The Government Accountability Office (GAO) today emphasized to Congress the urgent need for the Department of Defense (DOD) to address its vulnerabilities to fraud. Seto Bagdoyen, GAO’s Director of Forensic Audits and Investigative Services, testified before the House Oversight Committee’s Government Operations panel, highlighting significant concerns over the DOD’s commitment to combating fraud risk.
Bagdoyen revealed that despite the DOD’s annual spending exceeding $1 trillion — nearly half of the federal government’s discretionary budget — Pentagon officials recently informed the GAO they believe fraud within the department is minimal. However, GAO’s data shows confirmed fraud losses totaling nearly $11 billion from 2017 to 2024, suggesting a potentially significant fraud exposure.
The testimony also pointed to the DOD’s extensive contracting activity, which obligated $45 billion in fiscal year 2024 alone, more than any other federal agency. This vast scale increases the department’s susceptibility to fraud, especially procurement fraud.
“Until DOD officials recognize the threats that fraud pose to its resources and warfighter, it is not well positioned to fight fraud,” Bagdoyen stated in written testimony released by the GAO.
Following ongoing concerns, the GAO recently added DOD’s fraud risk management to its “high risk” list, signaling a critical need for executive and congressional attention. Bagdoyen noted that despite being responsible for overseeing fraud risk management, the Office of the Under Secretary of Defense lacks adequate authority and accountability mechanisms to effectively implement fraud controls across military components.
Furthermore, Bagdoyen underscored delays by the DOD in adopting GAO’s recommendations, including thirteen key actions still open. Among these are calls to establish advanced data analytics for fraud prevention and to implement comprehensive fraud risk assessments regularly — steps designated as GAO priority recommendations.
Kelly P. Mayo, DOD Deputy Inspector General for Investigations, echoed these concerns, stressing that procurement fraud represents a national security threat. Mayo detailed multiple fraud types, including delivery of counterfeit products, improper contract cost shifting, and corruption involving contract awards.
“Combating this threat requires more than internal vigilance; it demands a unified national response. To protect DoD procurement processes and uphold the integrity of the nation’s defense infrastructure, we must have the full engagement and support of Congress,” Mayo declared.
The GAO urges the DOD and Congress to take immediate, serious action to strengthen fraud risk management and safeguard taxpayer resources critical to national defense.
