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GAO: More Action Needed at DOD to Manage Procurement Fraud Risks

The Department of Defense (DOD), which spent about $422 billion on contracts for goods and services in FY 2020, has been the target of contracting-related fraud schemes.

The Department of Defense (DOD), which spent about $422 billion on contracts for goods and services in FY 2020, has been the target of contracting-related fraud schemes. For example, in January 2015, the owner of a contracting firm pleaded guilty to bribing DOD officials and defrauding DOD of tens of millions of dollars by overbilling for goods and services. DOD is also vulnerable to other types of contract fraud and corruption.

One way DOD tried to fight fraud in FY 2020 was to tap its subject matter experts for a Fraud Reduction Task Force. But a Government Accountability Office (GAO) review has found 11 of 59 DOD organizations, including the Army, hadn’t designated task force representatives. 

DOD uses its risk management program to assess and report fraud risks. But GAO found that the policy governing the risk management program does not specifically require fraud risk assessments. As a result, the watchdog is concerned that DOD may not be identifying all fraud risks, and its control activities may not be appropriately designed or implemented. DOD officials told GAO that they share fraud risk information with agencies’ risk management officials, but GAO said documentation of stakeholders’ roles and responsibilities remains incomplete. 

DOD provides guidance, tools, and training to its components to conduct fraud risk assessments and to assess procurement fraud risks. However, GAO found that three of six selected components reported procurement fraud risks in their fiscal-year-2020 risk assessments, and that three—which obligated $180.1 billion in fiscal year 2020—did not. 

GAO has five recommendations, including that DOD fill all Task Force positions, update its policy to require fraud risk assessments, and ensure that components assess procurement fraud risks. DOD agreed with some, but not all of the recommendations.

Read the full report at GAO

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The Government Technology & Services Coalition's Homeland Security Today (HSToday) is the premier news and information resource for the homeland security community, dedicated to elevating the discussions and insights that can support a safe and secure nation. A non-profit magazine and media platform, HSToday provides readers with the whole story, placing facts and comments in context to inform debate and drive realistic solutions to some of the nation’s most vexing security challenges.

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