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NEWS: New GAO Report Commissioned By Senator Bernie Sanders Finds DOD Fails to Take Basic Steps to Combat Fraud Despite Spending More Taxpayer Money Than All Other Agencies Combined

WASHINGTON, Feb. 29 – According to a new report, commissioned by Sen. Bernie Sanders (I-Vt.) and released Tuesday by the Government Accountability Office (GAO), the U.S. Department of Defense (DOD) has failed yet again to take basic steps to combat fraud in its massive contracting enterprise. Among other findings, the report showed the DOD often fails to even utilize the bare minimum of publicly available data to vet information provided by contract bidders. These shortcomings are costing taxpayers billions in misused funds.

“America’s national priorities are badly misplaced,” said Sanders. “We apparently have unlimited amounts of money to spend on the military industrial complex despite the decades of absurd waste, fraud, and financial mismanagement by the Pentagon. But somehow, we can’t summon the resources to provide for the basic needs of the American people. That is absolutely unacceptable. If we are serious about spending taxpayer dollars wisely and effectively, the time is long overdue for Congress to hold the Defense Department to the same level of accountability as the rest of the government. That is the very least we can do.”

The United States spends more on the military than the next 10 countries combined, and the DOD accounts for more than half of the federal government’s discretionary spending. By far the largest contracting agency in the federal government, the DOD obligates more money than all U.S. civilian agencies put together. In Fiscal Year 2022 alone, the DOD issued contracts totaling $414.5 billion, with more than $118 billion in Pentagon contracts going to Lockheed Martin, RTX, Boeing, General Dynamics, and Northrop Grumman.

Despite this massive spending, the DOD remains the only federal agency in the country that has failed to ever pass an independent audit – a requirement under federal law for all government agencies since the early 1990s – and has remained on the GAO’s High-Risk List for waste, fraud, and abuse for 34 years. Last year, the DOD failed its sixth consecutive audit and was unable to fully account for 63 percent of its $3.8 billion in assets. In 2022, the Navy audit found $4.4 billion in previously untracked inventory, while the Air Force identified $5.2 billion worth of variances in its general ledger. Not only that, but reports have found defense contractors routinely overcharge the Pentagon – and the American taxpayer – by nearly 40 to 50 percent. One company, TransDigm, overcharged by 4,451 percent.

For the new report, the GAO interviewed key oversight staff and analyzed 4,703 criminal fraud investigations conducted by DOD investigators from 2015 to 2021. The GAO found that the DOD has yet to implement a system that utilizes data analytics, such as cross-checking publicly available information with information provided by private contractors, to detect fraud or identify suspicious activity, an unacceptable shortcoming for a contracting operation of this size.

The report also found that the DOD has failed to fully implement past GAO recommendations, such as documenting fraud risk management roles within its staff or completing the membership of the Fraud Reduction Task Force established following GAO’s previous investigation in 2021. Additionally, the DOD continues to have difficulty identifying the ownership of some of the entities they contract with, resulting in clear fraud risks and national security concerns. In response to these findings, GAO made 11 recommendations to improve fraud risk management, assign responsibility for oversight to senior officials, improve data integrity, learn from fraud risk investigations, and harness data analytics to detect and reduce fraud.

This latest GAO report follows others commissioned by Sanders that help shed light on the lack of federal oversight within the DOD. In light of these reports, Sanders and Sen. Chuck Grassley (R-Iowa), along with Sens. Ron Wyden (D-Ore.), Mike Lee (R-Utah), Elizabeth Warren (D-Mass.), Mike Braun (R-Ind.), Jeff Merkley (D-Ore.), Rand Paul (R-Ky.), Ed Markey (D-Mass.), and Tammy Baldwin (D-Wis.), introduced the Audit the Pentagon Act, which would require the DOD to finally pass a full, independent audit in fiscal year 2024. If enacted, the legislation would require any DOD component that fails to obtain a clean audit to return one percent of its budget to the Treasury for deficit reduction.

Read the full report, here.