tv Defense Officials Testify on California National Guard Bonuses CSPAN December 23, 2016 2:45pm-4:36pm EST
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pentagon to recover improper bonuses paid to california national guard soldiers. defense secretary ash carter has ordered the pentagon to suspend such efforts. i want to welcome everyone to the subcommittee's hearing on the california national guard bonus repayment issue. we're here today to hear from the california national guard, the national guard bureau, and the office of the secretary of defense on an issue that we must get right. in fairness to not only the california guardsmen that this affected, but all service-members going forward. compensation, whether a bonus or service agreement or regular pay is an obligation to our service-members and their families that they should not
have to worry about. i find it unacceptable we would place additional burden of years of concern about the legitimacy of a student loan repayment on those who volunteered to serve. the armed services committee has taken action in the 2017 national defense authorization act to address the issue and the subcommittee is taking every opportunity to review and zutsz the way forward so we can end a wide spread problem in the future. the purpose today is gain an understanding from those involved on why it happened and what we can do to prevent it going forward. before i introduce our panel, let me offer congresswoman davis an opportunity to make opening remarks. >> thank you, mr. chairman. i would like to welcome witnesses today. i regret we have to have the hearing to discuss a major pay issue that impacts 17,000 soldiers in one state, from my home state of california. if not for the l.a. times article in october, congress wouldn't know the extent of the
issue. nor would the issue have been elevated to the department of defense. our understanding after this was first brought to our attention in 2010, is that a process was in place to adjudicate the issue but six years long we're trying to fix it. numerous investigations, audits, and briefings informed us of how we got to this point. my focus today is to ensure that through the legislation just passed by the house last week as part of the 2017 ndaa, an update from the dod that we guarantee that those who should keep their bonuses do so and that the systems and controls are in place to prevent an incident of this magnitude from happening again. while it is important that we perform oversight of the process moving forward, it's also critically important that we do not forget the service-members and their families that have been deeply affected by this. once these families have encountered financial hardships,
we know it can be truly difficult to recover. even if we return their bonus, we have already up ended their lives by creating unnecessary emotional stress and our military families, as we all know, have a tough enough time without the added burden of having to repay service-related deaths that they received in good faith. on another note, since this is his last hearing with us, i want to thank dr. heck for his leadership and his dedication to serving our troops, their families and retirees over the past two years as chairman of the subcommittee. it has been a great privilege to work with him, and he will be missed. >> thank you, ms. davis. thank you. i now ask unanimous consent that nonsubcommittee members be allowed to participate in today's hearing after all subcommittee members have had an opportunity to ask questions. without objection, so ordered. we are joined today by two
panels. the first from the national guard. the second will be from the office of secretary of defense in the army. we will give each witness the opportunity to make opening comments and each subcommittee member an opportunity to question the witnesses. i respectfully ask the witnesses to summarize the high points of your written testimony in no more than five minutes. your complete written statements will be entered into the hearing record. we are joined on panel one by lieutenant general timothy kadavy, director national guard, national guard bureau' and david baldwin of the california national guard. general kadavy, you are recognized for five minutes. >> thank you. chairman heck, ranking member davis, distinguished members of the subcommittee, thank you for the opportunity to discuss the readiness of army national guard personnel matters. on behalf of the army national guard, i thank you for your support and commitment to our soldiers, their families, to our veterans, wounded warriors, and those who have made the ultimate sacrifice. for your army national guard is
today mobilized with more than 11,000 soldiers both abroad and here at home. our soldiers are our nation's and our army's greatest assets and should be treated that way. the subcommittee's interests in recruiting and retention incentives programs is understandable. in 2008, the california national guard discovered inaccuracies in a number of incentive contracts awarded and launched an investigation in 2010. the investigation revealed that the california guard's incentive program had been grossly mismanaged and there were instances of fraud which were discovered. as a result, california took measures to ensure these individuals engage ed and their perpetration of fraud were punished. in 2011, the california incentive task force identified more than 17,000 california army national guard cases that were potentially linked to the unethical management of the incentives program between 2004 and 2011. in 2011, the california national
guard with assistance from the national guard bureau established a soldier incentive assistance center to assist any california national guard member affected by the mismanagement of the incentives program. every california national guard soldier impacted received a formal written letter to inform them of this option. this center will continue to provide assistance to each affected soldier. as a result of the issues with the california incentives program, the army national guard took steps to improve oversight within our incentives process. in 2010, the chief of the national guard bureau, then general craig mckinley, ordered a review of all national guard recruiting and retention incentives programs across all states, territories and the district of columbia, which found no systemic fraud. in 2012, the army national guard completed the fielding of the guard incentive management systems, known as gims, to all
states, territories and the district of columbia, which provides an oversight program for bonus and incentive payments. in 2016, an external review by the army audit agency of gims validated its effectiveness and found the system substantially improved the controls throughout eligibility, monitoring and payment phases of the incentive process. state a.j. nant generals have provided statements of insurance since 2012, documenting internal controls, processes to help prevent similar situations from occurring. additionally, based upon reviews and assessments of the entire army national guard, fraud and incentives program is not a nationwide problem. in november 2016, the united states property and fiscal officers provided additional assurances while reviewing their state incentive programs that there are no issues outside of what we know to be normal. currently, mr. peter levine, performing duties as the undersecretary of defense for
personnel and readiness, is chairing a cross-functional team with the national guard bureau, the united states army, the office of secretary and defense general counsel and the defense finance and accounting service, dfas. this team is leading the effort to expeditiously resolve the cases involving the affected california army national guard members. i understand you will hear from secretary levine little bit later this afternoon. secretary of defense carter's guidance is to adjudicate all cases by july 1st, 2017. the national guard continues to support the cross-functional team's process to ensure each soldier's case is fairly and equitably reviewed with due process afforded to each and every soldier. in closing, i assure you that the national guard has worked hard to implement appropriate, effective internal controls across the 50 states, the 3 territories, and the district of columbia, and to prevent similar systemic fraud from occurring in the future. thank you, and i look forward to
your questions. >> thank you, general. general baldwin, you're recognized for five minutes. >> thank you, mr. chair and ranking member davis and members of the committee. i do appreciate you very much taking up this issue to be able to help our soldiers. as general kadavy mentioned, in 2010, a whistleblower and very astute auditor uncovered signs of potential fraud within our incentives program in the california national guard that resulted in the fairly broad investigation by the federal department of justice that went through the course of three years. the governor relieved my predecessor in march of 2011 and recalled me from afghanistan in april of that year in order to take charge of this organization, and with a mandate of cleaning up this and some other challenges. i immediately ordered a full investigation on our side into this matter to do a couple things. one is i wanted to see if there's any other cases of fraud
that were out there that the federal government had not begun to investigate or picked up on. the second was to hold leaders accountable to find out, why did this happen and what were the problems. we found that there was a complete lack of internal controls, so we instituted an internal control system in order to prevent these problems from happening again, and then we held the leaders accountable that failed to provide the proper oversight or create a command climate. and we punished within the california national guard 61 people, including firing four general officers and two full colonels. the feds prosecuted 44 soldiers. some of those prosecutions continue to go on, and several people were put in jail for the fraud that they had committed. but as general kadavy mentioned, there were a lot of soldiers who were quaucaught up in this thro no fault of their own they took money from the federal government that they weren't necessarily due or couldn't document why they did deserve
that money. so we established the soldier assistance task force in 2011 to be able to address those problems. because of the fact that we had found a 91% error rate in the initial audits that we had done, we were compelled to review every record. there were 17,000 soldiers and about 30,000 records. we were able to get through about 12,000 of the records. of the 12,000, we found 4,000 soldiers that we were able to help keep their money to the tune of about $39 million because they had minor errors or problems in their contracts. and i'm very proud of the work that our task force did in order to help those soldiers keep the money that they, in fact, deserved. of the remaining soldiers, there were 1,400 -- only 1,400, that we actually sent to recruitment. those were soldiers that did not contact our task force for assistance, but also, we determined had problems that were probably insurmountable and we couldn't support an appeal. we submitted another 1,200 soldiers that did contact us for appeal because we felt that they, even though there were
problems in their contracts or maybe they may not have met the letter of their contract, we felt that they had served honorably and should be able to keep their money. of those, 400 cases were adjudicated by either the national guard bureau or the army board for the correction of military records. so, 400 soldiers were able to win their appeals and they were able to keep about $4 million between those 400 soldiers. another 400 soldiers, even with our endorsement, to help them keep their money, unfortunately, lost their appeal and have not gotten their money back. they lost about $3.3 million amongst them. and finally, there's 400 cases that are remaining. we're very encouraged today by the actions of the congress and the legislation that has gone into the ndaa that we think goes a very long way to help address some of the problems that we face and the frustrations that we face in trying to help our soldiers get through this. we're also very encouraged by the actions that secretary carter and his team at osd have
taken in order to increase the bandwidth to be able to adjudicate cases basically, fairly and with standards that err on the side of honoring the soldiers and their service and helping them keep their money. and again, thank you very much for the opportunity to discuss this today. >> thank you, general baldwin. my first question is for general kadavy. concerning the key recommendations in the u.s. army audit agency's follow-up review issued in may of this year, they noted that while ngb had made progress in implementing many of the control procedures outlined in their prior audit, that not all of the internal controls had been put into place. can you please update us on where ngb is in implementing the final recommended controls as put forward by the aaa? >> yes, chairman. thanks for the question. >> can i just ask you to pull that microphone directly? kind of like a rock star.
