 million for the collection’s continued maintenance is alone sufficient to justify disposal of the collection. According to our calculation, continued maintenance of the collection would even cost €60 million more than disposal.

The Federal Ministry of Defence must now decide whether or not to build up a new collection of specimens at additional costs of €60 million and permanent annual costs of €4.8 million, taking into account the fact that the strategy to be adopted and the potential benefits are still unclear.

 

2015 Annual report No. 52 - Federal Armed Forces modify location decision for parachuting

The Federal Ministry of Defence abandoned its plans to relocate the Airborne Operations and Air Transport Training Facility from Altenstadt in Bavaria to Oldenburg in Lower Saxony. As a result, the Federal Armed Forces will save €50 million.

In October 2011, the Federal Ministry of Defence announced closing down the Airborne Operations and Air Transport School in Altenstadt. It planned to establish a facility in Oldenburg as from 2016. The Federal Ministry of Defence wanted to preserve the location Altenstadt for a new battalion.

We noted that the Federal Ministry of Defence wanted to relocate the parachuting to Oldenburg even though the location Altenstadt was supposed to be preserved. We pointed out that this might cause avoidable expenditure of up to €50 million. Furthermore, less favourable conditions and thus a lower level of training, more effort and higher running costs were expected at the Oldenburg location. We recommended that relocating the parachute jump training to Oldenburg be abandoned.

The Federal Ministry of Defence decided to leave the parachute jump training in Altenstadt. Since the stationing decision in 2011, the framework conditions had changed. The Federal Armed Forces save €50 million and training of consistent quality. Thus, the Federal Ministry of Defence has implemented our recommendations.

 

2015 Annual report No. 51 - Federal Armed Forces eliminated severe safety IT shortcomings

In response to our advice, the Federal Armed Forces eliminated severe safety shortcomings in two IT systems. Thus, they better protected data against intentional and unintentional threats.

We examined what authorisations the Federal Armed Forces’ staff had in two important IT systems. The Federal Armed Forces use these systems, among other things, to pay their staff and to purchase goods and services. In 2013, the Federal Armed Forces paid about €23 billion via the two systems.

In particular the administrators responsible for the systems‘ technical support had almost unrestricted authorisations. Thus, they could change or delete data records of security incidents such as unauthorised system access. Several thousand other employees could create suppliers and pay them at the same time.

We noted that the Federal Armed Forces did not specify user authorisations according to their functions. Furthermore, there were too many users with extensive authorisations. They allowed administrators to act in the systems in an almost unrestricted and undetected way and other staff to change payment data without anyone knowing. We recommended to the Federal Ministry of Defence developing an authorisation concept for all staff, to implement it and to periodically review compliance.

The Federal Ministry of Defence concurred with our view. The Federal Armed Forces almost entirely eliminated these shortcomings; they intended to address the remaining shortcomings by mid-2015. We will follow up on that matter.

 

2015 Annual report No. 50 - Avoid expenditures of €5 million for unnecessary life vest accessories

In 2004-2011, the Federal Armed Forces bought complete sets of modular-design body armour and life vests for the crews of their transport aircrafts and helicopters. However, they did not purchase individual components as needed. In future, the Federal Armed Forces could save €5 million if they solely bought the components required. Furthermore, the Federal Armed Forces continued to use older models whilst storing new vests. This is inefficient.

In 2004, the Federal Armed Forces introduced a modular-design body armour and life vest for the crews of transport aircrafts and helicopters of all services. The modular design allows purchasing individual components as needed. Ballistic protection, restraint harnesses for standing passengers and life-saving collars are not needed for each and every flight and by every crew member. They account for two thirds of the complete vest’s price. We hold that just for ballistic protection and restraint harnesses for standing passengers the stock may be reduced by half. Thus, expenditures of at least €5 million could be avoided when buying new vests. Furthermore, the Federal Armed Forces continued to use older models of survival jackets and life vests for aircrews and stored new body armour and life vests which were supposed to substitute the older models.

We noted that the Federal Armed Forces did not use the less costly modular-design vest. The modular design allows purchasing individual components as needed.

We also pointed out that it is not efficient to continue to use older models whilst storing new vests.

The Federal Ministry of Defence pledged to examine whether the ballistic components can be stored and purchased separately. It also pledged to replace the older models still in use with the new vests as soon as possible and thus terminate the unnecessary effort of storing and safety inspections.

The Federal Armed Forces need to identify the need for the components restraint harnesses for standing passengers and life-saving collars. Then they are expected to examine whether it is efficient to store and purchase the vest’s components separately or rather the complete sets.

 

2015 Annual report No. 49 - Armed Forces should sell unused chain-driven off-road vehicles

The Armed Forces have not sold old chain-driven off-road vehicles which they had used ever less in recent years. Some of them are no longer needed. Some trailers of these vehicles have never been moved. Nevertheless, they intend to discard only a few redundant vehicles.

BV 206 is a chain-driven off-road vehicle. It consists of a front and a rear part firmly linked to each other and can draw a trailer. The Armed Forces have 162 older, unprotected vehicles and 189 newer, armoured vehicles plus 156 trailers.

We found that the Armed Forces used the unprotected vehicles ever less. The distances travelled by the protected vehicles increased slightly. The Armed Forces want to retain nearly all BV 206. It has roll-over protection built into the unprotected vehicles at a cost of €6.6 million.

We pointed out that the Armed Forces do not discard old vehicles used little or not at all for years. We expect the Armed Forces to make more use of armoured vehicles. The Armed Forces should discard and sell redundant unprotected vehicles and trailers. By doing so, they could generate revenue, reduce their maintenance costs and save refitting costs.

 

2015 Annual report No. 48 - Armed Forces plan new construction for a workshop not utilised to full capacity

The Armed Forces run an under-utilised carpentry shop in their Naval Arsenal. This workshop was not utilised to full capacity in the past. The Armed Forces intend to build new premises for this carpentry and other workshops.

In its Naval Arsenal, the Armed Forces repair naval vessels. For this purpose, several workshops are run in the Naval Arsenal including a carpentry shop. The Armed Forces are planning to build new premises for the workshops.

The carpentry was not used to full capacity, although it had been given additional tasks. For instance, the carpenters made representative objects of daily use and souvenirs. Moreover, they assisted e.g. the large maritime event “Weekend on the Jade Bay” or did maintenance work on the premises.

The price of objects made in the carpentry was more costly than similar products available in free marketplace. For instance, the carpenters made rope ladders at a cost of €7,000. In the market, rope ladders were available for €300. Souvenir coins were offered in the market at a price of €4 each. Manufacture in the naval arsenal cost €172. In our opinion, the manufacture at a cost of €8,000 of a mount for a bell of a ship to be decommissioned is unnecessary. Moreover, the expensive design of the articles of daily use was not needed in many cases.

We asked the Armed Forces to check the following before having new workshops built:

• to what extent the Armed Forces need carpentry services for the repair of their naval vessels;

• how the naval arsenal can satisfy its needs for carpentry work and

• whether running an own carpentry is efficient.

