Transcripts For CSPAN Defense Officials Testify On California National Guard Bonuses 20161212

Servicerelated debts that they received in good faith. On another note, since this is his last hearing with us, i want to thank doctor heck for his leadership and his dedication to serving our troops, our 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, miss davis. Thank you. Thank you. I now ask unanimous consent that non subcommittee members be allowed to participate in todays 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 the secretary of defense and ph the army. Well 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, to the greatest extent possible, 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 Army National guard, National Guard bureau. And Major General David Baldwin, adjutant general 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 would like to 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 nations and our armys greatest assets, and should be treated that way. The subcommittees interest in recruiting and retention Incentives Programs is understandable. In 2008, the california National Guard discovered inaccuracies in the number of incentive contracts awarded, and launched an investigation in 2010. The investigation revealed that the california guards 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 engaged in the 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 was 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 numerous 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 Army 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 again the district of columbia, which now provides a centralized Oversight Program for bonus and incentive payments. In 2016, an external review of the army 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 adjutant and generals have provided annual 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 in the 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, Mister Peter Levine performing duties is the undersecretary of defense for personnel and readiness, is chairing a across functional team with the National Guard bureau, the United States army, the office of secretary of 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 a little bit later this afternoon. Secretary of defense carters guidance is to adjudicate all cases by july 1, 2017. The National Guard continues to support the cross functional teams process to ensure it soldiers 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 three 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, youre recognized for five minutes. Thank you, mister chair and Ranking Member davis, and the members of the committee. I do appreciate very much you taking up the this important issue to be able to help our soldiers. As general kadavy mentioned in 2010, a whistleblower and a very astute auditor, uncovered signs of potential fraud within our Incentives Program in the california National Guard. That resulted in a fairly broad investigation by the federal department of justice that went through the course of of the three years. The governor relieved my predecessor in march 2011 and recalled me from afghanistan in april of that year in order to take charge of this organization and with the mandate of cleaning up this and some of the challenges. I immediately ordered full investigation on our side into this matter to do a couple things. One is, i wanted to see if there is any other cases of fraud were out there, that the federal government had not begun to investigate picked up on. The second was to hold leaders accountable to find out why did this happen and what what what were the problems. We found that there is a complete lack of internal controls, so instituted an internal control system in order to prevent these problems from happening again, and then we held the leaders accountable that that failed to provide the proper oversight or create a command climate. In that we we punished with the california National Guard 61 people, including firing four general officers and full colonials. The feds prosecuted 44 soldiers some of those prosecutions continue to go on and and several people were put in jail for the fraud that they had committed. But as general kadavy mentioned, we also recognize that there were a lot of soldiers that got caught up in this, that through no fault of their own had taken money from the federal government that they were not necessarily due or couldnt document why they did deserve that money. So, we established the soldier System Task Force in 2011 in order to address those problems. Because of the fact that we had found a 91 error rate in the in the initial audits that wed done, we were compelled to review every record. There were 17,000 soldiers and about 30,000 records; we are able to get through about 12,000 of the records. Of the 12,000, we found 4000 soldiers that that we were able to help keep their money to the tune of about 39 million because they had minor errors or problems and or contracts and were 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 recoupment. Those were soldiers that did not contact our task force for assistance, but also we determined had problems were probably insurmountable and we couldnt support an appeal. We submitted another 1200 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 have served honorably and should be able 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 and have not gotten their money back. They lost about 3. 3 million amongst them. And then finally there is 400 cases that are remaining. Were 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 redress some of the problems that we face the frustrations that we face in trying to help our soldiers get through this. Were 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 quickly, fairly and with standards that err on the side of honoring 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. So first, my first question is that for general kadavy. Concerning the key recommendations in the us army audit agencies followup review that was issued in may of this year, they noted that while the 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 give us an update as to where ngb is in and implementing the final recommended controls is 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 . Ok. So there were there were 15 initial recommendations, of which the 2016 Army Auditing Agency followup reported that all 15 initial recommendations were being implemented and then they recommended four new additional recommendations, of which one will be fully implemented by the end of this calendar year by the end of the month december. And the other three will be implemented by the end of this fiscal year. It is about writing software and updating systems to to get after ph . Particularly, its related to officer bonuses and army medical recruitment of experts to make sure we are tracking their contracts as we do with all others. And i would ask that you keep the subcommittee apprised of the progress in implementing those final for controls. We will, chairman. And 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 percent 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 Craig Mckinley asked us o do a survey of the other 53, states, territories and district of columbia, which began late 2010 completed 2011. And we did the agenda identified some some systemic problems, particularly related to the lack of oversight, no separations and duties, inadequate training, outdated regulations, lack amount manpower and overall tracking, but it said no idespread fraud. So we were already working on the gems ph system. They believe gems accounted for most of that as as done, as shown through the army auditing agencies follow on recommendations and where were t. And i can just give you a quick 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 percent, and you listen to some of the errors that were previously in and we have cut that down significantly. And the majority most of those recruitments are for of contractual issues when a soldier leaves before the end of their enlistment. . Show less text joe heck all right, thanks. General baldwin, you listed some of the other numbers of individuals that were either disciplined or charged. Certainly we have only heard in the in the open media about the one nco that seemed to bear the brunt. But you again just list for the record, the numbers of individuals other than that one nco who was incarcerated, whether it is administrative, reprimand or other discipline procedures . Yes, mr. Chairman. Ill start with the the cases that were prosecuted by either the feds or in some cases, some district attorneys took up the fraud cases. That was 44 soldiers in total, of those of 26 were prosecuted and found guilty and convicted. There is another 15 or so that are that are pending, prosecution is still ongoing and then the remainder of the cases were either dismissed, which is just a handful, i think its only four that were dismissed or were acquitted. Then on our side, within the military, we have two options. We can do you do ucmj action which can include up up to including Courts Martial or administer action. We initiated Courts Martials on seven personnel. It was six officers and one on 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 on both on the Receiving Side, so people that we had evidence that had committed fraud but didnt rise to the threshold that one of civilian prosecutors would take would apply the resources to take the case, so we took the case. And then on there also many, many cases of people that were in the chain of command that we couldnt prove that they committed fraud but as i mentioned before, were lax in their oversight or established support inaudible 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 two colonels. And of all the cases that you found scattered across the california guard, did it seem like these were cases, whether 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 that you mentioned that were actually doing this on purpose or just happen units apart from some type of organized activity . David baldwin so it was it was statewide. It was across on nearly every unit, and where there were cases of actual fraud, it was a bilateral arrangement between the Master 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 collusion were the the incentive was offered, and one or both parties admitted that they shouldnt be doing it, it violates rules, regulations, and they did it anyway. Joe heck and then just real quick, you mentioned or 1,400 cases that had insurmountable problems. Could you give an example of what those some of problems might have been that prevented them from Going Forward on appeal . David baldwin sure. Most common would be people that that the failed to serve the term of their contract egregiously, not just falling short just by a few days or months, but by years. People that enlisted never showed up to basic training, people that that we had to throw out for methamphetamine use, incarcerations, and those types of problems that are