>> right here? okay. so, there were 15 initial recommendations of which the 2016 army auditing agency follow-up reported that all 15 initial recommendations were being implemented. then they recommended four new additional recommendations, of which one will be fully implemented by the end of this calendar year, end of month december, and the other three will be implemented by the end of this fiscal year. it's about writing software and updating systems to get after that. particularly, it's related to officer bonuses and army medical recruitment of experts to make sure we're tracking their contracts, as we do with all others. >> great. i would ask that you keep the subcommittee apprised of the progress in implementing those final four controls. >> we will, chairman. >> while you noted in your testimony that there was no systemic fraud across the national guard, has there been a review to look at whether or not there is widespread administrative errors? and general baldwin mentioned
91% error rate in what they reviewed in california. so, while there may not be criminal fraud taking place, what about the administrative errors that might be more common across the national guard enterprise? >> so, chairman, the chief national guard bureau at the time, general greg mckinley, asked us to look at the 50 states, territories and district of columbia, which completed in 2011. and we did identify some systemic problems, particularly related to lack of oversight, no separations of duties, inadequate training, outdated regulations, lack of manpower, and no overall tracking. but it said no widespread fraud. we were already working on the gims system, and we believe gims accounted for most of that, as shown through the army auditing agency's follow-on
recommendations and where we're at. and i can just give you a quick upda update. so, on average, we do about 16,000 incentive contracts between 2011 and 2015, the latest year -- 2016. we do about 1,200 recruitments, on average, for normal processes, which is about 7%. and you listen to some of the errors that were previously -- and we have cut that down significant significantly. and the majority of those recru recruitments are for contractual issues, when a soldier leaves before the end of their enlistment. >> great, thank you. general baldwin, you listed some of the other numbers of individuals that were either disciplined or charged, that certainly we have only heard in the open media about the one nco that seemed to bear the brunt. but can you again just list for the record the numbers of
individuals other than that one nco who was incarcerated? whether it be administrative, reprimand or other disciplinary procedures? >> yes, mr. chairman. i'll start with the cases that were prosecuted by the feds or in some cases, district attorneys took up the fraud cases. that was 44 soldiers in total. of those, 26 were prosecuted and found guilty and convicted. there was another 15 or so that are pending, the prosecution is ongoing. and the remainder of the cases is dismissed, which is a handful, i think only four, that were dismissed or acquitted. then on our side, within the military, we have two options. ucmj action can include up to court's marshal, or administrative action. we instituted court's marshal on seven personnel -- six officers and one enlisted soldier.
those cases were dismissed by the military judge either for lack of jurisdiction or for lack of evidence. but we did go after 61 people, both on the receiving side, so people that we had evidence that had committed fraud but didn't rise to the threshold that one. civilian prosecutors would apply the resources to take the case, so we took the case. and then there were also many, many cases of people that were in the chain of command that we couldn't prove committed fraud but were lax in their oversight or established a poor command climate that we took action against. the most common action we took against the senior leaders was to give a formal reprimand and fire them, and that, again, included four general officers and two colonels. >> and in all the cases you found scattered across the california national guard, did it seem these were cases where it was up to one individual in a particular unit, or did there seem to be collusion?
was this a ring of individuals, of all the folks you mentioned that were doing this on purpose or just happened in units apart from some type of organized activity? >> so, it was statewide. it was across nearly every unit. and where there were cases of actual fraud, it was a bilateral arrangement between the sergeant that ended up going to prison and the soldier that was receiving the money. and in those cases, either we or the federal government were able to prove and show evidence that there had been co-collusion where incentive was order and one or more parties admitted they shouldn't be doing it, it's against the rules, but did it anyway. >> and you mentioned the cases with insurmountal problems. can you explain what those were that prevented them from going forward on appeal? >> most common would be people that failed to serve the term of their contract, egregiously, not falling short by days or months,
but by years, people that enlisted and never showed up to basic training, people that we had to throw out for methamphetamine use, incarcerations, those types of problems that are not compatible with military service. >> and problems that would happen regardless of component, regardless of the california national guard, things that are not isolated just to issues within the california guard. >> that's correct. >> then my last question, you said 400 of the cases you reviewed had lost their appeal -- their appeal was not approved. is there another step or is that the end of the line for those individuals? >> i would defer that question to the second panel, but our request, which we think they're going to honor, is to go back and relook at those cases because the secretary's applying new standards, and we're hopeful that many of those people will make it through the process now, too. >> great. thank you. ms. davis? >> okay. thank you, mr. chairman. actually, i was going ask about that as well, in terms of those that you actually, as in your words, endorsed but did not make it through the process. so, we'll deal with that later. you know, one of the things that i wanted to just ask you about, because in your written
testimony, you stated that congress should establish a streamline adjudication process to distinguish between those soldiers who through no fault of their own got involved in this and then others who had failed to meet the condition. but the california guard controlled those records, is that correct? i mean, you had control over those records? >> yes, ma'am. we would control the initial contract, but then it would go to the united states property and fiscal accounting officer who was a representative of the national guard bureau in each state, who would actually formally make the payments. so the payment threshold to get approved was by a california guardsman. the payment was made by the federal representative. >> okay. but the incentive assistance center, could they make those -- that judgment? >> the short to -- we at the state level do not have the authority to forgive any debts and we don't have the authority for any of the waivers.