We also recommended that largely representative items of equipment not be produced or produced at less cost.

Since further workshops are to be accommodated in new buildings, we hold that it is necessary to assess beforehand whether they are actually needed and whether they can be run efficiently.

 

2015 Annual report No. 47 - Too costly intermediary basing

The Federal Ministry of Defence adhered to the intermediary basing of an artillery demonstration battalion even though there was a more cost-efficient accommodation option. It would have been at least €5.6 million less if the artillery demonstration battalion had stayed at its former location until its definitive accommodation. We recommend to the Federal Ministry of Defence examining whether plans are still up-to-date and cost-efficient before implementing basing decisions.

The Federal Ministry of Defence had determined to close the previous location of an artillery demonstration battalion. The Federal Armed Forces decided to temporarily base the artillery demonstration battalion in other barracks until the barracks of the future location were ready for occupation. In its decision, it did not take into account the costs or option to use the previous barracks for a longer period.

After it had become apparent that the construction costs for the intermediary basing quadrupled to €12.6 million, the Federal Armed Forces assessed the barracks’ state of the artillery demonstration battalion’s previous location. They determined costs of a maximum of €7 million for a temporary stay. They recommended remaining for the time being at the previous location as a cost-efficient solution. Nevertheless, the Federal Ministry of Defence chose the intermediary basing.

At the end of 2014, the artillery demonstration battalion was relocated. In May 2015, the Federal Armed Forces estimated the construction costs for the intermediary basing at €13.7 million. The Federal Ministry of Defence intends to close the barracks after the intermediary basing in 2019.

The Federal Ministry of Defence stated that the construction costs for a temporary stay at the previous location were estimated to be €13.66 million. For this reason it considered the intermediary basing as cost-efficient solution.

We pointed out that the Federal Armed Forces decided for the intermediary basing without examining the efficiency. Furthermore, we pointed out that the Federal Ministry of Defence did not change plans even though there were indications that it was inefficient. The Ministry’s estimate on the construction costs at the previous location did not correspond with the structural condition determined by the Federal Armed Forces. The Federal Ministry of Defence did not take into account that some construction measures had already been executed and most of the buildings were fully functionable for a temporary use.

The strategy in relocating the artillery demonstration battalion shows that the Ministry of Defence does not always take the costs adequately into account in implementing basing decisions. In the next years, further relocations in the Armed Forces are projected which are associated with extensive construction measures. We recommended to the Federal Ministry of Defence examining whether the projected implementation is still up-to-date and cost-efficient before implementing basing decisions. Moreover, due to the large capital expenditure, we asked it to examine whether the barracks prepared for the intermediary basing can be used efficiently beyond 2019.

 

2015 Annual report - spring report No. 05 - Unnecessary expenditure of €50 million on Armed Forces TV station

Since 2002, the Defence Ministry has spent at least €50 million on a TV station of its own without proving the need for the station. It runs the Armed Forces television service for foreign missions, although nearly all soldiers can receive German-language public and private TV programmes in the mission areas. The Ministry should not enter into new spending commitments for the Armed Forces television service, since it is lacking justification.

Since April 2002, the Ministry has run an Armed Forces TV service. As early as 2007, a survey carried out by the Armed Forces had shown that 80 per cent of the interviewees deployed on foreign missions used public or private TV programmes. They watched German Armed Forces TV service only little. In 2012, 93 per cent of the soldiers deployed in the foreign mission areas watched German-language public or private TV programmes. The availability of the Armed Forces television programme in the mission areas was 92 per cent.

In response to our recommendation, the Defence Ministry had studied targeting and the need for the Armed Forces television service in 2007. In early 2010, it terminated the study without result because the need for the Armed Forces television service was still controversial within the Ministry. In 2011, the Ministry decided to relocate the Armed Forces television service by April 2014. It argued that the time up to the relocation was not sufficient for a new assessment of the need and cost-effectiveness of the service and that the expenditure on the assessment would have been disproportionate in relation to the expected findings.

In August 2013, the Ministry commissioned a study about how soldiers in the mission areas can be supplied with TV. Apart from the Armed Forces TV service, the study was to consider alternative options, e.g. internet TV. The Ministry is expecting the result of the study by mid-2015.

In February 2014, the Ministry decided to enhance the attractiveness of the Armed Forces. One of the measures considered is to provide soldiers in the mission areas with cost-free internet access by mid-2015. Independently of the current study and not complying with our recommendation, the Ministry procured new broadcasting equipment for the Armed Forces TV service at a cost of €1.3 million in August 2014. The Ministry intends to spend another €33 million on that TV service in the next ten years.

For more than twelve years, the Ministry had been unable to prove the need for the Armed Forces TV service. Nevertheless, it spent more than €50 million on it. In particular, we noted that the Ministry procured new broadcasting equipment although the need for the Armed Forces TV service was still uncertain.

The Ministry commented that the Armed Forces TV service was the only way to make available TV broadcasting to missions abroad. It argued that, without the Armed Forces TV service, the licensing regime offered no option for making broadcasts of major sports events available to the soldiers deployed in Asia and Africa.

We do not concur with the Ministry’s view. In 2012, more than 90 per cent of the soldiers deployed on foreign missions used German language TV programmes. Where major sports events are concerned, there are other options for transmission, e.g. via the internet. Where provisions of licensing law need to be complied with, these apply to all modes of transmission including to the Armed Forces TV service.

We recommend to the Defence Ministry not entering into new spending commitments for the Armed Forces TV service, because it has no justification for such service. The Ministry should arrange for a cost-effective provision of videos via TV and Internet.

 

2014 Annual report No. 49 - €11.2 million of unnecessary expenditure on an engine testing facility avoided

The Navy plans to erect an engine-testing facility that can operate under all weather conditions for eight long-range maritime patrol aircraft. Neither the necessity nor the cost-effectiveness of the testing facility has been proven. Moreover, the planned testing facility involves considerable constructional and financial risks.

In 2004, the Armed Forces had purchased eight P-3C ORION long-range maritime patrol aircraft plus a test facility for their engines from the Royal Dutch Navy. The aircraft were in poor technical condition. This required considerable repair work. In 2008, it was found that the components of the test facility stored at the Nordholz Naval Air Base were not in serviceable condition. In response, the Armed Forces planned to procure a new testing facility. It commissioned the building administration with planning the construction of a testing facility that can be operated in all weather conditions, to be used only by the Navy for testing the engines of the P-3C ORION aircraft.

By means of the testing facility, the Navy intends to enhance the operative readiness of the eight long-range maritime patrol aircraft. The building administration found out that, despite having larger numbers of such aircraft, other nations did not have a testing facility meeting the requirements formulated by the German Navy. The building administration consulted experts to identify the ideal structure of the facility and to ensure noise abatement. The functioning of the testing facility is to be demonstrated only after it has become operative. The building administration did not exclude the possibility that subsequent improvement work would be necessary.

