Kweisi Mfume Asks Witness To Describe Current State Of DoD’s Data Integration For Fraud Protection

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During a House Oversight Committee hearing on Tuesday, Rep. Kweisi Mfume (D-MD) questioned Seto Bagdoyen, Director of Forensic Audits and Investigative Services at the U.S. Government Accountability Office, about data integration for fraud detection at the Department of Defense.

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00:00While the young chairman's here, I'd like to bend his ear for just a second on a bipartisan basis.

00:06We believe that what we're doing today is also to point out that the Department of Defense,

00:13when they respond back to the investigations that have been done,

00:18the findings of fact and conclusions that the GAO and IG have presented to the management of DOD,

00:30in writing, they come back and say they are noncompliant,

00:36which means they do not agree with the findings of professionals like the IG or GAO.

00:44And so while you are worried about, and we are too, what we spend,

00:50we are more concerned that they ignore that fraud is present in this.

00:56And you will find that as a result of this hearing today,

01:00Mr. Infume and I will be requesting you and the ranking member of the committee

01:05join us in going to, across the river, to DOD to make sure that they understand

01:12that this is unacceptable and that they've got to understand there is fraud.

01:19Absolutely.

01:20Well, thank you all for what you're doing, and I appreciate this hearing and look forward to the rest of it.

01:24Mr. Chairman, thank you very much.

01:25Thank you very much, Mr. Infume.

01:28Thank you very much, Mr. Chairman.

01:31I've got a couple of questions about GAO and their risk management, if you don't mind.

01:38Mr. Bagdouyan, in your view, and I don't have a lot of time here,

01:42so if you can kind of quickly walk through these with me,

01:44what leadership actions would have the greatest immediate impact on lowering DOD's fraud risk profile?

01:55Yes, the key action here is to make it the top priority for action

02:00and make sure that that translates down to the various levels, the various components that we've audited over time.

02:08So it has to come from the Secretary to make sure that his staff are aware of that priority

02:15and start building a culture of fraud risk management.

02:19Without that, all the rest is not going to work.

02:22Yeah, and I think that's one of the clear things we're going to be communicating to Secretary Hex

02:26that it's got to start at the top and it's got to be sustained.

02:30Otherwise, we'll be here eight years from now talking about 15 failed audits.

02:34How would you characterize the current state of DOD's data integration for fraud detection?

02:41In other words, are we at the starting line, the halfway point, or near the finish line?

02:47Being at the starting line would be a charitable way to describe it.

02:53They're just not there.

02:54The data are massive.

02:58They are difficult to work with.

03:00We spent months cleaning up the data.

03:03One of my colleagues in the audience did that.

03:06This is his full-time job for a long period of time before we could even analyze the data.

03:11So that needs to be looked at before they do any other work with the data.

03:15Thank you for the characterizations.

03:17What specific analytics and capabilities related to analytics should DOD prioritize over the next 12 to 18 months

03:26to improve early detection of fraudulent activity?

03:29Early detection.

03:30Early detection, of course, make building a data analytics capacity the priority,

03:37then move on to the data themselves to clean them up, to make them usable,

03:42make them reliable and analyzable, if that's a word, to make sure that the end result is actionable.

03:52And could you highlight two or three, four, maybe, GAO recommendations that, if implemented this year,

04:02would deliver the biggest return on investment for taxpayers?

04:06Well, to start with, we expect the anti-fraud strategy from DOD towards the end of next month,

04:15I believe, that they have promised will include data analytics as a top priority.

04:21So that is a good starting point.

04:23And then the second priority recommendation that I alluded to earlier involves doing thorough fraud risk assessments

04:31and responding to the results.

04:35Now, giving me a piece of paper to close a recommendation is the beginning,

04:40but they have to go out and operationalize what they've done.

04:44Otherwise, it's not going to work.

04:46And where do you see the greatest barriers?

04:48Is it budget?

04:49Is it culture?

04:50Is it technology?

04:51When I say barriers, I mean barriers to closing those recommendations.

04:54Well, as I believe the chairman mentioned earlier, there was resistance from leadership to our reporting,

05:04to our recommendations, to the designation of the high risk as part of financial management.

05:11So that seems to have softened over time because the people we're working with at DOD are trying to implement the recommendations,

05:21and we expect some of their products to come through later this month and through next month.

05:26And do you and Mr. Mayo communicate with one another?

05:30We met this week.

05:32I expect that we will be in touch, yes.

05:35Yeah, I think it's important.

05:36I mean, I sense his sincerity and yours, but unless there is some sort of communication here,

05:41you know, we're still taking baby steps instead of giant steps.

05:44I have one final question.

05:46Do you see any new emerging fraud schemes that perhaps are enabled by new technologies?

05:54In other words, how do we stay one step ahead of the bad guys who are finding ways through technology to evade capture?

06:03Unfortunately, the fraudsters are ahead of us in multiple agencies, programs, and so on.

06:09The two most common schemes that we flag through our analyses are false claims and overcharging.

06:18There's a whole slew of others, false bids, and so on.

06:23So whatever analytics that DOD implements will have to be very tactically focused on those fraud schemes.

06:31But I can't speak to one being more prevalent than the other.

06:34Thank you very much.

06:35Mr. Chairman, I yield back.

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