soldiers. the california national guard later ordered those soldiers to pay back the bonuses but in october the secretary of defense ordered the pentagon to suspend efforts to get that money back. the director of the national guard and the head of the california national guard testified on capitol hill recently about that issue. republican congressman joe heck chaired the hearing. >> go ahead and call the military personnel subcommittee of the house of armed services committee to order. i want to welcome everyone to the subcommittee's hearing on the california national guard bonus repayments issue. we're here today to hear from the california national guard, the national guard bureau and the office of the secretary of defense on an issue that we must get right. in fairness to not only the california guardsmen that this affected but for all service

members going forward. compensation whether it is a bonus for a service agreement or regular pay is an obligation to our servicemembers and their families, that they should not have to worry about. i find it unacceptable that we would place the additional burden of years of concern about the legitimacy of a bonus payment or a student loan repayment on those who volunteer to serve. the armed services committee has taken action in the 2017 national defense authorization act to address this issue, and the subcommittee is taking every opportunity to thoroughly review and discuss forward so we can prevent such a widespread problem or abuse in the future. our purpose today is to gain understanding from why this happened and what we can do to prevent it going forward. before i introduce our panel let me offer congresswoman davise to make any opening remarks >> thank you mr. chairman. i regret that we have to have this hearing to discuss a major pay issue that impacts 17,000

soldiers in one state, from my home state of california. were it not for the "l.a. times" article in october, congress would not know the extent of this 12-year-old issue nor would the issue have been elevated to the department of defense. our understanding after this was first brought to our attention in 2010, was that a process was in place to adjudicate the issue but six years on we are still trying to fix it. numerous investigations and briefings informed us of how we got to this point. my focus is to ensure through the legislation just passed by the house last week as part of the 2017 ndaa an update from the dod that we guarantee that those who should keep their bonuses do so and that the systems and controls are in place to prevent an incident of this magnitude from happening again. while it is important that we perform oversight of the process moving forward, it's also

critically important that we do not forget the servicemembers and their families that have been deeply affected by this. once these families have encountered financial hardships we know it can be truly difficult to recover, even if we return their bonus, we have already up-ended their lives by creating unnecessary emotional stress and financial instability. our military families, as we all know, have a tough enough time without the added burden of having to repay service related debts that they received in good faith. on another note, since this is his last hearing with us, i want to thank dr. heck for his leadership and his dedication to serving our troops, their families, and retirees over the past two years as chairman of the subcommittee. it has been a privilege to work with him and he will be missed. >> thank you. >> i ask unanimous consent

nonsubcommittee members be able to participate after all subcommittee members have an opportunity ask questions. without objection so ordered. we're joined by two panels, first from the national guard, the second from the office of secretary of defense and the army. we'll give each the opportunity to make opening comments and each subcommittee member an opportunity to question the witness. please take no more than five minutes your complete written statements will be enterd into the hearing record. we're joined by lieutenant general timothy kagave, director army national guard, national guard bureau and major general david baldwin, adjutant general of the national guard. you are recognized for five minutes. >> thank you for the opportunity to discuss the readiness of army national guard personnel matters. on behalf of the army national guard i would like to thank you

for your support and commitment to our soldiers, their families, to our veterans, wounded warriors and those who have made the ultimate sacrifice. for your army national guard is today mobilized with more than 11,000 soldiers abroad and here at home. our soldiers are our nations and army's greatest assets. the investigation revealed that the california guards incentive program had been grossly mismanaged and imassistances of crowd which were discovered. as a result, california took measures to ensure these individuals engaged in their perpetration of fraud were punished. in 2011, the california incentive task force identified more than 17,000 california army

national guard cases that were potentially linked to the unethical management of the incentives program between 2004 and 2011. in 2011 the california national guard with assistance from the national guard bureau established a soldier incentive assistance center to assist any california national guard member affected by the mismanagement of the incentives program, every california national guard soldier impacted received a formal written letter to inform them of this option. this center will continue to provide assistance to each affected soldier. as a result of the issues with the california incentives program the army national guard took numb russ steps to improve oversight within our incentives process. in 2010 the chief of the national guard bureau then general craig mckinley ordered a review of all army national guard recruiting and retention incentives programs across all states, territories and the district of columbia, which found no systemic fraud.

in 2012 the army national guard completed the fielding of the guard incentive management systems known as gims to all states and the district of columbia which provides oversight program for bonus and incentive payments. in 2016 an external review by the army audit agency of gims validated its effectiveness and found the system substantially improved the controls throughout eligibility, monitoring and payment phases of the incentive process. state adjutant generals have provided annual statements of insurance since 2012 documenting internal controls processes to help prevent similar situations from occurring. additionally based upon reviews and assessments of the entire army and national guard fraud and incentives program is not a nationwide problem. in november 2016 the united states property and fiscal officers provided additional