they reside at the national guard bureau level, at general kadavy's level now, and then furth further, if cases are not able to get approved for a waiver at the national guard bureau label, you go to the officer correction of military records. my authority was very limited to help soldiers. and the 4,000 soldiers we did help were cases where they may have been just missing one signature or some initials on an otherwise good contract, and that was many of the errors. >> had that been different-you had more authorities, because it kept feeling like everybody was passing the buck a little bit, and i'm just wondering what you see -- what is ideal? because as we looked at some of the cases, i was struck by the long-lasting impact this was having on our military families. >> so, if we had had the authority, we could have -- we would have been able to act more quickly, because by the time --
we were making an endorsement. instead, it would have been approval. but i think the way the system's set up now, it's appropriate for the government to withhold that authority from the states, because after all, it's the federal government's money. in addition, the other substantive change is the national guard gims system that general kadavy and the chairman were discussing earlier, has been a very elegant solution to help correct a huge, huge amount of administrative errors and neck it down to very small number of administrative errors. and when you have a small administrative error rate, it's a lot easier to root out fraud because you don't have to sift through tons and tons of documents. so, i think the authorities are where they need to be. i'm very encouraged that osd has increased the bandwidth to be able to adjudicate cases. and under general kadavy's watch, before he got in, it used to take nine months to get an exception to policy approved a his level. they now knock them out in six
weeks. so, that is hugely helpful. >> general kadavy, would you want to comment on that, in terms of how you see the system working now? and i guess why we didn't change it before. >> well, i can just speak to the exceptions to policy which i have authority for, because they were written in army national guard policy. so i can do an exception to policy on skill, different, you know, infantrymen to an armored crewman and from one unit to another, if they enlisted for specific bonus to a unit. i would just say the sheer magnitude of the overall problem i think caught us off guard. it took us a while to get back to apply the resources to adjudicate them fast er, but we followed the policy and directives. and right now, the only thing i have the ability to do is to do exceptions to policy, and as
general baldwin said, it moves forward to abcmr. i'd like to just, you know, to talk about gims a little bit more. so, it identifies through electronic searches in the database, which we didn't have prior to 2011. so, it checks all those administrative data that's required to ensure that a soldier's eligible. so it does that. and it also tracks during the entire period. so, when a soldier may be changes in mos, it flags and sends a message to the administrative officer, nco, who then takes action. if it was a directed change, we do an exception to policy in a timely process. i think many of the things that are impacting what happened in california between 2004 and 2011 and then looking at the current investigation and work that the california task force has been doing, i think today we don't see those types of issues anymore. thank you. >> okay.
thank you, mr. chairman. i would just follow up and maybe someone else can ask about what other assistance we're providing. i know there was an issue around credit ratings and i think we were trying to fix that issue as well. again, i'm concerned about how this impacted families and if there's been sufficient outreach to know that there's help, there's support there, and we hope that they get it. thank you. >> i'll leave the majority of that comment to the next panel. i'll just say, from my perspective, we have had overwhelming support, partnership from the office of the secretary of defense, dod, army. everybody wants to get this right for the soldiers. >> thank you, mr. chairman. i want to thank the generals who are testifying today. you know, this goes back a long wa ways. i was chair of the veterans committee, and senator denham at
the time had the senate committ committee, and it brings back the memories. and i think part of it when we did this was just the shock of what was happening. and of koucourse, general baldw i'm very, very happy with what you've done since you've taken over. so, this is not an inquisition against you or anyone else, and we've had a conversation. and where i'm coming from is going to be the same thing over and over again. and i'm not so worried about the officers so much as the troops. everybody that's been in the military knows that everybody always has recruiters. and because you put your life in the hands of the recruiters. you trust them. you trust the army. you trust the national guard. you trust whatever service.
and people once they do that, it's like you're giving your entire life. so, my problems, which i'd like you to talk about, are on some of these cases where there's been troops who through no fault of their own are suffering the consequences. and maybe i'm wrong, but it sounds like we're anytime pitting, particularly where some of these people do not have the economic means to repay these things. it's our fault. and i use that word collectively on behalf of all officers that are in positions of authority. we betrayed the trust of the troops, and there is no excuse for that. so, obviously, i'm hearing how we're going to change this, and i still don't have a warm and fuzzy feeling about that's being
done. i don't want it to be too bureaucratic. and after saying that, i do want to comment once again. our guard is so, so important, not just to california, but to all the operations we're doing in -- everybody on this committee knows the exercises in europe and the commitments and the op plans and everything else. we have got to get this right. so once again, i'm going to ask a very broad question. as a matter of fact, i'm going to skip, because i've been ranting and raving and i do want to yield my time to congressman denham before it runs out. but eventually, if you could comment on the trust issue. jeff, sorry i talked so long. >> thank you. he and i, while we served in the legislature together, chair of the senate veterans committee and assembly veterans committee on his behalf we did work on this issue.
i would say the difference that he and i may have is the difference in how we both, how we first got into the military. i was 17. i signed the contract that was put in front of me. in fact, at 17, you have to take it home to your mom to have her sign it as well. so, for the military to take the position that the military is guilty and must prove a decade later that there was some fault of his own -- i mean, we continue to have conversations that you've still got to carry your yellow shot records around from decades before because it's not an automated system. so, to presume that the soldier is guilty and therefore responsible for a decade-old contract that they signed in good faith and put their life on the line to me is -- to me, it
is a big, black mark on our department of defense's record. i only have a short minute of time, but i'd ask you to just respond to both of our statements. >> congressman, first i want to thank both you and congressman cook for your leadership role in address i addressi addressing this and being aggressive about this and we appreciate the support and our soldiers, airmen and families appreciate both of you very, very much. i agree wholeheartedly that we have a problem that we're going to have to establish trust with our soldiers, with their families and with potential recruits. i am encouraged by the actions congress has taken. i think they go a long way to address some of the issues you just brought up, congressman denham, and the steps, again, that osd are taking in order to
be able to show that soldiers, we're going to trust the soldiers up front, and if we have a problem with it, the burden is on us to prove that the soldier has done something wrong, rather than the soldier having to prove their innocence, that they're innocent. >> thank you. gentleman's time has expired. mr. walz? >> thank you, mr. chairman. i'd like to take a moment, too, to thank you. general heck's service, integrity and effectiveness to this -- not just to this committee, but to our veterans and citizens is something i am proud to have stood beside you as you did it. oftentimes around here we talk about my good friend. i certainly mean it this time. you've set an example for our services here for those that we're charged to look out for in our veterans, so i thank you, sir, for that. thank you both for being here. i was just discussing with the gentle lady from california.
general baldwin, you made a case of this we're trying to get at and i think these gentlemen know this issue well. having been involved in this, both receiving bonuses and being part of a group that gives them, also being there when pay errors are made, when i had to tell my soldiers, you knew you were divorced, you weren't going to get the baq and you got it anyways, you'll have to pay it back because that's how it works. i know this is a touchy subject because somebody gets paid, all of the issues that the ranking member put out is this has huge impacts on families, huge impacts as it goes down the line. general baldwin, you talked about this, people got bonuses even before they went to basic training they got paid? >> yes, congressman. >> how did that happen? because i'm thinking back to me, a $1,500 bonus. i completed bonus training, i got $750, three years later i got $375. on the fourth year, i got $375. that kept me in. when did that change or how does that authority differ? >> i don't know when it changed, because when i joined it was same as you. you had to serve before you got some or all of your bonus. >> correct. >> some were around 2006, the
national guard bureau changed its policy in order to provide a bigger incentive to get massive amounts of troops in. >> right. >> and they would pay the bonuses up front. and that was a poor business rule that doesn't exist anymore. >> okay, so a lot of these -- i shouldn't say a lot. i'm trying to get the numbers on this. many of them fell in that category. >> that's correct. >> but there was a section of these, as you said, that where someone knew they were getting a bad bonus, they colluded with a recruiter and there was a kickback, basically to take this bad bonus. >> that's correct. >> now, could i ask -- can you give me those numbers again, the error rate when you did your audit, the error rate in contracts in general? >> so, there was an audit done by the army audit agency and then an inquiry, which was a precursor to an investigation initiated by my predecessor, first with the army auditing agency that i didn't mention before. they found a 55% error rate in the sample they looked at. i don't know how large that was.
