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88–274 PDF 2014

S. Hrg. 113–377 

FRAUD AND ABUSE IN ARMY RECRUITING 

CONTRACTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL AND 

CONTRACTING OVERSIGHT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 4, 2014 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEIKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

RICHARD J. KESSLER, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

KEITH B. ASHDOWN, Minority Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN CORCORAN, Hearing Clerk 

SUBCOMMITTEE ON FINANCIAL AND CONTRACTING OVERSIGHT 

CLAIRE MCCASKILL, Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

RON JOHNSON, Wisconsin 

JOHN MCCAIN, Arizona 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

MARGARET DAUM, Majority Staff Director 

RACHEL WEAVER, Minority Staff Director 

KELSEY STROUD, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator McCaskill ............................................................................................ 1 

Senator Johnson ............................................................................................... 3 

WITNESSES 

TUESDAY, FEBRUARY 4, 2014 

Lieutenant General William T. Grisoli, Director of the Army Staff, U.S. Army; 

accompanied by Major General David E. Quantock, Provost Marshal General of the Army, and Commanding General, U.S. Army Criminal Investigation Command and Army Corrections Command; and Joseph P. Bentz, 

Principal Deputy Auditor General, U.S. Army Audit Agency .......................... 4 

Lieutenant General Clyde A. Vaughn (Ret.), Former Director, Army National 

Guard .................................................................................................................... 21 

Colonel Michael L. Jones (Ret.), Former Division Chief, Army National Guard 

Strength Maintenance Division .......................................................................... 24 

Philip Crane, President, Docupak .......................................................................... 26 

Lieutenant Colonel Kay Hensen (Ret.), Corporate Compliance Officer, 

Docupak, and Former Contracting Officer, National Guard Bureau ............... 27 

ALPHABETICAL LIST OF WITNESSES

Crane, Philip : 

Testimony .......................................................................................................... 26 

Prepared statement .......................................................................................... 58 

Grisoli, Lieutenant General William T.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 41 

Hensen, Lieutenant Colonel Kay: 

Testimony .......................................................................................................... 27 

Prepared statement .......................................................................................... 61 

Jones, Colonel Michael L.: 

Testimony .......................................................................................................... 24 

Prepared statement .......................................................................................... 52 

Vaughn, Lieutenant General Clyde A.: 

Testimony .......................................................................................................... 21 

Prepared statement .......................................................................................... 48 

APPENDIX 

Statement for the Record from General Quantock ............................................... 66 

Responses to post-hearing questions for the Record: 

Mr. Grisoli ......................................................................................................... 69 

Mr. Bentz .......................................................................................................... 70 

(1) 

FRAUD AND ABUSE IN ARMY RECRUITING 

CONTRACTS 

TUESDAY, FEBRUARY 4, 2014 

U.S. SENATE, SUBCOMMITTEE ON FINANCIAL AND CONTRACTING OVERSIGHT

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m., in 

room SD–342, Dirksen Senate Office Building, Hon. Claire 

McCaskill, Chairman of the Subcommittee, presiding. 

Present: Senators McCaskill, Johnson, and Ayotte. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Welcome, everyone. I know that my colleague has a time crunch this morning and so I am going to try 

to begin right away so we can hopefully get time for both of us to 

have some questions before he has to go. Let me begin with a very 

brief opening statement. 

This hearing will now come to order. 

The Recruiting Assistance Program (RAP) was born in 2005 

when the Army National Guard (ARNG) was struggling to meet its 

recruitment numbers due to the wars in Afghanistan and Iraq. The 

National Guard’s Recruiting Assistance Program (G–RAP), would 

provide incentives to National Guard soldiers and civilians to act 

as informal recruiters, or recruiting assistants (RA). These recruiting assistants would receive a payment between $2,000 and $7,500 

for every new recruit. The contract was run out of the Army National Guard’s Strength Maintenance Division (ASM), and administered by a contractor, Docupak. The recruiting assistants were 

hired by Docupak as subcontractors. After the program was put in 

place, the National Guard began to meet its recruiting goals and 

the Active Army and Army Reserve began their own similar programs. 

In 2007, however, Docupak discovered instances of potential 

fraud, which it referred to the Army. Four years later, after suspecting a pattern of fraud, the Army requested a program-wide 

audit, and what the audit found was astounding—thousands of National Guard and Army Reserve participants who are associated 

with payments that are at high or medium risk for fraud, with an 

estimated total amount of $29 million paid fraudulently. This 

criminal fraud investigation is one of the largest that the Army has 

ever conducted, both in terms of sheer volume of fraud and the 

number of participants. 
2 

Although recruiters were prohibited from participating in the 

RAP program because recruiting was already part of their job duties, investigators found that potentially over 1,200 recruiters 

fraudulently obtained payments. For example, in Texas, a former 

member of the National Guard was sentenced to 4 years and 9 

months in prison for leading a conspiracy to obtain $244,000 in 

fraudulent recruiting bonuses. He did this by providing kickbacks 

to National Guard recruiters in return for the names and Social Security numbers of recruits who had, in fact, already been recruited. 

The fraud was not limited to service members. Because anyone 

could sign up to be a recruiting assistant, there are also cases of 

people unaffiliated with the Army stealing names and Social Security numbers of potential recruits and receiving referral payments 

that they were not entitled to. 

Even one case of fraud would have been too many. Instead, we 

now know that thousands of service members, their families and 

friends may have participated in schemes to defraud the government they served and the taxpayers. Worst of all, this program has 

the potential to become a stain on thousands of recruiters and National Guard members who do their jobs so well and so honorably. 

And when I looked into how this could have happened, the story 

just got worse. According to the auditors, the National Guard made 

mistake after mistake in designing and implementing the program 

that left it vulnerable to exactly the kind of fraud that occurred. 

In addition, Army auditors found that the contracts failed to comply with government contracting rules, including basic requirements to conduct the kind of minimal oversight that could have detected and prevented some of this fraud. 

And as if all that was not bad enough, the Army has determined 

in its investigation that the entire program was illegal from the beginning. The payments did not fall in a permissible category of 

bonus payments authorized by law. The program also exceeded the 

limits that Congress had placed on legal bonuses the Army could 

pay to encourage the referral of new recruits. As a result, the Army 

concluded that all of the money spent on the program, all $386 million of it, was illegal. 

I cannot begin to express how disappointed and angry I am to 

hear of such carelessness with taxpayer dollars. I appreciate that 

recruiting is key to maintaining our military strength and key to 

making sure that we have the skills that our military needs, particularly in wartime. But we have to make sure that we are going 

about it the right way. 

Congress and the American public have entrusted the Army with 

taxpayer dollars and with upholding standards of integrity. We 

cannot have programs fly in the face of law and good government 

practice simply to meet recruiting numbers, no matter how desperate the situation. 

To its credit, the Army’s leadership immediately suspended the 

program back in 2012 when the auditors began to expose these 

massive problems, and they began a variety of investigations to determine how this could happen and who was responsible. Some of 

those investigations are still ongoing and I look forward to learning 

the results when they are completed. 
3 

However, I am disappointed that it took a small story in the 

Washington Post in 2012 for this Subcommittee to even have an inkling about problems with this large contract, and that it took almost 2 years and our repeated insistence for the Army to inform 

the Subcommittee that the problems that the Post reported were 

just the tip of the iceberg. Since then, the Army has cooperated 

fully with our requests and I thank them for that. 

Today, I want to spend some time delving into exactly what went 

wrong in the design and management of this program and how so 

many mistakes were made. I also want to discuss what the Army 

is doing to hold all the individuals involved accountable. I will also 

ask questions about what concrete steps the Army has taken to address all the deficiencies uncovered so far. 

I thank you all for being here today and I look forward to your 

testimony. Senator Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Madam Chairman, and let me 

apologize for having to leave at about 10:25. I also want to thank 

you for holding this hearing and your pursuit of this particular 

issue in terms of oversight. I think it is definitely an important 

issue. I want to thank the witnesses who have taken time to meet 

with me in my office and also provide me some of the information, 

because this can be pretty detailed and pretty complex, exactly 

what happened here. 

From my standpoint, I think you did a pretty good job laying out 

the issues, laying out what the problem was. I basically have three 

questions. Did the National Guard have the legal authority to do 

what it did? I think that is still certainly a question in my mind. 

It sounded like they sought legal counsel. I think the question is 

whether there was undue pressure put to get basically those legal 

opinions to allow them to do this. I think that is a question we 

have to certainly ask. 

Has there been accountability and will there be accountability? 

Will there be accountability for those individuals that basically 

took the authority to institute this program, which obviously went 

awry? And then, do we have proper corrective action so this does 

not happen in the future? To me, those are the three big questions. 

I think I am heartened by the fact, and I think you would probably agree with this, that the Army did, once they became aware 

of it, immediately suspend the program. I think the investigation 

that is going on now is serious. I think that there are criminal 

charges being filed and pursued, and I think that has to be the 

case. 

So, from my standpoint, the program has been ended. I think 

this is very appropriate in terms of oversight. I think the fact that 

you have pushed this oversight hearing is certainly helping move 

this process along. 

And, again, I just want to thank you. I wish I could stay longer, 

because this is an important issue. 

Senator MCCASKILL. Thank you. 

Senator JOHNSON. Thank you. 

Senator MCCASKILL. I want to introduce our witnesses. Lieutenant General William Grisoli is Director of the Army Staff at the 
4 

1The prepared statement of Mr. Grisoli appears in the Appendix on page 41. 

Department of the Army Headquarters, a position he has held 

since July 2013. In this capacity, he is responsible for ensuring the 

effective integration and coordination of Army policy, positions, and 

procedures across the functional areas of Army responsibility. General Grisoli previously served as Director of the Army Office of 

Business Transformation within the Office of the Under Secretary 

of the Army. 

Major General David Quantock is the Provost Marshal of the 

Army and Commanding General, United States Army Criminal Investigation Command (CID) and Army Corrections Command. He 

serves as the Army’s top law enforcement official, with responsibility for investigations and incarcerations of Army personnel. General Quantock previously served as Commanding General of the 

U.S. Army Maneuvers Support Center of Excellence in the most excellent Fort Leonard Wood in Missouri. 

Joseph Bentz is the Principal Deputy Auditor General with the 

U.S. Army Audit Agency (AAA), with responsibility for developing 

and overseeing the execution of the Army’s internal audit plan and 

coordinating with other accountability organizations within the 

Federal Government. Prior to becoming Principal Deputy Auditor 

General, Mr. Bentz served as Deputy Auditor General for Acquisition, Logistics, and Technology Audits (ALT). So, you went from the 

Logistics Civil Augmentation Program (LOGCAP) to recruiting 

fraud. 

OK. I want to thank you all for being here. It is the custom of 

this Committee for you to stand and take the oath. 

Do you swear that the testimony that you are about to give will 

be the truth, the whole truth, and nothing but the truth, so help 

you, God? 

General GRISOLI. I do. 

General QUANTOCK. I do. 

Mr. BENTZ. I do. 

Senator MCCASKILL. Thank you very much. 

And, we will begin with you, Major General Quantock. 

General QUANTOCK. I think the opening statement will be with 

General Grisoli. 

Senator MCCASKILL. Oh, great. OK. 

TESTIMONY OF LIEUTENANT GENERAL WILLIAM T. GRISOLI,1

DIRECTOR OF THE ARMY STAFF, U.S. ARMY; ACCOMPANIED 

BY MAJOR GENERAL DAVID E. QUANTOCK, PROVOST MARSHAL GENERAL OF THE ARMY, AND COMMANDING GENERAL, U.S. ARMY CRIMINAL INVESTIGATION COMMAND AND 

ARMY CORRECTIONS COMMAND; AND JOSEPH P. BENTZ, 

PRINCIPAL DEPUTY AUDITOR GENERAL, U.S. ARMY AUDIT 

AGENCY 

General GRISOLI. Good morning, Chairman McCaskill and Ranking Member Johnson. Thank you for the opportunity to discuss the 

Recruiting Assistance Program and the Army’s comprehensive efforts to detect, analyze, and investigate allegations of fraud and 

mismanagement. 
5 

Before I discuss the particulars of the Recruiting Assistance Program, I want you to know that the accusations of fraud, mismanagement, and other potentially criminal activities surrounding 

this program are as disturbing to us as I know they are to you. You 

have my commitment that we will do whatever it takes to put this 

right, and you will hear today we have already done much, but 

there is more to be done. We will also punish those who have broken the law and recoup resources where we can. 

The Recruiting Assistance Program was created in 2005 to bolster Army National Guard recruiting efforts during a period of increased demand coupled with the difficult recruiting market. RAP 

provided payments to recruiting assistants for each potential enlistee that enlisted and entered basic training. This effort was coordinated by a contractor, Docupak. All components of the Army 

implemented a form of RAP for various periods of time: The Army 

National Guard from 2005 to 2012; the Army Reserve from 2007 

to 2012; and the active duty from 2008 to 2009. The total program 

was approximately $459 million. 