insurances while reviewing their state incentive programs that there are no issues outside of what we know to be normal. mr. peter levine performing duties for personnel and read since chairing a cross functional team with the national guard bureau, the united states army, the office of secretary of defense general counsel, and the defense finance and accounting service dfas. this team is leading the effort to expeditiously resolve the cases affecting the california national army guard members. i understand you'll hear from secretary levine a little bit later this afternoon. secretary of defense carter's guidance is to adjudicate all cases by july 1st, 201 to ensure each soldier's case is fairly and equitably reviewed with due process afforded to each and every soldier. in closing i assure you that the national guard has worked hard to implement appropriate effective internal controls

across the 50 states, the three territories and the district of columbia and to prevent similar systemic fraud from occurring in the future. thank you and i look forward to your questions. >> thank you, general. general baldwin you're recognized for five minutes. >> thank you, mr. chair, and ranking member davis and the members of the committee. i do appreciate very much you taking up this important issue to be able to help our soldiers. as the general mentioned in 2010 a whistle-blower and astute auditor uncovered signs of potential fraud within our incentives program in the california national guard that resulted in a fairly broad investigation by the federal department of justice that went through the course of three years. the governor relieved my predecessor in march of 2011 and recalled me from afghanistan in april of that year in order to take charge of this organization and with a mandate of cleaning up this and some other

challenges. i immediately ordered a full investigation on our side into this matter to do a couple things, one is i wanted to see if there was any other cases of fraud that were out there that the federal government had not begun to investigate or picked up on. the second was to hold leaders accountable to find out why did this happen and what were the problems. we found there was a complete lack of internal controls, so we instituted an intern control system in order to prevent these problems from happening again and we held the leaders accountable that failed to provide the proper oversight or create a command climate. that we punish within the california national guard 61 people, including firing four general officers and two full colonels. the feds prosecuted 44 soldiers, some of those prosecutions continuing to go on, and several people were put in jail for the fraud that they had committed. but as the general mentioned, we also recognize there were a lot of soldiers that got caught up

in this through no fault of their own had taken money from the federal government that they were not necessarily due or couldn't document why they did deserve that money so we established the soldier assistant task force in 2011 in order to address those problems. because of the fact that we had found a 91% error rate in the initial audits that we've done, we were compelled to review every record. there were 17,000 soldiers and about 30,000 records. we were able to get through about 12,000 of the records. of the 12,000 we found 4,000 soldiers that we were able to help keep their money to the tune of about $39 million because they had minor errors or problems in their contracts, and i'm very proud of the work that our task force did in order to help those soldiers keep the money that they, in fact deserved. there were only 1,400 remaining soldiers that did not contact our task force for assistance but also we determined had prom

problems insurmountable and we couldn't support an appeal. we submitted another 1,200 soldiers that contacted us for appeal because we felt even though there were problems in their contracts or maybe they may not have met the letter of their contract, we felt they had served honorably and should be able to keep their money. of those 400 cases were adjudicated by either the national guard bureau or the army board for the correction of military records, so 400 soldiers were able to win their appeals, and they were able to keep about $4 million between those 400 soldiers. another 400 soldiers even with our endorsement to help them keep their money unfortunately lost their appeal and have not gotten their money back. they lost about $3.3 million amongst them and then finally 400 cases that are remaining. we're very encouraged today by the actions of the congress and the legislation that has gone into the ndaa that we think goes a long way to help address some of the problems that we face and

the frustrations that we face in trying to help our soldiers get through this. we're also very encouraged by the actions that secretary carter and his team at osd have taken in order to increase the band width to be able to adjudicate cases quickly, fairly, and with standards that err on the side of honoring the soldiers and their service and helping them keep their money and again, thank you very much for the opportunity to discuss this today. >> thank you, general baldwin. so first my first question is for general, concerning the key recommendations in the u.s. army audit agencies follow-up review that was issued in may of this year, they noted that, while ngb had made progress in implementing many of the control procedures outlined that their prior audit not all of the internal controls had been put into place. can you give us an update as to where ngb is implementing the final controls as put forward by

the aaa? >> yes, chairman thanks for the question. >> can i ask to you pull that microphone kind of like a rock star. >> here we go. okay, so there were 15 initial recommendations of which the 2016 army auditing agency follow-up reported all 15 initial recommendations were being implemented and they recommended four new additional recommendations of which one will be fully implemented by the end of this calendar year, by the end of the month of december and the other three will be implemented by the end of this fiscal year. it's about writing software and updating systems to get after that. particularly it's related to officer bonuses and army medical recruitment of experts to make sure we are tracking their contracts, as we do with all others. >> great, and i would ask that you keep this subcommittee apprised of the progress in implementing the final four controls. >> we will, chairman. >> while you noted in your system there was no systemic fraud across the national guard,

has there been a review to look at whether or not there is widespread administrative errors and general baldwin mentioned 1% error rate in what they reviewed in california, so whoo there may not be criminal fraud taking place what about the administrative errors that might be more common across the national guard enterprise? >> so chairman, the chief national guard bureau at the time, general craig mckinley asked us to do a survey of the other 53 states, territories and district of columbia which began late 2010 and completed 2011, and we did identify some systemic problems particularly related to lack of oversight, no separations of duties, inadequate traiping, outdated regulations, lack of manpower and no overall tracking but it said no widespread fraud, so we were already working on the gims

