Fraud Report

The Pentagon recently completed a report to Congress that concludes the Defense Department "paid $285 billion over a three-year span to hundreds of military contractors that defrauded the Pentagon during the same period," according to a statement by the office of Sen. Bernie Sanders (I-VT). Sanders, who requested the report, further says:

"With the country running a $14 trillion national debt, my goal is to provide as much transparency as possible about what is happening with taxpayer money," said Sanders (I-Vt.). "The sad truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money."

The preliminary report detailed how the Pentagon spent $270 billion from 2007 to 2009 on 91 contractors involved in civil fraud cases that resulted in judgments of more than $1 million. Another $682 million went to 30 contractors convicted of hard-core criminal fraud in the same three-year period. Billions more went to firms that had been suspended or debarred by the Pentagon for misusing taxpayer dollars.

A Sanders provision in a defense spending bill required the report and directed the Department of Defense to recommend ways to punish fraudulent contractors. The Pentagon brass saw no need for any changes. "The department believes that existing remedies with respect to contractor wrongdoing are sufficient," the Report to Congress on Contractor Fraud concluded.

"It is clear that DOD's current approach is not working and we need far more vigorous enforcement to protect taxpayers from massive fraud," Sanders said.

Under a separate Sanders provision in another law signed by President Obama, a government-wide federal contractor fraud database will be accessible to the public by April 15.  Until now, access to the Federal Awardee Performance and Integrity Information System was limited to federal acquisition officials and certain members of Congress.

Sanders' office also released a "staff analysis" of the DOD report.

Eliminating fraud is something all the services have striven to do. As InsideDefense.com reported last December, each year the Army asks its headquarters staff, its major commands and what are known as direct reporting units to deliver a report card on their individual programs aimed at detecting and correcting instances of waste, fraud and abuse. The report card, called the "Annual Statement of Assurance," is sent to the Army secretary. Further:

"On Dec. 16, the assistant secretary of the Army for financial management and comptroller sent out a 40-page memo that provides guidance for the fiscal year 2011 statement," InsideDefense.com reported. "According to the memo, the statements are due to the Army comptroller's office by May 16, 2011, for everyone but the headquarters staff. That staff has until May 31 to submit its report card."

The Army's acquisition shop has one specific task for FY-11, according to the comptroller:

In May 2008, the Office of Federal Procurement Policy in [Office of Management and Budget] published guidelines for Federal Agencies to use in conducting internal control reviews of their acquisition functions. The DOD is required to integrate the internal control review of acquisition with the existing internal control assessment and annual Statement of Assurance reporting processes, beginning with the Fiscal Year 2009 cycle. Office of the Secretary of Defense Acquisition, Technology and Logistics -- has developed a template that provides focus areas ("cornerstones") and related questions that should be addressed when reviewing the acquisition processes. The execution of this requirement has been included by OSD as a validation requirement during Fiscal Year 2011.