In 2007, Docupak alerted the United States Army Criminal Investigation Command to possible fraud in the Recruiting Assistance Program. CID initiated several potential fraud case reviews, 

and in 2011 requested the U.S. Army Audit Agency begin a fraud 

risk assessment of the program. Upon learning of the preliminary 

results, in February 2012, the Secretary of the Army immediately 

canceled the Recruiting Assistance Program and directed the recovery of the remaining unexecuted RAP funds. He also issued a comprehensive directive to determine ultimate responsibility and accountability for the failures in the RAP program and to initiate appropriate corrective action. The Army created a task force to comprehensively and thoroughly review the scope, contracting organizational structural, contracting procedures, possible misuse of 

Army funds, and potential criminal activity. 

In September 2013, I updated the Secretary of the Army on specific actions the Army had taken to determine ultimate responsibility and accountability for the failures in RAP and the corrective 

actions instituted. The Secretary of the Army subsequently signed 

another directive focused on additional corrective actions to ensure 

individual and organizational responsibility and accountability. 

Currently, the Assistant Secretary of the Army (ASA) for Acquisition, Logistics, and Technology is reviewing the National Guard 

Bureau (NGB) and the Mission Installation Contracting Command 

Corrective Action Plans in response to their program management 

reviews, which found that there had been a general breakdown in 

sound business practices. 

As indicated in my written testimony and by documents previously provided to the Subcommittee, corrective actions and investigations are still ongoing and with completion dates ranging from 

Spring 2014 to the end of 2016. You have my assurances we will 

continue to keep you informed as these investigations proceed. 

In summary, the scope of the Recruiting Assistance Program investigations is complex and far-reaching. The Army has taken aggressive and comprehensive steps leading to corrective actions to 

prevent future occurrences and is committed to working with Congress as we move forward in this matter. Your focus helps us focus 
6 

our oversight. The Army will also identify and take action against 

individuals who should be held accountable. I am confident the end 

result will be substantially improved recruiting and contracting 

processes in the National Guard Bureau and the entire United 

States Army. 

Chairman McCaskill, Ranking Member Johnson, thank you for 

the time and interest in this matter. I look forward to your questions. 

Senator MCCASKILL. Thank you so much. 

I will just ask a couple of questions so there will still be some 

time left for you to ask questions before we leave. 

Senator JOHNSON. OK. 

Senator MCCASKILL. Let me get a sense of why it took 4 years 

from the time that Docupak gave you some indication that there 

was a problem? Can you lay out for us in a way that would make 

me feel more comfortable why it took until 2011 for the audit to 

be called for? 

General QUANTOCK. Chairman McCaskill, I can take a shot at 

that question. 

Senator MCCASKILL. OK. 

General QUANTOCK. If you look at how the case came to 

everybody’s attention, first of all, there were only two cases in 2007 

that our CID investigation—that came through a fraud hotline that 

was—— 

Senator MCCASKILL. OK. 

General QUANTOCK [continuing]. Directed. So, understand that 

over this period of time, CID investigated over 43,000 felony criminal investigations. 

Senator MCCASKILL. Right. 

General QUANTOCK. So, two cases in 2007 would not have raised. 

And then in 2008, there were five cases. 

Senator MCCASKILL. OK. 

General QUANTOCK. And then, of course, again, that would not 

send a signal, either. And then two more cases in 2009. 

It was not until 2010 when we had 10 cases in 1 year that one 

of our Huntsville agents in Huntsville, Alabama, realized there is 

something that could be misconstrued or cause some kind of systematic concern. So, they raised it to us. We took a hard look at 

it. That is when we, basically, went over to AAA and said, can you 

take a hard look at this? There looks to be some systematic failures 

in this program. Could you do a deep dive on this program and see 

if there is anything that we need to be concerned about, other than 

the 19 cases that we are doing. 

In addition to that, Docupak came to us in 2010, because they 

got the same 10 cases we did, and they also made us aware that 

they are seeing some irregularities, as well. So, it was a combination of Docupak, our agents at the Huntsville, Alabama, office, that 

really brought this to light, and that is when we transferred it over 

to AAA to take a hard look across the entire program. 

Senator MCCASKILL. Well, make sure you convey to that investigator, that law enforcement professional in Huntsville, our appreciation that he raised the flag in 2010. 
7 

So, basically, what you are saying, General, is that up until 2010, 

these appeared to be isolated incidents as opposed to a pattern and 

a systemic fraud. 

General QUANTOCK. Yes, ma’am. I have 150 fraud investigators, 

civilians, and we look at dozens of fraud investigations. So, this 

was just another one of those kind of dots on a map that cross the 

entire United States. Not only that, the 19 cases were, again, 

across the United States. So, there was really nothing that just 

jumped to our attention that would have directed us—— 

Senator MCCASKILL. OK. 

General QUANTOCK [continuing]. That we have a major problem 

here. 

Senator MCCASKILL. General Grisoli, one of the things—and I 

will get to questions for the auditor after Senator Johnson has a 

chance to question—but one of the things I am worried about is 

holding people accountable, and this is maybe a question for both 

you and General Quantock. I know that 2 years ago, we identified 

1,200 recruiters and over 2,000 recruiting assistants. I know we are 

looking at a statute of limitations. 

I am really concerned that there are going to be people that wear 

our uniform that are going to beat this by virtue of the statute of 

limitations, or they are only going to get ‘‘titled,’’ and are not going 

to lose benefits, and will be allowed to retire and go their way. 

These are criminals who have dishonored the uniform that we are 

all so proud of, and I would like you to address briefly, if you 

would, what we need to be doing statutorily, whether that is 

lengthening the statute of limitations or making sure that there is 

some kind of procedure internally that you lose your benefits. I do 

not want to mess with anybody’s benefits who served our country 

honorably, but if you have served dishonorably, I think you deserve 

more than the word ‘‘titled’’ in your file. 

General GRISOLI. Madam Chairman, we have the same concern 

you have on this particular issue, and as we prioritize our efforts, 

we try to prioritize the ones of greater risk as falling into that category of where the statute of limitations. 

As far as looking at some assistance from Congress, we are OK 

now, but I think we may have to come back and ask for some assistance, but we will let you know as we work with you through 

these problem sets and we address the highest priority first and 

the ones that are closest to the statutory limits. We will work 

through that and communicate with your staff. 

Senator MCCASKILL. It is going to break my heart if there are 

a lot of people who get away with this, on behalf of all the amazingly brave and courageous people who step across the line. It is 

just going to break my heart, and we have to figure out a way to 

hold every single one of them accountable, if nothing else, just for 

the benefit of all those, the vast majority, that serve so well. 

General GRISOLI. Madam Chairman, I would—— 

General QUANTOCK. I would agree. Go ahead, sir. 

General GRISOLI. Madam Chairman, I would just say that this 

was one of our major points about prioritizing these cases was 

based on age of the case, so we could get after and do exactly that. 

The other thing was going through—basically, we have 100,000 

individuals that could be held accountable and trying to figure out 
8 

the high-and the medium-and the low-risk, so we did not waste our 

time on the low-risk cases and we went after the high-and the medium-risk, and also the biggest dollar cost that was lost. 

All of those things sort of were our focus, so we could really focus 

in. And that is why, today, we have 104 cases adjudicated, 16 individuals already in confinement, and we, again, continue to go after 

this very aggressively across the entire CID force. 

Senator MCCASKILL. Great. Senator Johnson. 

Senator JOHNSON. Thank you, Madam Chairman. 

Let me just start out, because we discussed the history a little 

bit of recruiting bonuses, does anybody think just per se recruiting 

bonuses are a bad idea? 

General GRISOLI. No, Senator, I do not. I think that there are 

certain times when the market is tough to recruit that we have to 

have those incentives to bring young men and women into the military. So, we need to have those tools to be able to man the force. 

Senator JOHNSON. Now, in my business, we also employed recruiting bonuses, and they were most effectively paid out to employees, people that knew folks, understood the operation. In the 

past, recruiting bonuses actually had been legally paid out to members of the service, correct? 

General GRISOLI. Correct, Senator. 

Senator JOHNSON. But in this case, paying those bonuses to military personnel was illegal, improper? 

General GRISOLI. There are many different ways something can 

be illegal. For example, the types of funds that are used. When we 

look at our inefficiency concerns, we look at the type of money, the 

purpose of the money that Congress gives us, and the time we are 

supposed to spend those dollars. And so that is what we took a look 

at, and if those are not done properly, it is illegal. 

Senator JOHNSON. Now, as a manufacturer, I am always trying 

to drill down and find out what the root cause of this problem was. 

So, we have a recruiting bonus program, which on the surface 

makes sense and actually allowed you to recruit the number of individuals we needed. But then something went wrong. What was 

the breakdown? What was the root cause that something that may 

have been a good idea, a recruiting bonus, went across the line and 

resulted in fraud and criminal activity? 

General GRISOLI. The breakdown, the fundamental breakdown, 

was in how they established and then executed the program. So, 

when you establish a large acquisition program of this nature, first 

of all, you have to have the right internal controls and processes 

in place. Some of the other parts that were challenging for the National Guard Bureau was their actual organizational structure that 

we found. So, the structure was improper. They are working to correct that and we have addressed that. The establishment and the 

plan, the acquisition strategy, was improper, so, therefore, that led 

to poor execution. 

Senator JOHNSON. The last area I just want to explore is the authority of the Guard to actually utilize funds from this standpoint. 

Now, at least the previous recruitment bonus program was actually 

passed as a law by Congress, correct? And that was in what year? 

General GRISOLI. That was in 2006, that Congress had the Bonus 

Referral Program. 
9 

Senator JOHNSON. And this program started the same year, correct? 

General GRISOLI. It started prior to that. 

Senator JOHNSON. It actually started prior to that. 

General GRISOLI. Yes, sir. 

Senator JOHNSON. So, I guess, let me ask Mr. Bentz here, have 

you looked at the legal counsel, the legal advice that the Guard relied on to institute this program for their authority? 

Mr. BENTZ. Senator, we did not audit the authority under which 

the RAP program was established. 

Senator JOHNSON. General Grisoli, have you looked at that? 

General GRISOLI. Senator, the Guard relied on Section 10503 of 

Title X for our legal basis, which was their authority and responsibility to assist States. That particular area is ongoing review by us 

right now. We wanted to have our legal counsel take a hard look 

at that authority. 

Senator JOHNSON. Now, at the time, did the legal counsel look 

at that statute and express a legal opinion that this was legal and 

authorized? Or was this something that the command at the time 

just took upon themselves and took a look at that statute and said, 

OK, we have the authority, and just moved forward? 

General GRISOLI. At that particular time, we believe there was 

some legal counsel by the National Guard Bureau to their contracting office. The question in mind right now, was it the correct 

legal counsel to the Guard Bureau. 

Senator JOHNSON. Well, is there documentation of that? I mean, 

are there legal written opinions provided to the procuring officer? 

General GRISOLI. We do not have a legal opinion or opine of the 

situation at 2005, no, sir. 

Senator JOHNSON. If that legal opinion was sought, it was just 

a verbal opinion? 

General GRISOLI. I would have to presume, Senator, that that is 

what it was. 

Senator JOHNSON. OK. I would really dig into that. I would want 

to find out exactly how this authority was assumed, on the basis 

of what legal opinion. If it was verbal, I would get testimony from 

the counsel that provided that legal advice. I think it is a legitimate question. I think it is kind of the heart of the issue here, too, 

just in terms of ongoing oversight, to prevent this thing in the future. So, certainly from my standpoint, I want that question answered. 

General GRISOLI. Senator, we will do that, and as we review the 

basic authority for that, that will be part of our review. 

Senator JOHNSON. OK. Again, I want to thank the witnesses for 

your service, for coming forward, and again, thank you, Madam 

Chairman, for this excellent hearing. 

Senator MCCASKILL. Thank you. 

Senator JOHNSON. Thank you. 

Senator MCCASKILL. Let me followup on that a little bit. If there 

is a new program undertaken in the military, I was under the assumption that in the active branches, there was always the requirement of a written legal opinion for a program to begin, especially one that was embracing hundreds of millions of dollars of expenditures. 
10 

General GRISOLI. Madam Chairman, that is correct. When you 

establish an acquisition strategy, the Contracting Officer should always go and get a legal opinion on that strategy. 

Senator MCCASKILL. But that did not occur here. 

General GRISOLI. We do not have evidence of that occurring. 

Senator MCCASKILL. And, is that because there is not a written 

requirement of that in the Guard as there is in the active branches, 

or is that because that requirement was disregarded? 