system, and we believe gims accounted for most of that as done, as shown through the army auditing agency's follow on recommendations, and where we're at, and i can just give you a quick update, so on average we do about 16,000 incentive contracts between 2011 and 2015, the latest year, 2016. we do about 1,200 recruitments on average for normal processes which is about 7%. you listen to some of the errors that were previously, and we have cut that down significantly, and the majority of those recoupments are contractually for a soldier before they leave their enlistme enlistment. >> general baldwin you listed some of the other numbers of individuals that were either

disciplined or charged. certainly we have only heard in the open media about the one nco that seemed to bear the brunt. can you again just list for the record the numbers of individuals other than that one nco who was incarcerated, whether it be administrative reprimand or other disciplinary procedures? >> yes, mr. chairman, i'll start with the cases that were prosecuted by either the feds or in some cases some district attorneys took up the fraud cases. that was 44 soldiers in total. of those, 26 were prosecuted and found guilty and convicted. there was another 15 or so that are pending, the prosecution is still ongoing and the remainder of the cases either dismid, just a handful, i think it's only four that were dismissed or acquitted. then on our side within the military we have two options. we can do ucmj action up to and

including courts martial or administrative action. we initiated court-martials on six officers and one enlisted soldier. those cases were dismissed by the military judge either for lack of jurisdiction or for lack of evidence but we did go after 61 people both on the receiving side so we had evidence people committed fraud but didn't rise to the threshold one of the civilian prosecutors would apply the resources to take the case so we took the case and there were also many, many cases of people that were in the chain of command that we could improprovy committed for but as i mentioned for were lax in their oversight or established a poor command climate. the most common action we took against the senior leaders was to give a formal reprimand and fire them, and that again included four general officers and two colonels. >> and of all the cases that you found scattered across the

california guard, did it seem like these were cases where it was up to one individual in a particular unit or did there seem to be collusion? was this a ring of individuals of all the folks that you mentioned that were actually doing this on purpose or just happened in units apart from some type of organized activity? >> so it was statewide. it was across nearly every unit, and where there were cases of actual fraud, it was a bilateral arrangement between the master sergeant that ended up going to prison and the soldier that was receiving the money, and in those cases, either we or the federal government were able to prove and show evidence that there had been collusion, where the incentive was offered, and one or both parties admitted that they shouldn't be doing it, it violates the rules and regulations and they did it anyway >> quick you mentioned there were 1,400 cases with insurmountable problems. can you give an example what some of the problems might have been that prevented them from

going forward on appeal? >> most common are people that failed to serve the term of their contract egregiously, not falling short just by a few days or months but by years, people that enlisted and never showed up to basic never showed up to basic training. people we had to throw out for methamphetamine use, incarcerations, those types of problems that are not compatible with military zblfs and problems that would happen regardless of component, regardless of the california national guard, things that are not isolated just to issues within the california guard? >> that is correct. >> my last question, you said 400 of the cases you reviewed lost their appeal, their appeal was not approved. is there another step or is that the end of the line? >> i would defer that question to the second panel but our request is to go back and relook at those cases because the secretary is applying those standards and more hopeful many of those will make it through the process now, too. >> thank you, ms. davis? >> i was going to ask about that as well in terms of those that

you actually in your words endorsed but didn't make it through the process so we'll deal with that later. one of the things that i wanted to just ask you about because in your written testimony you stated congress should establish a streamline adjudication process to distinguish between those soldiers who through knew fault of their own got involved and others who failed to meet the condition. but the california guard controlled those records, is that correct? you had control over those records? >> yes, ma'am, we would control the initial contract but it would go to the united states property and fiscal accounting officer who would actually formally make the payments so the payment threshold to get approved was by a california guardsman. the payment was made by the federal representative. >> but the incentive assistance center, could they make those -- that -- that judgment.

>> the authority to -- we at the state level don't have the authority to forgive any debts and we don't have the authority for any of the waivers. they reside at the national guard bureau level. and further if cases are not able to get approved for a waiv waiver. my a if the cases of some were soldiers that may have been missing one signature on otherwise good contract and that was many of the errors. >> had that been different, had you had more authorities -- because it kept feeling like everybody was passing the buck a little bit and i'm wondering what you see -- what is ideal because as we look at some of the cases i was struck by the

long lasting impact that was having on our military families. >> if we had had the authority, we would have been able to tact more quickly because by the time we were making an endorsement instead it would have been an approval but the way the system is set up now is appropriate. it's appropriate from the federal government to withhold that authority from the states because it's the federal government's money. in addition, the other changes, the national guard gem session system that the general and the chairman were just discussing earlier has been an elegant solution to help correct a huge, huge amount of administrative errors and bring it down to very small number of administrative errors and when you have a small administrative error rate it's a lot easier to root out fraud because you don't to sift through tons and tons of documents so i think the authorities are where they need to be. i'm very encouraged that osd has increased the bandwidth to

