POGO Calls for Systemic Reforms for the Systemic Problem of Fraud

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Chair Biggs, Ranking Member McBath, and Members of the Committee, thank you for the opportunity to testify today about waste and fraud in the federal government, where to find it, and how to address it.

I am Dylan Hedtler-Gaudette, acting vice president of policy and government affairs at the Project On Government Oversight (POGO). POGO is a nonpartisan, independent watchdog that investigates, exposes, and champions reforms on systemic corruption, abuse of power, and waste.

For over four decades, POGO has worked with presidential administrations and Members of Congress from both parties to investigate waste, fraud, and abuse in our federal government and to identify and implement reforms for more effective, transparent, and accountable federal spending.

We began by training our watchdog work on the Pentagon. As we’ve grown, we’ve expanded our focus to the entire federal government. From exposing weapons systems boondoggles to calling out price gouging by government contractors to identifying widespread fraud in emergency spending, POGO has deep experience in investigating and exposing wrongdoing and in fighting for reforms to protect taxpayer dollars from waste, fraud, and corruption.¹

Our years of experience as a government watchdog have taught us the value of rigorous oversight. That’s why POGO also champions and supports the people and entities inside our federal government, like inspectors general (IGs) and the Government Accountability Office (GAO), who serve as internal watchdogs. Their fact-based, unbiased investigations, audits, and recommendations are critical to rooting out waste, fraud, and abuse, and to preventing or stopping corruption. Any real effort to address waste and fraud in federal funding absolutely depends on these oversight practitioners — and Congress’s own investigative offices — being sufficiently resourced, funded, supported, and protected from political pressure.

Over the last year, it has become increasingly clear that the work of sustaining and protecting these watchdogs will fall to Congress. From the unlawful firings of inspectors general to attacks on the GAO to presidential pardons of those convicted of fraud to the appointment of manifestly unqualified individuals to key oversight positions, the executive branch has repeatedly taken actions to undermine and dismantle systems of government oversight.²

Recent revelations about fraud and alleged fraud in the context of COVID relief spending and the Feeding Our Future program in Minnesota have again drawn our attention to the broader issue of waste, fraud, and abuse in the federal government.³ While the details inthis specific instance may be sensational and the location of the fraud and demographics of many involved have been spotlit by politicians and the media, the underlying issue is not new, and it is certainly not particular to Minnesota, the Feeding Our Future program, or the Somali-American community.

The fraud that’s the topic of today’s hearing is a symptom of a broader malady that afflicts the entirety of the federal government: namely, the use of the “pay and pray” model of federal funding combined with outdated and sluggish information technology, insufficient accountability and transparency mechanisms, and federal agency resistance to a more proactive and prophylactic approach. Until Congress addresses these problems, cases like this will continue to proliferate.

Obviously, no amount of fraud is acceptable, but we should be clear from the start: Congress should not pour all of its energy into addressing individual instances of wrongdoing, no matter how sensational, without fixing the systems that allow wrongdoing to occur (and sometimes continue, undetected, for years). It’s like bailing out a boat without bothering to find and patch the leaks. It will produce a lot of activity and draw a lot of attention, but ultimately, it’s no real help to anyone.

The good news is that we can tell you where the water is coming in. We at the Project On Government Oversight have plenty of recommendations for steps Congress can take immediately to address the systemic problems that allow for waste, fraud, and abuse in federal spending and programming. In fact, we have been suggesting these fixes to Congress and to the executive branch for decades — and we are grateful to this committee for the opportunity to uplift six of those recommendations today.

Preserve, strengthen, and insulate inspectors general.

Inspectors general are one of the first lines of defense against waste, fraud, and abuse in federal spending. Housed within federal agencies but operating independently of them, IGs are trained and supported in conducting fact-based, unbiased investigations into allegations of wrongdoing. They are tasked by statute with monitoring potential violations and misdeeds, investigating wrongdoing, and reporting to Congress.⁴

IG offices represent extraordinary value for the American taxpayer. In fiscal year 2024 alone, just over 70 IG offices closed more than 20,000 investigations. They processed nearly a million complaints, issued around 2,000 reports, and their work informed more than 3,500 successful criminal prosecutions.⁵ Moreover, IGs saved our country roughly $71.1 billion. That’s a return on of approximately $18 for every dollar we invest in these offices.