Mr. BENTZ. Sir, I can talk to the extent to which the Guard Bureau, in their contracting process, sought legal review or did not 

seek legal review. We concluded that their efforts to seek legal review on the RAP contracts was insufficient. In certain instances, 

they did not seek legal review. In certain instances, they received 

a legal review that was neither dated, fully commented on, and/or 

questions or comments from the legal review fully resolved, ma’am. 

Senator MCCASKILL. My friend from Missouri will be on the next 

panel and there is no question that I know that no one intended 

anything other than good to come out of this. We needed recruits. 

We were in a very stressful situation for command. We were, really, for one of the first times in our history, beginning to use the 

Guard and the Reserves in an operational capacity. They were 

being asked to do what they had never been asked to do before. 

And so I am sympathetic to the command pressure but I need 

to be clear here that it was, in fact, command pressure that 

brought this about rather than a thorough vetting of this program 

and the way it was going to operate through normal channels of 

legal counsel and acquisition policy. Is that a fair characterization? 

Mr. BENTZ. Senator, we did conclude that there was pressure 

brought from the ASM folks on the contracting folks to make RAP 

happen. 

Senator MCCASKILL. OK. Let me go back. Let us talk about the 

contracting process, because this is particularly frustrating. I 

worked on contracting for years and I keep thinking, OK, we have 

really turned the corner, and then one of these issues turns up. 

Now, admittedly, this was back in 2005, before we really began focusing the entire military apparatus on basic core competency on 

contracting. 

Now, I do not need to spend much time. I have been in briefings 

many times with your folks, General Quantock, about the fraud 

that occurred and the theft that occurred in the context of Iraq, 

and to a lesser extent in Afghanistan. We are doing better. We 

have actually got training for the contracting officer representatives (CORS). We stood up a contracting command. I think the 

leadership of the military now understands that you cannot have 

the attitude, ‘‘I needed it yesterday, I do not care what it costs,’’ 

because that is kind of what the attitude was. 

But, talk to me a little bit about this contract and how bad it 

was. Was there anything they did that met the requirements of 

Federal procurement law as it related to the way this contract 

came about? 

Mr. BENTZ. Our conclusion was, very little. There are actually 

three contracts associated with the RAP. Initially, the first Guard 

RAP contract was a task order placed off an existing marketing 

services contract, so outside the scope of that contract. As they 
11 

1The information from Mr. Quantock appears in the Appendix on page 66. 

2The information from Mr. Quantock appears in the Appendix on page 66. 

moved forward, there was little acquisition planning, as referred to. 

In the award of the G–RAP base contract in 2007, there were processes that favored the incumbent contractor, did not actually account for full and open competition in that award. 

Senator MCCASKILL. You are being very careful because you are 

an auditor, and I definitely understand, because having been an 

auditor, you never want to shade anything. But, let me state it 

plainly and see if you disagree with my statement. 

Docupak task ordered off an existing marketing contract that 

really had nothing to do with this particular function. Then, when 

it came time for competition, Docupak had inside information that 

allowed them to compete in a way that was totally unfair to the 

other potential bidders on this particular contract, so, no surprise, 

they got the contract. 

Mr. BENTZ. I agree, ma’am. 

Senator MCCASKILL. OK. Let us talk about leadership and fraud 

in this instance. There is evidence that one major general committed fraud, 18 full colonels, 11 lieutenant colonels, and dozens of 

other mid-level and junior officers. I need to know, and if you cannot give me specifically all of those today, I need to know for the 

record what has occurred in all of those instances in terms of holding them accountable. It is particularly egregious when it is our 

leadership, and that is why I hope they have received priority, and 

I would love you to speak to that, General Quantock. 

General QUANTOCK. Yes, ma’am. Actually, that was our first priority, is to look at all senior leader misconduct up front. So, in addition to age, we also looked at senior leader misconduct. I would 

have to take it for the record1 to go back and break down all those 

cases. But, again, it was dollar value, it was age of the case, and, 

of course, our first priority was senior leader misconduct, before we 

looked at anything else. 

Senator MCCASKILL. To your knowledge, have any of them gone 

to prison? 

General QUANTOCK. No, ma’am. To my knowledge, none have 

gone to prison. 

Senator MCCASKILL. Have any of them lost benefits, to your 

knowledge? 

General QUANTOCK. No, ma’am, not to my knowledge. 

Senator MCCASKILL. Have any of them been forced to resign from 

their service? 

General QUANTOCK. I would have to take that one for the 

record,2 ma’am. 

Senator MCCASKILL. OK. It is very important that we know that. 

General QUANTOCK. Yes, ma’am. Absolutely. 

Senator MCCASKILL. I think we have learned one thing over the 

last 6 or 7 years of contracting oversight, and that is the way you 

really begin to change a culture that would allow this to happen 

is to have everyone see that senior leaders are held as accountable 

as a young member of the Guard who figured out he or she could 

scam the system and game this to make thousands of dollars he 

or she was not entitled to. 
12 

General QUANTOCK. I will tell you that one of the senior leaders, though, it was one case and it was for $7,500 because they brought 

in a doctor. In that particular case, the statute of limitations did 

rise up and the Assistant U.S. Attorney failed to go forward with 

the case because—it was not that the statute of limitations had 

then expired at that point, but by the time it went through the 

courts, it would have. So, I think that is also. 

And also, the small dollar amount. Although to us it is abhorrent—to the Congress, it is abhorrent for senior misconduct, but for 

many Assistant U.S. Attorneys, it is more dollar value and bang for 

your buck than it is on actually who commits the offense. 

Senator MCCASKILL. Well, the thing I am most concerned about 

is I understand that there are very few U.S. Attorneys, unless they 

work in the District of Columbia or someplace where they have primary criminal jurisdiction, that would bend over or pick up something off the floor for a $7,500 fraud because they typically are focused on much bigger cases. 

On the other hand, the worst thing that could happen would be 

for senior leadership to go quietly into the night, and that is why 

I want to know, what tools do you have to make sure that everyone 

understands that there was punishment here? I mean, even if they 

are not going to prison, even if the criminal statute of limitations 

have run, I need to know what else you can do. 

General QUANTOCK. Well, there are, of course, many administrative tools in the Secretary’s kit bag, to include Promotion Review 

Boards at the very end of this chain to see if—did they serve at 

that particular last rank honorably, and it may impact, for example, what you talked about, future retirement benefits. 

Senator MCCASKILL. What about the Uniform Code of Military 

Justice (UCMJ)? Is it applicable for any of these? 

General QUANTOCK. Yes, ma’am. However, most of them were in 

the Guard and most of them are in Title XXXII, non-Title X status. 

So, it would fall to the Guard to prosecute many of these cases, or 

in many cases, it is going to even fall to the civilian jurisdiction, 

civilian courts, to take the vast majority of these cases. 

Senator MCCASKILL. Well, for the leadership cases, I am thinking. I would like to explore that further, and we will do some questions for the record, because I have gotten very familiar with the 

UCMJ on another subject matter and I think it is really important 

that we utilize it aggressively when we have had leadership that 

may fall outside of the interests, because we have a lot of cases 

that have dual jurisdiction, as you well know—— 

General QUANTOCK. Yes, ma’am. 

Senator MCCASKILL [continuing]. General. We have lots of cases 

where the civilian prosecutor could take it or the military could 

take it. And, frankly, when that occurs, many times, the civilian 

does not want it, as we have learned in sexual assault. Case after 

case, the civilian prosecutors say, ‘‘I will not touch that,’’ and the 

commanders have said, we are going to go forward. 

General QUANTOCK. Roger. 

Senator MCCASKILL. We know that has occurred, literally—— 

General QUANTOCK. Yes, ma’am. Of course—— 

Senator MCCASKILL [continuing]. A hundred times in the last few 

years. 
13 

1The information from Mr. Quantock appears in the Appendix on page 67. 

General QUANTOCK [continuing]. The subject at that time is in 

Title X—— 

Senator MCCASKILL. Right. So, you cannot—— 

General QUANTOCK. So that is the Title X-Title XXXII discussion 

that we always have when we want to take a case that we cannot. 

So, I agree with you a hundred percent, ma’am. We need to hold 

our senior leaders accountable, more accountable than anyone else, 

and we will take for the record1 where we are at on that. 

Senator MCCASKILL. And we may need to look at, in the Defense 

Authorization next year, at the UCMJ, because I know we are 

going to continue to focus on making sure we have it right there. 

It might be that we could do some things that would help. 

General QUANTOCK. Yes, ma’am. 

Senator MCCASKILL. Let us talk a little bit about oversight. This 

is an interesting part of this problem that I think is not immediately apparent to anyone who happens along this story. That is, 

the recruiters do not really work for the Army National Guard. 

They work for each individual Adjutant General in every State, is 

that correct? 

General GRISOLI. Chairman, that is correct. 

Senator MCCASKILL. So, what authority does the National Office 

of the National Guard have over these recruiters, if any? 

General GRISOLI. Chairman, you are getting at some of the crux 

of the problem, which is the decentralized execution of this particular contract and not having special management oversight or 

internal controls, and that, I believe, and we have found, has 

caused many of the challenges. 

Senator MCCASKILL. So, the bottom line is the recruiters in every 

State work for the Adjutant General (TAG) in every State who is 

appointed by that State’s Governor and is responsible for hiring the 

recruiters and overseeing the recruiters. 

General GRISOLI. The States have that requirement, and that 

is—the central National Guard Bureau or Army Guard assists 

them. 

Senator MCCASKILL. So, that is why we see a wide disparity between some States and other States? 

General GRISOLI. I think it is a training issue, because some 

States are better than others, and I think that causes a challenge 

in overall management. 

Senator MCCASKILL. Could you speak to that, Mr. Bentz, about 

the differences in terms of the patterns that you might have seen 

or maybe it is General Quantock—because we have some States 

where it looked like a free for all, and then other States where it 

appeared that there was not this rampant fraud. Could you give us 

any insight as to what was the difference in management in the 

various States in terms of oversight of this contract? 

Mr. BENTZ. I cannot. Our look at the oversight of the contract 

was really at the Guard Bureau and the folks at the headquarters 

level, oversight of the contractor. I cannot speak to—— 

Senator MCCASKILL. Can you, General Quantock, speak to the 

differences? We had a lot in Colorado. We had a bunch in Texas. 

There were other States that did not have as much. I mean, it is 
14 

1The information from Mr. Quantock appears in the Appendix on page 67. 

almost like word got out and nobody was paying attention, and all 

of a sudden everybody thought, OK, the bank is open. Let us go 

for it. 

General QUANTOCK. Ma’am, I have to take that for the record.1

We looked at this in a holistic sense. We did not really dive down 

into actually the interaction between each of the States and really 

make a comparison. 

Senator MCCASKILL. Well, I think we need to do that, because I 

think if we are going to hold people accountable, I think it is very 

important that in each individual State, the Adjutant General understands what happened under their watch and that they have 

primary responsibility for oversight and control over the recruiters, 

even though the program was designed in a way that it was very 

hard to have the adequate controls. 

People knew this was going on. There is no way that there was 

not a culture of people saying, hey, here is the deal. There is a 

bounty and we know these people are signing up. My understanding is, we even had some high school counselors who knew 

that their kids were interested in the Guard, so they went on and 

signed up to take credit and get money for these enlistments, even 

though these kids were going anyway. Is that true? 

General QUANTOCK. Yes, ma’am, that is true. 

Senator MCCASKILL. OK. Let us talk about the lack of controls 

in the program itself. Mr. Bentz did your recommendations include 

ways to design a recruiting program with a reward for a recruiting 

bonus where you would have some control? 

Mr. BENTZ. We did talk to changes to the contract, to the program, as far as the way the contract is set up and the fee that 

would be paid related to the contract. We did, obviously, look at the 

controls. The contractor, obviously, is responsible for controls over 

execution of the contract, and then the government has a responsibility to do quality assurance on the contract. 

Senator MCCASKILL. How many investigators do you have working this right now, General Quantock? 

General QUANTOCK. Ma’am, I have 60 full-time investigators 

working on this. We have brought in from the National Guard, 

from the Reserve, and some of our CID retiree rolls have come on. 

So, this is a task force, 60 full-time. Now, I also will tell you, many 

of our agents, or many of our other agents throughout the force are 

also working it. A total force of about 200, but 60 full-time. 

Senator MCCASKILL. And would you state for the record the total 

amount of money you estimate the government has been defrauded 

under these programs? 

General QUANTOCK. Right now, it is $29 million, but the question 

is—we have cleared about $203 million. There is a delta of $66 million that we still—and that is really the further investigations as 

we go on. But there is, at worst case, we believe, $66 million as 

we do the rest of the 21,000 that we have to basically vet through 

and run the criminal investigations, or run the investigations on. 

So, I would say there is about $66 million that are still out there 

in addition to the $29 million that we have already identified, 

ma’am. 
15 

1The information from Mr. Quantock appears in the Appendix on page 68. 

Senator MCCASKILL. Twenty-nine plus 66, or 66 total? 

