During a House Oversight Committee hearing on Tuesday, Rep. Kweisi Mfume (D-MD) questioned Seto Bagdoyen, Director of Forensic Audits and Investigative Services at the U.S. Government Accountability Office, about data integration for fraud detection at the Department of Defense.
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00:00While the young chairman's here, I'd like to bend his ear for just a second on a bipartisan basis.
00:06We believe that what we're doing today is also to point out that the Department of Defense,
00:13when they respond back to the investigations that have been done,
00:18the findings of fact and conclusions that the GAO and IG have presented to the management of DOD,
00:30in writing, they come back and say they are noncompliant,
00:36which means they do not agree with the findings of professionals like the IG or GAO.
00:44And so while you are worried about, and we are too, what we spend,
00:50we are more concerned that they ignore that fraud is present in this.
00:56And you will find that as a result of this hearing today,
01:00Mr. Infume and I will be requesting you and the ranking member of the committee
01:05join us in going to, across the river, to DOD to make sure that they understand
01:12that this is unacceptable and that they've got to understand there is fraud.
01:19Absolutely.
01:20Well, thank you all for what you're doing, and I appreciate this hearing and look forward to the rest of it.
01:24Mr. Chairman, thank you very much.
01:25Thank you very much, Mr. Infume.
01:28Thank you very much, Mr. Chairman.
01:31I've got a couple of questions about GAO and their risk management, if you don't mind.
01:38Mr. Bagdouyan, in your view, and I don't have a lot of time here,
01:42so if you can kind of quickly walk through these with me,
01:44what leadership actions would have the greatest immediate impact on lowering DOD's fraud risk profile?
01:55Yes, the key action here is to make it the top priority for action
02:00and make sure that that translates down to the various levels, the various components that we've audited over time.
02:08So it has to come from the Secretary to make sure that his staff are aware of that priority
02:15and start building a culture of fraud risk management.
02:19Without that, all the rest is not going to work.
02:22Yeah, and I think that's one of the clear things we're going to be communicating to Secretary Hex
02:26that it's got to start at the top and it's got to be sustained.
02:30Otherwise, we'll be here eight years from now talking about 15 failed audits.
02:34How would you characterize the current state of DOD's data integration for fraud detection?
02:41In other words, are we at the starting line, the halfway point, or near the finish line?
02:47Being at the starting line would be a charitable way to describe it.
02:53They're just not there.
02:54The data are massive.
02:58They are difficult to work with.
03:00We spent months cleaning up the data.
03:03One of my colleagues in the audience did that.
03:06This is his full-time job for a long period of time before we could even analyze the data.
03:11So that needs to be looked at before they do any other work with the data.
03:15Thank you for the characterizations.
03:17What specific analytics and capabilities related to analytics should DOD prioritize over the next 12 to 18 months
03:26to improve early detection of fraudulent activity?
03:29Early detection.
03:30Early detection, of course, make building a data analytics capacity the priority,
03:37then move on to the data themselves to clean them up, to make them usable,
03:42make them reliable and analyzable, if that's a word, to make sure that the end result is actionable.
03:52And could you highlight two or three, four, maybe, GAO recommendations that, if implemented this year,
04:02would deliver the biggest return on investment for taxpayers?
04:06Well, to start with, we expect the anti-fraud strategy from DOD towards the end of next month,
04:15I believe, that they have promised will include data analytics as a top priority.
04:21So that is a good starting point.
04:23And then the second priority recommendation that I alluded to earlier involves doing thorough fraud risk assessments
04:31and responding to the results.
04:35Now, giving me a piece of paper to close a recommendation is the beginning,
04:40but they have to go out and operationalize what they've done.
04:44Otherwise, it's not going to work.
04:46And where do you see the greatest barriers?
04:48Is it budget?
04:49Is it culture?
04:50Is it technology?
04:51When I say barriers, I mean barriers to closing those recommendations.
04:54Well, as I believe the chairman mentioned earlier, there was resistance from leadership to our reporting,
05:04to our recommendations, to the designation of the high risk as part of financial management.
05:11So that seems to have softened over time because the people we're working with at DOD are trying to implement the recommendations,
05:21and we expect some of their products to come through later this month and through next month.
05:26And do you and Mr. Mayo communicate with one another?
05:30We met this week.
05:32I expect that we will be in touch, yes.
05:35Yeah, I think it's important.
05:36I mean, I sense his sincerity and yours, but unless there is some sort of communication here,
05:41you know, we're still taking baby steps instead of giant steps.
05:44I have one final question.
05:46Do you see any new emerging fraud schemes that perhaps are enabled by new technologies?
05:54In other words, how do we stay one step ahead of the bad guys who are finding ways through technology to evade capture?
06:03Unfortunately, the fraudsters are ahead of us in multiple agencies, programs, and so on.
06:09The two most common schemes that we flag through our analyses are false claims and overcharging.
06:18There's a whole slew of others, false bids, and so on.
06:23So whatever analytics that DOD implements will have to be very tactically focused on those fraud schemes.
06:31But I can't speak to one being more prevalent than the other.
06:34Thank you very much.
06:35Mr. Chairman, I yield back.