As a result of our audit, we criticised that the Armed Forces did not respond to the considerable constructional and financial risks by reviewing the requirements of the testing facility and reassessing the project. We expressed doubts as to whether having the testing facility in place would significantly improve the operative availability of the aircraft because problems in this respect were not caused by the exchange of engines but rather by the poor technical condition of the aircraft and the resulting necessity to carry out lengthy repairs.

We have urged the Defence Ministry not to have the all-weather-capable testing facility erected as long as the constructional and financial risks involved and the cost-effectiveness of the facility remain unclear.

 

2014 Annual report No. 48 - Armed Forces failed to honour their commitment: For years, fuel deliveries to other entities were invoiced belatedly and incompletely

Since 2007, the Defence Ministry repeatedly promised that the Armed Forces would invoice fuel deliveries to foreign military units, public authorities and civilian recipients completely and on a timely basis. However, the Armed Forces did not take action to this effect. It issued necessary regulations only when we audited this issue once more in 2013.

The Armed Forces make deliveries of fuel (e.g. gasoil, petrol/gasoline) to foreign military units, public authorities and civilian recipients. They are obliged to charge remuneration for these deliveries in an amount which covers their costs.

As early as in 2007, we had reported that the Armed Forces had inadequate regulations in place for the invoicing of fuel deliveries to third parties. Thus, there was no assurance that all such deliveries were charged for. In addition, the Armed Forces frequently demanded payment from other governments with delays of several months or years. The time of our earlier audit, the Defence Ministry promised to take prompt steps for ensuring that fuel deliveries would be invoiced completely and on a timely basis. It affirmed its promise in 2008 after we had found that the Armed Forces still invoiced fuel deliveries with delay.

However, a follow-up audit which we conducted in 2013 showed that ten fuel deliveries worth €920,000 made by a supply ship in 2011 had not yet been invoiced. The Armed Forces had not noticed this until we carried out our follow-up audit. Furthermore, the invoicing of fuel deliveries still took a very long time.

Even though the Armed Forces have meanwhile improved their invoicing procedure, it is not acceptable, from the auditors’ point of view that the Ministry remained inactive for years in spite of its promise. The Defence Ministry must ensure that its promises are honoured.

 

2014 Annual report No. 52 - Armed Forces improve their management of ammunition stocks

After we had pointed out several deficiencies in the management of ammunition stocks, the Armed Forces have taken remedial action. They revised their procedures for identifying ammunition needs and stocked unnecessary procurements. They have taken measures to prevent the corrosion of small arms and ammunition. The Armed Forces procured ammunition on the basis of the requisitions made by the services.

Ammunition needs were estimated on the base of assumptions. In the case of high-consumption ammunition calibres, the estimates were practically always excessive. In the years 2001-2007, we had repeatedly pointed out the deficiencies of this method of determining ammunition needs. We also had pointed out deficiencies in the management, storage and monitoring of ammunition stocks.

In 2012, we once more audited the procedures for ammunition stock management. We found that the Armed Forces had not yet eliminated the deficiencies. The procurement of ammunition on the basis of assumptions, which we had criticized on the basis of our previous audits, still led to excessive procurements. In several cases, the services requisitioned much more small arms ammunition than they actually consume.

The excessive procurements of ammunition resulted in excessively long storage periods. Together with inadequate storage of the ammunition, various types of small arms ammunition were damaged by corrosion. This was not prevented by ammunition monitoring.

The Defence Ministry has eventually taken up the potential for optimisation which we had pointed out. The Ministry worked out solutions, which it means to implement in the handling of ammunition requisitions by the services and in the management of ammunition stocks. The Ministry also committed itself to make improvements in the storage conditions, the packaging and the monitoring of ammunition stocks. Damage through corrosion is thereby to be avoided in future. We shall observe further developments.

 

2014 Annual report No. 51 - Medical Service: Armed Forces intend to ensure transparency in the prescription of physiotherapy

The Armed Forces intend to ensure transparency in the prescription of physiotherapy. Moreover, they intend to increase the efficiency of their own physiotherapy facilities. By doing so, they will implement our recommendations based on our identification of causes for the steep increase of expenditures on physiotherapy.

Under the free treatment arrangements in place, soldiers also receive physiotherapeutic treatment. The Armed Forces have their own physiotherapeutic facilities. However, the soldiers may also receive treatment by civilian physiotherapists, if such treatment has been prescribed for them. In the years 2002-2012, the annual expenditure on treatment by civilian therapist increased from €14 million to €23 million. Given that military personnel has been downsized, this is equivalent to more than a duplication of the average expenditure per head.

We looked into the causes of this expenditure trend. We found that:

• Conversely to the arrangements in the civilian healthcare system, the Armed Forces have scarcely any regulations for the prescription of physiotherapy. The military physicians may prescribe any number of treatments, e.g. massages, on a single prescription sheet and may issue follow-up prescriptions without limit. They made much use of these possibilities.

• Although, within the Armed Forces, responsibility for the prescriptions and the handling of medical charges lies with the same unit, the Defence Ministry was not aware of this prescription practices. The Armed Forces do not have an IT-system by means of which they could systematically analyse and control medical prescription.

• Conversely to the prescription form used in the civilian healthcare system, the Armed Forces’ prescription form does not have an item requiring a report on the progress of treatment. Therefore, military physicians often decide about the continuation or change of therapy without having knowledge of the previous course of therapy.

• No organisational and performance targets are in place for the Armed Forces’ physiotherapeutic facilities. They carry out much fewer treatments than civilian physiotherapists.

Following our recommendations, the Defence Ministry intends to ensure transparency in the prescription of physiotherapy, committing itself to improving the prescription procedures and the possibility of monitoring prescriptions. The administrative and medical processes are supported by IT. Moreover, the Armed Forces would renew their own physiotherapeutic capacities and adjust them where appropriate.

We will observe whether the Armed Forces will implement the measures promised by the Ministry.

 

2014 Annual report – spring report No. 09 - Lacking cost transparency of the EUROFIGHTER

The Federal Defence Ministry lacks transparency about the total expenditure incurred so far and to be incurred in future for the EUROFIGHTER. Actual expenditure is likely to considerably exceed earlier estimates. This reduces the funds available for other defence systems. This lack of transparency makes it difficult to determine the volume of resources available for alternative defence projects.

In 1997, the Armed Forces planned to procure 180 EUROFIGHTER aircraft at a cost of about €11.8 billion. This amount will be almost completely exhausted by the procurement of 140 EUROFIGHTERs. The Defence Ministry expects life cycle costs to total at least €30 billion.

The Armed Forces use the term “life cycle costs” for all expenditure that is incurred during the life cycle of a defence system and can be imputed to the operational system. Knowing the life cycle costs serves to help plan expected expenditure in the long-term.