that are not compatible with military service. Joe heck and problems that would happen regardless of component, regardless the california National Guard, things that are not isolated, just the issues within california guard . David baldwin thats correct. Joe heck and then my last question, you said 400 locations you reviewed had lost their appeal, were not there appeal was not approved. Is there another step, or is that the end of the line for those. David baldwin and i would defer that question to the second panel, but our request, which we think they are going to honor is to go back and relook at those cases because the secretary is applying new standards and were hopeful that the many of those people make it through the process inaudible . Joe heck thank you. Ms. Davis . Susan davis thank you, mr. Chairman. Actually i was going to ask about that as well in terms of those that you actually in your words, endorsed but did not make it to the process, so well well deal with that later. One of the things that i wanted to to just ask you about, because in your written testimony, you stated that congress should establish a streamlined adjudication process to distinguish between those soldiers who, through no fault of their own got got involved in this, and and others who had failed to meet the condition. But the california guard control those records, is that correct . I mean that you had control over those records . David baldwin yes, maam. We we would control the initial contract but then i would go to the United States property and fiscal county officer who is a representative of the National Guard bureau in each state, who would actually formally make the payment. So the payment thresholds that would approve was by california guardsmen, the payment was made by the federal representative. Susan davis ok. But but the incentive assistant center, could they make those that that judgment . David baldwin the authority to we didnt we at the state level do not have the authority to forgive any debts, and we do not have the authority for any of the waivers. They reside at the National Guard bureau level, at general kadavy level now and and then further if the cases are not able to get approved for a waiver at the National Guard bureau level the recourse is to go the army board of correction of military records. My authority as the adjutant general was very, 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 a on a otherwise good contract, and that was many of the errors. Susan davis had been different, had you had more authorities because i its it kept feeling like everybody was passing the buck a little bit, and i am just wondering what what you see what is ideal . Because as we look at some of the cases i i really was struck by the longlasting impact this was having on our military families. David baldwin 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 endorsements instead, it would have been approval. But i think the way that the system set up now is appropriate. Its appropriate for the federal government to withhold that authority from the states, because after all, it is the federal governments money. In addition, the other substantial change is the National Guard gem ph session system that general kadavy and the chairman were just discussing earlier, has been a very elegant solution to help correct a huge, huge amount of administrative errors and neck it down to to very small number of administrators errors. And when you have a small administrator error rate, its a lot easier to root out fraud because you dont have to sift through tons and tons of documents. So i think the authorities are where they need to be. Im very encouraged that osd has increased the bandwidth to be able to adjudicate cases and under general kadavys watch, it before he got in, it used to take nine months to get an exception to policy approved at his level, and now they now knock them out in six weeks. That is usually helpful. Susan davis general kadavy, would you want to comment on that in terms of how you how you see the system working now. And i guess why we didnt change it before. Timothy kadavy well, i can just speak to the exceptions to policy, which i have authority for because they are written in an Army National guard policy. So i i can i can do an exception to policy on skill, different infantrymen to an armored crewman and from one unit to another if they relisted for specific bonus to a unit. I would say just the sheer magnitude of of the overall problem i think caught us off guard. It took us a while to to get back to apply the resources to adjudicate them faster. But you know its it it when we follow the policy and directives, and right now, the only thing i have the ability to is is to inaudible do exceptions to olicy as general baldwin said. Hen it moves forward that to abc mr. Id like to just talk about gems ph just a little bit more. It does so it identifies through electronic earches in the database, which we did not have prior to the 2011. So it checks all those administrative data that is required to to ensure that a soldier is eligible, so it does that and it also tracks him 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. You know, if it was a directed change then 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 dont see those types of issues anymore. Susan davis yes, ok, thank you. Mr. Chairman, i would just follow up and maybe someone else could ask about what other assistance were providing. I know there was an issue around Credit Ratings and i think we were trying to fix that issue as well. But, im again, im concerned about how this impacted families and if theres been sufficient outreach to know that theres hope, theres support there and we hope that they get it. Thank you. Timothy kadavy ill leave the majority of that comment to the next panel. Ill just say from my perspective, we have had overwhelming support, partnership from the office of the secretary of defense, dod, army, everybody wants us to get this right for he soldiers. Paul cook thank you, mr. Chairman, i want to thank the generals who are testifying today and, you know, this goes back a long ways. I was chair of the Veterans Committee and senator denham, at the time, had the senate committee. And it brings back the memories and i think that part of it when we did this was just the shock of what was happening. And of course, general general baldwin, im im very, very happy with what youve done since youve taken over. So, this is not an inquisition against you or anything else, and weve had a conversation, and where im coming from is going to be the same thing over and over again. And im not so worried about the officers so much as the troops. Weve everybody thats been in the military knows that weve everybody always says recruiters. And because you put your life in the the hands of the recruiters. You trust them. You trust the army, you trust the National Guard, you trust hatever service. And people, once they do that, its like youre giving them your entire life. So, my problems which id like you to talk about are on some of these cases where theres been troops that through no fault of their own are suffering the consequences. And maybe im wrong, but it sounds like were nitpicking, particularly where some of these people dont have the economic means to repay these things or what weve one its our fault. Now, 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 im hearing how were going to change this and and i still dont have a warm and fuzzy feeling about this being one. I dont want it to be too bureaucratic. And after saying that, i i do want to comment once again. Our guard is is so, so important; not just in california but to all the operations that were doing in and 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, im going to ask a very broad question and well, in fact, im going to skip because ive been ranting and raving and i do want to yield my time to congressmen denham before it runs out. But eventually, if you could comment on the trust issue over and over again. Jeff, sorry i alked so long. Jeff denham thank you, colonel cook. And he and i, while we served in the state legislature together, chair of the senate Veterans Committee and assembly Veterans Committee on his behalf, we did work on this issue. I would say that 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 ilitary to take the position that the soldier is guilty and must prove a decade later that there was some fault of their own i mean, we still continue to have conversations that youve got to still carry your yellow shot records around from decades before because its not in an automated ystem. 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 epartment of defenses record. And i i only have a short minute of time, but id id ask you to just respond to both our statements. David baldwin congressmen, first i want to thank both you and congressmen cook for your leadership role in addressing this and being very aggressive about it. We really appreciate the support, and our soldiers, airmen and families appreciate both of you very, very much. I would agree wholeheartedly congressman cook that we do have a problem that we are going to have to reestablish trust with our soldiers, with their families and with potential recruits. Im very encouraged by as i mentioned before by the actions the congress have taken. I think they go a long way to address some of the issues that you just brought up, congressmen denham. And the steps again that osd are taking in order to be able to show that soldiers were going to trust the soldiers up front and if we have a problem with it, its the burden is on us to prove that the soldier did something wrong rather than the soldier having to prove from their innocence that theyre innocent. Joe heck thank you, gentlemen. Time has expired. Mr. Walz. Timothy tim walz thank you, mr. Chairman. And id like to take a moment too to thank you general hecks service, integrity and effectiveness to this not just to this committee but to our veterans and our citizens is something that 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. And its youve set an example of of how we understand that our service is here for those that were charged to look out for and our veterans. So, i want to thank you, sir, for that. Thank you both for being here. And i was just discussing with the gentlelady from california general baldwin, you made a case of this and i think were trying to get at it. And i think the two gentlemen here obviously know this issue very well. But having been involved with this both receiving bonuses and being part of a group that that gives them also being there when pay errors are made. When i would have to tell my soldiers you knew you were divorced, you werent going to get that baq and you kept it anyways, youre going to have to pay it back because thats the way things work. I know this is a touchy subject because when somebody gets paid, all the issues that the Ranking Member put out is this has huge issues on family. It has huge impacts as it goes down the line. Just a couple of