adjudicate cases and under the general's watch, before he got in, it used to take nine months to get an exception to policy approved at his level. they now knock them out in six weeks. so that is hugely helpful. >> general cad sri, would you want to comment on that in terms of how you see the system working now? my guess why we didn't change it before. >> well, i can just speak to the exceptions to policy which i have authority for because they were written in army national guard policy so i can do an exception to policy on skill, different infantry man to an armored crewman and from one unit to another. i would say the sheer magnitude of the overall problem. that caught us off guard and took us a while to adjudicate

them faster. but we followed the policy and directives and the only thing i have the ability to is to do exceptions to policy and general baldwin said then it moves forward to abcmr. i'd like to just talk about gems just a little bit more. it identifies through electronic searches in the database which we didn't have prior to 2011 so it checks all those strait i data that's required to ensure that a soldier's -- is eligible so it does that and it also tracks during the entire period so when a soldier maybe changes an mos, it flags and sends a message to the administrative officer nco who takes action. if it was a directed change we do an exception to policy in a timely process. so i think many of the things impacting what happened in california between 2004 and 2011 and looking at the current

investigation and work that the california task force has been doing i think today, we don't see those issues anymore. >> thank you, mr. chairman, i would just follow up with what other assistance we're providing. i know there was an issue around credit ratings and we were trying to fix that issue as well but i'm concerned about how this impacted families and if there's been sufficient outreach to know there's hope, there's support there and we hope they get it. thank you. >> i'll leave the majority of that comment to the next panel. i'll just say from my perspective we have had overwhelming support, partnership from the office of the secretary of defense, d.o.d., army, everybody wants to get this right for the soldiers. >> thank you, mr. chairman. i want to thank the generals for

testifying today. you know, this goes back a long ways. i was chair of the veterans committee and senator denham at the time had the 123459 committee and it brings back the memories and i think part of it when we did this was just the shock of what was happen iing a of course general baldwin, i'm very, very happy with what you've done since you've taken over so this is not an inquisition against you or anything else and we've had a conversation and where i'm coming from is going to be the same thing over and over again. and i'm not so worried about the officers so much as the troops. everybody always says

recruiters. and because you put your life in the hands of the recruiters, you trust them. you trust the army, you trust the national guard, you trust -- whatever service and people once they do that they give you their entire life. so my problems that i'd like you to talk about are some of these cases where there's been troops that through no fault of their own are suffering the consequences and, maybe i'm wrong, but it sounds like we're nitpicking, particularly where some of these people don't have the economic means to repay these things or what -- we've got -- it's our fault. now i use that word collectively on behalf of all officers that are in positions of authority, we betrayed the trust of the troops.

i still don't have a warm and fuzzy feeling about that being done. i don't want it to be too bureaucratic and after saying that i do want to comment once again. our guard is so, so important, knot ju not just to california but to all the operations we're doing. everybody on the committee knows the exercises in europe and the commitments and the op plans and everything else. we have got to get this right so once again i'm going to ask a very broad question. i've been ranting and raving and i do want to yield my time to congressman denham before it runs out but eventually if you could comment on the trust issue. jeff, sorry i talked so long. >> thank you, colonel cook. and he and i, while we served in

the state legislature together, chair of the senate veterans committee, assembly veterans committee on his behalf, we did work on this issue. i would say the difference that he and i may have is the difference in how we both -- how we first got into the military. i was 17, i signed the contract that was put in front of me. in fact, at 17 you had to take it home to your mom to have her sign it as well. so for the military to take the position that the soldiers is guilty and must prove a decade later that there was some fault of their own -- i mean, we still continue to have conversations that you've still got carry your yellow shot records around from decades before because it's not an automated system. so to presume the soldier is guilty and tlrve responsible for

a decade old contract that they signed in good faith and put their life on the line to me is -- to me it is a big black mark on our department of defense's record and i only have a short minute of time but i'd ask you to just respond to both of our statements. >> congressman, first i want to thank both you and congressman cook for your leadership role in addressing this and being very aggressive about it and we appreciate the support and our soldiers, airmen and families appreciate both of you very, very much. i would agree wholeheartedly, congressman cook, that we do have a problem that we're going to have to reestablish trust with our soldiers, with their families and with potential recruits. i'm very encouraged by, as i mentioned before, by the actions

that congress have taken. i think they go a long way to address some of the issues you just brought up, congressman denham and the steps again that osd are taking in order to show that soldiers -- we're going to trust the soldiers up front and if we have a problem with it, the burden is on us to prove the soldier did i don't think wrong rather than the soldier having to prove from their innocence, that they're innocent. >> yes man's time has expired. >> thank you, mr. chairman, i'd like to take a moment to thank you, general, for your service, integrity and effectiveness not just to this committee but our veterans and our citizens is something i am proud to have stood beside you. often times we talk about "my good friend. i sternly mean it. you've set an example of that.

thank you both for being here and it was just discussing what the gentlelady from california you made a case of this general and i think the two gentlemen know this issue very well but having been involved with this, both receiving bonuses and being part of a group that gives it, also being there when pay errors are made when i would have to tell my soldiers "you knew you were divorced, you knew you weren't going to get that vaq and you kept it anyway, you have to pay it back, that's the way things work." i know this is a touchy subject. somebody gets paid. this has huge impacts on family. general, do i hear you right that even before they went to basic training they got paid? >> yes, congressman. >> how did that happen. >> i completed basics, i got $750. two years later i got $375, on the fourth year i got $375. that kept me in.