But IGs can only protect taxpayers if they themselves have the resources necessary to complete their work — and the independence to complete their work with integrity. They must remain shielded from political and other kinds of pressure, and their independence requires at least some protection against dismissal for political or partisan reasons.

Congress should update the Inspector General Act of 1978 to further protect and insulate IGs from political meddling and interference so they can perform their vital duties without fear or favor, as we have previously recommended.⁶ It should also ensure IG offices have the funding they need to perform their important work for the American people.

Protect and strengthen the Government Accountability Office.

The Government Accountability Office is another resource on which Members of this Committee and your colleagues in the House and Senate rely to get accurate information to fuel investigations and hearings like this one. GAO, for example, consistently offers recommendations to both Congress and federal agencies on ways they can prevent fraud and promote integrity and effectiveness, all stemming from their expert analysis, audits, and investigations.⁷

Like IG offices, GAO requires both funding and independence to continue serving as an indispensable resource for Congress. To ensure its continued operation, Congress should pass the GAO reforms contained in the Congressional Power of the Purse Act.⁸ To protect GAO’s independence and prevent a president from undermining it from within, Congress should also reform the process for appointing the Comptroller General.

And if this body wants to take immediate steps to address waste and fraud in taxpayer-funded spending, Congress should more regularly act on GAO recommendations and reports, including but not limited to those set forth in the annual report on duplicative programs. In 2025, GAO noted that Congress and federal agencies, by “implementing our newest measures, in conjunction with our existing recommendations, could save over $100 billion for the American people.”⁹

Protect federal government whistleblowers, who sound the alarm on waste, fraud, and abuse.

The investigations, recommendations, and reports that come from both IG offices and GAO often begin with whistleblower disclosures. Whistleblowers have always played an important role in exposing misconduct, fraud, and abuse in our federal government.

And in some cases, the value of whistleblower exposures is actually quantifiable. To offer just two recent examples, between 2007 and 2024 the IRS recouped more than $7 billion dollars through a whistleblower program targeting tax cheats.¹⁰ In fiscal year 2024 alone, the Department of Justice recovered nearly $3 billion through the False Claims Act and its whistleblower provisions.¹¹

But these savings don’t come without risk, and often it’s those who raise the alarm who risk the most. Whistleblower retaliation punishes those who try to keep our government honest and discourages others from coming forward. Congress should enact further protections for whistleblowers and provide safer, more secure routes for conveying sensitive disclosures so as to remove fear of retaliation.¹²

Before moving on to other recommendations, I must pause here to note that the three internal safeguards I’ve so far discussed — IGs, GAO, and whistleblowers — are all in immediate need of congressional protection and support. In a hearing on fraud and protecting taxpayer dollars, I cannot neglect to again speak out against the mass firing of inspectors general, attempts to curtail the funding and independence of GAO, and attacks on whistleblowers.¹³ POGO continues to support bipartisan calls to action in the face of unwise and sometimes unlawful attacks on those who work each day to address waste, fraud, corruption, and abuse in our federal government.

A fair warning that the two recommendations that follow are more technical, but no less important, than the three steps I’ve so far discussed.

Reform existing systems and tools for tracking and analyzing federal funding.

GAO, IGs, and other watchdogs could be far more efficient if our systems for tracking federal spending were clearer and stronger. We cannot assess what we cannot measure.