General QUANTOCK. Twenty-nine plus 66. 

Senator MCCASKILL. OK. 

General QUANTOCK. That is worst case. Many of these folks will 

have done nothing wrong. These are the medium-and high-risk individuals that we talked about, and—— 

Senator MCCASKILL. So, it is every medium-risk—— 

General QUANTOCK. It is every medium-, every high-risk—— 

Senator MCCASKILL [continuing]. Came into the corral, you 

would end up—— 

General QUANTOCK [continuing]. For all fraud—— 

Senator MCCASKILL [continuing]. With close to a total of $100 

million. 

General QUANTOCK. Yes, ma’am. 

Senator MCCASKILL. Which is unlikely, that all of the mediumrisk cases are fraud. 

General QUANTOCK. Yes, ma’am. I would call that very unlikely. 

Senator MCCASKILL. Right. So, we are probably talking about, if we had to guess or die, around $50 million. 

General QUANTOCK. Yes, ma’am. I think that is a good estimate. 

Senator MCCASKILL. OK. What is the most that any single recruiter defrauded that you have been able to uncover at this point 

in time? What is the largest amount that somebody pocketed that 

was fraudulent? 

General QUANTOCK. I want to say it is around $35,000, but I will 

tell you, we have one case with five individuals that is nearly a 

million, between five individuals. 

Senator MCCASKILL. OK. What percentage of the medium-and 

high-risk cases that you have are at danger of running the statute 

of limitations? 

General QUANTOCK. I have to take that one for the record,1

ma’am. 

Senator MCCASKILL. OK. And I think before we have—before I 

close this part of the panel, I think it is important that we look at 

what one of these fraud cases looks like. It does not matter to me 

which one of you takes this, but if you would give maybe two different examples of how this fraud occurred so we would have it in 

the record, so people could envision how this worked and how easy 

it was to pocket this money fraudulently. 

General QUANTOCK. Well, ma’am, in your opening statement, you 

laid out well how this could have happened. Recruiters’ assistants 

were basically anyone, and, of course, if they had access to a great 

deal of personal identifying information (PII) is what we refer to 

it—and if they were either by themselves, or they could be in cahoots with a recruiter—that is why we have to go through every 

single recruiter—but they could create an account, register an account, and then anybody that they thought may be able to—and 

they would be unknowing. They could come into the Army, or into 

the National Guard, and they never knew they gave up their PII. 

And that recruiter assistant would basically register them up. 

And that is sort of how we go after the investigation piece. We 

have to go back and look at all the people they recruited and find 
16 

out, you were registered under this recruiter assistant. Did you 

give your personal information? Did you know that he was registering you to come into the National Guard? And, of course, the 

vast majority of these individuals, as we go through them, did not 

know that they had given their PII up to a recruiters’ assistant. 

Now, in the bigger cases, not only did they do that, they also 

were in cahoots with the recruiter, and that is the second type, 

where the recruiters’ assistants were in cahoots with the recruiter. 

And you could tell that because many of the—when they went online to put their names in the system—they all had the same IP 

address. So, they either had the high IP address or they had many 

people using the same account information to put the money into. 

So, that is why you can quickly vet through the low-and the medium-and the high-risk based on how the crime was expected to 

be—— 

Senator MCCASKILL. So, you go to the people who are in the 

Guard and you say, someone recruited you and got paid for it. Do 

you have any idea who that is? And they are saying, no, I do not 

know who that is, and nobody recruited me, and I did not give my 

information to this person. 

General QUANTOCK. That is correct, ma’am. 

Senator MCCASKILL. How would they have gotten this information other than from a recruiter? Maybe you could go hang out in 

the office and—— 

General QUANTOCK. Well, another example—— 

Senator MCCASKILL [continuing]. See who was walking in and 

then try to claim that you recruited them. 

General QUANTOCK. Well, if you have a recruiter that is in this, 

you go into the office, you want to recruit, you give your personal 

information to the recruiter. The recruiter has his recruiters’ assistants out there, and what they can do is give that personal information to the recruiter assistant. He registers and they cut the 

$2,000 in half. 

Senator MCCASKILL. I get the kickback part. I get that a recruiter could easily set up 15 recruiters’ assistants who were all his 

good friends or family members and he could sign up everybody he 

recruited to get his family members paid so he could get a kickback. But what about the cases where the recruiters were not enabling this? How would a recruiting assistant get the personal information and get this money unless they were a high school counselor or something like that? 

General QUANTOCK. Exactly the point. High school counselor or 

high school principal with all the PII available, knowing their seniors are getting ready to join, want or are interested in joining the 

military, they already have ready access to the Personal Identifying 

Information, and that is usually how we saw it, and there are 

many ways, and a lot of times, they would get the PII, and the person unknowingly would give the PII to them, but did not know 

what they were going to do with it. 

Senator MCCASKILL. I see. We have a number of things for the 

record, and one of them is I do want to look at the highest rates 

of fraud on a State-by-State basis so that we can provide some 

guidance and oversight to these Adjutant Generals, because I am 

sure the Adjutant Generals are just as mortified and embarrassed 
17 

as anybody is that knows that we have the best Army in the world 

and the finest National Guard that anyone would hope for. I want 

to make sure that we are not forgetting that there is a whole piece 

of this that is not in Washington. 

Is there anything else that I have not covered with you or a 

question I have not answered that any of you want to address before we dismiss you and hear from the next panel? Yes, General 

Grisoli. 

General GRISOLI. Chairman, I just want to ensure you that we 

look forward to working with the Subcommittee and yourself as we 

continue to work through this very complicated challenge. We are 

concerned, also, about the fraud and the mismanagement and we 

will work with you openly to make sure that we get this right. 

Senator MCCASKILL. Well, once we finally began to open the 

spigot, you all have been very cooperative. I think there was at the 

beginning a little bit of denial as to the necessity for our Subcommittee to get all of this out in the open, and it is painful, but 

sometimes you have to rip the band-aid off and that is the only 

way you really get it fixed. 

Mr. Bentz, you had one more thing, and then I will turn it over 

to Senator Ayotte to ask as many questions as she would like. 

Mr. BENTZ. No, ma’am. I was just going to say there was nothing 

further. 

Senator MCCASKILL. OK. Great. Thank you all for your work, 

and Senator Ayotte, do you have some questions? 

Senator AYOTTE. I want to thank the Chairman very much. This 

is an incredibly important issue, and I know that you have asked 

many of these questions. 

I am trying to understand, and I think the Chairman already 

covered it—but why it took from CID so long, from 2007 to 2011, 

to request the Army Audit Agency to begin a fraud risk assessment. So, that is a long time when you have fraud going on. 

General QUANTOCK. Yes, Senator, and I will walk you through 

that. Again, in CID, we conducted over 43,000 felony investigations. If you look at how this started, in 2007, we had two CID 

cases that were related to this, five in 2008, two in 2009, and then 

10 in 2010. So, you can see, these are dots and they were across 

the United States. So, they would not have been picked up systematically until 2010, when one of our agents in the Huntsville office 

realized there is some vulnerability in this and we are seeing a little bit more of this kind of problem. So, we need to really take a 

systematic look at this whole contract, and that is why it was referred to AAA in 2011. 

Senator AYOTTE. So, what about the command structure? Where 

was the oversight of this? So, I know it is done by a contractor, obviously, but when the funds started going out the door much faster 

than you would have anticipated, as I understood they did—— 

General QUANTOCK. I would have not had oversight of that particular—— 

Senator AYOTTE. Yes, but I am talking—— 

General QUANTOCK. We look at it from a criminal—— 

Senator AYOTTE [continuing]. About in the command structure. 

One of the things I think we struggle with quite frequently is 

things that are delegated to contractors, and sometimes the con-
18 

tractors—and I am not being critical of the contractor here. My 

point is that there are other places where we can be quite critical 

of contractors across the board, Snowden, other things that this 

Chairman, I know, has spent a lot of time on. 

How are we conducting oversight of these contractors, so not just 

your, the transfer to looking at the investigation of it, but there is 

an oversight function. When the money starts going out the door 

a lot faster, how is it within the command structure that we did 

not pick up on that as a raw indicator right there, that something 

was not quite right, as oversight within the system? 

Mr. BENTZ. Senator, you are correct. On behalf of the Guard Bureau, the oversight of the contract insufficient. The Contracting Officer’s representatives that were responsible for that oversight, they 

believed that the contractor was responsible for the oversight and 

control of the program. 

Senator AYOTTE. They thought the contractor. They did not realize that they—that we had to oversee the programs—— 

Mr. BENTZ. Correct. 

Senator AYOTTE [continuing]. Because the contractor does not 

take the same oath that all of you take in terms of overseeing what 

the contractor does. 

Mr. BENTZ. Correct. Obviously, the contractor has a responsibility to ensure that it has a system of quality control to—— 

Senator AYOTTE. Right. But they report to someone within the 

agency, with the Guard Bureau. 

Mr. BENTZ. Exactly. 

Senator AYOTTE. OK. One thing that, Lieutenant General Grisoli, 

in your written statement, you wrote that, quote, ‘‘funds were lost 

due to systematic weaknesses, a general breakdown in sound business processes, and wrongdoing.’’ So, one is oversight within the 

system and other weaknesses. Can you tell me a little bit about 

that, and the one thing that I think about as we look at this problem is if the problems are systematic, how can we have confidence 

that the Army does not have similar problems in other programs 

when we are talking about systematic problems? So, if you can help 

me with that, I would appreciate it. 

General GRISOLI. Senator, first, on the question reference other 

issues, you talked a little about the oversight and the structure. 

The structure, we found to be not sound. 

Then, when we took a look at how, and we spoke a little bit 

about this, how there was oversight for each one of the States, because it was kind of decentralized, what sort of internal controls 

were placed on that, those were not where they should have been. 

And then the way we prevent something like this happening in 

the future is we have what we call Program Management Reviews. 

We had our Procurement Executive do a Program Management Review on the overall contracting system of the National Guard Bureau. We are working very closely with them to implement that 

now. They have provided us a corrective action plan. We have accepted that plan and now they are implementing that plan. But we 

have directed that and they are moving out. So the systematic, the 

systemic ones that we are concerned about, we are working on fixing those right now so we do not have another sort of—— 

Senator AYOTTE. So, you are looking across systems—— 
19 

General GRISOLI. Exactly. 

Senator AYOTTE [continuing]. Not just this particular issue. 

General GRISOLI. Yes, Senator. 

Senator AYOTTE. And, General Quantock, you talked about how 

the rising rate of incidents really flagged, came to eventually flag 

this in terms of the criminal investigation. Why is it, though, and 

maybe you answered this but it would help me to understand, 

when the money started going out the door on a faster rate and 

that was not flagged, for example, in the Guard Bureau piece, why 

was it not that somebody before it got to you all asked the question, well, why is this money going out the door so much faster 

than we thought it would last us? I am just trying to understand 

that, because that would have been a question that I would have 

had, had I been, or any of us, in that situation, wondering, our 

money is supposed to last us this long and it seems to be going a 

lot faster than, really, it was supposed to. 

General GRISOLI. Senator, I believe you are getting at another 

issue as far as internal controls and the feedback loop and properly 

providing that oversight to track that, and that was another weak 

area. 

Senator AYOTTE. So, someone just was not tracking that, or how 

was it not flagged? 

Mr. BENTZ. Senator, part of the responsibility on the Contracting 

Officer’s representative, they did look to the burn rates of how they 

were going through the funds. They just did not call flags based on 

what they saw on the burn rates. 

Senator AYOTTE. That did not flag for them? 

Mr. BENTZ. That did not flag. 

Senator AYOTTE. But, this was burning the money much faster 

than we thought, was it not, as I understood it? 

Mr. BENTZ. I do not believe that was an issue across the program, that the funds were being used more quickly than anticipated. 

Senator AYOTTE. Maybe I misunderstood that, but—— 

General QUANTOCK. I think there is also probably no common 

flags on the cause, because when you look at the recruiters, Senator, and the recruiters’ assistants, about 105,000 estimate, 81,000 

are probably OK. 

Senator AYOTTE. Sure. 

General QUANTOCK. We have gone through and vetted them. So, 

when you start looking at the totality of it, there was not really— 

no red balloons that were up there for us to identify until later on 

down the road. Even the burn rate, because if the burn rate was 

below the authorization, then it probably did not send any signals 

up, either. 

Senator AYOTTE. Thank you. I appreciate it. Obviously, this is 

something that we need to make sure that the systematic controls 

are put in place, but also that within the command leadership that 

this becomes a priority of oversight when we do have contractors. 

And I think one of the bigger challenges we face, too, is there is 

sort of this feeling, when the contractor is doing it, they have it 

covered, and it has created—there have been multiple examples 

where—not just within the Department of Defense (DOD), in other 

agencies, we have seen some pretty significant problems with this. 
20 

So, we have to create—if there is going to be a contractor—I think 

we should ask ourselves, do we need a contractor for this, No. 1. 