questions. General baldwin, you talked about this; where people got bonuses. Did i hear you right . Even before they went to basic training they got paid . Avid baldwin yes, congressman. Timothy tim walz how did that happen . Because its im thinking back to me. 1,500 bonus, i completed basics and ait and i got 750. Two 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 . Me. 1,500 bonus, i completed David Baldwin i i dont know when it changed because when i joined it was the same as you. You had to serve before you got all or some of your bonus. Timothy tim walz correct. David baldwin somewhere around 2006, the National Guard bureau changed its policy in order to provide a bigger incentive to get massive amounts of troops in. Timothy tim walz right. David baldwin and they would provide they would pay the bonuses up front. And that was a very poor business rule that doesnt exist anymore. Timothy tim walz ok. So that so a lot of these i shouldnt say a lot. Im trying to get the numbers on this. Many of them fell in that category . David baldwin thats thats correct. Timothy tim walz but there was a section of these, as you said, that where someone knew they were getting a bad bonus, they colluded with recruiter and there was a kick back basically to take this bad bonus. David baldwin thats correct. Timothy tim walz now, could i ask can you give me those numbers again . The error rate when you went back through and did your audit. The error rate in contracts in general. David baldwin so, there were two there was an audit done by the Army Audit Agency and then an inquiry, which was a precursor, as you know, to an investigation that was initiated by my predecessor. First with the Army Audit Agency, that i didnt mention before, they found a 55 percent error rate in the sample that they looked at. I dont know how large that sample was. In the inquiry that was occurring in the month before i took command, they reviewed i want to say it was 153 records and then in the case of the records, they found a 91 percent error rate. And that was enough that i felt compelled that we had to continue to look at every single record. Walz what what what accounted for that . And having done these before and the detail that went into them im still from the old age of carbon paper and everything had to be exact or it was no good and they through them back out. How could you have a 91 percent i mean, were these small errors, large errors, misinterpretations of the regulations . David baldwin it was 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 just a handful of incentives that would offer for critical moss or bonuses to a very, very broad pallet of of incentives that ranged everything from medical professionals to people that were going to join the band and everything in between. And at the time, they had one person managing these incentives. She was overwhelmed. She was under tremendous pressure to help meet, get the numbers; to disperse 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 oing things correctly. Timothy tim walz which is a recipe for disaster. General kadavy, if i could move to you on this. When you did a system wide ngb audit of this im reading this correctly you only found irregular bonus activity to a total of about 58,000. Is that correct . Am i reading this right . Timothy kadavy congressmen inaudible , 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 general baldwin mentioned the Army Auditing Agency, they did a sampling of 159 in california. They discovered 97 errors. Timothy tim walz see this one and my time is going to come up, but somewhere id like to come back to this. Most often when you have an issue like this i find it system wide, whether its the v. A. Or dod. This is very odd. Does that strike you and well come back to it. I know the fraud made a piece of that, but thats very interesting statistic. So, ill get more when we come back on my time. But thank you. Steve knight thank you mr. Chair. And i have just a brief question; im going to yield some time. I, too, would like to thank congressman heck for his leadership. Hes been invaluable. My only question is on the jim ph system because we are talking about trust and when i went down and signed when i was 18 years old, i dont know that i was a whole lot smarter than congressman denham when he was 17. Probably a lot smarter but, you know, it is kind of a contract that youre going down there and youre trusting and youre believing that what the recruiter is saying is the truth and so i think that it is a trust issue that were trying to build back. But general kadavy, you talked about the jim ph system a little bit. Im going to give you just a little bit of time to tell us how thats 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 some of the all of these problems if not are going to be caught before they become a problem. So, congressman, i i think jims ph puts trust back into the system. I think what were really talking about is trust between leadership and soldiers and thats earned and the system isnt going to fix that. And so, we do a tremendous amount of training out at our professional Education Center for all recruiters. We are not getting our recruiters there in a timely fashion. We are working on that. Weve provided Additional Guidance to ensure they are getting the training and then weve also implemented a program called post ph and ill have to ill have to get you the exact name of it. So, the adjunct ph generals review each and every recruiter to make sure theyre ethically, morally the right folks to be talking to young men and women that potentially could join our Army National guard. And when theres issues that they think the soldiers still good, it comes up to me and i read each nd every one of the poster equests for any waivers. And i think in the time that ive been the director, ive approved one because youre absolutely right. Timothy kadavy our very best, most trusted professionals must be the ones that are recruiting our young americans. Steve knight very good. And mr. Chair, im going to yield the balance of my time to congressman denham. Joe heck the gentleman will suspend. I was informed by staff that subcommittee members cannot give their time to a nonsubcommittee member. Theyd have to wait until after all subcommittee members had an opportunity to ask their questions. Steve knight im going to keep my time. So, general kadavy, on the same kind of vein, i know that congresswoman davis was talking us down this road of when the folks have been given a bonus and then theyve 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. I mean, thats going to be part of the trust issue too of how we can make those soldiers whole moving forward. Is that obviously, thats going to be a big part of what you do but is that also part of how we can help in this issue . Timothy kadavy congressman, i can tell you that its very important to the crossfunctional team that mr. Levine is leading. Its one of the key issues that we are looking at. At this point in time, what im hearing is we think we have all the authorities and the abilities to to make a soldier whole, particularly in the instances that that you were that you were talking about. But i would say the subject Matter Experts on this particular question are probably in the panel, too. Steve knight ok. And mr. Chair, im going to yield back. Joe heck ms. Speier . All right, then well go to mr. Coffman. Mike coffman hank you, mr. Chairman. The so, let me understand this right. So, youve got a recruit coming in and takes a certain mos ph for a certain length of time under the bonus to in order to get a bonus. That individual is placed, for hatever reason, in a different mos. Is that or occupies a different position in a unit that that is different from that mos. Is that individual required to pay back the bonus . . Show less text 00 42 43 . Timothy kadavy it depends. So, we give bonuses for three reasons. For a skill, a grade, or a unit. It if that is a critical mos and the soldier elects to change on their own, in general, yes, hat is a recoupment. 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 was directed by us, theres no recoupment. And then, a solider of course can always provide an exception to policy request, and many have, that that indicates if there were some issues, i cant go that far to drill, its too far of a drive, we take all those considerations and then a decisions made. But it doesnt necessarily mean that. But in the jim ph system, theres a flag that goes up which means it needs to be adjudicated one way or another with exception to policy or termination of a contract. Mike coffman ok. What what is the status of these recruiting bonuses to pay other other soldiers . That practice has stopped, right . Timothy kadavy yes. Mike coffman ok, thats stopped. Timothy kadavy. Thats been stopped for quite some years. Mike coffman what what is the status of of the bonus structure now for recruiting people, say first term enlistees . Timothy kadavy i guess i dont understand the question. Mike coffman is there so, i assume theres still a bonus structure for first term enlistees. Timothy kadavy right. There are there are enlistment bonuses for certain units, certain skill sets, and then Retention Bonuses for certain grades where where we dont have enough. For instance, maybe staff sergeants and et cetera. Mike coffman and how dynamic is that is that process . Because i think that this it seems like i know in 2005, it was very tough to fill the ranks of the military across the board and obviously its much easier today than it was back hen. Timothy kadavy right. So, congressman, its very dynamic today. Were taking a look at it. I think its almost too dynamic, that it gets to be a bit confusing and i just talked to a few of the adjunct ph generals that are on a general officer Advisory Committee and we are likely going to go to talk to the states and they provide us where their holes are at the beginning of the year and mid year. We will adjust it if need be so that it stabilizes and doesnt change the skill sets and the grades and the units on a continual basis that maybe is is confusing and causes some of these issues. Timothy kadavy so, were going to try and. Mike coffman. But those but those enlisted soldiers that sign up for an mos specialty and they get moved, are or they how is that i guess they elect to move. But there i just want to make sure theyre fully cognizant. Timothy kadavy. Well, that what im talking about is is initial enlistment. Mike coffman right. Timothy kadavy. When you sign. Mike coffman. Right. Timothy kadavy. Were going to were going to limit how often we change which skill sets so, we might have one a different one every month and sometimes that gets confusing to recruiters or a recruit walks in thinking theyre 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 youre talking about is once a soldier signs the contract, jims ph verifies that and and, you know, as long as they live up to that contract, there are no issues. If something changes, jims ph flags it and we adjudicate it either through an exception to policy, abcmr, or