Currently, it’s extraordinarily difficult to track most federal dollars from their appropriation to their final impact for the American people. As today’s hearing illustrates, the challenges involved in tracking, and safeguarding, federal funds increased exponentially during the COVID-19 pandemic. But while the fast and furious spending of that era, the lack of oversight, and the waste and fraud that resulted were different in scope from earlier periods, the problems with federal spending during the pandemic were no different in kind from the problems of previous years. Pandemic spending, and the fraud that attended it, only concentrated the problems that have attended federal spending for decades.¹⁴

For an example, we can look at USASpending.gov, the primary tool for tracking federal spending. This database is unquestionably an improvement on what came before, but the information it provides is still full of gaps. There are no standards or minimum requirements for what information must be included in award descriptions. The number of required data fields is different for spending facilitated through contract awards than for other kinds of spending, such as grants and loans (the category where data on Feeding Our Future would have been made public). And the reporting requirements that do exist are not followed by all agencies, making it harder for watchdogs within and outside of government to alert Congress to waste, fraud, or corruption.¹⁵

Tracking is further complicated by the challenges associated with subawards. When funds are appropriated by Congress to federal agencies, those agencies go on to provide billions of dollars to subrecipients like state agencies. Those subrecipients themselves then typically subaward or subcontract funding, a process that continues any number of times until our tax dollars finally reach those actually doing the work Congress has funded for our communities. Setting aside any questions about the efficiency of this process, it is remarkably opaque. After the first level of subaward, we regularly lose all meaningful insight into where funding is going.¹⁶ Because we can’t consistently track the flow of federal funding into our communities, the potential for waste and fraud is literally impossible to holistically calculate.

There are several steps Congress can take to improve how we track federal dollars and to provide tools for spotting and heading off leakages in the spending chain, including shoring up and expanding subaward recipient reporting, requiring better and more consistent award descriptions and other information, and enhancing the quality and types of data collected.

Representative Nick Langworthy (R-NY), a member of the House Oversight and Government Reform Committee, has taken it upon himself to lead a bipartisan bill aimed at addressing the subaward component of this broader issue, and POGO has enthusiastically supported the Representative in this effort. Congress should act swiftly to pass this legislation.¹⁷

Enact stronger ethics and conflict of interest rules to safeguard the federal spending process and to protect taxpayer dollars.

Unlike waste, corruption doesn’t just harm the taxpayers whose money has been lost, the Americans who fail to benefit from the projects Congress has funded, and the legitimate businesses who miss out on federal contracts. It also corrodes the trust between a people and their government. One YouGov poll from last August found that majorities of Americans believe that a Member of Congress, a governor, or the current president would likely accept a bribe if offered one.¹⁸

One of the key drivers of government corruption is the misuse of the federal process through which spending decisions are made. It’s simply too easy for large, well-connected entities to peddle influence, leverage connections, and entice government officials to tilt the system in their favor.¹⁹

To prevent this type of corruption and to help rebuild Americans’ faith in their elected leaders, Congress should enact stronger conflict-of-interest rules. These rules should ensure that federal contracts are awarded through a rigorous and objective process of merit and in accordance with programmatic guidelines and public interest needs, not on the basis of cronyism or as a result of corporate capture. Included among these reforms should be stronger revolving door rules and more transparency in federal contractor lobbying and political activities.²⁰

Consider and pursue revisions to the presidential pardon power.

In light of recent abusive uses of power through which presidents of both parties have pardoned their own family members, preemptively pardoned political allies, pardoned convicted fraudsters, and otherwise made a mockery of the concept of clemency and justice, a reconsideration of this constitutional power is overdue.²¹ There are examples of this kind of abuse in each of the two most recent presidential administrations, underscoring that this is a bipartisan, systemic problem.

In December 2024, President Joe Biden granted clemency to nearly 1,500 people. Among those whose sentences were commuted was an attorney who developed a tax scheme that the Department of Justice said cost the U.S. $1.6 billion dollars of revenue.²² At the same time, President Biden commuted the sentence of a former judge who pleaded guilty to racketeering in a “kids-for-cash” scandal, in which he and another judge received millions of dollars in financial kickbacks for sending children to for-profit jails.²³ He also commuted the sentence of a local official who pleaded guilty to wire fraud charges related to her 20-year-embezzlement of more than $50 million from her city of roughly 15,000 people.²⁴ He also drew fire from a federal judge in North Dakota for commuting the sentences of two men convicted of fraud. Together, they had been ordered to pay nearly $40 million in restitution to their victims.²⁵