in the inquiry occurring in the month before i took command, they reviewed -- i want to say it was 153 records. and in that case of those records, they found a 91% error rate, and that was enough that i felt compelled that we had to continue to look at every single record. >> what accounted for that, you know, and having done these before and the detail that went into them, i'm still from the old age of carbon paper, and everything had to be exact or it was no good. and they threw them back out. how could you have a 91% -- i mean, were these small errors, large errors, misinterpretations of the regulations? >> it was all of that, but the root cause problem was lack of oversight of control and lack of resources. so, they had one person doing incentive managements. and the number of incentives had grown very rapidly from a handful of incentives that would offer for critical moss or bonuses to a very, very broad
pallet of incentives from medical professors to people who were going to join the band and everybody in between. at the time, they had one person managing these incentives. she was overwhelmed. she was under problem douse pressure to help get the numbers to disburse the money, and she had no good oversight, only people pressing on her to get money out, no one checking to see if she needed help, no one checking to see if she was doing things correctly. >> which is a recipe for disaster. general kadavy, when you did a systemwide ngb audit of this, if i'm reading correctly, you only found irregular bonus activity to a total of $158,000, is that correct? am i reading this right? >> congressman, so when we did the 53 other states, territories and district of columbia, we did a sampling of about 9,600 records. we found 689 that had errors
across the other 54 for a percent of about 14%, and that was actually 2.4 million, where you know, general baldwin mentioned, the army auditing agency, they did a sampling of 159 in california. they discovered 97 errors. >> see, this one -- and if my time is going to come up, somewhere i'd like to come back to this. most often when you have a problem like this, it's systemwide, whether it's dod. i know the fraud made a piece of that but that's a very interesting statistic. so i'll get more when we come back on my time, but thank you. >> thank you, mr. chair. and i'll be quick and yield my time. i also thank congressman heck. he's been invaluable. we are talking about trust. and when i signed when i was 18 years old, i don't know that i was a whole lot smarter than
congressman denham when he was 17, probably a lot smarter. but it is kind of a contract that you're going down there and you're trusting and you're believing that what the recruiter is saying it is the truth, so i think it is a trust issue we're trying to build back. but general kadavy, you talked about the gims system a little bit. i'm going to give you a little time to tell us how that's going to build back some of the trust that we can have in how the recruiting process is going to go and how we can be assured that awful these problems, if not, are going to be caught before they become a problem. >> so, congressman, i think gims puts trust back into the system. i think we're really talking about trust between leadership and soldiers, and that's earned, and the system isn't going to fix that. so, we do a tremendous amount of training at our professional education center for all recruiters. we are not getting our
recruiters there in a timely fashion. we are working on that. we provided additional guidance to ensure they are getting the training. and then we've also implemented a program called o.s.t., and i'll have to get the exact name. we interview each recruiter to make sure they're morally, ethically the right folks to be talking to young men and women that could potentially join our army national guard, and when there's issues that they think the soldier's still good, it comes up to me and i read each and every one of the poster requests for any waivers, and i think in the time that i've been the director, i've approved one, because you're absolutely right. our very best, most trusted professionals must be the ones recruiting our young americans. >> very good. mr. chairman, i'll yield my time to congressman denham. >> gentleman will suspend. there is a form by staff that subcommittee members cannot give
their time to a non subcommittee member. they'd have to wait until all subcommittee members have had an opportunity to ask their questions. >> i'm going to keep my time. so, general kadavy, on the same kind of vein, i know congressman davis was talking us down this road. when the folks have been given a bonus and then they've had to repay the bonus, but under the appeal, they were awarded the bonus. they should have gotten the bonus. they should have kept the bonus. but some of these folks have now paid back a bonus and maybe their credit approval has been hurt. some of the things that because of paying back that bonus, it put them in some hardship. that's going to be part of the trust issue, too, of how we can make those soldiers whole moving forward. obviously, that's going to be a big part of what you do, but is that also part of how we can help in this issue?
>> congressman, i can tell you that it's very important to the cross-functional team that mr. levine is leading. it's one of the key issues that we are looking at. at this point in time, what i'm hearing is we think we have all the authorities and the abilities to make a soldier whole, particularly in the instances that you were talking about. but i would say the subject matter experts on this particular question are probably in the panel, too. >> very good. mr. chair, i'm going to yield back. >> ms. speier? all right, then we'll go to mr. coffman. >> thank you, mr. chairman. so, let me understand this right. so, you've got a recruit coming in, and takes a certain mos for certain length of time under the bonus -- in order to get a
bonus. that individual is placed for whatever reason in a different mo s mos. that occupies a position in the unit different than the mos. is that individual required to pay back the bonus? >> it depends. we give bonuses for three reasons -- for a skill, a grade or a unit. if that is a critical mos and the soldier elects to change on their own, in general, yes, that is a recruitment. if we direct the change, or for instance, we just had a number of units that changed their structure from military police to others, that's directed by us, there's no recruitment. then a soldier, of course, can always provide an exception to policy request, and they have,
that indicates if there are some issues. i can't go that far to drill. it's too far of a drive. we take all of those considerations and then a decision's made. but it doesn't necessarily mean that. but in the gims system, there is a flag that goes up, meaning it needs to be adjudicated one way or another, exception of policy or a termination of a contract. >> okay. what is the status of these recruiting bonuses to pay other soldiers? that practice is stopped, right? >> yes. that's been stopped for quite some years. >> what is the status of the bonus structure now for recruiting people, say first-term enlisties? >> i guess i don't understand. >> so, i assume there's still a bonus structure for first-term enlisties. >> right. there are enlistment bonuses for certain units, certain skill sets and retention bonuses for certain grades where we don't have enough, for instance, maybe
staff sergeants and et cetera. >> how dynamic is that process? because i think that this is -- it seems like, i know in 2005 it was very tough to fill the ranks of the military across the board. and obviously, it's much easier today than it was back then. >> right. so congressman, it's very dynamic today. we're taking a look at it. i think it's almost too dynamic that it gets to be a bit confusing. i just spoke with a few of the adjent generals on the advisory committee and we are likely going to go talk to the states and they provide us where their holes are at the beginning of the year and midyear we will adjust it, if need be, so that it stabilizes and doesn't change the skill sets and the grades and units on a continual basis that maybe is confusing and causes some of these issues. >> but those enlisted soldiers that sign up for an mos speciality and they get moved or they -- how does that -- i guess
they elect to move. but i just want to make sure they're fully cognizant of -- >> what i'm talking about is initial enlistment. >> right. >> if you sign, we're going to limit how often we change which skill sets. so we might have a different one every month. and sometimes that gets confusing to recruiters, a recruit walks in thinking they're going to get a bonus, but they wait to make a decision a couple months later and that skill is no longer there as far as recruiting. what you talked about is once a soldier signs the contract, gims verifies that. and you know, as long as they live up to that contract, there are no issues. if something changes, gims flags it and we adjudicate it either through an exception to policy, abcmr, or if the soldier, for instance, doesn't complete a set of training and decides to serve out their enlistment period in the army air national guard, then by statute and policy, we
must recoup for any unexecuted portion of that contract. >> right. but when you said if an enlisted soldier, first-term enlistment, elects to change an mos, they would be responsible for recouping, but if it was a critical mos, how would the command structure allow them to elect to change their mos? >> i can't speak to every case, but in general, you know what you signed up for. so, in most cases, in my observation, is it's more related to changes in force structure and updates that the army provides. so you're an mos in a unit in a location today and that changes. we do not collect from that particular soldier. and i don't see that as an issue that is related as much as it was to the past. >> chairman, i yield back. >> thank you. mr. garamendi. >> mr. chairman, thank you for the privilege of sitting with
your committee and now asking the question. i appreciate the information that's been elicited thus far in the testimony. we now have an ndaa that has a new law, a new section that will eventually become law, and it's certainly meant to affect those men and women that took a bonus in good faith, carried out their responsibilities, even though it may not have been to the strict mos or other criteria, and have faced a clawback of their bonus. i agree with i think every member on this panel that that's unconscionable that that would happen. it did happen. but my real question is going forwa forward. general baldwin, you gave statistics and numbers at the outset. i'd like you to quickly review
those in the context of how does the new, hopefully, soon-to-be new law in the ndaa, affect those men and women that are under review as a result of the bonus question that's arisen in california? if you could run through that quickly. i also understand there are certain criteria that are in the soon-to-be law as well as criteria that you -- excuse me, that the army may use to eliminate from the clawback or potential lclawback. could we go through that, please? >> sure. so, i think an important step is, that's in the law, is as osd is putting together their team, and they'll discuss in the next panel, that's going to be able to more rapidly adjudicate the cases and find the soldiers to find the many, many thousands, perhaps, of the ones that
deserve to keep their money, one of the main things that it does is that it relieves the notion that for that targeted group of individuals that we have to have a presumption of guilt in order to arrive their case, they're going to review every case that they take before them, so that's very encouraging. the other thing the law does that i think is very, very helpful, is that, and as i understand it, this will impact not only the soldiers that are in this population that we're addressing here, but national guardsmen, ostensibly in the air national guard also going forward, if dfas establishes a debt for a national guard soldier or airman prior to this current ndaa, the national guardsman could not go to dfas to ask for some total financial relief for financial hardship. they could do it in the case of lost or damaged government
property, but in the case where they've been overpaid or paid a bonus they weren't due, they couldn't get a relief if they were suffering financial hardship. title 10 active duty personnel could, title 2 couldn't. the current ndaa corrects that, and we're very, very happy to see that in there. >> i understand that there were other criteria that would eliminate from the clawback, certain men, guardsmen -- guardspeople. is that the case? is it only the issue of financial hardship or does it have to do with rank, position? >> i'll take this one, dave. >> sure. >> as a member of the dp cross-functional team lead by osd, we are still reviewing. in the next panel, they can tell you exactly where we're at on this. but we are building criteria, and i think based on the secretary's guidance and what's in the ndaa.