if the soldier for instance doesnt complete a set of training and decides to no longer serve in serve out their enlistment period in the Army National guard, then by by statute and policy, we must recoup for any unexcused ph portion of that contract. Mike coffman but when you said if an enlisted soldier elects first term enlistment elects to change an mos, then they would be responsible for recouping, but if it was a critical mos, how would the command structure allow them to to elect to hange their mos . Timothy kadavy well, i cant speak to every case but in general, you know what you signed up for. So, in ost cases, in in my observation, is its more related to changes in force structure and force Design Updates that the army provides us. So, youre in an mos in a unit in a location today and that changes. We do not collect from that particular soldier. Mike coffman right. Timothy kadavy and i dont see that as an issue that is related as much as it was to the past. Coffman sure. Chairman, i yield back. Timothy kadavy thank you. Joe heck mr. Garamendi. John garamendi mr. Chairman, thank you for the privilege of sitting with your committee and now asking a question. I appreciate the information thats 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 may affect 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 claw back of their bonus. I agree with, i think every member of this panel, that thats unconscionable that that could happen did happen. But my real question is Going Forward. General baldwin, you gave a bunch of statistics and numbers at the outset. Id 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 has arisen in alifornia. If you could run through that quickly and 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 claw back potential claw back. Could we go through that please . David baldwin sure, so for the i think the important stuff thats in the law is it as osd is putting together their team, and theyll discuss it in the next panel thats going to be able to more rapidly adjudicate the cases and review soldiers to find the ones that the many, many thousands perhaps, the ones that deserve to keep their money, one of the main things that it does is that it it relieves the notion that for that targeted group of individuals that we have to have a presumption of guilt in order to review their case. Theyre going to review every case that they take before them so thats very, 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 were addressing here, but National Guardsmen ostensibly both in the army and the air National Guard from time forward, that if you 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 a sum total Financial Relief for financial ardship. They could do it in the case if they had lost or damaged government property, but in the case when they had been overpaid or paid a bonus that they werent due, they couldnt get relief if they were suffering Financial Hardship. Title 10 active duty personnel could; title 32 couldnt. The current ndaa corrects that, and were very, very happy to see that in there. John garamendi i understand that there were other criteria that would eliminate from the clawback certain men or guardsmen guardspeople. Could you is that the case . Are there is it only this issue of Financial Hardship . Or does it have to do with rank, position . Timothy kadavy ill take this one, dave. David baldwin sure. Timothy kadavy so, congressman, as a member of the crossfunctional team being led by osd, we are still reviewing. In the next panel, mr. Levine can tell you exactly where were at on this. But we are building criteria. And i think based on the secretary of defenses guidance and whats in the ndaa, the intent is to only find those that 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. Its only to get after those that were ineligible and accepted a bonus knowing they were ineligible. John garamendi will that criteria significantly reduce the number of guardspeople that are affected . Timothy kadavy so, ive been asked if you could refer that question to the next panel. John garamendi 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. Jackie speier 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. The you took over in 2011, correct . David baldwin yes, maam april of 2011. Jackie speier and you took over in part because the governor saw this as a problem and wanted to relieve the general before you and put you in that position. Correct . Baldwin thats correct. Speier all right. So, from 2011 until 2016, the only time this was ranked as an issue, and it was ranked number six, was in 2014 to the to the Armed Services committee. And there was no impetus to take this seriously enough to fasttrack it. And it was only until the Los Angeles Times did a story that this issue got some traction. Baldwin thats correct. Speier 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 didnt you elevate this to a highenough level in 2012, in 2013, in 2015, and again in this year . David baldwin so, for the first two years you mentioned, 2012 and 2013, we werent 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 for cases to run their course, it wasnt until the end of 2013 to 2014 that we realized the scope of the problem we had based on the amount of time it was taking to get relief for soldiers. Thats why in 2014, we first brought. Jackie speier ok. Im going to shortcut this a little bit because i have a limited amount of time. I just want to make the point that while youre you have made it a priority on a list, you didnt make it a priority to the committee and so it wasnt 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 to six years seems like a nobrainer. Why would anyone do that in an administrative role when the likelihood of someone skipping s pretty high . David baldwin yes, so that is a great example, because those cases, because of the dollar amount, were amongst the most egregious. The way that the program for benefits or 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 in tranches. So every couple of years, as they served more time, they would get paid part of the bonus. Now its 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 sixyear commitment, that medical professional served two years, got their 60,000, 80,000 whatever it was, and then. Jackie speier ok. So i want to go on record that those medical professionals that got those bonuses, with a 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 were under the impression that for oncommissioned personnel, that who were enlisted, that for the most part, especially if they were over 10 years in length, that that is going to be waived. And that requirement for enlisted will not be clawed back. Is that true . David baldwin so that i think thats one of the business rules that theyre going to discuss in the next panel, that for certain ranks and for certain time in service, for more junior people, theyre 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. Jackie speier ok. Ive always had a problem with this should have known, because if you received it, you didnt know that you werent supposed to receive it. But you should have known, and its 10 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. Joe heck mr. Aguilar . Pete aguilar thank you, mr. Chairman. I dont serve on this panel. Thank you for allowing me the opportunity to ask a few questions, and thank you for its been a pleasure to serve with you on the full committee as well. General baldwin, can you explain again, maybe this is getting a little too deep into the should have and did know, that you mentioned. Can 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 . David baldwin sure. So ill address those cases where we did not find fraud or suspect fraud. So for the the preponderance of the soldiers, what we would do is overlay the paperwork that they had that showed heres their contract, heres what the regulation says, in order for them to receive that certain benefit, in order for them to establish eligibility, what other documents are required and whether or not they had all 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 were 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 kadavys 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 of military records, where the case would then go and get reviewed by an Administrative Law judge that would then make a determination of whether or not they would approve it. We have about a 50 percent success rate success rate there. Ill give you one concrete example of a fairly common problem that we found, was for soldiers that were firstterm enlistees. As in the case of congressman denham where you can join the National Guard or the military when youre only 17 years old. A lot of these soldiers hadnt 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 just didnt 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 to policy or up to the abcmr to get relief. Pete aguilar and what kind of time period were they given in order to correct the document side the deficiency that you saw, whether it was a High School Diploma or whether it was any other document . David baldwin the only soldiers that we sent to recoupment were those soldiers that did not contact us. So the soldier who contacted us, we worked with them and have continued to work with them. And to my knowledge, have not sent any soldier to recoupment for any benefit that we could assist them on. Pete aguilar general kadavy, do you want to talk a little bit about that from a process perspective those that came through, you know, within that flow chart; those that that came through that your office and your predecessor reviewed . You know, what did what did that look like from the documentation standpoint . Thats what im concerned about, for those folks that that were dinged because the lack of documentation, but met the riteria for the bonus. Timothy kadavy so, i believe i cant always speak from a processor. But our guidance, our intent is to work as hard as we can for exception to policy for each and every soldier. And quite honestly, if they had served the term and met the agreements, then exception to policy was almost always provided. Pete aguilar ok. I appreciate it. Yield back, mr. Chairman. Gwen graham thank you, mr. Chairman. I think you touched on this. Im directing my question to general kadavy. Did i pronounce your name correctly . Kadavy . Ok. It was one way or the other, i picked the wrong way. You discussed in your initial in your opening comments that you have not seen wide this concern widespread across the country, its limited to california. Im 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 recoupment with our National Guard. We have 12,000 in florida. Just want to confirm that you dont see any of these concerns in florida that have come to the attention of those here, egarding california. Timothy kadavy well, specifically related to the fraud, we have given no guidance to any other state, district, or territory or district of columbia or any territories to do any audits or any inspections. As i said, through gems ph , we always have ongoing recoupments for generally those that dont meet the term of their nlistment. So specifically i cant 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 type of systemic problem related to the fraud hat we are aware of. Gwen graham well, that answer kind of concerns me because i thought in the beginning, that you stated that there werent concerns across the country, that this was limited to alifornia. 