Fraudsters Have Bilked Billions From Pentagon — And It Could Be Way More, Watchdog Warns

Swindlers in the defense industrial complex have ripped off the Pentagon to the tune of billions of dollars in recent years, but that figure may just be scratching the surface, according to a Government Accountability Agency (GAO) report published Wednesday.

The report revealed that the Department of Defense (DOD) had been defrauded of nearly $11 billion between fiscal years 2017 and 2024, while noting that the confirmed amount reflects “only a small fraction of DOD’s potential fraud exposure.” The GAO published the report in conjunction with testimony from the Director of Forensic Audits and Investigative Service Seto Bagoyen before the House Oversight Committee on Wednesday.

“Unfortunately the fraudsters are ahead of us in multiple agencies, programs and so on,” Bagoyen said during the hearing. “The two most common schemes we flagged are false claims and overcharging, there’s a whole slew of others … whatever analytics the DOD implements will have to be very tactically focused.”

One example of fraud cited in the report included a contractor using U.S.-based shell companies that delivered faulty components for use in F-15 fighter jets. The fraudulent contract led to the grounding of 47 F-15s for safety reasons.

Another instance cited involved a DOD contractor who conspired with a child company to illegally jack up prices for parts, which ultimately cost the Pentagon $48 million, according to the report. The GAO also noted in its assessment that the DOD has been slow in implementing its recommendations to reduce fraud in its contracting system over the last seven years.

In another case, two DOD contracting firms misled the Pentagon about their respective ownership to bid for contracts that they should not have been eligible for, a scheme that defrauded the federal government of $200 million, according to the GAO report.

Shady dealings in the DOD are not just limited to procurement contractors, but have also involved misconduct by military officials.

Retired Adm. Robert Burke was convicted on bribery charges after attempting to award a slew of contracts to a company called Next Jump in exchange for a job with an annual salary of $500,000 and a grant of 100,000 stock options upon his private sector retirement, according to the Department of Justice. In 2021, Next Jump made a deal with Burke to leverage his position in the Navy to push a contract forward in December 2021 in exchange for a cushy job, which he assumed in December 2022 after retiring from the armed forces.

“Even a small percentage of DOD’s $1 trillion in annual spending lost to fraudsters is a significant diversion of resources from its warfighting mission,” the GAO report reads. “Not only does fraud threaten DOD’s financial position, but it can also put the warfighter in increased danger.”

The GAO did not immediately respond to the Daily Caller News Foundation’s request for comment.