the intent is to only find those who were ineligible for a bonus and should have or did know they were ineligible. the intent is not to recoup from soldiers that did not understand what was going on. it's only to get after those that were ineligible and accepted a bonus knowing they were ineligible. >> will that criteria significantly reduce the number of guardspeople that are affected? >> so, i've been asked if you could refer that question to the next panel. >> i will do so. mr. chairman, i want to thank you and i want to thank this panel for writing into the ndaa the language that will significantly solve most of the problem, perhaps not all of it. and i would ask that in the future this panel continue to observe and watch as this plays out. thank you very much. >> thank you, mr. chairman. let me add my words of praise to
you for your service to our country and to this congress, and thank you as well for bringing this issue to the forefront today. let me start with you, general baldwin. you met with me yesterday, and i appreciated that. you took over in 2011, correct? >> yes, ma'am, april of 2011. >> and you took over in part because the governor saw this as a problem and wanted to relieve the general before you an put you in that position, correct? >> that is correct. >> all right. so, from 2011 until 2016, the only time this was ranked as an iss issue, and it was ranked number six, was in 2014 to the armed services committee, and there was no impetus to take this
seriously enough to fast-track it. and it was only until the "los angeles times" did a story that this issue got some traction. so, my question to you is, while you are not responsible for what happened before your watch, you are responsible for what happened after you took over, and why didn't you elevate this to a high enough level in 2012, in 2013, in 2015, and again in this year? >> so, for the first two years you mentioned, 2012 and 2013, we weren't aware of the amount of time it was going to take to get through the adjudication process. we first started pushing cases forward after doing the review in late 2012. and since it was taking two years for cases to run their course, it wasn't until the end of 2013 to 2014 that we realized the scope of the problem based on the time it was taking to get relief for soldiers. that's why in 2014, we first
brought -- >> okay, i'm going to shortcut this a little bit because i have limited amount of time. i just want to make the point that while you have made it a priority on a list, you didn't make it a priority to the committee, and so it wasn't dealt with as it should have been. now, you had mentioned to me that some of the largest bonuses went to physicians, the $40,000, the $50,000, the $60,000 bonuses. and in those cases, they have not -- they committed to six years served, in some cases less than two years, got the bonus up front. now, that decision to offer that bonus up front before you had committed the six years seems like a no-brainer. why would anyone do that in an administrative role when the likelihood of someone skipping is pretty high?
>> that is great example, because those cases for the dollar amount were among the most egregious. the way the program for incentives for medical professionals worked at the time is they could actually get up to an $80,000 bonus and it was paid out inofears as they served mor time, they would get paid part of the bonus part of the bonus. and that was in accordance with the regulation. what happened is the incentive manager, though, would just push the button to pay the whole lump sum in one year, or maybe after two years. so if they had made a six-year commitment, that medical professional served two years, got their $60,000, $80,000, whatever it was, and then walked. >> okay. so, i want to go on record that those medical professionals that got those bonuses with the commitment to serve six years and only served two, that we should claw back every single dime. now, for those -- you also told me that you are under the impression that for
noncommissioned personnel who were enlisted, that for the most part, especially if they were over ten years in length, that that is going to be waived, and that requirement for enlisted will not be clawed back. is that true? >> so, i think that's one of the business rules that they're going to discuss in the next panel, that for certain ranks and for certain time and service, for more junior people, they're going to apply some rules that are more forgiving for people that may have been more senior or perhaps worked in recruiting that should have known the rules. >> okay. i've always had a problem with this should have known, because if you received it, you didn't know that you weren't supposed to receive it, but you should have known, and it's ten years past. that is, i think, an expectation that we should not require those
individuals to pay it back. particularly if they committed to a contract and served for the requisite period of time. and with that, i yield back. >> mr. aguilar? >> thank you, mr. chairman. i don't serve on this panel. thank you for allowing me the opportunity to ask a few questions, and thank you for -- it's been a pleasure to serve with you on the full committee as well. general baldwin, can you explain? again, maybe this is getting too deep into the should have and did know that you mentioned. could you explain the process that was gone through to determine whether the incentive pay or the student loan needed to be recouped? and then immediately thereafter, once that decision was made and the notification was given, what were the next few steps along the process? >> sure. so, i'll address those cases where they did not find fraud or suspect fraud. so, for the preponderance of the
soldiers, what we would do is overlay the paperwork that they had that showed here's their contract, here's what the regulation says in order for them to receive that certain benefit, in order for them to establish an eligibility. what other documents are required and whether or not they had all of that paperwork. by the rules that were in place on time, at that time, if someone was missing one of those elements, it voided the contract, and that forced us to then send them to the national guard bureau for an exception to policy, which we again sent with the ones that we did send where we're working with the soldiers we sent with endorsements recommending approval. if they did not get approved -- if their exception to policy got approved by the national guard bureau, that was then within general kadavy's predecessor to allow them to keep the money, and then we were done. if the national guard bureau did
not or could not approve the exception to policy, it did give us the ability to help the soldier go to the army board of correction military records where the case would then go and get reviewed by an administrative law judge that would then make a determination on whether or not they would approve it. we had about a 57% success rate there. i'll give you a concrete example of a fairly common problem we found. for soldiers that were first-term enlisties, as in the case of congressman denham, where you can join the national guard or the military when you're only 17 years old, a lot of these soldiers hadn't graduated from high school when they enlisted. for the national guard, you could do that. you can join the national guard before you graduate from high school. however, in order to be eligible for the bonus, you have to produce a high school diploma. and in many cases, the soldier served and served well, but we didn't have a high school diploma in their records. and then in that case, we were -- we had to take action.