But, No. 2, if there is going to be a contractor, so that the leadership is clear what their oversight responsibilities are with that contractor. 

So, I want to thank the Chairman for holding this hearing and 

really bringing this topic to light, and thank you all for what you 

do for us. 

Senator MCCASKILL. Thank you. 

I want to make sure I clarify this for the record. Mr. Bentz, there 

was a determination that the whole program violated the Anti-Deficiency Act, correct? 

Mr. BENTZ. They are currently doing a review at our ASA, or Assistant Secretary of the Army for Financial Management and 

Comptroller, over potential Anti-Deficiency Act violations—— 

Senator MCCASKILL. OK. 

Mr. BENTZ. Yes, ma’am. 

Senator MCCASKILL. So, that has not been determined yet? 

Mr. BENTZ. That is in process. I believe the completion timeframe 

for that is October of this current year. 

Senator MCCASKILL. OK. Do you want to add anything to that, 

General? 

General GRISOLI. Chairman, it is a preliminary right now. It is 

with the Office of Secretary of Defense (OSD) and the formal 

should come out on October 14. 

Senator MCCASKILL. October 14? 

General GRISOLI. Yes, ma’am. 

Senator MCCASKILL. OK. We will mark our calendar. Thank you 

all very much. I appreciate your service, and to have somebody in 

law enforcement and an auditor on the same panel makes my day 

anytime, so thank you very much. 

Senator AYOTTE. Madam Chairman, may I submit something just 

for the record—— 

Senator MCCASKILL. Sure. 

Senator AYOTTE [continuing]. So that it is clear, because there 

really was a problem with, as I recalled reading, with the rate in 

which this contract was spent that was not flagged sooner, and I 

have a document that I would like to submit for the record. 

So, if you all could just address that question for me again in 

light of this document, I would appreciate it. 

General GRISOLI. Yes, Senator. 

Senator AYOTTE. In written answer. 

General GRISOLI. Yes, Senator. 

Senator AYOTTE. Thank you. I appreciate it. 

Senator MCCASKILL. Thank you all very much. 

We call our next panel of witnesses. [Pause.] 

I will tell you what. Why do not you all stay standing and we 

will do the oath first and then I will introduce you and it will keep 

you from having to get back up. 

Do you swear that the testimony you are about to give before the 

Subcommittee will be the truth, the whole truth, and nothing but 

the truth, so help you, God? 

General VAUGHN. I do. 

Colonel JONES. I do. 
21 

1The prepared statement of Mr. Vaughn appears in the Appendix on page 48. 

Mr. CRANE. I do. 

Colonel HENSEN. I do. 

Senator MCCASKILL. Thank you all. 

If you would be seated, let me introduce this distinguished panel, 

first, beginning with Lieutenant General Clyde Vaughn. He retired 

as the Director of Army National Guard in June 2009 after 40 

years of outstanding service to the Guard and to the U.S. Army. 

As Director, General Vaughn oversaw a force of 350,000 soldiers in 

50 States, U.S. Territories, and the District of Columbia, and developed and implemented all programs and policies affecting the Army 

Guard. General Vaughn previously served as Deputy Director of 

the Army Guard and Assistant to the Chairman of the Joint Chiefs 

of Staff for National Guard matters. 

Colonel Michael Jones retired from the U.S. Army in 2012, after 

27 years of service, and now works in the civilian market to provide veterans, military spouses, and wounded warriors with employment opportunities. Prior to retiring, Colonel Jones served as 

Division Chief of the Army National Guard Strength Maintenance 

Division and held positions in the Office of the Secretary of Defense 

and the National Guard Recruiting and Retention Office. 

Philip Crane is the President and co-founder of Docupak, a marketing company founded in 1998 with expertise in program management, information technology, and the development of promotional materials. Prior to forming Docupak, Mr. Crane held several positions related to marketing, advertising, sales, and logistics. 

And Lieutenant Colonel Kay Hensen manages all Federal contract compliance programs for Docupak. She is retired from the 

military and previously served in the United States Army Reserve, 

the Ohio Army National Guard, the National Guard Bureau, and 

the Montana Army National Guard. During her military service, 

Lieutenant Colonel Hensen served as a Contracting Officer and expert in contractual planning, proposal writing, compliance, and 

budget forecasting. 

I would like to thank all of you for appearing today. We appreciate you being here. I know that you are anxious to help us get 

to the bottom of this and make sure that we keep this from ever 

occurring again. I will take my home State privilege, General 

Vaughn, and turn it over to the Missourian in the group. 

TESTIMONY OF LIEUTENANT GENERAL CLYDE A. VAUGHN 

(RET.),1 FORMER DIRECTOR, ARMY NATIONAL GUARD 

General VAUGHN. Chairman McCaskill, it is a pleasure to be 

here. I really mean that. I look forward to testifying and I am 

proud that you have called this hearing. 

As you know, I have talked with your staff quite a bit last Tuesday. I had not seen any of the reports that were out there. They 

got them for me. I had already turned in my statement, so I am 

going to cover some of the things that were in the memorandum 

from your staff, which are very helpful. 

OK. So, the idea for this comes from the States. We were 

Arkansawing [phonetic] about January 2006 and the Adjutant Generals brought it to me and said, ‘‘If we could recruit from within, 
22 

if you manage to get to be the Director, then we could make a big 

difference.’’ Now, what were they talking about? In fact, that particular individual was Major General Hank Cross out of Mississippi. When I became the Director, we were 20,000 soldiers 

under strength, and as you have said several times, they had a lot 

of stuff going. To give you an idea, we had over 100,000 mobilized 

all over the world at one time. We had Katrina and Rita hit and 

we put 50,000 more on the Southern coast. And when we looked 

around, we only had 275,000 available out of the whole thing. So, 

we had to get our strength up. 

We had thought about this comment from the TAGs and we had 

set out to see if we could figure out how to do that, because it—— 

Senator MCCASKILL. TAG, just for the record, General, is the acronym for the Adjutant Generals in each State. 

General VAUGHN. Exactly. 

Senator MCCASKILL. Right. 

General VAUGHN. So, we put the plan together. Again, I have not 

done any interviews on this, but there was a PAT that was called 

in from the States. It was led by my deputy, General Grass. It was 

staffed very well. If you are asking about the legal and contracting 

piece, they never worked for me. 

But there were chops on a document someplace because nothing 

could possibly come up that far from what you call ASM through 

the G–1 through the Chief of Staff. You are exactly right. There is 

always a summary sheet that shows the chops on it. And the two 

chops, of course, that you have to have are contracting and legal, 

and the authorities, you account for your people to do the right 

work and have all that in place. And when it finally gets to you, 

you have a back brief. 

We cut an order off of that back brief, got it out to the States. 

They were very excited about it. There were some other events. I 

have seen some verbiage and some reports that want to know why 

I accelerated. That would be a good question to ask, maybe, later 

on. I want to get through my statement now. 

But, we moved out and kind of the rest is history. It was a great 

recruiting program and I do not think you will find too many people that will not state that. We have a recruiting commander in the 

back from one of the States that is an expert on this program and 

I think he will tell you exactly that. Some States did a wonderful 

job with this. 

I did not know of the irregularities, and, of course, you cannot 

blame me, because the CID, the Commander just told you how this 

occurred. We thought we had a great program running. And, I tell 

you, I reviewed documents on a daily basis, what was happening 

in the program, and I had a lot of things on my plate, no excuse. 

Once a month, we had video teleconferences (VTCs) with all TAGs, 

with all Adjutant Generals and all the recruiting staffs, and I told 

them, I said, we have to catch the first peckerwoods who get out 

here and mess this thing up for everybody and we have to prosecute them quickly. And I did that 18 months in a row. And if I 

did not do it, Frank Grass did it as my deputy, or a guy named 

Jim Nutall. You can find it, exactly where that was done. 

Now, you asked a question a while ago about the relationships 

of the TAGs. Obviously, they have command and control. Well, how 
23 

did that work? What could we have done? We had done the same 

thing that Secretary McHugh did with the entire program when he 

was alerted to a real problem out there. If we would have known 

that there was a real problem in this program during the time I 

was there, we would have shut a State down, which would have 

been a major embarrassment, because, you see, the power we had 

where we were at was the power of the purse strings. 

The burn rate was what it was. I mean, I think the report says 

we got a soldier for every piece of money that went out there. And, 

oh, by the way, the $300,000 that is referred to in your report, that 

recruited 130,000 soldiers, if you look at that, that only comes up 

to about $2,400 a soldier. 

So, what I am telling you is, at the end of the day, if you are 

buying tanks and you wanted to buy a thousand tanks, if it had 

been tanks, we would have gotten a thousand tanks for the money 

we put out there. I mean, sometimes that case or that point is lost. 

Now, there was fraud between people that really knew there was 

fraud, and I do not think when they find them they have any trouble prosecuting them, because, like you say, the trail is there. But 

we did not have a chance to make a mid-course correction because 

we did not know. 

Now, who else did not know? Well, if you think about this, the 

Secretary of the whole Army rolled the same program out along 

with the United States Army Recruiting Command (USAREC) over 

the top of the Army Reserve. Now, last time I was around, the 

Army Reserve’s big program was under the control of the Army 

under USAREC. You need to check that out, because I am not sure. 

I have been retired for quite a while, but that is the way it was. 

So, you ask yourself, how is it that the Director, and, oh, by the 

way, the two deputies, and, oh, by the way, the Chief of the Bureau 

and the Secretary of the Army Chief’s staff of the Army do not 

know about this in order to make a mid-course correction? 

The other thing, of course, you are going down the road on is 

what were the authorities that they were operating under with all 

their lawyers—and again, that is a legal and contracting issue that 

belonged over with the National Guard Bureau. 

Now, to look at your report real quick, and I know I am running 

short, but this is very important, especially for some of the things 

that you covered a while ago. They covered the fact that the CID 

learned about this in phases all the way out and so it was hard 

to pick up. Here is an amazing thing, and sometimes we lose sight 

of this, and I think I have heard you talk about it a couple times 

and also had the CID agent. 

They open the cases up on everybody that received payments, of 

106,364 individuals, right out of your report. And they also told you 

a few minutes ago that they had cleared the cases with the exception of 20,000. There are still 20,000 out. That leaves the figure of 

1,219 that they are now investigating or have been adjudicated, 

which means, looking at it from another way around, which I do 

not see anyplace, and based on what he said, it means approximately 84,800, which is 98.5 percent, of our great soldiers and 

some of the greatest patriots in America did the right things, and 

there were some dunderheads, about 1.5 percent, that have caused 

us the problems. And by causing us the problems, they shifted 
24 

1The prepared statement of Mr. Jones appears in the Appendix on page 52. 

money around. And at the center of this, for the most part, were 

full-time recruiters. 

But, we do not lose sight of the fact that it was a tremendous 

recruiting program and we got the people. And we reached 350,000 

soldiers in May 2007. I retired in 2009, and I was dismayed to see 

that article in the Washington Post, and I kept thinking, what is 

there that we missed? How in the world did that happen? 

And so I am pleased that you have had the hearing. I would look 

forward to talking to anybody in great detail about what occurred 

here so it can be sorted out. 

The one thing, I am not sure it would even have made a difference, but one thing I guess I should have, looking backward at 

it, is had an informal relationship with CID. Now, CID, of course, 

has a command line to the Chief of Staff of the Army and Secretary 

of the Army. For some reason, I guess if I had to do it—and I know 

they do not talk to anybody, because you have been in this business 

where they are trying to prosecute folks, but somehow, I probably, 

if I had done anything over again, I would have probably done that, 

and I still do not know if we would have been able to make course 

corrections mid-term because of the way it occurred, and it looks 

like it really peeled out a little later in the cycle past my retirement. 

Senator MCCASKILL. Thank you. 

General VAUGHN. That concludes—— 

Senator MCCASKILL. Thank you, General. We will have some 

questions for you. Colonel Jones. 

TESTIMONY OF COLONEL MICHAEL L. JONES (RET.),1 FORMER 

DIVISION CHIEF, ARMY NATIONAL GUARD STRENGTH MAINTENANCE DIVISION 

Colonel JONES. Chairman McCaskill, Ranking Member Johnson, 

and Members of the Subcommittee, thank you for inviting me to 

testify before you today to help educate and provide more context 

of the program. 

First of all, my name is Michael Jones. I am a retired Colonel 

from the Army National Guard. I had the honor to work and lead 

the Army Strength Division between the years of 2006 and 2009. 

The G–RAP program, to me, I believe, was an excellent program, 

and as I sit here today, as the General had talked about, dollar for 

dollar, it was one of the best bang for the buck, as you referred to 

earlier, ma’am, that the taxpayers had. 