when does that change and how does authority differ? >> i don't know. when i joined it was the same as you, you had to serve before you got all or some of your bonus. >> correct. >> somewhere around 2006 the national guard bureau changed its policy in order to provide a bigger incentives to get massive amounts of troops in and they would pay the bonuses up front and that was a poor business rule that doesn't exist anymore. >> okay. so a lot of these -- i shouldn't say a lot. many of them fell in that catego category. >> that is correct. >> and when someone got a bad bonus they colluded with the recruiter and there was a kickback to take the bad bonus? >> that's correct. >> could you give me the numbers again? the error rate in contracts in general? >> there was an audit done by the army audit agency and then an inquiry which was a precursor

to an investigation initiate bid my predecessor first with the army audit agency. they found a 55% error rate in the sample they looked at. i don't know how large that simple was. in the inquiry that was occurring in the month before i took command they reviewed -- i wanted to say it was 153 records and the case of those records they found a 91% error rate and that was enough that i felt compelled that we had to continue to look at every single record. >> what accounted far? having done these before and the detail that went into them, i'm still from the old age of carbon paper and everything had to be exact or it was no good. how could you have a 91% -- i mean were these maul errors, larger or ares, misinterpretations of the regulations? >> it was that. but the root cause problem was lack of oversight of control and lack of resources. so they had one person doing incentive managements and the number of incentives had grown

over -- very rapidly from just a handful of incentives that would offer for critical moss or bonuses to a very, very broad palette of incentives that ranged everything there medical professionals to people that were going to join the band and everything in between and at the time they had one person managing these incentives, she was overwhelmed. she was under tremendous pressure to help get the numbers to disperse the money and she had no good oversight, only people pressing on her to get money out, no one checking to see if she needed help, no one checking to see if she was doing things correctly. >> which is a recipe for disaster, general kadavy, if i could move to you on this, when you did a system wide audit of this, if i'm reading this correctly, you only found irregular bonus activity to a total of about $58,000. is that correct? am i reading this right? >> congressman, so when we did

the 53 other states, territories and district of columbia, we did a sampling of about 9,600 records. we found 689 that had errors across the other 54 for a percent of about 14 and that was $2.4 million. where general baldwin mentioned the army auditing agency, they did a sampling of 159 in california, they discovered 97 errors. >> if my -- somewhere i'd like to come back to this. most often when you have an issue like this i find it system wide, whether it's the v.a. or d.o.d. this is very odd. does that strike -- we'll come back to it. i know the fraud made a piece of that but that's a very interesting statistic. i'll get more when we come back on my time. thank you. >> thank you, mr. chairman. and i have just a brief question i'm going to yield some time. i, too, would like to thank congressman heck for his leadership. he's been invaluable. my only question is on the gym

system because we are talking about trust and when i went down and signed when i was 18 years old, i don't know that i was a whole lot smarter than congressman denham when he was 17, probably a lot smarter. but it is kind of a contract that you're going down there and trusting and believing that what the recruiter is saying is the truth so i think it's a trust issue we're trying to build back. but general kadavy, you talked about the system a little bit. tell us how that will build back some of the trust that we can have how the recruiting process and all of these problems will be caught before they become a problem. >> congressman, i think it puts trust back into the system, we're talking about trust between leadership and soldiers.

so we do a tremendous amount of training out at our professional education center for all recruiters we have provided by guidance to make sure they are getting the training and we've also implemented a program called post -- i'll have to give you the exact name of it. to the adjutant general's review each and every recruiter to make sure they're ethically morally the right folks to be talking to young men and women and when there are issues i read each and every one of the requests for waivers and in the time i've been the director i've approved one because it's -- you're right our best most trusted professionals must be the ones that are recruiting our young

americ americans. >> i'm going to yield the balance of my time to congressman denham. >> the gentleman will suspend. subcommittee members cannot give their time to a nob subcommittee member, they have to wait until all subcommittee members had an opportunity to ask their questions. >> i'm going to keep my time. >> general kadavy of when the folks have been given a bonus and then they've had to repay the bonus but under the appeal. but some of these folks have paid back a bonus and maybe their credit approval has been hurt it put them some hardship because of repaying the bonus. that will be part of the trust issue, too, of how we can make those soldiers whole moving

forward is that how we can help in this issue? >> i can tell you it's very important to the cross functional team that mr. levine is leading. it's one of the key issues we were leading at. at this point in time i'm hearing we think we have the authorities and the abilities to make a soldier whole, particularly in the instances that you were talking about. >> mr. chairman, i'll yield back. >> ms. spear. all right, we'll go to mr. kaufman. >> thank you, mr. chairman. so let me understand this right, so you've got ary cruet coming