and those are cases that were fairly easy for us to go back to either exception of policy or abcmr to get relief. >> what kind of time period were they given to correct the document side, the deficiency you saw, whether it was a high school diploma or any other document? >> so, the only soldiers we sent to recoupment were those soldiers who did not contact us. so if a soldier contacted us, we worked with them and have continued to work with them. and to my knowledge, we have not sent any soldier to recruitment for any benefit that we could assist them on. >> general kadavy, would you talk about that from a prosper suspective? those that came through within that flow chart, those that came through that your office and your predecessor reviewed. you know, what did that look like from the documentation standpoint? that's what i'm concerned about, or those folks that were dinged because of a lack of documentation but met the
criteria for the bonus. >> yeah, so, i believe -- i can't speak for my predecessor, but our guidance, our intent is to work as hard as we can for an exception to policy for each and every soldier. and quite honestly, if they had served the term and met the agreements, an exception to policy was almost always provided. >> okay. i appreciate it. i yield back, mr. chairman. >> thank you, mr. chairman. i think you touched on this. i'm directing my question to general kadavy. did i pronounce your name correctly? kadavy? okay. it was one way or the other. i picked the wrong way. but you discussed in your initial -- in your opening comments that you have not seen this concern widespread across the country. it's limited to california. i'm from florida and reached out to our national guard as soon as i heard of this to just see where they thought that they
were with any challenges with bonus recruitment with our national guard, and we have about 12,000 in florida. i just want to confirm that you don't see any of these concerns in florida that have come to the attention of those here regarding california. >> well, specifically related to the fraud, we have given no guidance to any other state, district, or the territory -- district of columbia or any of the territories to do any audits or any inspections. as i said, through gims, we always have ongoing recruitments for generally those that don't meet the term of their enlistment. i can't talk specifically to florida and what is going on in florida, but we have not directed any type of work, and we have not discovered any systemic type of problem related
to fraud that we are aware of. >> well, that answer kind of concerns me, because i thought in the beginning that you stated that there weren't concerns across the country that this was limited to california? could this be could this be something that the wonderful men and women that serve in our national guard in florida have to be worried about? because i certainly as i think the only representative of florida here want to give them assurances that that will not be the case. >> i'm on the next panel and i apologize for jumping on this. i thought it would be helpful for me to mention that. i yield back mr. chairman, thank you. >> thank you mr. chairman and thank you for being here today. i'm troubled between 2006 and 2008 national guard senior
jail time but there were other officers some noncommission officers that were given sentences that included some jail time. and i believe it was a captain that was the highest ranking individual that received money. higher ranking officers weren't eligible for the bonuses. >> actually i'm getting at those that were responsible for initiating the payment. not those that received them. >> the only person responsible for initiating the payments was master sergeant and held people responsible for their failure to provide proper oversite and leadership. >> why were not the others charged criminally? it appears that the master
sergeant may have been made the fall guy from a criminal standpoint. >> you would have to ask the u.s. attorney that question because they did the prosecution and seized all the evidence related to that case so if there was any evidence that senior leaders colluded i haven't seen that evidence. if i was presented by evidence like that i would take that appropriate action. >> what was it about the target major's case that made it actionable from a criminal standpoint where as others were not? >> they had fiscal evidence whether it was copies of
contracts or e-mails or some forms of conversations where they could prove that she had actually colluded with officers and enlisted people to do this. >> all right. the criminal cases now or criminal prosecution has the criminal investigation ended or sit still on going? >> i don't know. again you'd have to ask the u.s. attorney that question. >> did your office make any recommendations as to who or who would not be prosecuted? who should or should not be prosecuted? >> they did not have that conversation with us they seized that evidence before i came back from afghanistan. >> in your testimony you stated that service members -- you stated service members that should be required to repay their bonuses should be made to do so. can you describe in more detail in what cases would service members actually have to repay the bonuses and that they have received especially since in most cases it seems they got the bonuses through no fault of their own. >> it would be in those cases
where the service member violated the contract for which they said they would serve. for example they signed up and then never went to basic training or they signed up for six years and only performed two years of guard duty and then either went awol or left the guard for some reason. >> do you have the number. >> the gentleman's time has expired. >> thank you. >> you put together a list of priorities through your office.
>> that's correct. >> when do you start working on that? >> generally we start working in the late fall early spring. >> your list of priorities wasn't in here. six priorities and this debt repayment wasn't one of them. why did it fall off of the list? >> it fell off because in 2014 the item had been scored and we weren't successful in getting it through because of the cost that was involved. it was a tough sequestration year. >> we're still under a tough sequestration year. >> i regret not including it in the 2016 year and i'm very encouraged that the committee again with your leadership assisting is helping to get this legislation passed. >> why wasn't it included in 2017? you would have started working on that two years ago; is that correct? >> that's correct. we felt that we were not able to take it across the goal line. you're right. i should have continued to make this a priority.
>> that's correct. again, we felt that we had asked -- we were not able to take that ball across the goal line so we directed our time and energy towards trying to help soldiers that we could influence. in retrospect, in hindsight, you're right, i should have continued to make this a priority. >> is that a -- your list of priorities, is that at your sole discretion or does the governor weigh in on that? >> ultimately it's my list and i take responsibility for list. >> in the language that we've included in the ndaa, we have resolution to this. my concern has been as a member of congress i don't get a list from the d.o.d. on who has -- who they're going after for this debt forgiveness, i don't get a -- any idea of who's having to repay this, who's been harassed until they call my office so somebody who has now repaid their debt, how do they go about filing to resolve this issue going forward?
what is the process? how does the process work to make somebody financially whole that has now taken a second out on their house and repaid a debt they didn't owe. >> i think the second panel would be able to address much of that. we still have our financial -- our soldier assistance team in place. there is a 1-800 number that we have posted on our web page that people can call so we can get to work that if they have suffered the this or they are on the list of people that potentially may have had a problem with it, that we can refer them to the lawyers and the people whether in california or at the army or osd to get help. >> and what if there is an individual that is still serving that either in the guard or reserves it is being asked to repay a debt but in their chain of command they're asking them not go to a legislator or a member of congress. what would your opinion of that
be? >> well, that violates the policies in place that are both osd policies and policies i have that that are in the military department. no one can interfere with an individual's right or ability to make a protected communication between themselves and their elected officials. >> thank you, i'll look forward to following up with you on that as we resolve this issue for a constituent. one final question. you and i had a discussion about this earlier. i have a big concern with -- when somebody takes a government document, a private e-mail, and puts that out for the press to
see, my concern in this case wasn't about the legislation itself, my concern is what the issue with recruitment and retention has now had on the department of defense and even in the v.a. in this case. i'd like to follow up with you on this release of e-mails from your subordinates to get a further clarification on why they felt the need to go outside of their chain of command on this issue as well. >> i look forward to that, congressman, and if there's anyone in the california military department that violated any laws, rules, policies or regulations, we'll take the appropriate action. >> thank you. >> i'd like to thank both of you for taking the time to be here to review this important issue. at this time we'll switch out the panels and hear from representatives from the office of secretary of defense.
>> i'd like to introduce our second panel, we have mr. peter levine from the department of defense, ms. alyssa starzik and theresa mckay. director of defense finance service. mr. secretary, you're recognized for five minutes. >> mr. chairman, ranking member davis, thank you for holding this hearing and appreciate the discussion that i heard with the first panel. it shows serious engagement on what is really an important issue. i would also like to join your colleagues, mr. chairman, in thanking you for your service. you've been very good to the department of defense. your focus on these personnel and readiness issues has been
important to us and helpful to us so thank you. i can't -- i'd also like to, if i may, thank chairman thornberry for being here and continuing to listen on occasion to my good friend mr. similar monos who i see also in the back row. you have my written statement and i won't read any of it. there are a few points i would like to focus on, some of which have been discussed but some i think deserves attention. recoupment is an ordinary fact of life in the military. our pay systems aren't as perfect as we would like them to be and we run into any number of issues from the person we heard about earlier who might be divorced and still getting bah as if they were married to somebody who has the wrong paycheck or fails to pay a bill, fails to pay a travel bill. we're recouping against as many as 100,000 soldiers, sailors, airmen and marines at any given time. civilians as well. the california army national guard cases are a --
particularly the ones that have been in the press, have been reported in the press, are particularly egregious cases but i wouldn't want members of this committee to think this is the nature of recoupment and that we always have this problem with recoupment. there are a number of reasons why the cases we've read about in the press are particularly troublesome. one is that many of them are based on a technical deficiency. we've heard about wrong mos cases where the soldier may have been misled as to whether that wrong mos mattered, technical absence of paperwork which seems like a pretty minor reason for recoupment, particularly in the case -- in cases like this what is we have service members who made a commitment on the basis of a bonus and then served out that commitment so when we come in later after somebody has fulfilled their commitment and question on a technical ground why they received a bonus in the first place, that's a particular hardship.