Although the number of EUROFIGHTER aircraft to be procured is to be reduced from 180 to 140, we estimate that the life cycle costs will be about twice higher than those estimated at the beginning of the procurement process. The increase of operational expenditure is exceptionally large; this applies especially to the expenditure on material maintenance.

Moreover, additional needs for complementary developments and procurements are arising and only a small portion of these is already reflected in the budget and the medium-term financial plan.

We criticised that, in spite of changing conditions, the Federal Defence Ministry failed to update life cycle costs and did not keep track of all incurred and expected expenditure on the EUROFIGHTER. We demanded the Ministry to ensure greater transparency of expenditure and to enhance its monitoring. To do so, the Ministry should re-estimate life cycle costs, to look into the causes for cost increases and to press for cost reductions. In our opinion, it is imperative that the Ministry’s annual progress reports compare the expenditure actually incurred with the re-estimated life cycle costs.

 

2014 Annual report – spring report No. 08 - Unnecessary expenditure for private-sector service providers

Through the years 2011-2013, the Armed Forces spent more than €2 million on purchasing an unnecessary service. It commissioned a private-sector service provider to procure equipment and materiel for the two Armed Forces universities. The service provider was able to carry out the procurements without any significant effort. We repeatedly recommended that the Armed Forces make themselves the procurements.

The two Armed Forces universities have procurement units of their own which partially cover their needs of equipment and materials. Simultaneously, the Armed Forces have for more than 30 years commissioned a private-sector service provider who also procures items for the universities. Through the years 2011-2013, the Armed Forces paid remunerations totalling €2.1 million to the service provider.

Assisted by our Munich regional audit office, we audited procurements made by the contractor on behalf of one university. We found that, apart from standard items, e.g. tablet computers and digital cameras, the contractor also procured technical equipment for laboratories. As a rule, the university described the items to be purchased in such detail that the contractor was able to directly place orders on this basis. For instance, the Armed Forces paid a remuneration of €2,400 for the following procurement. The university forwarded to the service provider the negotiated five-page tender of a supplier for a robot system with all desired component and technical specifications. On this basis, the service provider bought the robot system from the supplier.

Already in 1988, 2001 and 2003, we had pointed out to the Federal Defence Ministry that the permanent use of a private-sector service provider for making the procurements on behalf on the universities was unnecessary.

The Ministry stated that, apart from the examples we gave, the contractor had provided much more demanding services and that the universities had installed extremely complex facilities and laboratories with the assistance of the contractor’s technical competence. The Ministry promised that the Armed Forces would in future process “less complex” procurements on their own.

In our opinion, this is not sufficient. In all procurement cases we audited, the university informed the service provider in detail about requirements and technical specifications and even about the results of price negotiations with suppliers. Therefore, the service provider’s own input was limited to placing orders on this basis and monitoring delivery. Neither the Ministry nor the university gave examples for more demanding services rendered by the contractor. This shows that the university does not need the technical competence of the service provider. Expenditure in the range of millions of euros on purchasing these services could therefore be saved.

The Ministry has for several years failed to ensure that the Armed Forces make procurements with their own personnel. In particular, the necessary resources for doing so are available in the universities’ own procurement units and the Armed Forces’ central procurement office. The Ministry should ensure that the Armed Forces do not permanently rely on a service provider for processing procurements on behalf of the Armed Forces’ universities.

 

2013 Annual report No. 56 - Armed Forces pay salaries to newly recruited soldiers inaccurately

The Armed Forces inadequately checked the salary payments to their newly recruited military personnel. 2,000 soldiers received inaccurate amounts of pay. The new IT payroll system does not meet the technical requirements for ensuring that salaries are paid in correct amounts. Therefore, the Federal Defence Ministry should complement the IT system by controls and introduce electronic payroll records.

Based on our audit findings, we had recommended that the Federal Defence Ministry verify the salary payments. When doing so, the Ministry found that nearly 2,000 soldiers had received incorrect, usually too low amounts of pay. The new IT payroll accounting system (SASPF) does not permit a centralised verification of the salaries paid to the soldiers. The Armed Forces keep hardcopy payroll records for their soldiers at several locations. Therefore, a manual ex-post check of the payments involves a large administrative burden. Additional checking functions and soft copy pay records could remedy this deficiency. Due to financial considerations, the Armed Forces have not yet introduced electronic pay records.

The Federal Defence Ministry is obliged to ensure the accurate payment of military salaries. It should make arrangements that personnel expenditure can be verified with a reasonable administrative burden. To do so, it should complement SASPF by verification functions and introduce electronic payroll records.

 

2013 Annual report No. 55 - Expenditures on foreign assignment allowance cannot be sufficiently verified

During their assignment abroad, e.g. in Afghanistan, Armed Forces personnel received foreign assignment allowances in addition to the pay they draw when serving in Germany. Owing to inadequate keeping of files, the quality of processing and the amounts paid out cannot be verified. Excess or underpayments thus go permanently unnoticed.

Armed Forces personnel assigned to a humanitarian or support mission abroad are paid foreign assignment allowances under the relevant legislation. Depending on the strain implied in local conditions, tax-free allowances in six brackets ranging between €30 and €110 per diem are granted. We intended to audit the payment of foreign assignment allowances to 20,000 staff in the annual amount of €180 million on the basis of a sample of payroll cases. The Armed Forces did not keep the corresponding files in good order. Only with a considerable input of work were they able to furnish records on payments of such allowances. As a result, we had to limit the scope of our audit which impeded accurately assessing the processing quality of the allowance cases by the Armed Forces. We also audited the calculation of the allowances in Germany. In one Armed Forces entity, 30 per cent of the cases had been processed inaccurately. Soldiers were frequently either overpaid or underpaid.

We expect the Federal Defence Ministry to ensure checks of the allowance payments and the accurate keeping of files as soon as possible. This will be the only way for the Ministry and its subordinate authorities to exercise their power of technical oversight and to ensure accurate payment of the foreign assignment allowances.

 

2013 Annual report No. 54 - Projects of the privatised clothing supplier of the Armed Forces funded

The Federal Defence Ministry has funded several technical projects of the privatised clothing supplier of the Armed Forces with an amount of €5 million. There was no legal basis for doing so. In addition, the Ministry cannot exclude the possibility that its grant towards one of the projects actually exceeded its costs. The Ministry has not acceded to our demand to clarify the circumstances of such funding.

On behalf of the Federal Government, the Federal Defence Ministry holds 25.1 per cent of the share capital of LH Bekleidungsgesellschaft mbH, a limited liability company established jointly with two private sector companies. Being the sole customer of Bekleidungsgesellschaft, the Armed Forces do not only bear the cost of procuring clothing but also the company’s other expenditure. For this purpose, the Armed Forces and the company annually agree on a fixed price.