in and takes a certain mos for a certain length of time under the bonus -- to -- in order to get a bonus. that individual is placed for whatever reason in a different mos: occupies a different position in a unit that is different from that mos. is that individual required to pay back the bonus? >> it dpe pends. we give bonuses for three reasons -- a skill, a grade, or a unit. if that is a critical mos and the soldier elects to change on their own in general, yes that is a recoupment. if we direct the change or, for instance, we just had a number of units that changed their structure from military police to others, that was directed by us, there's no recruitment and

then a soldier, of course, can always provide an exception to policy request and many have that indicates if there were some issues. i can't go that far to drill, it's too far of a drive, we take those considerations and a decision is made. but it doesn't necessarily mean that. but in the gym system there's a flag that goes up which means it needs to be adjudicated with exception to policy or a determination to contract. >> what is the status of these recruiting bonuses. has that been stopped? >> that's been stopped? >> what's the status of the bonus structure now for recruiting people first term enlist i enlisties. >> yopds the question. >> i assume there's a bonus

structure for enlistees. >> there are enlistment bonuses for certain units, certain skill sets and retention bonuses for certain grades where we don't have enough for instance maybe staff sergeants and etc. >> how dynamic is that process? i know in 2005 it was tough to fill the ranks of the military across the board and it's easier today than back then. >> congressman, it's dynamic, we're looking at it. i think it's almost too dynamic that it gets to be a bit confusing and i talked to a few adjutant generals in a are on a jennifer advisory committee and we are likely going to go talk to the states and where are there are holes in the beginning of the year and mid-year we will adjust it if need be so it stabilizes and doesn't change the skill sets and grades and units on a continual basis that maybe is confusing and causes

these issues. >> but those enlisted soldiers that sign up for an mos specialty and get moved, are -- or they -- i guess they elect to move. but are they -- i just want to make sure they're -- cognizant of -- >> what i'm talking about is initial enlistment. when you sign, we're going to limit how often we change which skill sets. so we might have a different one every month and sometimes that gets confusing to recruiters or recruit walks in thinking they're going to get a bonus but they wait to make a decision a couple months later and the skill is no longer there as far as recruiting. what you're talking about is once a soldier signs a contract, gyms verifies that and as long as they live up to that contract there are no issues. if something changes, gyms flags it and we adjudicate it through an exsense to poception to poli

or if a soldier decides to no longer serve out their enlistment period in the army national guard then by statute and policy we must recoup for any unexecuted portion of that contract. >> but when you said if a soldier elects to change an mos they would be responsible for recouping but if it was a critical mos how would the command structure allow them to elect to change their mos rts. >> well, in general you know what you signed up for. so in most cases it's more related to changes in force structure and design updates that the army provides. so you're in an mos, in a unit in a location today and that change changes we don't collect from

that particular soldier. >> chairman, i yield back. >> thank you. >> mr. chairman, thank you for the privilege of sitting with your committee and now asking a question. appreciate the information that's been ill lis ted thus far in the testimony. we now have an ndaa that has a new law, a new section that will become law and it's meant to effect those men and women that took a bonus in good faith, carried out their responsibilities even though it may not have been to the strict oms or other criteria and faced a clawback of their bonus i agree with every member of this

panel that that's unconscionable or did happen but my real question is going forward, general baldwin, you gave a bunch of statistics, and numbers at the outset, i'd like to review those in the context of how does the new hopefully soon to be new law in the ndaa affect those men and women that are under review as a result of the bonus question that has arisen in california. if you could run through that quickly. and i also understand there are certain criteria that are in the soon to be law as well as criteria that you -- excuse me, that the army may use to eliminate from the clawback, potential clawback. could we go through that? >> sure, the important step that's in the law is it -- as osd is putting together their team and they'll discuss in the

the next panel that will more rapidly adjudicate the cases and i are view soldiers to find the ones that -- the many, many thousands perhaps and the ones that deserve to keep their money. one of the main things that it does is it relieves the notion that for that targeted group of individuals that we have to have a presumption of guilt in order to review their case. they're going to review every case they take before them, so that's very, very encouraging. the other thing the law does that i think is very, very helpful is that not only in this population we're addressing here but national guardsmen ostensibly both in the army and the air national guard from time forward that if you -- if a debt is established for a national guard soldier or airman prior this ndaa, the national

guardsman could not go ask for some total financial relief for financial hardship. they could do it in the case if they had lost or damaged government property but in the case when they had overpaid or paid a bonus they weren't do they couldn't get relief if they were suffering financial hardship, it too 108 active duty personnel could, title 32 couldn't. the current nda corrects that and we're happy to see that in there. >> i understand that there were other criteria that would eliminate from the clawback certain men -- guardsmen, guards people is it only this system of financial hardship or does it have to do with rank, position? >> if i can take this one, dave. >> sure. >> as a member of the cross functional team being led by osd we are still revealing in the next panel mr. lincoln can tell you where we are at on this but

we are building criteria based on the secretary of state's guidance the intent is to find those ineligible for a bonus and should have or did know they were ineligible. the intent is not to recoup from soldiers that didn't understand what was going on. it's only to get after those that were ineligible and accepted a bonus knowing they were ineligible. >> will that criteria significantly reduce the number of guards people that are affected? >> i've been asked if you could refer that question to the next panel. >> i will do so. mr. chairman, i want to thank you and this panel for writing into the ndaa the language that will significantly solve most of the problems, perhaps not all of it. and i would ask in the future this panel continue to observe and watch as this plays out.