what i hope you'll understand is that that's not all the cases we're dealing with even with the california national guard. we heard about some of the medical professionals who may have received bonuses and not served out their commitment. we have a significant number of other cases in this pile of recoupment cases where we had service members make a commitment and receive a bonus on the basis of commitment and not fulfill that commitment. so as a matter of basic fairness to those who did serve out their commitment we need to look closely at those cases. those would tend to be cases in which we would expect to uphold -- in most cases uphold recoupment if the service member didn't fulfill the terms of the contract. second point i would like to focus on briefly is how the process of recoupment sets up. we read in the press that the pentagon ordered recoupment.
the pentagon means a lot of different things to a lot of people. it could mean the secretary, osd, people in washington or the entire department of defense. the way we work on these kind of issues, not on just limited to recoupment or auditor issues. the auditor identifies the program. they have standards to which they identify the problems. auditors do not determine we are going to recoup or not recoup. auditors make recommendations. and contracting officer would make a decision. in this case the auditor would make a recommendation to the property and financial accounting official who is technically in an employee of the national guard bureau. and california national guard and served as the federal role when they're activated to that position. as we look at the way these cases we have set up we had the army audit agency in regard to a limited number of cases.
and california national guard looked at that and we have discretion. we don't have to say yes the auditor said to do this. we're going to do every one in these things. before we get to the point of establishing a debt we can determine whether or not it's in our interest to establish a debt or not. when we looked at other states some of the other states where you had 8 cases only two of them were sent for recruitment or 40 cases only 5 were sent for recruitment. they make those judgments. what california did and it was within their discretion and given that they said that they did another review and had a 91% error rate i can't say it's wrong for them to do this but not only all the cases they had for recruitment but also said we're going to do a 100% review of everybody else so not only for recruitment but those cases in our sample are going to go to the rest of the universe that brought in 17,000 more
individuals. i think what the california national guard discovered over a period of years after they did that was that they didn't have the bandwidth to deal with the cases. some they should have put into recruitment and some of them maybe not but they left thousands of other cases with the threat of rekoop -- recruitment hanging over them. we were not aware of this until we read it in the newspaper and that's on us. we missed this. but when we became aware of this, the secretary specifically directed me go in and address this. do this fairly and do it expeditiously and get it done by next summer so we're going through a process where we're going to be looking at the cases
to figure out which should be subject to recruitment and as your legislation requires we'll favor the soldier where ever possible but account for the differences in different types of cases. we have two basic categories of cases we have to deal with. one is the cases that were termed to have a debt and sent for recruitment. they're the receiver here and they get the cases. somebody else tells them that they're supposed to recruit so we have 1400 cases in that category. we have a second category of cases put under suspicion or threat of recruitment about 16,000 more cases in that category. for those cases that are in recruitment we have the question of are we going to dismiss the
case or forgive the debt or repay the soldier if we decide it's improper. we put those through a screening process and we already had the army audit agency look at all 1400 cases through a preliminary screening. and eliminate a quarter of them which we will be able to recommend without further action and get us into more detail with you and repair them down to about half. and further review process that i'll describe in a moment. it's my hope we can get to 1400 down to 1700 just based on reviewing the paperwork without involving the soldier at all. and we're going to establish the rules of thumb which we referred to earlier and it would be up to the secretary of the army to accept the recommendations but i expect he's going to have the same objective that i do and that's that we want to pair these cases down to the most serious ones. it's a debt of $10,000 or less. and we'll try to screen out most of the cases with enlisted members and lower ranking
members and members without prior service on the basis that they would have a basis to know that they'll be able to understand their contract. this is an issue that came up earlier. so as we go through the screens i think we will get ripped from that second universe of 16,000 or so cases. i expect to reduce that by about 90% so we get down to about 10% of those. something on the order of 2,000. 1500 to 2,000 cases. we will then put that through the kinds of screens.
you and i hope to the get that down further. it's my hope by the end of the year we will have between 1,000 and 2,000 cases total out of 17,000 subject to review. those are the cases we will put in front of bcmr and allow soldiers to make their case that they shouldn't be subject to recruitment. but the objective is to find the easy ones first, get rid of those, tell people we're not pursuing you. we'll tell you you are off the hook. we will focus on the cases that are most significant, the ones
where we need to staff member. we are going to add resources. they're in the training process. we expect to be up and running by the end of the year. the staffing numbers they have established we believe are sufficient so that we have 2,000 cases. we will be able to handle that by the july 1st deadline that was is set by the secretary. that concludes my testimony, mr. chairman. i would be happy to answer any questions. >> any opening comments? thank you for running us through the process. of those 400 that they had recommended and being relieved and lost and not granted relief. do they have another appeal avenue or is that it, they're done?
>> let me say two things. i don't track all the general's numbers. not that his numbers are wrong but we're trying to develop our own data base and i can't identify necessarily those 400 cases but what i can say is that we will provide an avenue for everybody here in the cases of those that have been committed already convicted of fraud that may be a narrow avenue but we'll provide an avenue for everybody. >> for those in collections and having wagers garnished by the irs or turned over to a credit agency, where is it to make sure that the irs stops taking money. >> this is dfas function. we'll respond to that in greater detail. >> the secretary asked us to stop the recruitment. we were able to do that within a week for the cases that had been
identified to us by the california national guard. that included the cases that we had internal to dfas where we were recouping from military pay as well as any voluntary repayments that were under way, as well as any cases that we had turned over to the treasury for recoupment for private collection agencies. and we took action to send to the credit reporting bureaus so those cases that were identified and the national guard to us those credit ratings have been restored as if these debts never occurred. >> thank you very much. >> there is one i would like to add, mr. chairman. there are a handful of cases that lagged the one week only because we had trouble identifying the individual involved. we had erroneous social security numbers and things like that.
>> thanks for being here. of all the changes that have been suggested and some are in the legislation and that you have been working on is there an area that you have seen from guardsmen or women or others that's still an issue that you can tell me confidently that you resolved. >> i'm confident that we have the authority that we need to clean up the situation and put them in it and we will address this in a way that is fair to everybody. we would always prefer to see legislation before it goes into law and then we believe we can work in legislation and do what you need to do. >> anybody else have a concern.
one of the issues we had was to see a number of pieces of correspondence of those really affected by this. some from california, not necessarily all. certainly our offices have had several inquiries. we had casework around this. minimally so there wasn't a sense this was something systemic at that particular time. and i think the issue over whether or not it was number six on a list of issues the guards were looking at. but we do have a number, quite a bit of correspondence that you all have received over the course of time that suggest to me that perhaps it wasn't follow through on a number of occasions and to what expect do you take another look at some of that correspondence and see what was happenings in the lives of the men and women that were writing, why they weren't getting any response whatsoever.
whether the hotline or even in the assistant center wasn't responding, why was that? >> honestly, i don't know the answer to that. i have been asked to take a forward look and clean this thing up going forward. i have not been asking to retrace the history of how we got to where we are today. i agree with you and that's why i pointed out that we have an oversight role here and we should have seen this before and i don't know why we didn't. >> thank you. so i guess going forward because i'm for that as well. that's what is really important and we don't want this to happen again but i am a little concerned that we have these cases.
