GAO: Pentagon at High Risk for Fraud
The Department of Defense (DOD) has far from a sterling reputation for financial discipline. It remains the sole federal agency to have not passed a clean audit under the Chief Financial Officers Act of 1990. The Marine Corps is the only one of the five DOD branches that has passed an audit, which it accomplished in both 2023 and 2024.
The Government Accountability Office (GAO) has been tracking DOD mismanagement since it listed weapons system acquisition on its High-Risk List in 1990 and added financial management in 1995. The February 25, 2025, GAO High-Risk Series report contained five areas within the DOD.
GAO expanded its concerns over DOD financial management in an April 29, 2025, report that added fraud risk management to the High-Risk List. The report noted that between fiscal years (FY) 2017 and 2024, the DOD reported $10.8 billion in fraud and $6.6 billion in fraudulent payments tracked between FYs 2013 and 2017.
The GAO stated, “the full extent of fraud affecting DOD is not known but is potentially significant. Until DOD implements a comprehensive antifraud strategy that effectively aligns with leading practices, as GAO has recommended, its programs and significant expenditures will remain at substantial risk of fraud.” Furthermore, “confirmed fraud reflect only a small fraction of DOD’s potential fraud exposure. While DOD officials previously informed us that they did not believe there was much fraud within the department relative to its overall spending, even a small percentage” of the Pentagon’s budget “…lost to fraudsters would be a significant divergence of resources from its warfighting mission.”
Underscoring all of this is the fact that the Pentagon’s budget, the government’s largest discretionary expenditure accounting for approximately one-sixth of federal spending and 82 percent of its physical assets, is likely to increase dramatically. The Trump administration is seeking a defense budget greater than $1 trillion for FY 2026, with approximately $893 billion requested in the base DOD budget and $113 billion in the reconciliation bill under consideration by Congress. This would represent a 13 percent increase in defense spending compared to FY 2025.
The DOD’s fiscal negligence must be addressed regardless of the size of its budget but especially when there appears to be a significant increase for FY 2026. President Trump has made cutting wasteful spending a high priority and that must include the Pentagon. The GAO recommendations, many of which have languished for years, are a good starting point.