In December 2011, the Armed Forces paid €4.13 million to the company for a new IT system. The Ministry’s directorate arranged for payment within a few days on the basis of an inadequate project application and without sufficient back-up documentation. The company intended to commission the IT system as late as in 2013. We hold that this prepayment was inadmissible. Moreover, there was no legal basis for this funding. The decision has been poorly documented and the Ministry cannot exclude that the company took costs of the IT system into account when calculating the fixed price. If this is the case, the Armed Forces would have overpaid the IT system.

For the year 2009, the company offered the Armed Forces to credit them an amount of €913,000. The Ministry’s directorate arranged for most of the credited amount to be spent by the company for technical changes of two high-bay warehouses, “passing by the federal budget”. In our opinion, this infringement of budgetary law is particularly grave since, during decision-making in the Ministry, the directorate had previously not been authorised to fund this measure from the federal budget.

The Ministry has not acceded to our demand to review and comprehensively assess the legal aspects of all decisions concerning the funding of the projects.

 

2013 Annual report No. 53 - Armed Forces still have no modern system for tracing materiel in place

In the 1990’s, the Armed Forces repeatedly attempted to implement an effective system for tracing materiel. These efforts have not been successful so far. In the latest instance, they invested €5 million into a separate IT system for their Afghanistan mission. However, this system turned out to be impracticable. Now they intend to spend more than €8 million on commissioning a civilian contractor to monitor the backflow of materiel from Afghanistan. Nevertheless, the efficiency of the Armed Forces’ materiel management remains limited.

To perform their mission, the Armed Forces have to move and trace materiel worldwide. An IT system for tracing materiel from commissioning up to consumption or decommissioning is to be implemented. We repeatedly found that, especially in connection with missions abroad, the Armed Forces were not able to ensure the necessary transparency of the movement of materiel. With the support of our Munich field office, we looked into the Armed Forces’ system for tracing materiel in 2012.

In the year 2000, the Armed Forces had decided to implement their standard management software (SASPF) also for their materiel management. Since then, they have equipped selected logistic units in Germany with the appropriate systems. However, so far, these systems only support depot management and do not have the capability of tracing shipments or airlift routes.

In 2004, the Armed Forces procured a system costing €5 million for tracing materiel in connection with supplying German troops in Afghanistan. They did not participate in the system used by other NATO Member States. The Armed Forces intended to later integrate their own tracing system into SASPF. They spent the funds of more than €12 million appropriated for this purpose on other partial projects. Since further investment would have been required, the Armed Forces decided to discontinue the use of the system effective from 2011. They now intend to use the support of a commercial contractor for bringing back materiel from Afghanistan. This contractor is to ensure, by means of his own technology and at a total cost of €8 million, the tracing of the return to Germany of about 4,800 containers and 1,200 vehicles.

In our assessment, the steps so far taken by the Armed Forces to improve the tracing of their materiel have been incoherent and inadequate. We perceive an urgent need for the Armed Forces to integrate a system for tracing materiel into SASPF. In our opinion, separate solutions not integrated into the Armed Forces’ logistic system are inefficient. Only by integrated materiel management will the investments add value in the long term.

 

2013 Annual report No. 52 - Armed Forces cannot completely verify the whereabouts of lent materiel

Over the last 20 years, we repeatedly criticised that the Armed Forces do not have an overview of defence materiel lent to others. In 2012, they were once more unable to trace the whereabouts of defence materiel worth €92 million. Even with the assistance of additional specialist staff, the Armed Forces were unable to fully clarify accounting differences. After years of investigation and futile clarification efforts, they have no choice but writing off these assets worth millions.

The Armed Forces temporarily hand over defence materiel both to scientific institutions and manufacturers of defence materiel for testing, development and research purposes.

In 1993 and 2006, we had already criticised that the Armed Forces were unable to trace defence materiel it had lent to such institutions and companies. In 2012, with the support of our Munich field office, we looked once more into the way in which the Armed Forces organised the tracing of lent materiel. We found that the Armed Forces had meanwhile set up a central unit for the tracing of materiel but that this unit worked with unsuitable procedures and too few staff. Moreover, we advised the Armed Forces that there was more untraceable materiel than they had known.

Only as a result of our audit work did the Armed Forces step up their efforts to trace lent materiel. In spite of extensive investigations, the special unit was unable to trace defence materiel worth €92 million. The Federal Defence Ministry now intends to introduce a formal procedure similar to that used to deal with damaged materiel. It thereby intends to write off a lump sum of €92 million in the relevant accounts without being able to ascertain whether and by whom damage has been caused in individual cases. In spite of their repeatedly announced intention to clarify this matter, they have not been able to fully trace the whereabouts of lent defence materiel during the last 20 years.

We consider it necessary that, in future, the Armed Forces continuously trace lent materiel right from the start. Doing so will require a robust procedure and a suitable IT system along the lines of the intentions declared by the Armed Forces for years. Failing that, the Armed Forces cannot exclude the loss of assets.

 

2013 Annual report No. 51 - Armed Forces purchase unsuitable green electricity certificates for €3.5 million

The Armed Forces purchased green electricity certificates worth more than €3.5 million, which were not suitable for increasing the share of green electricity in the power consumption of their installations. The certificates merely served to declare the conventional electricity consumed as green electricity. The purchase of the certificate did not contribute to meeting the climate protection goals of the Federal Government.

By means of green electricity certificates, producers of energy can market the value added of their green electricity separate from the physical electricity. If, e.g. a customer purchases green electricity certificates, he is permitted to re-label electricity generated from nuclear fuel or coal as green electricity.

In the years 2010-2012 the Armed Forces purchased green electricity certificates at a total cost of €3.5 million. Their intention was to increase the share of green electricity in the power consumed on their real estate and to support the Federal Government in meeting the climate protection goals. The Federal Environment Ministry and the Federal Environmental Agency considered green electricity certificates as unsuitable for proving compliance with environmental requirements. Therefore, they discouraged contracting authorities from purchasing green electricity certificates. Nevertheless, three Armed Forces entities purchased green electricity certificates. One entity actually purchased so many green electricity certificates that it nominally used green electricity in excess of its actual power consumption. The green electricity certificates purchased by the Armed Forces almost exclusively related to green electricity from existing hydro-electric power stations in Norway. No electricity from there flows into the German green power grid. Thus, the real share of green electricity in the power consume on Armed Forces real estate has not increased. Thus, the purchase of the certificates was ineffective. Moreover, the purchase of green electricity certificates for 100 per cent of the power actually consumed could not be justified in terms of cost-effectiveness, since 30 per cent of the power actually consumed were green electricity.

The Federal Defence Ministry admitted the weaknesses of the green electricity certificates. Nevertheless, it announced that it would continue to purchase them. It pointed out that it did not concur with the opinion of the Federal Environment Ministry and the Federal Environmental Agency concerning the promotion of green electricity.

The arguments of the Federal Defence Ministry have not convinced us. We cannot see why the advice of the Environment Ministry and its subordinate Agency should not be valid for the Armed Forces. To us, it is a matter of particular concern that, while admitting the weaknesses of the green electricity certificates, it wishes to continue purchasing them. The Federal Defence Ministry has spent budget funds in the range of millions of euros on an ineffective measure.