do you receive inquiresy on the part of men or women whether it's mental health, financial assistance or whatever it may be. there seems to be a group of individuals who clearly this made a difference in their lives. >> we have all sorts of mechanisms through the department of defense for receiving complaints. there were any number of avenues of appeal for these soldiers that were established avenues to appeal to the secretary of the army and those are official channels they can go through. in addition we have the ability to complain to members of congress and the ability to go to hotlines we have pressure valves for those kind of things. i can't tell you why those pressure valves didn't raise this case to a higher level before now. >> it's going forward and as this law changes and we can be grateful that at least in the
numbers that we have seen we're not going to see this kind of occurrence again but we still have the cases out there that in fact perhaps people could have used some assistance and can still use assistance. how do we deal with that. >> going forward the national guard bureau really has taken important steps in instituting this system and should pop up places where we have improper payments and instituting a double check system and you don't have the person that can sign off on something. and we're much more likely to identify them early and it's the payment errors and we let somebody serve out their service and then came back to them after they served out their service and oh by the way we want our money back. if we identify that problem in a timely manner then at that point i think it's much more appropriate to recoup than five
years later when you say i want my money back. >> as we look at the time frame and even the tile frame from 2011 to 16 until the general's command i think that there are a lot of cases there that people were hurting and there's also a mechanism within the guard to check up on people just the same way that we check up on people that are going through transition and that have returned and do not request the assistance of a mental health provider or any kind of health provider that, you know, there's a sense that we had to check up on them. >> i appreciate that. that is part of the commanders responsibility. >> well and i think going forward i suspect that the committee is going to want to have another opportunity really to talk about this in six months and see how everybody is doing. okay. thank you very much.
>> if everybody else wants to answer this i am surprised for members of the national guard that we would go for these -- let's just call it that they were going after them civilly and affecting the credit union. does that affect active duty people as well when there is a mistake on a bonus? we refer cases for recruitment all the time. we pursue them and they're large cases and small cases. the numbers show that most of them are relatively small cases and we can have recruitment cases because you're getting aviation in santa fe when you weren't a pilot. any number of different reasons we can have recruitment cases when the debt is certified.
in this case, the property and financial officer for the national guard out in california. when the debt is certified it goes there and they would follow the same procedures in every case. >> you asked specifically about active duty. so as long as when a debt is established on an active duty member it's handled within the military pay system and debts are recouped against the payments going to the military members. so it will come out of active duty pay. they're not considered delinquent and there wouldn't be any credit reporting against them.
>> in your testimony you address the compared recruitment of malice between california and other states. as $11 million in california alone and a total between all of the states. i understand that a special audit team was sent to the state of colorado and washington texas and the territory of puerto rico to check 100% of the records in each of those states and territories. the records check revealed that the automated system internal controls were not working as intended resulting in management of the system being bought to the national guard bureau level as a short material solution. would you describe for us how
those systems were not working as intended and what the result of that were in each of those states, particularly perhaps for the state of colorado. >> i'm unable to answer the question. we did, could have the aaa and the national guard bureau conduct reviews across the state. they did determine that there were internal weaknesses, lack of oversight and lack of multiple sign off the kind of weaknesses that we discovered in california. we didn't discover the kind of exploitations of the weaknesses. they determined that there was fraud involved. i ask the national guard bureau or aaa to look at whatever cases we had elsewhere and i show the same thing for colorado that i do for florida which is no cases of recruitment so if you have something different on that, on colorado recruitment i would be very interested in seeing that.
i can't guarantee that i have 100% accurate information but i would like to know if there's a significant number of recruitment cases in colorado and i don't show any based on the information at this point. >> on the recruitment side we do. >> if you have information on that i'd appreciate it if you'd share it with us so we can go back to the national guard bureau and see where that fell through the cracks. >> i'd like to distinguish between the two. they're a different issue. >> those came out with some results but there was no finding of the type of systemic problems that they had in california. >> having said that the numbers that i got from aaa were supposed to cover both of those reviews.
if you have something else i would appreciate seeing it. >> thank you again. the issue of counseling those who now have issues around their credit and the like, is that something that's going to be undertaken by the guard or by separate office? >> we do financial counseling for members for service members. we provide that as a service. my expectation would be through the national guard bureau but we have to check that for you. >> it's fielded since they're in close proximity to them that they would like to pursue providing that counseling. >> it would be the california national guard that would counsel national guard soldiers and we'll have to check that for you.
>> all right. when the general was kind of running through those that were prosecuted most of them from the u.s. attorney. when he referenced the court-martials, six enlisted i guess, he made the statement that both because of lack of evidence and just the ucmj itself prevented them from pursuing court marshals of those individuals what would have to be changed in the ecmj in order to allow the military justice system to work.
>> and often if somebody did something wrong and we have prosecutors look at the case and there's just not enough here to pursue it to trial. i think that given the way our justice system works that's to be expected and i don't think that we are -- that any of us want to change it. >> no, no but i just wondered based on what you said whether there was something in the ucm. >> there's wegss that we run into in general. >> and then i guess finally i'm still some what confused by the fact that this was a california only problem.
and it appears the national guard chose to distribute these bonuses in a manner inconsistent with other national guards in an effort to get their numbers up, but to somehow offer a recruitment bonus that is given 100% at the beginning of the tour seemed quite foolish. should there be more uniformity among various national guards? >> so the way i would describe it is that we had a system at that time that was vulnerable to abuse. that system was vulnerable to abuse not only in california but in other states too. it was in california that they identified abuse and that they went after it, pursued it for that reason. it's not that the other states didn't have the same system. it's that they didn't find the same evidence of abuse that lead
into this 100% audit and review that they did in california. >> i can never tell you that we won't have mistakes or problems in the department of defense. we have addressed this one but where we'll make a mistake next time i can't tell you. >> thank you all for your service and i yield back. >> thank you. it's a very difficult issue but we want to make sure that we ensure that we take care of the guards men and women in california and make sure that we don't have similar issue across the defense enterprise so we appreciate you being here. before we adjourn, this is my last subcommittee hearing. i want to thank my ranking member mrs. davis for all of her help the last two years. we set out an agenda of what we were going to accomplish and we had quite a few major issues and people said we were crazy for thinking we could get only one of them done. whether that be retirement reform or health care reform and due to your support, the hard work of all the committee members and staff we got all
four of them done and that would not have happened had it not been for the great working relationship that we all have. i was to thank, although he is not here sergeant waltz. he was that person for me and i really want to thank the staff. everybody who made the last two years as successful as it has been. it's been a great honor to serve and it shows this committee's commitment to taking care of our men and women in uniform and families and survivors. with there being no further business, this hearing is adjourned. this weekend on american history tv on c-span3, saturday
afternoon just before 5:00 eastern, architectural historian gary lewis talks about the construction of the brooklyn bridge, why manhattan needed the bridge and how transportation changed at the 20th century. >> when the bridge was opened, it did not put the ferries out of business. the ferries were still running at capacity. by the mid 1890s, the city of brooklyn had reached 1 million people. >> then at 8:00 on lectures in history. >> that is the real and interesting thing about country music. it's the music of poor white people. people who are privileged to be white, and i'll talk about that in a second. but also people who are underprivileged in terms of their class identity and economic opportunities. >> cotton siler on the emerging
definitions of whiteness and blackness in colonial america and how it impacted the origins of country music. sunday afternoon at 4:00 on reel america. >> a cautious congress, budget cutbacks and a tangle of state and local administrative problems on a new year's horizon, created evidence that the greatest enemies may be slowed or worse, may level off and fade. this was the climate, the land, and the unfinished tasks that faced lyndon johnson the 1st of december 1966. >> the president 1966 documents the final month of the year of president lyndon b. johnson, his meeting with mexico's president, awarding a medal of honor to a marine. william hazelboro, the secret