GAO report finds DOD fails to combat waste and fraud

The report noted that the DOD has been susceptible to multiple forms of fraud schemes, including fraudulent bid submissions, counterfeit parts, billing for work not performed, and disguising conflicts of interest.

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The Government Accountability Office (GAO) recently released a report determining that the U.S. Department of Defense (DOD) has wasted billions of dollars in less than a decade due to corruption and fraud. Although the GAO made several recommendations to update fraud risk assessments, the Defense Department has not finalized or implemented a comprehensive approach.

Requested by House Oversight and Reform Committee Chairwoman Carolyn B. Maloney (D-N.Y.) and Senate Budget Committee Chairman Bernie Sanders (I-Vt.), the GAO report was released Monday and stated, “In fiscal year 2020, DOD obligated approximately $422 billion on contracts. The scope and scale of this activity makes DOD procurement inherently susceptible to fraud.”

The report noted that the DOD has been susceptible to multiple forms of fraud schemes, including fraudulent bid submissions, counterfeit parts, billing for work not performed, and disguising conflicts of interest. GAO also reported that, “given the billions of dollars DOD spends annually on procurement, failing to manage and mitigate fraud effectively may ultimately adversely affect DOD’s ability to support the warfighter.”

“The Pentagon doesn’t seem to want to get serious about combatting the fraud, waste, and financial mismanagement that has been its legacy for decades,” said Sen. Sanders in a press release. “They don’t seem to want to get serious about spending taxpayer dollars wisely and effectively. Well, I think we can all agree, that is absolutely unacceptable. Currently, the U.S. spends more on our nation’s military than the next thirteen countries combined. Meanwhile, half of our people are living paycheck to paycheck, just under 40 million Americans are living in poverty, and over 600,000 Americans are homeless including roughly 40,000 veterans. The time is long overdue for the Defense Department to be held to the same level of accountability as the rest of the government.”

“This independent report shows that the Trump Administration utterly failed to address the Pentagon’s longstanding problems with financial management, including procurement fraud,” asseted Chairwoman Maloney in a recent statement. “This failure to safeguard taxpayer dollars is completely unacceptable, and I urge the Biden Administration to quickly and fully implement GAO’s recommendations and put the Defense Department on a path to operate more efficiently and effectively, with the confidence that it is not spending money on fraudulent contracts.”

In 2018, the DOD reported to Congress that from fiscal years 2013 to 2017, over $6.6 billion had been recovered from defense contracting fraud cases. In 2020, the DOD Office of Inspector General reported that 395 of its 1,716 ongoing investigations—or approximately one-in-five—are related to procurement fraud.

The GAO report made five recommendations, including that DOD fill all Fraud Reduction Task Force positions, update its policy to require fraud risk assessments, and ensure that components assess procurement fraud risks. The DOD agreed with some, but not all of the recommendations. The GAO continues to believe all the recommendations are warranted and should be implemented.

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