We expect the Federal Defence Ministry to renounce future purchases of green electricity certificates or similar instruments and to take regard to the advice of the Federal Environment Ministry about the cost-effective purchase of green electricity.

 

2013 Annual report No. 20 - Federal Interior Ministry merges automated border checks to a single system

Following our recommendation, the Federal Interior Ministry will develop a single system of automated border checks by 2014. Under this system, the Federal Police identifies travellers by means of the digital photograph in the electronic passport and thus can renounce the expensive procedure of identifying individuals by means of an iris scan. This will lead to one-time savings in capital expenditure of €2 million and subsequent annual operating costs of €200,000.

The Federal Interior Ministry currently operates two systems for automated border checks on a trial basis at Frankfurt Airport. These systems are designed to reduce staffing needs and accelerate border checks. They rely on biometric data. The fully automated ABG (Automated Biometrics-Supported Border Control) system identifies travellers by iris scan, whereas the partly automated EasyPASS system is based on the digital photo in the electronic passport. The Ministry intended to expand both systems. Non-recurring capital expenditure of €2 million and annual operating expenses of €200,000 had been earmarked for the ABG system.

We found that the Federal Police had neither carried out capital expenditure appraisals before nor during the two projects. In particular, it had failed to evaluate target achievement perspectives prior to deciding on the system expansion. Moreover, our audit evidence shows that ABG user numbers have declined.

We recommended evaluating the effectiveness of both systems. The Federal Interior Ministry and the Federal Police followed our recommendation and had real-time project evaluations carried out. They found that only EasyPASS was cost-effective and therefore pledged to exclusively focus on this system. Data of travellers participating in the ABG system are to be migrated to the EasyPASS system by year-end 2014.

 

2013 Annual report No. 19 - Federal Police renounces the unnecessary construction of office and laboratory premises

In response to our recommendation, the Federal Police renounced a construction project for new office and laboratory premises for its research and test centre in Lübeck. Instead, it accommodated the staff concerned in an existing federal property. This will save €700,000 in federal expenditures.

The Federal Police built up a central research and test laboratory for command, control and operational equipment. This included devices for detecting objects and dangerous substances such as explosives. Such equipment is used e.g. for security checks at airports. The research and test laboratory evaluates and accepts these items. The Federal Police intended to build new office and laboratory premises for the staff at a planned expenditure of €700,000.

We found that the Federal Police had not conducted an investment appraisal for this construction project. In particular, it had failed to consider other options for accommodation, although federal premises on the same property were unoccupied.

We recommended that the Federal Police use the existing premises to accommodate staff. The Federal Ministry of the Interior and the Federal Police followed our recommendation, permanently accommodating the staff concerned in another building available.

 

2013 Annual report No. 05 - Parallel development and operation of human resources management systems is inefficient

The Federal Government has failed to develop an overall plan for human resources management systems (HR systems) in federal departments and agencies and to coordinate the relevant efforts. As a result, departments and agencies have since 1996 developed and operated four large and many small systems that are among each other incompatible and inadequately at a cost in the range of a 9-digit euro amount. This lack of standardisation makes the necessary restructuring in the federal administration more expensive and difficult.

HR systems support human resources planning, recruitment, allocation, development, payroll accounting and management.

These tasks are largely identical in all departments. Nevertheless, these did not agree common standards for their HR systems. Some used the same and some different technologies and products. There was duplication in the development of components. As a consequence of incompatible HR systems, transferring part of human resources management of the Armed Forces to the Interior Ministry and the Finance Ministry has become difficult and more expensive.

The Federal Government needs to develop measurable goals for merging its HR systems and implement them in a consistent and efficient way. Moreover, it has to set up an appropriate interdepartmental steering system for federal IT.

 

2012 Annual report No. 66 - More cost-effective rescue chain for soldiers deployed in Afghanistan

Following our recommendation, the Armed Forces replaced unsuitable distress transceivers used in the Afghanistan mission. Thus, it ensures a rescue chain for air crews in distress.

Air crews in distress need to alert rescue forces as quickly as possible. Therefore, they carry emergency locator beacons with them during missions that communicate their position in case of distress. The nations which participate in the Afghanistan mission operate a joint rescue coordination centre for the entire country.

In the years 2006-2009, the Defence Ministry spent €7.7 million on the purchase of 711 distress transceivers that were not sufficiently compatible with the distress radio equipment of the Coalition forces. In November 2009, the joint rescue coordination centre in Afghanistan found that it was impossible to integrate the distress transceivers into the multinational rescue chain. The mountain chains in the deployment area absorbed the radio signals and the German distress transceivers could not be used for communication via satellite. In response, the German troop contingent in Afghanistan demanded the procurement of new distress transceivers of the type used by the other Coalition forces as “immediate mission requirement” in December 2009. The need for new distress transceivers had not yet been met by mid-2011, since the Ministry had not yet finally decided about this procurement.

In response to our recommendation, the Defence Ministry has replaced the incompatible transceivers. From now on, the German forces deployed in Afghanistan use the same type of transceivers and radio system as the allies. It does no longer use the unsuitable transceivers as emergency locator beacons.

 

2012 Annual report No. 65 - Savings of €1 million annually as a result of giving up military rescue service schools

We recommended that the Ministry transfer the initial and continued training of rescue service personnel to military hospitals and to disband its own rescue service schools. This will result in savings of €1 million annually.

The Defence Ministry operated five rescue service schools for the initial and continued training of its rescue service personnel. Paramedics, first responders in the medical corps and emergency medical assistants were trained in these schools. This caused personnel costs of about €1.5 million annually. The instructors had little practical experience with emergency situations and had to draw on physicians of military hospitals specialised in rescue service and emergency room (ER) work. The rescue service schools cooperated intensively with the military hospitals. Only there was it possible to impart realistic training and ER experience to the rescue service personnel.

We audited initial and continued training of military rescue service personnel and found that, owing to the cancellation of many training courses, there were excess capacities of instructors and equipment. We held that the expensive operation of separate rescue service schools was unnecessary. We recommended that the Defence Ministry disband the five rescue service schools and transfer initial and continued training to the military hospitals. This will enable the Armed Forces to train rescue service personnel to a higher standard and to save up to €1 million annually in the medium term.

The Defence Ministry has taken up our recommendation and ordered that the rescue service schools be disbanded. The relevant training will now be provided more cost-effectively in training and simulation centres of military hospitals.

 

2012 Annual report No. 64 - Manufacture of pharmaceutical products by Armed Forces too costly

The Armed Forces manufacture pharmaceutical products in their own pharmacies. According to their own policy, they are primarily to manufacture products that are either completely unavailable or only available to a limited extent in the free market. If the Armed Forces consistently paid attention to obtaining medical supplies cost-effectively, it could renounce its own manufacture of common products on an industrial scale.