In 2006, the Department of Defense released a report that said 

that the Army was paying, on average, $18,327 for every new accession, and G–RAP reduced that down to approximately $2,400, a 

savings of $15,927, roughly. Now, if you were to say 130,000 accessions, as documented in your staffers’ memo yesterday, you can 

quickly do the math on what that savings was. Well, it is well over 

a billion dollars of potential savings and real savings for the government. 

Despite these savings, and I just have recently heard, when 

Jackson e-mailed me the notification last Friday, that the Committee had heard or been told of alleged widespread fraud, which, 
25 

according to the numbers—and, ma’am, Jackson did provide us, 

and I do not know why the Army did not have it, we do have the 

State-by-State breakdowns of those percentage of recruiters and 

those that are still to be adjudicated. So, it is completely analyzed 

and I am sure that the Army can be provided or will be—or I will 

provide them what I have on that State by State. 

In my opinion, this was a very successful program, perhaps one 

of the most effective peer-to-peer recruiting programs. After all, 

these were not our full-time Guard members. These were those citizen soldiers that worked and lived and went to church and school 

exactly in the places where we needed to be. And in 2005 and 2006 

and then on into the Afghanistan surge, recruiting was so difficult 

and the ability to just pile on deeper and deeper with advertising 

money and more direct mail, it just was not working. And so the 

Adjutant Generals came up with a program some have said was illconceived. Ma’am, I think it was brilliantly conceived because it allowed us to use the greatest resource we have to tell the Guard’s 

story, and that is that traditional Guard soldier. 

All I have seen is a claim that there are roughly 100 adjudicated 

cases out of the 130,000. I did hear and respect the general officers 

that testified, ma’am. I know there is more to be done and it is a 

process that goes on there. But, based upon what the staffers provided and running the numbers by State, it shows that—and I 

think General Vaughn talked about it—approximately 1 percent of 

potential fraud there, and, ma’am, that is 1 percent too many. One 

case is one case too many. 

It was only yesterday that I realized, or received information 

which informed that there was alleged direction of the methods and 

pressure put on contracting. It has also been alleged that there was 

undue influence and command pressure. Ma’am, this is sheer nonsense, and here is why. 

According to the reports I have read, those claiming that this 

happened—these people claiming that had at least seven options 

available to them if they felt some vague pressure. No. 1, they 

could have looked at me, Colonel Jones, and said, ‘‘You are not our 

boss.’’ 

No. 2, these warranted Contracting Officers could have done the 

acquisition plan correctly. 

No. 3, these same warranted Contracting Officers could have 

gone to their senior level of command, of which I was not in. I was 

on the Army Guard side of command working for my three-star, 

not on their side of command working for their three-star. 

Or, they could have gone to the NGB–IG. Or, ma’am, they could 

have gone to the Army Inspector General. Or, these warranted 

Contracting Officers could have simply not done it because, ma’am, 

I had no authority, no control, no supervision, no oversight, and no 

power to direct them or make them do anything inappropriate. 

In closing, ma’am, the few comments that have alleged that the 

concept was not well conceived, I would like to be able to—hopefully, that will come up and talk to you about that. 

In my opinion, Senator, we have done a great job of cooperating 

with your staff, Jackson and his team—I hope he will corroborate 

that—and look forward to attempting to address the value of G– 
26 

1The prepared statement of Mr. Crane appears in the Appendix on page 58. 

RAP, address what I think are some maybe misconceptions, address any issues of weakness. 

Thank you, ma’am. 

Senator MCCASKILL. Thank you so much. Mr. Crane. 

TESTIMONY OF PHILIP CRANE,1 PRESIDENT, DOCUPAK 

Mr. CRANE. Good morning, Chairman McCaskill, Ranking Member Johnson, and Committee Members. Thank you for allowing me 

the opportunity to testify today. I am Philip Crane, President of 

Docupak, an integrated marketing company founded in 1998 that 

provides marketing and production capabilities within a single firm 

to meet client needs with program management design, packaging, 

production, inventory control, warehousing, and distribution. Our 

company also provides other services, including information technology, print on demand, and development of promotional products. 

Docupak does not sell prepackaged products, but tailors our solutions to each individual client’s needs. 

Madam Chairman, at the outset, I would like to correct the 

record to reflect that it has come to my attention in preparation for 

my appearance today that we previously stated that the staff that 

we contacted Army CID initially. As a matter of fact, our review 

has indicated that an agent within the Defense Criminal Investigative Service (DCIS) contacted us and focused on the program with 

various investigative agencies. We have at all times remained 

available and transparent to government authority. 

Today, I am here to discuss the program that we provided to the 

National Guard Bureau for the Guard Recruiting Assistance Program. Since the inception of G–RAP, Docupak has established and 

informed government and contracting offices of internal controls 

used to mitigate fraud, waste, and abuse, and through these efforts, we identified and suspected—we identified and reported suspected fraud cases to the Army CID for investigation and potential 

prosecution. 

While the contract was terminated for convenience in 2012, we 

have continued to assist Army CID and other government agencies 

in identifying potential fraudulent activities. To date, we are aware 

of approximately 28 convicted RAs out of the more than 300,000 

that participated in the program. Since its inception, G–RAP has 

achieved in excess of 149,000 total accessions and achieved a 92 

percent successful ship rate to basic combat training. 

We have consistently made our program records available for review and audits. As I have mentioned in my letter to the Committee requesting the opportunity to testify, our records and our 

employees remain available to the Committee Members at the 

staff’s convenience. 

Throughout the history of the contract, Ernst and Young was retained to audit and to provide assurance that our company’s financial statements were precise, complete and accurate. Those audits 

include an examination of evidence supporting the amounts and 

disclosures in our financial statements and an assessment of the 

accounting principles used by our company. 
27 

1The prepared statement of Ms. Hensen appears in the Appendix on page 61. 

I am truly grateful to the Committee to allow me to testify today. 

Thank you. 

Senator MCCASKILL. Thank you, Mr. Crane. Colonel Hensen. 

TESTIMONY OF LIEUTENANT COLONEL KAY HENSEN (RET.)1, 

CORPORATE COMPLIANCE OFFICER, DOCUPAK, AND 

FORMER CONTRACTING OFFICER, NATIONAL GUARD BUREAU 

Colonel HENSEN. Good morning, Chairman McCaskill. I am Kay 

Hensen, former National Guard Bureau Contracting Officer and 

now the Corporate Compliance Officer of Docupak. I would like to 

take a brief moment to provide some background on my experience 

directly related to my current position at Docupak, where I am responsible for contract procedures and ensuring compliance with applicable laws and regulations. 

Before my employment with Docupak, I served for 27 years in 

the military. During my tenure in the military, I served various duties, including logistics, administration, contracting, contract policy, 

and supervisory positions. My last duty assignment was as the supervisory Contracting Officer for the Montana National Guard. 

After receiving my post-employment clearance from the Montana 

National Guard Ethics Counselor, I accepted a position at Docupak 

conducting contract audits, reviewing and updating compliance requirements, and developing corporate policy guides for government 

purchasing. 

I have more than a decade of experience in government procurement from both a government and corporate perspective. My areas 

of expertise include Federal Acquisition Regulation (FAR), longterm contractual planning, proposal writing, compliance, negotiations, and budget forecasting. In addition, I have a Level III certification in contracting from the Defense Acquisition University. I received my Bachelor’s of Science (BS) degree in sociology from Regions College and a Master in Business Administration (MBA) from 

Touro University. 

Today, I am here to discuss my duties as both a Contracting Officer for the National Guard Bureau as well as my current role at 

Docupak. Thank you for allowing me to participate in this hearing. 

Senator MCCASKILL. Thank you. 

I will go over your numbers and see the 1-percent, but our numbers say the G–RAP program, in total, was $338 million. The Reserve RAP was $28 million and the Active Army was $7 million. 

You add that up, it is just shy of $400 million. And you just heard 

the General in charge of all criminal investigations in the Army 

say that his estimate was this is going to be $50 million. Well, I 

am not a mathematician, but $50 million of less than $400 million 

is a hell of a lot more than 1 percent. I mean, north of 10 percent 

of the total amount of money spent on this program has been identified as fraud. Now, I do not think you think that is acceptable, 

that level of fraud. 

Colonel JONES. No, ma’am. 

Senator MCCASKILL. Correct? 
28 

General VAUGHN. Ma’am, I was talking about if you take the 

total number, the 106,000, and you subtract out what they have investigated, you get to a figure of 86,000. Of that, they have cleared 

84,800. What he said in here was about 81,000 or 82,000 soldiers 

they have cleared. And what that means, that 1,219 that is on your 

document is about 1.5 percent of that first tranche of 86,000 people. 

Senator MCCASKILL. So, what you are saying is—— 

General VAUGHN. I am talking—— 

Senator MCCASKILL [continuing]. The number of people who participated in this—— 

General VAUGHN. Yes, ma’am. 

Senator MCCASKILL [continuing]. Was small, but the amount 

they ripped us off for was pretty darn big. 

General VAUGHN. It could be. It certainly could be, and they 

could have shifted it around. I do not see the numbers because I 

do not have access to that. 

Senator MCCASKILL. OK. I wanted to make sure I understood 

that. 

General VAUGHN. No, I certainly was not claiming it was 1 percent that was fraudulent. 

Senator MCCASKILL. Yes. OK. 

General VAUGHN. OK. 

Senator MCCASKILL. And, listen, I get it that if you incentivize 

people with money, you are going to get results. I get that. There 

is no question that you got results with this program. I do not 

think anybody is here to argue that. What we are here to argue 

about is whether or not it was designed in a way that would have 

prevented people making money while not adding value. 

General VAUGHN. Right. 

Senator MCCASKILL. It is one thing if somebody goes to their 

church and recognizes that there is someone there who is an engineer that we need in the Guard and they say to them, hey, have 

you thought about the Guard, and they bring them in. It is a whole 

another ballgame when the recruiter is providing personal information so they can grab some money when that person signs up and 

does not even know the recruiter. 

I know you all are here, and I am proud of you for being here 

and you have cooperated, but we have to realize that this could 

have been prevented. We could have stopped this from the beginning. This did not have to happen. All you had to do is when a recruit came in, they would be required to name their recruiter. 

General VAUGHN. If you are asking the question, and the responsibility for that happens to lay down at the Adjutant General’s Office through their command chain. You hit a great point a while 

ago. Many, States are going to come out of this, in my view, pretty 

good, and why? Because they had great leadership and they had 

a lot of integrity and they continually talked about the things that 

you have just addressed. And it all hurts us to hear that, but that 

is exactly what the issue is. 

Senator MCCASKILL. OK. I have to argue with you a little bit, Colonel Jones. You said that it is $18,000 per recruit. Well, you do 

not do away with some of that base cost if you go totally to a bounty system. In that $18,000 is the administrative costs of actually 

processing people through the system, correct? 
29 

Colonel JONES. Chairman McCaskill, I did not mean to argue 

with you and certainly would never try to argue with you. I was 

just referring to the number that was put out as the cost per recruit at the time in 2006 that was rising steadily. All of the factors, 

whether that included the manpower cost—— 

Senator MCCASKILL. Advertising—— 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL [continuing]. Marketing—— 

Colonel JONES. Yes, ma’am. But, I do—to the best of my ability, 

it does not include the manpower cost. But, yes, ma’am, with great 

respect, ma’am,$2,400, there was still some additional cost to process them. Yes, ma’am. 

Senator MCCASKILL. Right. Then the question is not was the 

$2,400 nice and low, but is the $18,000 too high, and what I would 

love to do at the end of this whole process is to come up with some 

recommendations that would be adopted by the National Guard 

Bureau and by the States and by the Army and the Army Reserves 

as to how you could run a recruiting program with adequate controls. 

Colonel JONES. Ma’am, may I address that? 

Senator MCCASKILL. Yes. 

Colonel JONES. To echo what you had said, ma’am, the 1-percent—I just wanted to clarify, because I did not want to in any way 

mislead you or be disrespectful—was I meant the number of people 

that were involved. 

Senator MCCASKILL. The bad apples. 

Colonel JONES. Yes, ma’am. I am a soldier. I sacrificed. My family sacrificed. And my buddy on the left and right of me, they were 

not all bad. That was what I was trying to say. 

Senator MCCASKILL. Of course. 

Colonel JONES. And, yes, ma’am, a dollar misspent is a dollar 

misspent, and I apologize for that. 

Back to your question about effectiveness and cost effectiveness, 

we were converting three-to-one, so for every three what were 

called potential soldiers, when a recruiting assistant brought in 

someone, that was one. The next two that came in, so we had 

three. For every three that were brought in, one became an accession. On all of our other advertising programs, ma’am, and I have 

enormous documentations down to this particular direct mailing 

had all of this metrics that I will provide to Jackson, we had that 

on everything we did. The traditional advertising, which Congress 

was so gracious—during these years, ma’am, not you, but the Congress was giving us—— 

Senator MCCASKILL. A huge amount of money. 