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 for florida here, want to give them some assurances that that will not be the case. Timothy kadavy well, i. Peter levine congresswoman weve conducted weve conducted audits for the national performing the duties of undersecretary of defense, personnel and readiness, peter levine. I apologize, i am on the next panel. Gwen graham no worries, thank you for stepping in . Peter levine i have to ph apologize for jumping on this. But because weve done some reviews and weve identified zero cases in florida, i thought it would be helpful for me just to mention that. Timothy kadavy right. Gwen graham zero cases is very good. Thank you, i thank you very much. So i will take from your testimony that the men and women that serve in our National Guard in florida do not have to be worried about this same concern. Thank you, i appreciate that. And i yield back, mr. Chairman. Thank you. Hank johnson jr. Thank you, mr. Chairman. And thank you, gentlemen for eing here today. Im troubled. Between 2006 and 2008, National Guard senior noncommissioned officers improperly provided student loan repayments and bonuses to numerous california ational guard members. And one person, sergeant Master Sargent female toni i cant come up it toni jaffe was the only person to be criminally sanctioned. But dozens of personnel, including Senior Leaders and general officers, were punished by the california National Guard for this illegal activity, is that correct . David baldwin thats correct, congressman. But an additional 43 soldiers were charged and prosecuted by the either the federal government or district attorneys for fraud, also. Master sergeant jaffe is not the only person that served jail time. She served far more time in prison than anyone else that did jail time, but there ere other officers, and some noncommission officers that were given sentences that included some jail time. Hank johnson jr. All right, thank you. What was the highest ranking official to be found to have ngaged in this misconduct . David baldwin so on the Receiving Side or ph the people that we actually had evidence that committed fraud or colluded to commit fraud, i believe it was a captain, was the highest ranking individual that received money. Higher ranking officers werent eligible for the bonuses. Hank johnson jr. Yeah. Actually, im getting at those who were responsible for initiating the payments, not those who received them. David baldwin sir, the only person held responsible for initiating the payments was Master Sergeant jaffe. I held many, many people responsible, though, for their failure to provide proper oversight or leadership. That included three 2star generals, one 2star general and one colonel that was in the california National Guard. And then the National Guard bureau fired a colonel that was working for the National Guard bureau. Hank johnson jr. Why were not the others charged criminally . It appears that the Master Sergeant may have been made the fall guy from a criminal standpoint. David baldwin you would have to ask the u. S. Attorney that question, congressman, because they did hose prosecutions and they actually had seized all of the evidence related to that case. So if there was any evidence that Senior Leaders had actually colluded, i havent seen that evidence. If i was presented with evidence like that, i would take the appropriate action. Johnson what was it about the sergeant majors case that made it actionable from a criminal standpoint, whereas others were not . David baldwin i dont know the details of the cases. I understand they had physical evidence. Whether it was copies of contracts or it was emails where or some forms of conversations where they could prove that she had actually colluded with officers and enlisted people to do his. Hank johnson jr. All right. Criminal case is now or is criminal prosecution is has the criminal investigation ended or is it still ongoing . David baldwin i dont know. Again, youd have to ask the u. S. Attorney that question. Hank johnson jr. Did you did your office make any recommendations as to who or who would not be prosecuted, who should or should not be prosecuted . David baldwin they did they did not have that conversation with us. And again, they seized all the evidence. So any recommendation that we did have would have to be based on the evidence. They seized all that evidence before i came back from afghanistan. Hank johnson jr. Major general baldwin, in your testimony you stated that the that Service Members you stated Service Members that should be required to repay their bonuses should be made to o so. Can you describe in more detail in what cases would Service Members actually have to repay the bonuses and that theyve 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 egregiously violated the contract for which they said that 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 or left the guard for some eason. Hank johnson jr. Do you have the numbers. Joe heck the gentlemans time has expired. Hank johnson jr. Thank you. Joe heck jeff denham mr. Chair general baldwin, annually you put together a list of priorities through your office. Thats something you do every year . David baldwin thats thats correct. Jeff denham when do you start working on that . Baldwin generally, we start working in the late fall, early spring in order that we can present those legislative priorities to the congress around the march timeframe so theyre ahead of the mark. Jeff denham and ive got here in front of me your list from fy15. So you would have started this in spring of 14, addressed ongress later that year . David baldwin we would have presented it in the spring of 14, started working on it in the fall 13. Jeff denham so your fy15 i just want to be clear. Fy15 ndaa priorities, you present that to congress when . David baldwin around march of wouldve been around march in 2014. Jeff denham 2014 . So you started working on that in 2013 . David baldwin thats correct. Jeff denham and this year in particular, fy15, you list as priority number six, your final priority, servicemember debt relief equity. That is the the issue that weve now i introduced legislation on this year, weve not included in the ndaa this year. But i was surprised to see that in fy 2016, your list of priorities, it wasnt in here. Youve got six priorities and this Debt Repayment was not one of hem. Why did it fall off of the list . David baldwin so it it fell off because in 2014, the item had been scored by the cbo and when we we werent successful in in getting it through because of the the cost that was involved. It is a tough sequestration year. In 2015. Jeff denham but were still under a tough sequestration year. David baldwin i i understand that, congressman. I i regret not including it in the 2016 in the 2016 year and im very encouraged that the the committee, again with your leadership assisting, is is helping to get this legislation assed. Jeff denham what why wasnt it included in 2017 . You wouldve started working on that two years ago, correct . David baldwin thats correct. Again, we we felt that that we had we had asked we were not able to to take that ball across the across the goal line, so we directed our time and energy towards trying to help the soldiers that that we could influence. In retrospect, in hindsight, youre right. I shouldve continued to make this a priority. Jeff denham is that a your list of priorities, is that at your sole discretion or does the governor weight in on that . David baldwin ultimately, its its its my list and i take responsibility for the jeff denham in the language that weve now included in the ndaa, we have resolution to this. My concern has been, as member congress, i dont get a list from the dod on who has who theyre going after for for this debt forgiveness. I dont get a any idea of who is having to repay this, whos been harassed until they call my office. Eff denham so somebody who has now repaid their debt, how do they go about filing to resolve this issue Going Forward . David baldwin so. What is 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 that they didnt owe . David baldwin i think the the second panel will be able to address much of that. We we have still have our financial our soldier Assistance Team in place. There is an 1800 number that we have posted on our webpage that people can call that have been in this so that we can get to work, that if they have suffered from this or they are on the list of people that potentially may have had a problem with it, that we can then refer them to the lawyers and the people whether its in california or at the army or at osd to get help. Jeff denham and what if there is an individual that is still serving that either in the guard or reserves that is being asked to repay a debt, but in their chain of command, theyre asking them not to go to a legislator or a member of congress. What would what would your opinion of that be . David baldwin well, that that violates that violates the policies that are in place that are both osd policies and policies that i have within the military Ph Department. No one can interfere with a an individuals right or ability to make a protected communication between themselves and their elected officials. Jeff denham thank you. Ill look forward to following up with you on that as we resolve this issue for a constituent. One final question, and and you and i had a discussion about this earlier. I have a big concern with when somebody takes a government ocument, a private email and puts that out for the press to see, my concern in this case wasnt about the legislation itself. My concern is what the the issue with recruitment and retention that it has now had on the department of defense and even the v. A. In this case. Id like to follow up with you on this release of emails 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. David baldwin i look forward to that, congressman, and if theres anyone in the California Military Ph Department that violated any laws, rules, policies or regulations,well take the appropriate action. Denham thank you. Joe heck id like to thank both of you for taking the time to be here today to review this important issue. And at this time, we will switch out the panels and well hear from representatives from the office of secretary of defense. . Show less text 01 16 46 . Joe heck id now like to introduce our second panel. We have mr. Peter levine, performing the duties of the under secretary of defense for personnel and readiness from the department of defense; ms. Alissa starzak, general counsel for the department of the army; and ms. Teresa mckay, director of the defense finance and accounting service. Mr. Secretary, youre