Congress addresses $10.8B fraud risk in Department of Defense spending oversight

The U.S. House Committee on Oversight and Government Reform convened on June 5, 2025, to address the Department of Defense's (DOD) fraud risk management efforts. The meeting highlighted concerns regarding the significant amount of fraud reported within the DOD, which spends over $1 trillion annually. DOD officials indicated to the Government Accountability Office (GAO) that they did not perceive fraud as a major issue relative to their overall spending. However, the committee members expressed that the confirmed fraud amounting to approximately $10.8 billion from 2017 to 2024 is indeed a substantial problem.

The discussion emphasized that this figure likely represents only a fraction of the actual fraud occurring within the department. In fiscal year 2023, DOD allocated about $431 billion, or 71% of its total defense spending, to contractors for various services and products. The GAO has consistently reported that the DOD struggles to accurately account for government property held by contractors, which hampers its ability to produce fully auditable financial statements and ensure taxpayer money is spent appropriately.

Notable historical cases of fraud were referenced, including a significant corruption scheme involving Thad Leonard, who defrauded the Navy of at least $35 million over a decade. The committee underscored the need for improved fraud detection methods, such as data analytics, which could enhance the verification of contractor eligibility and identify suspicious activities more effectively.

The meeting also addressed the operational risks posed by fraud, citing instances where defective parts supplied to the military could endanger service members' lives. The committee reiterated its commitment to working with the GAO and DOD to ensure accountability and prevent fraud, emphasizing the importance of safeguarding taxpayer dollars.

In closing, the committee members acknowledged the ongoing challenges in addressing fraud within the DOD and expressed a unified determination to implement effective strategies to combat this issue. The meeting underscored the critical need for leadership commitment to uphold the integrity of defense spending and protect the interests of both taxpayers and military personnel.