Brandon Gill Asks Witness Point Blank: What Is The Monetary Estimate Of Fraud Annually In The DoD?

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During a House Oversight Committee hearing on Tuesday, Rep. Brandon Gill (R-TX) questioned Seto Bagdoyen, Director of Forensic Audits and Investigative Services at the U.S. Government Accountability Office, about fraud within the Department of Defense.

Transcript

00:00We next go to the distinguished gentleman from Denton, Texas.

00:03The gentleman, Mr. Gills, recognized.

00:06Thank you, Mr. Chairman, and thank you for holding this hearing,

00:10and I'd like to also say thank you to the witnesses for taking the time and coming here.

00:15Mr. Bagdoyan, I'll start with you.

00:18A recent report by the GAO found that for fiscal years 2017 through 2024,

00:24DOD reported about $10.8 billion in confirmed fraud.

00:28The report went on to say, quote,

00:30the full extent of fraud affecting DOD is not known but is potentially significant.

00:37Do you have a monetary estimate of the fraud that takes place annually within the DOD,

00:41perhaps beyond that number?

00:43I do not, and actually the figure you quoted is for all fraud around DOD,

00:49not just procurement.

00:49The recovered amount that is about $7 billion over a number of years is for procurement,

00:56so those are two different sets of numbers.

00:59Plus, for the confirmed fraud, we did notice, and I believe the IG may have flagged this as well,

01:07that DOD reported the same figure, $2.4 billion, for two consecutive fiscal years.

01:15So that raises some questions about the reliability of what's been reported.

01:21I believe in the past the OIG has questioned the process of arriving at those types of numbers.

01:27So I would urge some caution in using those numbers,

01:31but they do represent what is basically known through adjudication.

01:36So they have to be detected first, investigated, then adjudicated.

01:41So we have no idea what is being missed.

01:44If you were to guess, would you guess that total fraud at the DOD is higher than that number?

01:48I would suspect it is, yes.

01:51And how many open recommendations issued by the GAO are there that would improve financial management within the DOD?

02:00For financial management, I will have to get back to you on fraud risk management,

02:05based on the three reports that I've been responsible over the last six years or so.

02:09We still have 13 open recommendations.

02:13We are expecting responses from DOD, as I mentioned before, throughout June and into next month.

02:23We just sent over the list of priority recommendations to the Secretary of Defense, Mr. Hexeth, for his personal attention.

02:34And so that letter will be made public early next week.

02:39Got it.

02:40But either way, it's a substantial number.

02:42It is a substantial number.

02:44The risks are immediate.

02:46So delaying implementation exacerbates that risk.

02:50Why do you think they have delayed implementation?

02:53And how long should it take for the DOD to implement some of the recommendations that have been given to them?

02:59Yeah.

02:59To be fair, it does take time to do this and to do it right.

03:03But we have encountered pretty significant delays, I think, over time that may reflect lack of attention, lack of urgency, lack of priority.

03:13That is speculative on my part.

03:15But it is consistent with what we've encountered with other agencies.

03:19Got it.

03:20And Mr. Mayo, a couple questions for you.

03:23The DOD inspector general has identified 17 scope-limiting weaknesses that are significant roadblocks to the DOD's clean audit opinion goal.

03:31What steps do you think the DOD can take or needs to take to obtain a clean audit by 2028?

03:38Sir, that's a great question and really out of the side of my expertise.

03:43I would submit I can go back to the audit component and get some data for you and get back to you on that.

03:52Got it.

03:52Okay.

03:53And with that, Mr. Chairman, I'll yield back the remainder of my time.

03:57Gentleman yields back his time.

03:58I'd like to, if I can, answer one of the questions that the distinguished gentleman asked,

04:05because we have two witnesses who are trying to professionally represent not only themselves,

04:12but the department's GAO and the IGs.

04:16The bottom line is that there's plenty of documentation that shows that DOD,

04:23at least over a period of several years, said it's not a problem.

04:30The things you bring to us is not a problem.

04:32We're not going to even take this conversation further.

04:37And so that is the conversation that both of these gentlemen are operating under.

04:41And the hope is now with a new administration, a new secretary, that there will be an emphasis not only on attempting to do something,

04:52but be willing to opening up their eyes to the recommendations that have come from professional groups like GAO and inspector generals.

05:02And so it's not a matter of them wanting to do or not do.

05:07They deny its existence.

05:10And this is the part why both these gentlemen literally came out of their chairs yesterday in my office when we pulsed this issue.

05:20And so I want you to know that your line of questioning is most instructive.

05:25They also were trying to be very polite back to you.

05:28So that's on in defense of these young men.

05:32Thank you very much.

05:33Gentleman yields back his time.

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