recognized for five minutes. Peter levine mr. Chairman, Ranking Member davis, first of all, thank you for holding this hearing and i really appreciate the discussion that i heard with the first panel. It shows some serious engagement on what is is really an important issue. Id also like to join your colleagues, mr. Chairman, in thanking you for your service. Youve been very good to the department of defense. Your focus on these personnel and readiness issues has been really important to us and really helpful to us. So thank you. I cant also id also like to, if i may, thank chairman thornberry for being here and and for continuing to to listen on occasion to my good friend, mr. Simmons ph , who i see also in the back row there. You have my written statement and i wont i wont ready any ph , but there are there are a few points that id like to focus on, some of which have already been discussed, but i think deserves some attention. First of all, recoupment is an ordinary fact of life in the military. Our pay systems arent as perfect as wed like there as wed like them to be and we run into any any number of issues from the person we heard about earlier might be might be divorced and still getting bahs ph if they were married to somebody whos got the wrong paycheck or fails to pay a bill fails to pay a travel bill. Were 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 particular particularly the ones that have been in the press that have been reported in the press are a particularly egregious set of cases. But i wouldnt want members of the committee to think that this is the nature of recoupment and that we always have this problem with recoupment. There are a number reasons why these cases are particularly the cases weve read about in the press and articularly troublesome. One is this that many of them are based just on a technical eficiency. Weve heard about wrong mos cases where also where the soldier may have been isled as to whether that wrong mos mattered, whether they needed to have a High School Diploma. Technical absence of paperwork, which seems like a pretty minor reason for for for recoupment, particularly in the case in cases like this where we have servicemembers 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 then question on a technical ground why they received a bonus in the first place, thats a particular hardship. What i hope that youll understand is that thats not all the cases that were dealing with the california National Guard. We heard about some of the medical professionals who may received bonuses and then not served out their commitment. We have a significant number of other cases in this pile of recoupment cases where we had servicemembers make a commitment and receive a bonus on the basis of commitment and then not fulfill that ommitment. So as a matter of basic basic fairness to those who did serve out their commitment, we need to take a very close look at those cases and those would tend to be cases in which we would expect to uphold in most cases, uphold the recoupment if the servicemember didnt fulfill the terms of the commitment the terms of the contract. Second point id like to focus on briefly is just how the process of 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 or osd or people in washington or could mean the entire department of defense. The way we work on these kinds of issues, and its not just limited to recoupment issues or pay issues, we have an auditor come in and look at an issue, an auditor identifies a problem and they have standards to hich they work to identify those problems. But auditors do not make decisions for the epartment of defense, auditors do not determine that were going to recoup or not gonna recoup, auditors make recommendations. So if youre n a contract matter ph , an auditor would make a recommendation to a contracting officer and the contracting officer would make a decision. In this case, the auditor would make a a recommendation to the property and Financial Accounting official, who is technically an employee of the National Guard bureau, but is appointed by the california National Guard and is a california National Guard member appointed by the california National Guard, but then serves as a federal role because theyre activated when theyre appointed to that position. As we look at the way that these cases set up, we had the the the Army Audit Agency do an audit and make a recommendation with regard to a limited number of cases and found an error rate, i think, we heard of 50 something percent. California National Guard looked at that. We have when we look at these things, we have discretion we have Enforcement Discretion. We dont have to we dont have to say yes, the auditor said to do this work do every one of these things. Before we get to the point of establishing a debt, we can determine whether its in our interest to establish a debt or not. So, as weve looked at other states where we had smaller numbers and lower error rates, we see that some of the other states with. We can determine whether it is in our interest to establish a debt or not. So, as we have looked at other states where we have smaller numbers and lower error rates. We see that some of the other states with the National Guard were had eight cases, only two of them were sent for recoupment. Or 10 cases, only three were sent for recoupment or 40 cases only 5 were sent for recoupment. Some states sent all the cases for recoupment. They make they make those judgments. What california did and it was within their discretion and given that they said they said that they did another review and on a 91 percent error rate. I cant say its wrong for them to do this, but they not only referred all the cases that they had for recoupment, but they also said were going to do 100 percent review of everybody else. So, were not only going to refer for for recoupment those cases that were in our sample, were going to go to the rest of the universe which brought in about i think the what the california National Guard discovered over a period of years after they did that was that they didnt have the bandwidth to deal with those cases, and so they dealt with some of those cases and put some of them into recoupment. Some of them should have put into they should put into recoupment. Some of them maybe not, but they left thousands of other cases hanging out there with the threat of recoupment over them. Which i think adds to the to the unfairness of this process. Now i have to say we have oversight over the california National Guard. Army army as has oversight. The National Guard bureau has oversight. We were not aware of this until we read it in the newspaper and thats on us. We missed this, but when we became aware of this, the secretary specifically directed me, go in and address this. Do this do this fairly, do this expeditiously get it done by next summer. So were going through a process where were going to be looking at were going to be looking at these cases to figure out which one should be subject recoupment and were going to do it as expeditiously as possible. As your legislation requires were going to favor the soldier wherever possible. But, were going to account for the differences and different types of cases. Now we have two basic categories of cases that we have to deal with. One is those cases that were already determined to have a debt and sent to be dfas for recoupment. Dfas is just sort of the receiver here. They can get the cases, they have implement it somebody else tells them that they are supposed to recoup. So we have about 1,400 cases in that category. Then we have a second category of cases that were essentially put under suspicion or or or threat of recoupment about 16,000 more cases in that category. For those cases that are in recoupment we have the question are going to dismiss the case, are we going to forgive the debt, are we going to be repay is the soldier if we decide it as improper. We are we are we put those through a a screening process. We have already had the Army Audit Agency look at all 1,400 cases, through a preliminary screening. Through that preliminary screen, we think that we can eliminate about a quarter of them which which we will be able to recommend for for forgiveness without further action. Were going to go through a second review, which can get us into more more detailed review to look at those cases. Its my hope that we can pare those cases down to by about half before we put the remainder in front of a further review process, which i will escribe in a moment. So its my hope we can get from 1,400 down to about 1,700 before we just just based on our reviewing paperwork without involving the soldier at all, and tell half of them you are off the hook. That thats a goal. I do not know what the exact numbers we get to. Turning to the second category the 15,000, the larger category. In that case, we have greater discretion because we havent yet established a debt. So we have our Enforcement Discretion at this point. And so, were going to establish a number of rules of thumb which were referred to earlier and these will be my recommendations, it will be up to the secretary of the army to accept those recommendations. But, i expect that he is going to have the same objective that i do and secretary of defense does, which is that we want to pair these cases down to the most serious ones so were going to screen out cases that are more than 10 years old. Thats consistent ith your legislation. I expect were going to screen out cases with with some exceptions, we were going to have to be careful about soldiers who gone awol, or have other kinds of problems. But, were basically going to try and screen out cases with a debt of 10,000 or less. Were going to screen out cases with were going to try to screen out most of the cases with enlisted members and lower Ranking Members members without Prior Service on the basis that is unlikely that they would have a basis to know that they were going to to read and understand their contract. This is an issue that came up earlier. So as we go through those screens, i think we will get from that second universe of 16,000 or so cases, i expect to reduce that by about 90 percent. So, we get down to about 10 percent of those, so about something between something on the order of 2,000 1500 to 2000 cases. We will then put that universe through the kinds of screens substantive screens, substantive review that. And i hope to get that down further. Its my hope that by the end of the year, we will have a we will have something between 1,000 and 2,000 cases total out of the total universe of 17,000 that are subject to review. Those are the cases that we will then put in front of the bcmrs and allow soldiers to come in and make their case that they shouldnt be that they shouldnt be subject to recoupment. But the objective is to find the easy ones first. Get rid of those, tell tell people were not pursuing you so we dont have to tell you come into bcr or you can come into bcmr. Were telling you, you are off the hook, were done with you and do that on the base of the