thank you very much. >> thank you, mr. chairman. let me add my words of praise to you for your service to our country and to this congress and thank you as well for bringing this issue to the forefront today. let me start with you, general baldwin. you met with me yesterday and appreciated that. you took over in 2011. correct? >> yes, ma'am. april of 2011. >> and you took over in part because the governor saw this as a problem and wanted to relieve the general before you and put you in that position, correct? >> that is correct. >> all right, so from 2011 until 2016, the only time this was ranked as an issue -- and it was ranked number six -- was in 2014

to the foreign -- to the arms services commit tie and there was no impetus to take this seriously enough to fast track it. and it was only until the "los angeles times" did a story that this issue got some traction so my question to you is while you are not responsible for what happened before your watch, you are responsible for what happened after you took over and why didn't you elevate this to a high enough level in 2012, 2013, 2015 and again in this year? >> so for the first two years you mentioned, 2012 and 2013, we weren't aware of the amount of time it was going to take to get through adjudication process we first started pushing cases forward after doing the review in late 2012. and since it was taking two years for cases to run their

course, it wasn't until the end of 2013 to 2014 that we realize it had scope of the problem we had based on the amount of time it was taking to get relief for soldiers, that's why in 2014 we first brought -- >> okay, i'm going to short cut this a little bit because i have limited amount of time. i just want to make the point that while you're -- you have made it a priority on a list, you didn't make it a priority to the committee so it wasn't dealt with as it should have been. now you mentioned to me that some of the largest bonuses went to physicians, the $40,000, the $50,000, the $60,000 bonuses and in those cases they have not -- they committed to six years served, in some cases less than two years, got the bonus up front now that decision to offer the bonus up front before you committed the six years seems like a no brainer.

why would anyone do that in an administrative role when the likelihood of someone skipping is pretty high. >> so that says a great example because those cases because of the dollar amount were amongst the most egregious. the way the program for benefits -- for incentives for medical professionals worked at the time is they could get up to an $80,000 bonus and it was paid out in tronchs so they could get paid part of the bonus and that was in accordance with the regulation. what happened is the incentive manager was push the button to pay the lump sum in one year or maybe after two years so if they made a six-year commitment, that medical professional served two years, got their $60,000, $80,000 whatever it was and t n then. >> so i want to go on record, those medical professionals that got the bonuses to serve six

years and only served two that we should claw back every single dime. now you also told me you were under the impression that for no non-commissioned personnel who were enlisted that for the most part especially if they were over ten years in length that that is going to be waived and that requirement for enlisted will not be clawed back, is that true? >> so i think that's one of the business rules they'll discuss in the next panel that for certain ranks and certain time and service for more junior people they're going to apply some rules that are more forgiving for people that may have been more senior or perhaps worked in recruiting that should have known the rules. >> i've always had a problem with this "should have known" because if you received it you didn't know that you weren't

supposed to receive it but you should have known and it's ten years past that is, i think, an expectation that we should not require those individuals to pay it back, particularly if they committed to a contract and served for the requisite period of time. with that i yield back. >> mr. aguilar? >> thank you, mr. chairman, i don't serve on this panel, thank you for allowing me the opportunity to ask a few questions and thank you for -- it's been a pleasure to serve with you on the full committee as well. general baldwin, can you explain, again, maybe this is getting too deep in the should have and did know that you mentioned, can you explain the process that was gone through to determine whether the incentive pay or the student loan needed to be recouped and then immediately thereafter once the notification was made, what were the next few steps along the process?

>> sure, i'll address the cases where we did not find fraud or suspect fraud. so for the preponderance of the soldiers what we would do is overlay the paperwork that they had that showed here's their contract, here's what the regulation says in order for them to receive that certain benefit in order for them to establish eligibility, what other documents are required and whether or not they had all that paperwork, by the rules that were in place on time, at that time, if someone was missing one of those elements, it voided the contract and that forced us to then send them to the national guard bureau for an exception to policy which we again sent with the ones that we did send where we're working with the soldiers we sent with endorsements recommending approval. if they did not get approved -- if their exception to policy got

approved by the national guard bureau, that was within general kadavy's predecessor to allow them to keep the money and then we were done. if the national guard bureau did not or could not approve the exception to policy, it difd gie us the ability to help the soldier go to the military krep review board correction of records to have a determine nation of whether or not they would approve it. we had about a 50% success rate. i'll give you one example of a fairly common problem. for soldiers that were first term enlisties as in the case of congressman denham where you can join the national guard or military when you're only 17 years old, a lot of these soldiers hadn't graduated from high school when they i enlisted. for the national guard you can do that. you can join the national guard before you graduate from high school however to be eligible you have to produce a high school diploma and in many cases

