Created evidence that greatest enemies may be slow or level off. This was the climate, the land, and unfinished task that faced Lyndon Janson johnson. It documents the final year of president lyndon b. Johnson. His meeting with mexicos president. Awarding the medal of honor to a marine who fought in vietnam, and celebrating the holidays. And on the presidency. William hazelgrove. Edith wilson was Woodrow Wilsons second wife and buffered access to the president as he recovered from a massive stroke in 1919. For our complete American History tv schedule, go to cspan. Org. Two Army National guard officials told a House Committee about recent efforts by the pentagon to recover improper bonuses paid to california National Guard soldiers. Defense secretary ash carter has ordered the pentagon to suspend such efforts. I want to welcome everyone to the subcommittees hearing on the california National Guard bonus repayment issue. Were here today to hear from the california National Guard, the National Guard bureau, and the office of the secretary of defense on an issue that we must get right. In fairness to not only the california guardsmen that this affected, but all servicemembers Going Forward. Compensation, whether a bonus or Service Agreement or regular pay is an obligation to our servicemembers and their families that they should not have to worry about. I find it unacceptable we would place additional burden of years of concern about the legitimacy of a Student Loan Repayment on those who volunteered to serve. The Armed Services committee has taken action in the 2017 National Defense authorization act to address the issue and the subcommittee is taking every opportunity to review and zutsz the way forward so we can end a wide spread problem in the future. The purpose today is gain an understanding from those involved on why it happened and what we can do to prevent it Going Forward. Before i introduce our panel, let me offer congresswoman davis an opportunity to make opening remarks. Thank you, mr. Chairman. I would like to welcome witnesses today. I regret we have to have the hearing to discuss a major pay issue that impacts 17,000 soldiers in one state, from my home state of california. If not for the l. A. Times article in october, congress wouldnt know the extent of the issue. Nor would the issue have been elevated to the department of defense. Our understanding after this was first brought to our attention in 2010, is that a process was in place to adjudicate the issue but six years long were trying to fix it. Numerous investigations, audits, and briefings informed us of how we got to this point. My focus today is to ensure that through the legislation just passed by the house last week as part of the 2017 ndaa, an update from the dod that we guarantee that those who should keep their bonuses do so and that the systems and controls are in place to prevent an incident of this magnitude from happening again. While it is important that we perform oversight of the process moving forward, its also critically important that we do not forget the servicemembers and their families that have been deeply affected by this. Once these families have encountered Financial Hardships, we know it can be truly difficult to recover. Even if we return their bonus, we have already up ended their lives by creating unnecessary emotional stress and our military families, as we all know, have a tough enough time without the added burden of having to repay servicerelated deaths that they received in good faith. On another note, since this is his last hearing with us, i want to thank dr. Heck for his leadership and his dedication to serving our troops, their families and retirees over the past two years as chairman of the subcommittee. It has been a great privilege to work with him, and he will be missed. Thank you, ms. Davis. Thank you. I now ask unanimous consent that nonsubCommittee Members be allowed to participate in 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 secretary of defense in the army. We will give each witness the opportunity to make opening comments and each subcommittee member an opportunity to question the witnesses. I respectfully ask the witnesses to summarize the high points of your written testimony in no more than five minutes. Your complete written statements will be entered into the hearing record. We are joined on panel one by Lieutenant General timothy kadavy, director National Guard, National Guard bureau and David Baldwin of the california National Guard. General kadavy, you are recognized for five minutes. Thank you. Chairman heck, Ranking Member davis, distinguished members of the subcommittee, thank you for the opportunity to discuss the readiness of Army National guard personnel matters. On behalf of the Army National guard, i thank you for your support and commitment to our soldiers, their families, to our veterans, wounded warriors, and those who have made the ultimate sacrifice. For your Army National guard is today mobilized with more than 11,000 soldiers both abroad and here at home. Our soldiers are our nations and our armys greatest assets and should be treated that way. The subcommittees interests in recruiting and retention Incentives Programs is understandable. In 2008, the california National Guard discovered inaccuracies in a number of incentive contracts awarded and launched an investigation in 2010. The investigation revealed that the california 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 engage ed and their perpetration of fraud were punished. In 2011, the california Incentive Task force identified more than 17,000 california Army National guard cases that were potentially linked to the unethical management of the Incentives Program between 2004 and 2011. In 2011, the california National Guard with assistance from the National Guard bureau established a soldier incentive Assistance Center to assist any california National Guard member affected by the mismanagement of the Incentives Program. Every california National Guard soldier impacted received a formal written letter to inform them of this option. This center will continue to provide assistance to each affected soldier. As a result of the issues with the california Incentives Program, the Army National guard took steps to improve oversight within our incentives process. In 2010, the chief of the National Guard bureau, then general craig mckinley, ordered a review of all National Guard recruiting and retention Incentives Programs across all states, territories and the district of columbia, which found no systemic fraud. In 2012, the Army National guard completed the fielding of the guard incentive management systems, known as gims, to all states, territories and the district of columbia, which provides an Oversight Program for bonus and incentive payments. In 2016, an external review by the Army Audit Agency of gims validated its effectiveness and found the system substantially improved the controls throughout eligibility, monitoring and payment phases of the incentive process. State a. J. Nant generals have provided statements of insurance since 2012, documenting internal controls, processes to help prevent similar situations from occurring. Additionally, based upon reviews and assessments of the entire Army National guard, fraud and Incentives Program is not a nationwide problem. In november 2016, the United States property and fiscal officers provided additional assurances while reviewing their state Incentive Programs that there are no issues outside of what we know to be normal. Currently, mr. Peter levine, performing