Leadership: Auditing Chaos


December31, 2006: During the last year, U.S. Department of Defense auditors recovered $1.9 billion from companies that had defrauded the government on military contracts. Defense spending is over $400 billion a year, so that recovery amounts to less than one half of one percent of spending. Nearly half (47 percent) of the money recovered was from one case, that of a health care company that filed false claims for care given to military dependents and retirees. The Department of Defense spends nearly $40 billion a year on such care, although the money recovered in this case was for fraud that occurred over several years. Another 32 percent of the money recovered was from Boeing, for cheating while bidding on a satellite launching contract. The remaining 21 percent of the money recovered was for work on hundreds of smaller cases. Auditors are taking a close look at spending in Iraq, because, under combat conditions, controls are not as tight, and there's more opportunity for stealing, or just making the kinds of errors auditors and journalists love to find.


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