The Subcommittee on Government Operations convened a hearing to address fraud risk management within the Department of Defense (DOD). The session, titled "Safeguarding Procurement: Examining Fraud Risk Management in the Department of Defense," aimed to scrutinize strategies for mitigating fraud and the measures DOD is implementing to tackle these issues. Enhanced fraud risk management could potentially save billions for both the department and American taxpayers.
Subcommittee Chairman Pete Sessions highlighted ongoing challenges, stating, "For years, GAO and others have reported that DOD has struggled to accurately account for the government property that contractors possess." He emphasized that this issue impacts the department's ability to produce fully auditable financial statements and affects taxpayer money spending.
Seto Bagdoyan from the U.S. Government Accountability Office pointed out in his testimony that procurement fraud remains a significant problem at DOD. He stated, "Our analyses of about 2,700 adjudicated procurement fraud cases covering fiscal years 2015 to 2021 conclusively show that assertions to the contrary notwithstanding fraud and risk is indeed a problem at DOD."
Kelly P. Mayo from the DOD Office of Inspector General noted successful outcomes from investigations into defense criminal activities. "[Defense Criminal Investigation] investigations routinely lead to criminal convictions, civil False Claims Act recoveries and contractor debarments," he said.
The House Committee on Oversight and Government Reform will continue investigating procurement fraud schemes within DOD. Chairman Sessions expressed intent to ensure agencies understand their responsibility regarding taxpayer money use.
Chairman James Comer questioned Mr. Bagdoyan about estimating fraud levels within DOD, with Mr. Bagdoyan responding that confirmed instances are massive but not comprehensive due to undetected cases.
Rep. Andy Biggs asked about contracts most prone to fraud, with responses indicating subcontractors as particularly susceptible areas due to less oversight compared to prime contractors.
Rep. Tim Burchett criticized DOD's inability to quantify annual losses due to fraud and called attention to repeated audit failures by the Pentagon.
Rep. Virginia Foxx queried about obstacles in identifying fraudulent activities before they occur, with Mr. Bagdoyan citing lack of analytics and commitment as major hurdles.
The subcommittee aims for continued dialogue with relevant agencies and departments regarding efficient taxpayer money usage and preventing contracting system vulnerabilities.