paper, so we can focus our resources on those cases, their most significant, where we really need to understand the facts better. The army has already staffed up the bcmrs theyve theyve identified the people who will be serving this role. So were going to add resources, they are in the training process. We expect to be up and running by the beginning of the year and that the staffing numbers that hey have that they have establish, we we believe are sufficient so that if we have 2000 cases we will be able to handle that number cases by the july 1st deadline that that was set by the secretary. That concludes my testimony mr. Chairman. I would be happy. We would all be happy to answer any of your questions. Joe heck ms. Starzak, ms. Mckay, do you have any opening comments . Alissa starazk no. Joe heck great, thank you. Thank you mr. Secretary for taking the time to be here and running us through the process. So one of the questions that i asked general baldwin, which he deferred to the second panel was of those 400 who they had recommended being relieved but lost did not get seek i guess but not granted relief. Do they have another appeal avenue, or is that it they are one . Peter levine so let me say two things. First i dont i dont necessarily tracked all of general baldwins numbers. Not that his numbers are wrong but were trying to develop our own database and go through the numbers on our way. So i can identify necessarily those 400 cases. But i can say is, we will provide an avenue for verybody here. In the cases of those who been committed who have already been convicted of fraud, that may be an narrower avenue, but we will provide an avenue for everybody. Joe heck and, my only other question is for those that are in collections lets say and they are having wages garnished by the irs, or may have been urned over to a credit agency. Whos you know where is the rose getting pinned to make sure that the irs stops taking money, or that we help get Credit Ratings restored. Peter levine this is a dfas function and and we believe thats already been taken care of in terms of stopping action. Ms. Mckay may want to respond that in greater detail. Mckay thats correct. When the secretary asked us to stop recoupment we were able to do that within a week for the cases that have been identified o us by the california National Guard. That included the cases that we had internal to dfas where we were recouping from their military pay, as well as any voluntary repayments that were underway as well as any cases that we ad turned over to the treasury for recoupment and, that would include the category of private collection agencies. We also took action to rescind any reporting to the credit reporting bureaus and so those those for those cases that were identified by the california National Guard to us, those Credit Ratings have been restored as if these debts never occurred. Joe heck thank you. Thank you very peter levine the one thing id like to add, mr. Chairman, is in terms of the one week, there are there are a handful of cases that lag the one week only because we had trouble identifying the individual involved. We had erroneous Social Security numbers and things like that weve been trying to clean up as we went along. Joe heck all right, thank you. Ms. Davis . Susan davis thank you, mr. Chairman. And thanks for being here. Of all the changes that have been uggested and some are in the legislation and that youve been working on, is there an area that youve seen by virtue of correspondence from guardsmen or women or others that is still hanging out there, still an issue that youre not sure that you could tell me confidently that youve esolved . Peter levine congresswoman, im confident that we have the authority that we need to clean up this situation. We need to put the resources into that were now putting into it and and we will we will address this i think in a way that is fair to everybody. The we would, of course, always prefer to see legislation before it goes into law because we can help head off unintended side effects. But but we believe that we can work with the legislation that youve enacted and do what we need to do. Susan davis anybody else have a concern . Ok. One of the issues and we had the opportunity to see a number of pieces of correspondence from those who were really ffected by this, some from california, not necessarily all. And and certainly, our offices had had several inquiries and we had casework around this, but minimally, so that there wasnt a sense that this was anything systemic at that particular time and i think the the issue over, you know, whether or not, you know it was number six on a list of of issues that the guards were looking at. But we do have a number you know, quite a bit of correspondence i think that you all have received over the course of time that suggests to me that perhaps it wasnt followed through on on a number of occasions. And im so to what extent do you take another look at some of that correspondence and see what was happening in the lives of the men and women who were writing, why they werent getting any response whatsoever, whether the hotline or either the and the Assistance Center wasnt esponding . Why was that . Peter levine honestly, i dont know the answer to that. Ive been asked by the by the secretary to take a forward look and clean this thing up Going Forward, i have not been asked to go go back and and retrack retrace the history of how we got to where we are today. Peter levine i agree with you that we and thats why i pointed out that we have an oversight role here. I think that we should have seen this before now, and i dont know why we didnt. Susan davis thank you. So i guess Going Forward because im im for that, as well. I think that thats whats really important. We dont want this to happen again. But i am a little concerned that we have these cases. And do you do you receive inquiries on the part of of the men and women for additional assistance, whether its Mental Health or financial assistance, whatever that may be . I mean, does there seem to be that that group of individuals who clearly, this made a difference in their lives . Peter levine so we we obviously 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 that are established avenues; appeal to dfas, appeal o the secretary of the army, appeal to vcmr. Those are official of channels they can go through. In addition, we have obviously abilities to complain to members of congress, ability to go to hot lines. We we we have we have pressure valves for those kinds of things. I cant tell you why those pressure valves didnt raise this this case to a higher level before now, just dont know. Susan davis i think what im wondering about it is Going Forward and as this law changes and we can be grateful that at least in the numbers that weve seen, were not gonna see this kind of occurrence i hope again. But we still have all these cases out there that, in fact, perhaps people really couldve used some assistance and can till use assistance. How do we deal with that . Peter levine so Going Forward, i think that the guard really has the National Guard bureau really has taken important steps in instituting this automated system, which will which should automatically pop up places where we have improper payments and instituting a double check system so you dont have the one person who can sign off on something and get in the kind of problems we had in california there. So while i cant be 100 percent confident that were going to avoid any problems, i think we are much more likely to identify these kind of payment errors early. And and i think the big problem here was not that we had the payment errors, its that we made these errors and then let somebody sit serve out their service and then came back to them after they served out their service and said oh by the way, we made a mistake, we want our money back. Susan davis right. Peter levine if we identify that problem in a timely manner, then as a matter then at that point, i think its much more appropriate to recoup than it is when you come back five years later and say i want my money back. Right, because i think as we look at the timeframe and even the timeframe from 2011 until 16, under the generals command, i think that there are a lot of cases there that people were hurting. And i dont know whether there is also a mechanism within the guard, there should be, to check up on people just the same way that we check up on people that are going through transition and have returned and who do not request the assistance of a Mental Health provider or any kind of health provider, that theres a sense that they have we have to check up on them. Peter levine i appreciate that. That is part of a commanders responsibility. Susan davis ok. Well and i think Going Forward, i suspect that the committees gonna wanna have another opportunity really, to talk about this perhaps in six months and see how everybodys doing. Ok. Thank you very much. Mike coffman mr. Levine, and if anybody else wants to answer this, but i am surprised for members of the National Guard that we would go for these, and lets just call it deficiencies or whatever you wanna call it, that we were going after them civilly and affecting their credit union. Does that effect active duty people as well and when theres a mistake on a bonus . Peter levine so again, this is a fairly unique case because we were going after people on tactical grounds. Some people at least, on technical grounds, years after this technical mistake was made when theyd already served out. We we refer cases for recoupment all the time. As i indicated, there there are probably 100,000 cases under recoupment at any given time. We pursue them. There are large cases and small cases. I think that the numbers show that most of them are relatively small cases. I mean, we could have recoupment cases for for lost or damaged equipment, we could have recouping cases because you failed to pay for your travel, we could have recoupment cases because you were getting youre getting Aviation Incentive Pay when you werent a pilot, you know, any any number of different kinds of reasons we could have we could have recoupment cases. When the debt is certified, i in this case, the the property and Financial Officer for the National Guard out in california, when the debt is certified, it goes to to dfas and i believe dfas would follow the same procedures in each case. So i would defer to ms. Mckay to speak to that. . Mckay yes, sir. You asked specifically about active duty. So as long as the when a debt is established on an active duty member, its handled within the military pay system. Debts are recouped against the payments going to the military members at a predetermined statutory rate. And so it will come out of their active duty pay. As long as an account is not delinquent, and in these cases thered be active collections gainst the debt, theyre not considered delinquent, there wouldnt be any credit eporting against them. Mike coffman mr. Levine, in your testimony, you address the compare to recoupment amounts between