Colonel JONES. It was, what can we avoid to do to avoid a draft, 

because of all that was happening, and all of the other traditional 

methods that had worked, ma’am, honestly, for 20 years—— 

Senator MCCASKILL. Were not working. 

Colonel JONES. They were not, and they converted at 18-to-1. 

And that was in General Schoomaker’s 2007 posture statement. 

And so, ma’am, this is called a high-risk program. And, in my 

heart, during this period, my boss in the Army and the Congress, 

we believed—I do not want to put words in the Congress’ mouth, 

but I believed that the highest-risk program was deploying our 
30 

combat units at 70 or 80 percent end strength, and that is where 

we were. And that does not excuse anyone, as you said, scheming 

the system. 

And, ma’am, during this period, the General talked about that 

during the time that I was there, that he found out two, five, and 

two. So, CID only knew about two, five, and two, and they were 

not even briefing us on what was going on. If we had known that 

there was even two, five, and two during the time that I was there, 

that would have been enough to, I think you said, send up a red 

balloon or flag to say, let us take a look at this and find out—— 

Senator MCCASKILL. Right. 

Colonel JONES [continuing]. Where can we make this better, so 

that what you said is so that the goodness of the program is not 

shelved because the bad actors that are out there. 

Senator MCCASKILL. Right. 

Colonel JONES. And, ma’am, honestly, we had recruiting assistants that were in college. They were in the middle of the market. 

Our recruiters were not there, but they were there. 

Senator MCCASKILL. No, I understand. Our problem here is not 

whether or not the idea was a bad idea. 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL. It is whether or not the execution of the 

program—— 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL [continuing]. Was done in a way to prevent 

fraud. That is why we are here. 

Colonel JONES. Yes, ma’am, and—— 

Senator MCCASKILL. And so let me move on—— 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL [continuing]. And let me ask Colonel 

Hensen, with your background, have you read the audit that Mr. 

Bentz did? 

Colonel HENSEN. I did read it one time, ma’am. 

Senator MCCASKILL. OK. So, I am curious, since you are an expert in FAR, did you read that this program did not comply with 

almost any of them? 

Colonel HENSEN. I left National Guard Bureau in 2006, in January 2006, so all I can speak to is what was going on in the office 

during my tenure, and I believe when I made my decision to execute that first task order, that I was in compliance with the FAR. 

And I did have legal and I had policy and my division chief approval in writing prior to making that award. 

Senator MCCASKILL. So, you had legal in writing that you could 

do on a task order for Docupak to do this? 

Colonel HENSEN. That is correct. 

Senator MCCASKILL. Well, you need to help us find that. 

Colonel HENSEN. I have no access to it at this point. I did call 

the Contracting Office to make—— 

Senator MCCASKILL. Because that lawyer is in trouble, because 

there is no way you could task this off a marketing contract. 

Colonel HENSEN. Under the terms that we were executing that 

marketing contract to maintain maximum flexibility in developing 

new programs, new initiatives in order to find a way to recruit in 

a completely different environment, that contract was used, basi-
31 

cally, to investigate and conduct contract research on different new 

initiatives, and this started off as a lead generation initiative. 

Senator MCCASKILL. Were you there when this contract was competed after the task order? 

Colonel HENSEN. No, ma’am, I was not. I was in Montana at that 

time. 

Senator MCCASKILL. Mr. Crane, I want to thank you for your cooperation and thank you for correcting and giving us the information that it was, in fact, the criminal investigation side of the Army 

that began this as opposed to your company. 

Having said that, you were here and you heard the testimony 

from the first panel that you all got an insider position on this competition. I want to give you the opportunity to address that. Would 

you quarrel with that, that you had information that no other bidder had? 

Mr. CRANE. Well, the bit of information that we did have that no 

one else did was we were the incumbent and we had past performance. But beyond that, that was all the advantage we would have 

had. 

Senator MCCASKILL. So, you are maintaining that the only thing 

about the competition that was unfair was that you were the incumbent? 

Mr. CRANE. Yes, ma’am. 

Senator MCCASKILL. But, we have incumbents all the time and 

the auditors do not find that there was an unfair advantage, that 

there was information an incumbent had that was not shared with 

the other bidders. 

Mr. CRANE. I am not aware of any information that we would 

have had that would have been not made public during the solicitation. 

Senator MCCASKILL. Well, evidently, the auditors found some 

that was, so we will hunt that down for you and make sure that 

you have a chance to review. 

I have other questions I need to get to, but some questions just 

arose from your testimony. I am a little worried, frankly, and I get 

the points you are making and you have made them very well, that 

there are a lot of things about this program that made sense. I get 

that. But, what worries me a little bit is that I am reminded of 

what I heard around contracting in Iraq from the generals. Not my 

problem. Not in my command. Not my issue. The notion that this 

was a problem for the warranted Contracting Officers, do you see 

any problem with that? Do you agree that we need to figure out 

how to make sure every commander in every situation realizes the 

contracts that are being executed that impact their command have 

to be their problem? 

General VAUGHN. No, I agree with you. As I discussed earlier, 

probably, there has to be a staffing document to come all the way 

up. All our staffing documents carried a chop, from each one of the 

organizations, whether it was outside of our organization or not. 

And in this particular one, it was outside of our organization. But 

it would have carried a chop from them. And to hear Ms. Hensen 

talk about this thing that there has to be a document out there, 

I would say it is absolutely right. 
32 

And not only that, it had to be coordinated with the same Army 

that went down the same road in RAP. I mean, that is why if you 

follow the bouncing ball, I do not quite understand this. It was 

Army that stood side by side with us and rolled out Army First 

when we used the G–RAP program, me and the Secretary standing 

side by side. Now, how can everybody with a national press conference, stand there and look at that and then some years later 

say, well, we got that all wrong authority-wise and on and on and 

on. There is more questions that need to be asked—— 

Senator MCCASKILL. There is no question, and I agree—— 

General VAUGHN. Yes, ma’am. 

Senator MCCASKILL [continuing]. Because the Army did roll it 

out, although much later than you did, and obviously it was shut 

down much more quickly. You all had been in operation for a number of years and their time—I think I just said that the amount 

they spent was $7 million compared to $338 million in the 

Guard—— 

General VAUGHN. Yes, ma’am. 

Senator MCCASKILL. But, that does not change the fact that they 

signed up, and so there should have been those legal authorizations 

there just as we are asking those questions of you. 

General VAUGHN. That is exactly right, and I think from a regular authority standpoint, the only they could use was their Deployed Entry Program (DEP), I believe, and that was only, like, 500 

soldiers. Those were young soldiers waiting to go to basic training, 

and so they were not Title X soldiers yet and they used them in 

the same program. But they only used it for 500. But, the fact of 

it is, the Army Reserve moved into the same program, having to 

use the same authorities with the same oversight. 

And so as I look at this years later, and anybody that has ever 

worked with me all the way through, we had never done anything 

where we pressured someone to do something wrong. And it is an 

integrity issue and we would not put up with it. 

Senator MCCASKILL. In a November 2005 Operations Order that 

you issued that established G–RAP, it identified fraud as a potential problem in the contract. Who was in charge? Who did you look 

to as being primarily responsible for finding or detecting the fraud 

that you identified when you rolled the program out? 

General VAUGHN. When we rolled the program out, as you have 

said, we did a risk assessment. We did a hot wash, a red teaming 

on that, brought all the States in. And, of course, that is exactly 

where those pieces in the op order came from, and they are all even 

today talking about how that rolled out. We gave that to the individual States and TAGs and then we set—I have spent 1 day a 

month all day with all 54 States and Territories four regions explaining the whole thing. And in every instance that we went 

through one of these regions, I would say, OK, now, do not forget, 

do not kill the goose that laid the golden egg here. Stay on top of 

it. I emphasized every piece of this. And every recruiter out there 

understood that, and there were States that took the direction on 

this and moved out and did great things. And then there were 

other States, as I discussed with you, that the really heartbreaking 

thing is we did not have a place to make a mid-course correction 

in this and shut down a program or go in and do some real deep 
33 

soul searching about what they were doing. And you can only imagine the embarrassment in a State if they were singled out and we 

had shut them down. We would not have had a problem with that. 

So, who do we hold responsible? We hold, as the CID agent, or 

Commander, pointed out, the ultimate responsibility is that TAG, 

and he has command responsibility down through his recruiting 

commanders. 

Senator MCCASKILL. So, Colonel Jones, did you disagree with the 

audit finding that there was no effective internals in the program? 

Colonel JONES. I did, ma’am. 

Senator MCCASKILL. You did disagree with that? 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL. And what were the effective controls that 

were there? 

Colonel JONES. Ma’am, the Operations Order clearly spelled out, 

the FAQ sheets, the G–RAP document spelled out in great detail. 

It went through and issued, or talked about every question, scenario, level of responsibility, tasked to be taken all the way down 

to the non-commissioned officer in charge (NCO–IC). That is the 

E–8 who runs the recruiters. I mean, it had specifically in there 

that they were to conduct continuous fraud risk assessment, take 

proper corrective actions, and notify chain of command, and all the 

way up the chain of command to the Recruiting and Retention—— 

Senator MCCASKILL. Well, it is one thing to say you should not 

have fraud in the program, but an effective control would be something that would ferret out when somebody was sharing personal 

information in order to get a bounty on somebody who they had not 

recruited. Was there any control like that at all in this program? 

General VAUGHN. Ma’am, the structural piece that is built in is 

the United States Property and Fiscal Officer (USP&FO) in every 

State. That is a Title X officer put out there that is owned by the 

Chief of the National Guard Bureau and detailed out there for 

that. And inside of his or her—— 

Senator MCCASKILL. That is a Fraud Prevention Officer for those 

of us—— 

General VAUGHN. Absolutely. He owns all of the pieces. Now, 

how is it possible that, for instance, the center core of all these 

things revolved around full-time recruiters? How is it possible as 

a front-line supervisor that if there is an investigation going on, or 

a commander, that he would not have known about the investigation and come up on the other side to the Chiefs of the National 

Guard Bureau, which you know my ex-boss, General Blum, you 

know what that would have done over there on that other side. 

That is an explosion. He did not know—I do not see how he knew 

it. I never talked to him. 

But what I am telling you is, that chain did not work. For what 

reason, I do not know. Today, I still do not know whether CID ever 

coordinated and talked to every officer—and I am not trying to 

push any bucks anyplace. I am just telling you, there were redundant looks and redundant places that we should have been able to 

get the word and make a correction to this exercise. It did not happen. 
34 

Now, they say they did not see it, either, and I am telling you, 

when I left in 2009, it looked like a clean program. They did not 

pick it up until 2011, obviously. 

Colonel JONES. Chairman, there was one thing that we talked 

about that we believed would have prevented this, one system, one 

internal control check. Now, before I get to that one, we had internal control checks within the division. We used the Army’s system 

of record called the Amateur Radio on the International Space Station (ARISS). So, that was check No. 1. Was the accession loaded 

in there? Did it correlate to recruiting assistance, recruiter’s Social 

Security number, their accession load number? 

Then we said, OK, that is not good enough for payment. Let us 

wait until it is actually loaded into the Standard Installation and 

Division Personnel Reporting System (SIDPERS) database, which 

is the Army Guard’s system of record for personnel, because we 

wanted to say, what happens if there is a system error and something dropped? A payment would be made. That would have been 

a payment in fraud. So, we waited, and that was approximately 30 

days. 

Senator MCCASKILL. Right. 

Colonel JONES. And then we said, OK. Let us give it another 30 

days, because, what we used to call it in the recruiting world, buyer’s remorse. A kid gets in there, he is ready to go. Bad news on 

the—— 

Senator MCCASKILL. Colonel Jones, I get you explaining all that. 

I get you had controls in there to make sure nobody got paid until 

somebody actually joined. That is the control you are talking about. 

We are not talking about that kind of control that was needed. 

We are talking about the kind of control to prevent a situation 

in which somebody was going to join anyway and somebody made 

five-grand off him joining. That is the fraud. It is not that somebody did not go all the way through accession and report to basic 

and actually become a member. It is, in fact, that for people who 

were going to do that anyway, somebody was paid who did not deserve it. That was the fraud. 

So, I get that you had that control in—— 

Colonel JONES. OK, ma’am. 

Senator MCCASKILL [continuing]. But nobody put a control in, 

and did you realize at Docupak that there was no control for that? 

Mr. CRANE. Well, may I take just a moment and walk you 

through the controls that we did have in place? 

Senator MCCASKILL. Sure. 

Mr. CRANE. The first primary function was to determine whether 

an RA was eligible to participate in the program. That fact was determined by government supplied data which would give us the 

duty status of an individual, and if they could not participate, if 

there were certain programmatic things that they were doing within the Guard, such as if they were associated with a recruiting office, that would eliminate them. 