For their military personnel, the Armed Forces manufacture pharmaceutical products on a small scale in the pharmacies of military hospitals, e.g. pain killers or skin care products. In Ulm and Coblence, it has own capacities for the serial production of tablets, ointments and sterile solutions (manufacture on an industrial scale). For this purpose, they spent €19.8 million for the new construction of a pharmaceutical lab in Ulm.

We found that the pharmaceutical products manufactured on an industrial scale were commonly available in the market places. Apart from pain killers, cough drops and nasal sprays, they included sun cream, lip balm and insect repellents. Only 10 per cent of these products were needed by military personnel deployed in Afghanistan and Kosovo.

When deciding about ways to secure a cost-effective supply of pharmaceuticals, the Armed Forces based their calculations of manufacturing costs on inaccurately low figures. Thus, they failed to detect that the pharmaceuticals manufactured in military labs are too expensive, generating a deficit of several millions of euros annually in commercial terms. Cosmetics e.g. sun cream can be bought from the pharmaceutical industry at prices lower than the Armed Forces’ own manufacturing costs.

We recommended that the Federal Defence Ministry realign the manufacture of pharmaceutical products. Industrial-scale production of pharmaceuticals in military labs should be restricted to products not sufficiently available in the market. The Armed Forces should periodically review the range of products manufactured in their own facilities and centralise the manufacture of indispensable pharmaceuticals whose availability in the market is limited in the newly-built pharmacy lab in Ulm. Capacities in the Coblence lab should be downsized.

The Federal Defence Ministry announced that it would review the entire process chain of the drug manufacture. In doing so, it also intended to consider the expediency and possibility of manufacturing pharmaceuticals in Armed Forces’ facilities.

We uphold our opinion that the industrial-scale manufacture in Armed Forces’ labs of pharmaceutical products that are sufficiently available in the market is generally unnecessary.

 

2012 Annual report No. 63 - No need for air cushion vehicles

For more than a decade, the Federal Defence Ministry sought to procure air cushion vehicles (ACV), which were not needed. It considered two ACVs purchased for testing as unsuitable. It repudiated the contract for the purchase of a third ACV and intended to seek for other solutions. Based on the experience gathered, the Ministry should entirely abandon the intended procurement.

As from the year 2000, the Defence Ministry proposed to purchase 65 amphibious ACVs at a cost of €20 million for the Army. It successively procured two different ACVs for testing, both of which did not meet the requirements. Thereupon, it reduced initial requirements. A third ACV was also considered unsatisfactory. The Australian manufacturer intended to appoint a used-car dealer who was inexperienced in the boat trade as its distributor for the ACV in Germany. The ACV was still not operational by mid-2012. Therefore, the Defence Ministry repudiated the contract. Up to then, it had already spent more than €1.1 million on the purchase of the two unsuitable ACVs.

We found that the ultimately unsuccessful procurement of ACVs was unnecessary. The procurement process took twelve years and involved considerable administrative burden. The long time taken suggests that replacing the previous assault boats was not a priority issue for the Armed Forces. During the entire period, alternative options for the crossing of bodies of water were relied on. Given the gradual reduction of requirements, it was impossible anyway to achieve the utility originally sought with any of the ACVs.

Especially in connection with the procurement of the third ACV, it appeared that the Ministry had not obtained assurance about the reliability, technical and professional capacity of the Australian manufacturer and the German distributor. We advised the Ministry to abandon the procurement of ACVs.

The Ministry admitted planning weaknesses and technical difficulties. It cancelled the project to explore new options.

We hold that this substantiates our opinion that the ACVs are neither suitable nor necessary. We expect the Defence Ministry to discontinue all efforts to purchase or develop ACVs. Moreover, we consider this case representative of how future defence projects can be enhanced by appropriate project control.

 

2012 Annual report No. 62 - Multiple crewing models of the Navy are ineffective and inefficient

The Navy has been introducing new crewing models on the basis of unreasonable assumptions. Thus, it is planning for more crews than it can deploy in the foreseeable future. However, the Navy does not accomplish the objective of reducing the strain on crews.

Due to the new models, crews are no longer firmly linked to a ship or boat. The objective of introducing this multiple crewing model is to reduce the crews’ absence on voyages from the current average target of 180 days to 120 days.

For many types of vessels, the Navy is not able to maintain its previous cycle of training and deployment with an average absence limited to 120 days. For instance, training frigate crews to the required proficiency takes about 100 days. A subsequent deployment in the same year would thus be ruled out.

Furthermore, the currently operative vessels are not intended for alternating crews. So far, the Navy has not proven that it can change crews on these vessels speedily and without detriment to operative capacity under deployment conditions. Failing that, the vessels would in future return to their home bases after 120 days. As a consequence, more vessels would have to be deployed to meet the same deployment commitments and more transit voyages would be required.

The Federal Defence Ministry argued that the limitation of absences to 120 days was necessary to ensure the continued attractiveness of service in the Navy. In practice, individual absences would significantly exceed the 120-days period anyway.

We concur with the Ministry that the limit of 120 days of absence will significantly be exceeded in practice. Thus, the planned multiple crewing models with the target of not more than 120 days of absence do not achieve the intended reduction of strain on deployed crews. Rather than that, the Navy would have too many crews for the available vessels. Avoidable costs would be incurred by maintaining these crews in readiness and by training them.

We recommend that realistic absence targets differentiated by type of vessel should be developed for multiple crewing vessels and the crew levels should be determined on this basis.

 

2012 Annual report No. 61 - Armed Forces spent €7 million on the unnecessary repair of a damaged floating dock

The Armed Forces spent €7 million on the repair of a floating dock which could no longer be operated efficiently. They interrupted the on-going repair work and sold the dock for €4 million. The unnecessary repair illustrates organisational deficiencies and weaknesses in official supervision. Moreover, the Armed Forces did not sufficiently verify the repair work done.

For nearly 50 years, the Navy arsenal used a floating dock to repair navy vessels. The Federal Defence Ministry decided to modernise the dock. Prior to modernisation, the Navy arsenal found that the dock was in worse condition than anticipated. It estimated repair costs at up to €21.6 million. Further examinations revealed that it was impossible to continue to safely operate the dock without extensive repairs. In response, the Armed Forces abandoned the modernisation.

Nevertheless, the Navy arsenal had the dock repaired at a cost of €7 million three months later. It did not check whether the dock could be used after repair. The Naval Office made the necessary budget funds available in spite of the known poor condition of the dock.

Moreover, the repair became more expensive than necessary due to inadequate monitoring of and accounting for the materiel and services provided. For instance, the Navy arsenal accepted another location for the repair without taking the contractor’s resulting savings into account for purposes of price bargaining. Where the accounting/invoicing of the repair work is concerned, it did not adequately verify the materiel and services provided, paid partial invoices prematurely and failed to assert financial claims of the Federal Government.

The Navy arsenal terminated the on-going repair work before completion. Up to then, it had spent €7 million. The Armed Forces sold the dock for €4 million two years later.

