Chairman James Comer’s Oversight and Reform subcommittee on government operations and the federal workforce devoted a hearing to fraud risk management at the Department of Defense, where witnesses from the Defense Criminal Investigative Service and the Government Accountability Office told members that fraud in procurement remains an unresolved, high‑risk problem.

The hearing opened with the committee’s chair, who said the session would examine “the Department of Defense's fraud risk management efforts and how they work to combat fraud.” Ranking Member Mfume told the committee that DOD has failed seven straight financial audits and that even small error rates are consequential given the department’s massive budgets.

Why it matters: Members from both parties said fraud undermines military readiness and public trust. Witnesses described gaps in leadership commitment, data integration, and the operational use of analytics, and GAO said those gaps leave the department on GAO’s high‑risk list for financial management.

Deputy Inspector General Kelly P. Mayo, who leads criminal investigations at the DOD Office of Inspector General’s Defense Criminal Investigative Service (DCIS), told the panel that investigating procurement fraud “is a top priority for DCIS” and said DCIS’s work returns money to the government and leads to criminal convictions and contractor debarments. Mayo said DCIS had more than 1,800 open investigations and pointed to a recent six‑month period in which investigations resulted in more than $3 billion recovered for taxpayers.

Estetto Bagdoyan, director for forensic audits and investigative services at the U.S. Government Accountability Office (GAO), said GAO’s work across three reports since 2019 demonstrates that procurement fraud and weak fraud risk management are significant problems at DOD. Bagdoyan said data analytics activities to identify and assess fraud risks were “essentially nonexistent” across components and called the department’s analytics posture “being at the starting line would be a charitable way to describe it.”

GAO told the committee it has 13 open recommendations tied to its procurement fraud work, including two it classifies as priority recommendations that it says DOD must implement. GAO added fraud risk management to its high‑risk list for DOD financial management in February 2025.

Members pressed both witnesses about scale and causes. The hearing transcript records several figures cited by members and witnesses: DOD’s total annual spending was described as “over $1,000,000,000,000,” DOD reported $10,800,000,000 in confirmed fraud from 2017 through 2024, and members cited that roughly $431,000,000,000 (71 percent of defense spending in a cited year) went to contractors. Committee leaders also referenced a continuing resolution that would set defense discretionary spending at about $892,000,000,000.

Both witnesses said those confirmed figures likely understate the full extent of fraud because confirmed fraud counts depend on detection, investigation, and adjudication. Bagdoyan said GAO’s analysis of approximately 2,700 adjudicated procurement fraud cases from fiscal years 2015–2021 showed fraud is a problem despite DOD assertions to the contrary.

Committee members and witnesses gave examples that illustrated operational risks as well as financial loss. The transcript includes references to historical and recent cases: the early‑2000s Glenn Defense Marine Asia corruption scheme, described in the hearing as involving bribery and at least $35,000,000 in overcharges to the Navy; an example GAO cited where nonconforming parts from an ineligible foreign manufacturer contributed to the grounding of 47 fighter aircraft (the total contract value cited was roughly $180,000); and a recent industry settlement in which a large defense contractor resolved allegations for misconduct with a roughly $950,000,000 payment (mentioned by a member during questioning).

Members from both parties urged concrete steps. GAO and the IG’s investigative lead urged: (1) visible leadership commitment from the secretary of defense and service secretaries to make fraud risk management a clear, sustained priority; (2) rapid development and operationalization of data analytics capacity so “data can talk to data before the money walks out of the door”; and (3) timely enforcement actions (suspensions, debarments, criminal referrals) when fraud is found.

On data analytics, Bagdoyan said GAO expects an updated DOD anti‑fraud strategy and that he hopes the strategy will make analytics an explicit, operational requirement rather than a general reference. He said the department’s data are large and messy and that GAO staff spent months preparing data for analysis. Both witnesses said early detection through analytics could shift DOD away from a costly “pay and chase” model toward prevention.

Witnesses and members also discussed impediments. Bagdoyan told members that DOD’s leadership and some components have resisted GAO’s findings and delayed implementation of recommendations; GAO continues to classify several recommendations as open. Mayo said DCIS has an organic data analytics capability to support investigations but declined to discuss active cases.

On accountability institutions, members asked whether recent changes at DOD — including personnel reductions and leadership turnover referenced during the hearing — had impaired oversight. Mayo said his investigative work had continued but acknowledged staff departures; Bagdoyan said some responsiveness has improved but that delays remain pervasive.

There were no formal committee votes or binding actions taken during the hearing. Members said they plan continued oversight, including a potential visit to DOD leadership to press for implementation of GAO and IG recommendations.

Ending: Lawmakers closed the hearing urging sustained bipartisan oversight and faster implementation of GAO recommendations. The witnesses committed to continuing to work with committee staff; GAO said it would review any updated DOD anti‑fraud strategy when released.