Senator MCCASKILL. Right. You had to eliminate the recruiters. 

Mr. CRANE. Yes, ma’am. So, the first action was to try to make 

sure that there is a separation off of ARISS files. 

And then, second, we would bounce last names versus last names 

of recruiters to see if it was a spouse of a recruiter or a sibling or 
35 

a dependent of a recruiter. This was community-based, so we did 

run across that. So, they would be disqualified. 

Second, when an RA nominated—— 

Senator MCCASKILL [continuing]. Which were essentially your 

subcontractors. 

Mr. CRANE. Yes, ma’am. That is correct. So, in order to nominate 

a potential soldier, you would have to be in an eligible status—— 

Senator MCCASKILL. Right. 

Mr. CRANE [continuing]. And you would have to put in PII of 

that individual. 

Senator MCCASKILL. Right. 

Mr. CRANE. In addition to that information, we required—in the 

beginning, it was a radio button, seven questions, where you met 

them, how you met them, and a series of questions. After the program was instituted, I do not remember the exact date, but we did 

alter that to be able to put in free typing which would require the 

RA to fill out all of that information prior to it being recognized in 

our system that it was a legitimate nomination. 

Senator MCCASKILL. OK. So, let me make sure I understand this. 

In the beginning, you had to answer questions, where you met this 

person—what else besides where you met them? 

Mr. CRANE. What is most likely their Military Occupation Specialty (MOS) they would be interested in—— 

Senator MCCASKILL. OK. 

Mr. CRANE. And I do not remember all seven, and I apologize. 

What would be a likelihood of a timeframe of him or her—— 

Senator MCCASKILL. OK. And then you converted that to them 

having to write some kind of summary as opposed to answering 

questions. 

Mr. CRANE. Yes, ma’am. 

Senator MCCASKILL. OK. And what did the summary have to 

contain? 

Mr. CRANE. It would be those same questions, but they would not 

be fixed questions. They would have to free-type that information 

in. 

Senator MCCASKILL. What kind of check was there that what 

they put in was true? 

Mr. CRANE. Well, that leads me to where I was headed, and you 

made mention of it just a few moments about, about trying to recognize and identify things that could have helped eliminate some 

of the potential fraud. In looking backward and thinking about this 

an awful lot over the last week and a half, if we had created an 

automated response—it could have been an e-mail, because we had 

to get the potential soldiers’ contact information—if we would have 

sent out a verification e-mail to that potential soldier who had been 

nominated basically restating the facts that had been put into the 

system by whom it had been put in by, where they would have to 

certify the information that we had was legitimate, I think it would 

have gone a long ways, because—— 

Senator MCCASKILL. This is what kills me about this. This is 

basic. You just assumed that whoever was typing this in was telling the truth, and nobody ever checked to see if they were lying. 

You are handing out millions of dollars, no questions asked. 
36 

Mr. CRANE. I would just like to clarify one thing. We did have 

coordinators on our staff and those individuals were making anywhere from 25,000 to 30,000 phone calls a month, either reaching 

out to the recruiting assistants to verify information that they had 

put into our system, and also making attempts to contact the potential soldier. 

Senator MCCASKILL. Well, it has to be really hard to find the soldier at that point in time. 

Mr. CRANE. That is correct. 

Senator MCCASKILL. Calling them is going to be hard. 

Mr. CRANE. Yes, ma’am. 

Senator MCCASKILL. And, if you are going to call a liar and ask 

him, are you telling the truth, guess what they are going to say? 

‘‘Yes.’’ They are not going to say, ‘‘No, I lied.’’ Did it say on the 

form, after they typed this in, that you could go to prison if you 

lied there? 

Mr. CRANE. Yes, ma’am. That was in part of our—— 

Senator MCCASKILL. And that did not stop. 

Mr. CRANE. No, ma’am. 

Senator MCCASKILL. Obviously, I think you would need to figure 

out a kind of control that would not require you to get hold of them 

in person in light of what we were asking them to then do. I mean, 

they were in basic. They have been over the country. But this is 

why I am frustrated—— 

Mr. CRANE. Yes, ma’am. 

Senator MCCASKILL [continuing]. That these kind of controls, either through contracting at the beginning or through oversight 

through the program, were never put in place. And there was a lot 

of stovepiping here. 

General, you were looking at numbers, and you were looking at 

your contract requirements, and there was an assumption that 

Fraud Prevention Officers in the States were aware of what they 

specifically needed to be looking after. Frankly, they could have 

taken a random sample of the recruits, and pretty quickly, they 

would have found out that there was fraud going on. So, that is 

what is so frustrating about this. 

I think it is really important for me to point out this quote that 

you have in your written testimony, Colonel Jones. You said, ‘‘Potential wrongdoing on the part of contracted individuals were not 

believed to be within our authority.’’ 

Colonel JONES. Yes, ma’am. I should have said subcontractors, 

because we were not allowed to talk to subcontractors. It should 

have been subcontractors, and that was at the State level to do the 

Fraud Mitigation Plan, the followup, the investigative work to 

check on what was happening via the contractors. 

The only way that we could have known for sure, ma’am, was if 

we had had access to a recruiter’s bank account, even non-sequentially named, and could have had a list of bank accounts, and then 

we could have monitored any transactions, any deposits from a contractor. That would have been the ultimate catch-all to say, OK, 

that is wrong because you know you are not allowed to be in the 

program. When discussed, we were told, you cannot have access to 

anything like that without a court order with a known suspicion 

of wrongdoing. 
37 

Senator MCCASKILL. Well, at that point, did you feel comfortable 

contacting the Criminal Investigation Division of the Army for assistance? 

Colonel JONES. Well, ma’am, we were told—or, we were not told. 

I never knew—again, when I was there, the numbers that were 

available were two, five, and two, that there were a total of nine 

incidents going on. 

Senator MCCASKILL. So, you did not have any sense that this 

was going on whatsoever. 

Colonel JONES. Well, I had the—what I just told you. It is the 

same knowledge that CID had, that in 2006, there were two; in 

2007, there were five; and in 2009, there were two more. It was not 

until 2010 and 2011 where they started to see it, and then it started to become more prevalent—— 

Senator MCCASKILL. Prevalent. 

Colonel JONES. Prevalent, yes, ma’am. Thank you. Sorry. 

Senator MCCASKILL. Well, we have dozens and dozens of pages 

of deficiencies that the auditors found in the contract, and we have 

a contractor that does not appear to have taken seriously the potential fraud problem here. And I understand, it did not impact 

your bottom line, other than the fact that it went away. I assume 

this was a profitable contract for your company. 

Mr. CRANE. Yes, ma’am. 

Senator MCCASKILL. So, is there anything that I have not asked 

about that you feel has been characterized unfairly here? I really 

do think that there is a systematic failure along the way here of 

people to talk to one another. I think the chain of command got in 

the way on this one. I think that the decentralized nature of the 

Guard contributed to the problem. There is a wide variety of things 

that actually occurred here that allowed this fraud to flourish, and 

we have to figure out how to fix it without blowing anything up 

that we do not want to blow up, and that is where I need you all 

to give us input. I need you to talk about how you have some kind 

of ability, some kind of authority over contracting, how you take 

more responsibility for fraud other than just saying it is the TAGs, 

because it is not the TAGs’ money. This money is all coming out 

of the central budget, right? This money came straight from Washington, did it not? 

So, should we not have some kind of fraud oversight in the 

Guard Bureau that has the specific responsibility of doing spot audits for programs with this kind of money that is being paid out 

to civilians who sign up online? 

Colonel JONES. Yes, ma’am. 

Senator MCCASKILL. There is not that position now, I assume. 

Colonel JONES. I do not think so, not that I am aware of. 

General VAUGHN. No, not that I am aware of. I do not know how 

the Joint Staff is organized, because, as they deal down to touch 

the United States Property and Fiscal Officers, for the most part, 

they mirror whatever is out there. So, I do not know if it exists 

over there. It certainly did not exist with us other than providing 

overall guidance, and I think we nailed it pretty good in our op 

plan, in our op order. In fact, I read somewhere in one of the reports, and I did not know what the heck a QASP was, I mean, we 
38 

had lots of things. We were dealing with the $40 billion worth of 

equipment upgrade and deploying lots of soldiers—— 

Senator MCCASKILL. No, there is no question, your plate was full. 

That is why I am saying, it appeared that your fraud control was 

having a VTC with Adjutant Generals every month saying, if you 

get caught with fraud, you are going to screw this up. Well, with 

all due respect, General, that is not really aggressive fraud control. 

I think you were a powerful guy and you were in charge of the 

Guard Bureau, and you did have the power of the purse. But, having a VTC once a month and saying, do not have any fraud, did 

not appear to get it done in this instance. And I think we probably 

need to have a more aggressive fraud structure at the Guard Bureau. 

General VAUGHN. Well, I think that is an excellent point. There 

is no doubt about it. We certainly would not argue with it at all. 

Senator MCCASKILL. Great. 

General VAUGHN. But, it still gets back to the issue of some 

States did a remarkably good job, and that is going to come out. 

And one of the things I look forward to when you finally bring this 

to an end is what happened out there in all the States. 

Senator MCCASKILL. Well, we are going to continue to work on 

that, and we will publish a ranking of the States when the criminal 

investigations are completed by virtue of statute of limitations or 

the investigations being complete. Now, they have a lot of work 

still to do. In fact, CID let us know that some of these investigations might go all the way to 2016. So, it is going to be a while 

before the dust settles and we really figure out how many people 

we are going to put in jail on this. But, at that point in time we 

are going to publish a report card and we will go after the States 

that did such a poor job at this. 

General VAUGHN. If you can really make a difference—and I really hate to see, in spite of everything that has been written about 

the program, I hate to see the baby thrown out with the bathwater. 

You asked something of Mike a while ago. I viewed the whole program as a test program as to whether we could move in and cut 

down the total number of recruiters in our force. 

Now, when you do this math if we took, say, the 4,000 recruiters 

and cut them to 200 and made them general managers out there 

in the States—and I was working this issue, but we had to make 

sure that we could pull the whole load and recruit it with the G– 

RAP force and we basically proved that. But, if you did that, and 

if you were after 50,000 recruits and you paid them, just using 

$3,000 for the math, that is $150 million. 

If you took the same 4,000 recruiters and say—and do not use 

the 18,000, take the other piece out of it, because now I am giving 

you the admin load in there, and you save the retired pay accrual 

and panel outs and the whole thing, and just say it is 100,000, and 

you know as well as I do it is much more than that, OK, that is 

$400 million up against 150 using this other system. 

And then to get out the bigger issue, what if you took all of the 

Army’s stuff, for instance, and just used one advertising system 

rather than three, and, oh, by the way, what if you could move that 

over to where that was the program to recruit folks, and that is 
39 

what we were doing with Active First with Secretary Geren and we 

proved that we could do it—— 

Senator MCCASKILL. Well, listen, I think all those—— 

General VAUGHN. So, the cost savings is in the billions. 

Senator MCCASKILL. Yes, and those are all good ideas, and I will 

convey to Guard leadership currently and to the Joint Chiefs and 

to the Secretary of Defense that there are better efficiencies we can 

realize out of our recruiting system. I think we have wasted a hell 

of a lot of money on a lot of things that have not worked. And I 

am not saying that the premise of this program is not valuable. 

But I will guarantee you this. I am going to yell at the top of my 

lungs if somebody tries to roll out this program without fraud control in it again, because that is what happened. This program got 

rolled out and implemented without fraud control, and you cannot 

do this kind of program without fraud control. 

I know that we can sit here all day and talk about the value of 

the premise, but execution is the problem here, the way it was 

drawn up without controls embedded in it, whether it is more fraud 

prevention at the States, whether it is oversight of fraud prevention at the Bureau, or whether it is requirements in the contract 

in terms of recruits having to sign off as to who recruited them. 

There are a variety of things that could be done. I think we need 

to get to the bottom of all this and get it straightened out before 

we even start talking about rolling out this program again. 

But, we are not going to end this hearing without recognizing 

there is value to the premise. It is a lot more efficient to send people into neighborhoods and to send people into churches and to 

send people into college campuses, and members of those communities can sell the Guard much more effectively than putting the 

name on a video game ad. I am all for that. I am not big on the 

video game ads, just so you know. 

Is there anything else anybody wants to add for the record before 

we conclude the hearing? I really appreciate all of you being here. 

We will have followup questions for the record, and this will be a 

continuing area of focus of investigation for the Subcommittee until 

we finally get to the bottom of all the fraud that has occurred. I 

particularly want to reiterate on the record, until we find out how 

many of these leaders, how many of these colonels, the major general that has been implicated, how we make sure that they are 

held accountable, as they have done a great disservice to the men 

and women they lead. 

Thank you very much. 

Colonel JONES. Thank you, ma’am. 

[Whereupon, at 12:06 p.m., the Subcommittee was adjourned.] 

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