alifornia and other states, as 11 million in california alone and a total of only 2 million between all other states. I understand that a special audit team was sent to the state of colorado, washington, texas and the territory of puerto rico to check 100 percent of the records in each of those states and territories. The records check revealed that the Automated Systems internal controls were not working as intended, resulting in management of the system being brought to the National Guard bureau level as a short term solution. Those systems were not working as intended and what the results of that were in each of those states, particularly perhaps for the state of olorado . Peter levine so im unable to answer the question as to the specific internal control of deficiencies in the state of colorado. We we we did we did have the the aaa and the National Guard bureau conduct reviews across the states. They did determine that there were internal weaknesses, lack of oversight, lack of multiple signof, the kinds of the kinds of weaknesses that we discovered in california. What we didnt discover was the kind of exploitation of the weaknesses or systematic problems weaknesses where where in california they determined that there was fraud involved. With regard to colorado, im nterested by by the 100 percent review because again, as with florida, i have i asked the the National Guard ureau and the aaa to look at whatever cases we had elsewhere, and ive got a rackup of those, which is what the 2 million comes from. I show the same thing for colorado that i do for florida, which is no cases of recoupment. So if you have Something Different on that, on colorado recoupment, i would be very interested in seeing that. I cant guarantee that ive got 100 percent accurate information, but i would i would certainly like to know if theres a significant number of recoupment cases in colorado because i dont i dont show any based on the information weve been able to gather at this point. Mike coffman on the recruiting bonus side, we do. Peter levine ok. Ill be if you have information on that, id appreciate it if youd share it with us so we can go back to the National Guard bureau and the aaa and see where that fell through the cracks. Actually, id like to distinguish between the two. The recruiting bonuses are a different issue than the than this enlistment bonus issue. So when aaa looked at those questions, it did it did do an audit of several states. I think it was missouri, indiana, pennsylvania and a couple others potentially. They they did not find systemic problems. They did identify some concerns with like internal controls. The National Guard bureau also had send audit teams out to different states and they asked their internal folks to audit. Those came out with some results, but again, there was no there was no finding of the type of systemic problems that they had in california. Peter levine having said that, the numbers that i got from aaa and National Guard bureau are supposed to cover both of those reviews. So if you have something else, id id really appreciate seeing it. Mike coffman oh and i just want to before i yield back, i just wanna thank mr. Chairman, thank you so much for your service to this committee, its been a privilege to work with you despite the fact that you greatly outrank me in terms of being in the military. Ackie speier thank you again. You again. The issue of counseling those who now have issues around their credit and the like, is that something thats going to be undertaken by the guard or by a separate ffice . Peter levine we we do financial counseling for for members for Service Members. Generally, we provide that as a service. My expectation would be it would be done through the National Guard bureau but wed have to check that for you. Jackie speier all right, because the National Guard indicated to me that they feel that since theyre in close proximity to them that they would like to pursue providing that counseling. Peter levine it would be my expectation that in the normal course of events hat it would be the california National Guard that would counsel california National Guard soldiers but, again, well have to check that for you. Jackie speier ll right. When the general was kind of running through those that were prosecuted and pending cases, most of them from the u. S. Attorney, when he referenced the Court Marshals, seven of them, six officers, one 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 ucmj in order to allow the military Justice System to work . Peter levine the military Justice System has the same presumption of innocence that the civilian ustice system does and so we have the same issues of proof that we have in the civilian Justice System and often there are cases which we might have a suspicion that somebody did something wrong but when we have prosecutors look at the case, they say theres just not enough here to pursue it to pursue it to trial. I think that given the way our Justice System works, thats to be expected and i dont think that were in in that any of us want to change the fundamental premises of our Justice System. Jackie speier. Oh, no, no but i just wondered based on what you said whether there was something within the ucmj. Peter levine. I dont think theres anything unique to the ucmj that id look to. Id look to the difficulty of prosecuting cases where theres where theres tough evidentiary questions which we run into in general. Jackie speier all right, and then i guess finally, im still somewhat confused by the fact that this was a californiaonly problem and it appears that the the National Guard chose to distribute these bonuses in a manner that was inconsistent ith other National Guards in an effort to, i guess, get their numbers up but to to somehow offer a recruitment bonus that is given 100 percent t the beginning of the tour as opposed to in increments seemed quite foolish. Should there be ore uniformity among the various National Guards . Peter levine the way i would describe it is that we had a system at that time that was vulnerable to abuse. And that system was vulnerable to abuse not only in california but in other states too. It was in california that they identified abuse and they went after it pursued it for that reason. Its not that the other states didnt have the same system, its that they didnt find that same evidence of abuse that led into this 100 percent audit and review that they did in california. Jackie speier i see. So but moving forward, that is not going to be able that abuse cannot take place . Peter levine i i can never tell you that we wont have mistakes or problems in the department of defense. I think weve addressed this one but where well make a mistake the next time, i cant tell you. Jackie speier all right, well thank you all for your service and i yield back. Joe heck thank you. Thank you, mr. Levine ph , ms. Starzak, and ms. Mckay for being here. I know its a very difficult issue but one we want to make sure we get our hands around and sure that we take care of the guardsmen and women in california and make sure that we dont have any similar issues across the defense enterprise so we appreciate you being here. Before we adjourn, i just want to take a moment of personal privilege as this is my last subcommittee hearing and, one, thank my Ranking Member, ms. Davis, for all of her help over the last two years. When we set out an agenda for this congress, what we were going to accomplish in this subcommittee, we had quite a few major issues, and people said we were crazy for thinking we could get even one of them done, whether that be ucmj reform, retirement reform, healthcare reform, commissary reform. And due to your support, the hard work of all of the committee members, and the incredible 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 also, although hes not here, want to thank the sergeant major, mr. Walz. We know that standing beside every officer is an nco making sure he gets the job done right. And mr. Walz 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. Its been a great honor to serve, and it shows this committees commitment to taking care of our men and women in uniform, their families, our retirees, and our survivors. There being so further business, the hearing is adjourned. [captioning performed by national captioning institute] [captions Copyright National able satellite corp. 2016] captioning performed by the national captioning institute, which is responsible for its caption contents and accuracy. Visit ncicap. Org tonight, verizons Vice President talks about the companys changes over recent years including the purchase of a. O. L. And the proposed acquisition of yahoo. Also discussing the need for a massive fiber buildout. Hes interviewed by john mckenen, Technology Reporter for the wall street journal. Were building the the fiber deeper into the networks so the wireless signals are traveling a shorter distance. 90 is figer. We mentioned the internet of things and smart cities. Look at what cities are trying to do. You need a massive fiber infrastructure to do that. Thats live monday december 19, on cspan. Cspan student cam documentary contest is in full swing. This year were asking students to tell us whats the most important issue for the new president and congress to address in 2017. Joining is ashley, a former winner of 2015, for her documentry, help for homeless heroes. Tell us about your documentary. In 2015 my partner and i produced a documentary where we covered issues of Homeless Veterans on the streets of orange county, california. We decided that these are people who have fought for our country. And the fact that they are now living on the streets not having family, not having anyone who cared for them, were not ok. So we decide that had we are going to talk about this issue within our community and we decided to make a documentary about it. I encourage all seniors in high school, even juniors in high school, even middle schoolers to use this platform to speak their voice, to raise your voice, to say that your generation deserves to be heard in the government. D if there is a better place to speak these issues, this is it. I think my advice for the students who are on the fence of starting this documentary is to really look in to your community and see what is affecting those around you. Because they are the ones who you love. They are the wubsquho you see the most. They are the ones you are around with almost er day. So if theres an issue that you see happen every day on the streets, thats probably where you can start. Be a part of the documentary, because you want to be a voice for your community. Thank you for all of your advice and tips on student cam. If you want more information on our contest go to our website. Student cam. Org. Brian brian gruber, your book. Party, what is it about . Mr. Gruber it is about whether we achieve the mission when we go to war. All my life we have been in one military intervention or another. In business, when you look at a project, you look to see whether you have achieved your objectives, and at what cost. I