President Donald Trump has also commuted the sentences of those convicted of fraud. In May 2025, he granted a full pardon to an individual who pleaded guilty of tax crimes the Department of Justice said cost the federal government nearly $11 million.²⁶ The over $4 million restitution the man was ordered to pay the federal government was wiped away as a result of the pardon.²⁷ In October, President Trump commuted the sentence of former Representative George Santos, who had been ordered to pay more than $370,000 after he pleaded guilty to wire fraud and aggravated identity theft.²⁸ The President issued “an immediate commutation of his entire sentence to time served with no further fines, restitution, probation … or other conditions.”²⁹ And in November, a former nursing home operator who pleaded guilty to charges related to what the President’s own Department of Justice called a “$38 million employment tax fraud scheme” got a pardon from President Trump after enlisting the services of two lobbyists who themselves were sentenced to probation for voter intimidation.³⁰ In December, the President commuted the sentence of a former private equity manager convicted in a $1.6 billion fraud case. The fraudster in question no longer has to pay $15.5 million in restitution as originally ordered.³¹ And just this month, the President pardoned a fraudster who was convicted in a second fraud case in 2024 after the President commuted the sentence for her first conviction in 2021.³²

Given these recent decisions, it is worth pausing briefly to highlight the dissonance between this administration’s fixation on fraud in Minnesota and some of the pardons issued by President Trump.

Though a fundamental overhaul of the pardon power would require a constitutional amendment, other more modest limitations and restrictions could potentially be achieved legislatively and Congress must seriously engage in that effort, including by passing the Abuse of the Pardon Prevention Act.³³

Conclusion

In 2024, GAO estimated the loss to the government due to fraud is somewhere between $233 billion and $521 billion per year.³⁴ This is a hefty sum and a preventable problem. To put the Feeding Our Future situation in numerical perspective, note that the reported $250 million in fraud stemming from that scandal would represent a little over .01% of total fraud at the high end of the range.³⁵ While fraud is still fraud no matter the dollar value, it is still useful to keep in perspective the relative scale and scope of any given instance of fraud as compared to the overall problem.

The only way to truly address the persistence of fraud and waste in the federal government is to adopt pragmatic and time-tested reforms while also empowering watchdogs — who have the expertise in the work of oversight and fraud-prevention — so they can do this work effectively.

Reforms aimed at enhancing objective, nonpartisan oversight, along with modernizing information technology systems and architecture for purposes of federal spending transparency and accountability, are the only sustainable and truly effective paths toward mitigating fraud and ensuring efficacy throughout the federal government.

Virtually no reasonable interlocutor, least of all the Project On Government Oversight, would disagree with the proposition that fraud in federal government spending exists and that it should be prevented and perpetrators should be pursued and held accountable when it does happen. A cursory look at what I have laid out here today as well as in previous congressional testimony, along with recommendations spanning the nearly 45 years we have existed, will show the reality: We mean it when we say that waste, fraud, abuse, and corruption represent a serious challenge to the functioning of an effective federal government and we must do something to address them.

Where we may diverge from some stakeholders is whether we find value in focusing exclusively on sensationalistic anecdotes in lieu of the less flashy but more important work of enacting practical reforms. Each scandal is idiosyncratic and sui generis, meaning it will not necessarily offer actionable and generalizable solutions. This is why it is absolutely paramount to focus on cleaning up the systems and architecture currently in place for monitoring and analyzing federal government programming and activities. It is crucial to adequately resource and protect key oversight and accountability practitioners and stakeholders. It is vital to conduct evidence-based, fact-driven oversight that can generate sound policy interventions and reforms.

We should not get distracted by provocative incidents driven by political, partisan, or ideological agendas. Fraud and corruption are too important an issue for us to indulge slipshod investigations or politically motivated attacks. Oversight and accountability targets should never be derived on the basis of the demographic characteristics of either victims or perpetrators, or the favored or disfavored status of involved constituencies. That way lies madness — and a nearly certain continuation of an untenable status quo.