duties as the undersecretary of defense for personnel and readiness, is chairing a crossfunctional team with the National Guard bureau, the United States army, the office of secretary and defense general counsel and the defense finance and accounting service, dfas. This team is leading the effort to expeditiously resolve the cases involving the affected california Army National guard members. I understand you will hear from secretary levine little bit later this afternoon. Secretary of defense carters guidance is to adjudicate all cases by july 1st, 2017. The National Guard continues to support the crossfunctional teams process to ensure each 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 3 territories, and the district of columbia, and to prevent similar systemic fraud from occurring in the future. Thank you, and i look forward to your questions. Thank you, general. General baldwin, youre recognized for five minutes. Thank you, mr. Chair and Ranking Member davis and members of the committee. I do appreciate you very much taking up this issue to be able to help our soldiers. As general kadavy mentioned, in 2010, a whistleblower and very astute auditor uncovered signs of potential fraud within our Incentives Program in the california National Guard that resulted in the fairly broad investigation by the federal department of justice that went through the course of three years. The governor relieved my predecessor in march of 2011 and recalled me from afghanistan in april of that year in order to take charge of this organization, and with a mandate of cleaning up this and some other challenges. I immediately ordered a full investigation on our side into this matter to do a couple things. One is i wanted to see if theres any other cases of fraud that were out there that the federal government had not begun to investigate or picked up on. The second was to hold leaders accountable to find out, why did this happen and what were the problems. We found that there was a complete lack of internal controls, so we instituted an internal control system in order to prevent these problems from happening again, and then we held the leaders accountable that failed to provide the proper oversight or create a command climate. And we punished within the california National Guard 61 people, including firing four general officers and two full colonels. The feds prosecuted 44 soldiers. Some of those prosecutions continue to go on, and several people were put in jail for the fraud that they had committed. But as general kadavy mentioned, there were a lot of soldiers who were quaucaught up in this thro no fault of their own they took money from the federal government that they werent necessarily due or couldnt document why they did deserve that money. So we established the soldier Assistance Task force in 2011 to be able to address those problems. Because of the fact that we had found a 91 error rate in the initial audits that we had done, we were compelled to review every record. There were 17,000 soldiers and about 30,000 records. We were able to get through about 12,000 of the records. Of the 12,000, we found 4,000 soldiers that we were able to help keep their money to the tune of about 39 million because they had minor errors or problems in their contracts. And im very proud of the work that our task force did in order to help those soldiers keep the money that they, in fact, deserved. Of the remaining soldiers, there were 1,400 only 1,400, that we actually sent to recruitment. Those were soldiers that did not contact our task force for assistance, but also, we determined had problems that were probably insurmountable and we couldnt support an appeal. We submitted another 1,200 soldiers that did contact us for appeal because we felt that they, even though there were problems in their contracts or maybe they may not have met the letter of their contract, we felt that they had served honorably and should be able to keep their money. Of those, 400 cases were adjudicated by either the National Guard bureau or the army board for the correction of military records. So, 400 soldiers were able to win their appeals and they were able to keep about 4 million between those 400 soldiers. Another 400 soldiers, even with our endorsement, to help them keep their money, unfortunately, lost their appeal and have not gotten their money back. They lost about 3. 3 million amongst them. And finally, theres 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 address some of the problems that we face and 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 basically, fairly and with standards that err on the side of honoring the soldiers and their service and helping them keep their money. And again, thank you very much for the opportunity to discuss this today. Thank you, general baldwin. My first question is for general kadavy. Concerning the key recommendations in the u. S. Army audit agencys followup review issued in may of this year, they noted that while ngb had made progress in implementing many of the control procedures outlined in their prior audit, that not all of the internal controls had been put into place. Can you please update us on where ngb is in implementing the final recommended controls as put forward by the aaa . Yes, chairman. Thanks for the question. Can i just ask you to pull that microphone directly . Kind of like a rock star. Right here . Okay. So, there were 15 initial recommendations of which the 2016 Army Auditing Agency followup reported that all 15 initial recommendations were being implemented. Then they recommended four new additional recommendations, of which one will be fully implemented by the end of this calendar year, end of month december, and the other three will be implemented by the end of this fiscal year. Its about writing software and updating systems to get after that. Particularly, its related to officer bonuses and army medical recruitment of experts to make sure were tracking their contracts, as we do with all others. Great. I would ask that you keep the subcommittee apprised of the progress in implementing those final four controls. We will, chairman. While you noted in your testimony that there was no systemic fraud across the National Guard, has there been a review to look at whether or not there is widespread administrative errors . And general baldwin mentioned 91 error rate in what they reviewed in california. So, while there may not be criminal fraud taking place, what about the administrative errors that might be more common across the National Guard enterprise . So, chairman, the chief National Guard bureau at the time, general greg mckinley, asked us to look at the 50 states, territories and district of columbia, which completed in 2011. And we did identify some systemic problems, particularly related to lack of oversight, no separations of duties, inadequate training, outdated regulations, lack of manpower, and no overall tracking. But it said no widespread fraud. We were already working on the gims system, and we believe gims accounted for most of that, as shown through the Army Auditing Agencys followon recommendations and where were at. And i can just give you a quick upda update. So, on average, we do about 16,000 incentive contracts between 2011 and 2015, the latest year 2016. We do about 1,200 recruitments, on average, for normal processes, which is about 7 . And you listen to some of the errors that were previously and we have cut that down significant significantly. And the majority of those recru recruitments are for contractual issues, when a soldier leaves before the end of their