We pointed out that, although aware of the poor condition of the dock, none of the responsible officials prevented the unnecessary repair. This indicates weaknesses in procedures and official supervision. We expect the Federal Defence Ministry to address the problems stated.

 

2012 Annual report No. 60 - Urgent need for regulations on IT security in the Federal Armed Forces

Contrary to a commitment made to Parliament, the IT security regulations of the Federal Defence Ministry are not up to date. It has not taken regard to changes resulting from cooperation with an IT company and has not included cross-departmental standards.

The Federal Defence Ministry has issued a service regulation on IT security for the Ministry and the military and civilian entities of the Federal Armed Forces. The Federal Office for Information Security develops cross-departmental standards on the security of information technology and regularly updates these in line with the state of the art in IT security. In 2006, the Federal Defence Ministry had committed itself vis-à-vis the Public Accounts Committee to applying the standards of the Federal Office for Information Security. Nevertheless, it did not incorporate these standards into its regulations.

Since March 2007, an IT company has modernised and operated the administrative and logistic IT of the Federal Armed Forces. While this entailed changes in the processes and responsibilities for IT security, the Ministry failed to adapt its IT security regulations accordingly. This resulted in an unclear allocation of responsibilities between the IT security officers and the IT company and impedes IT security officers in the discharge of their functions, e.g. security inspections and checks of cases in which a breach of the security regulations was suspected. No guidance was issued to describe the modified functions and procedures.

The Ministry stated that it had drafted a new service regulation into which the IT security standards promulgated by the Federal Office for Information Security were to be incorporated and made obligatory for the Armed Forces. In this draft service regulation, the Ministry would also more clearly define the functions of security officers and issue relevant guidance. However, the Ministry added, the IT security officers could carry out security inspections or investigate potential infringements of the security regulations only in conjunction with the IT company.

We expect the Ministry to honour its commitment to the Public Accounts Committee and to adopt the cross-departmental standards of the Federal Office for Information Security as obligatory. Furthermore, the Ministry should accurately define the remits of IT security officers and develop relevant guidance. Furthermore, we consider it necessary to ensure that IT security officers can discharge their functions without lengthy coordination with the IT company.

 

2012 Annual report No. 59 - Lacking effectiveness of the resources allocated to voluntary reservist work

The Federal Defence Ministry pays grants to an association to fund voluntary reservist work. While the association evaluates the success of its activities, the Ministry does not know the criteria on which such evaluation is based. In 2003, the Ministry had pledged to do appropriate programme evaluations. The progress made since then is insufficient.

The Federal Defence Ministry gives grants of €14 million annually to an association that discharges functions of voluntary reservist work under general guidance from the Ministry. The association is a mediator between the Armed Forces and society. The association organises events through which it imparts knowledge in the field of security policy and promotes the development of military skills. As early as in 2003, we found that the Ministry inadequately monitored the success of the association’s work. At that time, the Ministry had promised to introduce programme results evaluations and, in particular, to commission the association to carry out such evaluations itself.

In the course of a follow-up audit conducted in the years 2011 and 2012, we found that the Ministry restricted its oversight activities to issuing general guidance to the association and to sending Ministry representatives to selected events. While, in the meantime, the association carried out results evaluations for its events, the Ministry was unable to retrace the evaluation process and thus also unable to conduct a substantive evaluation of its own. Neither did the reports of its representatives contain any information significant for such evaluation. As a result, the Ministry still did not know enough about the reservist work for which it gave grants. To make more informed decisions, the Ministry would have had to evaluate target achievement and the expediency of the association’s event by means of criteria derived from the Ministry’s grant-funding objectives. Only thus would the Ministry have been able whether and in what way it needs to align and support the association’s reservist work to better meet its objectives. This is of special significance against the background of structural changes in the Armed Forces and the increasingly important role of reservists. We uphold our opinion that the Ministry needs to get a clear picture of the effectiveness of voluntary reservist work.

 

2012 Annual report No. 58 - Federal Defence Ministry manages a federal shareholding inadequately

The Federal Defence Ministry failed to take action to obtain proof of the efficiency of capital expenditure in the range of millions of euros incurred by an enterprise majority-owned by the Federal Government.

The Federal Defence Ministry is the majority shareholder of a company incorporated under private law that almost exclusively works under contracts from the Armed Forces. The objective of this shareholding is to obtain better value for money in performing certain Armed Forces functions. The company receives payments from the federal budget for the services it provides. The Ministry has representatives on various governing bodies of the company who, apart from other functions, are to monitor the efficiency of management decisions. The company carried out an investment appraisal to identify ways how to renew its software. The new software was to be based on standard software. For this project, the company only compared various alternative options available from a single IT provider. Our audit revealed that the investment appraisal carried out by the company was incomplete and flawed.

The Ministry was not able either to assess the validity of the company’s investment appraisal for the IT project. However, the Ministry considered the company’s decision proposal for the implementation of the standard software as plausible. The Ministry’s representatives used the company’s investment appraisal as basis for their decision on the IT project.

In our opinion, the Ministry should have taken greater regard to the interests of the Federal Government. However, it failed to instruct its representatives to object more insistently to the weaknesses in the investment appraisal made by the company. This would have been the only way in which to alert the company of the need to base its decision on a sound foundation.

We consider this as an example of the problems that can emerge when Armed Forces functions are discharged by companies in which the Federal Government is a major or the sole shareholder. We have reported on the financial impact of such problems on the federal budget before. In particular, we pointed out that by establishing companies and being a shareholder in them, the Ministry incurs considerable long-term financial commitments. This is one of the reasons why the Ministry should thoroughly prepare its representatives so as to enable them to pursue the special interests of the Federal Government.

 

2012 Annual report No. 14 - Federal Police redesigns its driving schools

Following our recommendation, the Federal Police has begun to redesign its driving schools and to adjust training courses for special driving licences for police officers to actual demand. It intends to consider to what extent it may outsource basic modules of its drivers’ training to private-sector driving schools and to concentrate police-specific drivers’ training at fewer locations.

Apart from holding a civilian Category B driving licence, police officers must obtain a special driving licence for police officers, if they are to drive vehicles of the Federal Police. The training required for obtaining the special licence is provided by the Federal Police itself, which operates driving schools at several locations.

We identified a lack of demand-driven operational and training strategies for the respective driving licence categories. Moreover, the Federal Police did not know the costs of providing drivers’ training for special driving licence categories. Thus, it lacked information essential for comparing the internal provision of special drivers’ training with the costs and performance of private-sector driving schools and for merging the driving schools. It assigned the same numbers of staff to each driving school without taking into account different functions of the individual schools.

We recommended that the Federal Police develop demand-driven location, operation, staffing and training concepts for each police driving licence category. To do so, it should consider the possibilities for outsourcing basic modules of general drivers’ training to private-sector driving schools. Its own drivers’ training programme should be limited to police-specific contents.

The Federal Police has begun to implement our recommendations.

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