the soldiers served and served well but we didn't have a diploma in their records and in that case we had to take action. those are cases that were easy for us to go back to either exception to policy or the abc mr to get relief. >> what kind of time period where they given in order to correct the document side, the deficiency you saw, whether it was a high school diploma or any other document. >> the only soldiers we sent to recoupment were soldiers that did not contact us. so if a soldier contacted us we worked with them and have continued to work with them and to my knowledge have not sent any soldier to recoupment for any benefit we could assist them on. >> general kadavy, do you want to talk about that from a process perspective? those that came through within that flowchart? those that came through that your office and press saysor review reviewed what did that look like

from the documentation standpoint? that's what i'm concerned about are those folks that were danged because of a lack of documentation but met the criteria for the bonus. >> so i believe, i can't speak for my predecessor but our guidance, our intent is to work as hard as we can for an exception to policy for each and every soldier. quite honestly, if they served the term and met the agreements, an exception to policy was almost always provided by. >> okay, appreciate it. i'll yield back, mr. chairman. >> thank you, mr. chairman. i think you touched on this directing my question to general kadavy, did i pronounce your name correctly? kadavy? it was one way or the other and i picked the wrong way. but you discussed in your initial -- in your opening comments that you have not seen this concern widespread across the country.

it's limited to california. i'm from florida and reached out to our national guard as soon as i heard of this to just see where they thought that they were with any challenges with bonus recoupment with our national guard and we have about 12,000 in florida. i just want to confirm that you don't see any of these concerns in florida that have come to the attention of those here regarding california? >> well, specifically related to the fraud, we have given no guidance to any other state, district, or the territory of -- district of columbia or any territories to do any audits or inspections. as i said, through gems we always have ongoing recoupments for generally those that don't meet the term of their enlistment. so i can't talk specifically to florida and what is going on in

florida but we have not directed any type of work and we've not discovered any type of systemic problem related to fraud that we are aware of. >> well, that answer kind of concerns me because i thought in the beginning you stated that there weren't concerns across the country, that this was limited to california. could this be something that the wonderful men and women that serve in our national guard in florida have to be worried about? because i certainly, as i think the only representative from florida here, want to give them some assurances that that will not be the case. >> well, i -- >> >> we conducted audits for the national -- performing the duties of undersecretary of defense personnel and readiness peter levine, i'm on the next panel. >> thank you for stepping in. >> i apologize for jumping on this but because we've done reviews and identified zero cases in florida i thought it

would be helpful for me just to mention that. >> zero cases is very good. thank you very much. so i will take from your testimony that the men and women that serve on our national guard in florida do not have to be worried about this same concern. thank you, approaeciate that ani yield back, mr. chairman, thank you. >> thank you, mr. chairman. and thank you, gentlemen, for being here today. i'm troubled. between 2006 and 2008 national guard senior non-commissioned officers improperly provided by student loan repayments and bonuses to numerous california national guard members.

and one person, sergeant master sergeant -- female, toni jaffee was the only person to be criminally sanctioned. but dozens of personnel, including senior leaders and jennifers, were punished by the california national guard for this illegal activity. is that correct? >> that's correct, congressman. but an additional 43 soldiers were charged and prosecuted by the -- either the federal government or district attorney's for fraud also. master sergeant jaffee is not the only person that served jail time. she served far more time in prison than anyone else that did jail time but there were other

officers and some non-commissioned officers that were given sentences that included some jail time. >> all right, thank you. that was the highest-ranking official to be found to have engaged in this misconduct? >> so on the receiving side or the people that we had evidence that committed fraud or colluded to commit fraud i believe it was a captain was the highest-ranking individual that received money. higher-ranking officers weren't eligible for bonuses. >> actually i am getting at those who were responsible for initiating the payments, not those who received them. >> so the only person held responsible for initiating the payments was master sergeant jafee. i hold many, many people responsible, though, for their failure to provide problemer

oversight or leadership, that included three two-star generals, one two-star general and one colonel in the california national guard and then the national guard bureau fired a colonel working for the national guard bureau. >> why were not the others charge criminally? it appears that the master sergeant may have been made the fall guy from a criminal standpoint. >> you would have to ask the u.s. attorney that question, congressman because they did those prosecutions and they add which you willy had seize all of the evidence related to that case so if there was any evidence that senior leaders actually colluded, i haven't seen that evidence. if i was presented with evidence like that i would take the appropriate action. >> what was it about the sergeant major's case that made it actionable from a criminal standpoint whereas others were not? >> i don't know the details of

the case. as i understand they had physical evidence, whether it was copies of contracts or it was e-mails where -- or some forms of conversations where they could prove that she had colluded with officers and enlisted people to do this. >> all right. the criminal cases now -- is criminal prosecution -- has the criminal investigation ended? or is it still ongoing? >> i don't know. again you'd have to ask the u.s. attorney that question. >> did your office make any recommendations as to who or who would not be prosecuted? who should or should not be prosecuted? >> they did not have that conversation with us and, again, they seized all the evidence so any recommendation that we did have would have to be based on the evidence. they seized that evidence before i came back from afghanistan. >> major general baldwin.

in your testimony you stated that the -- that service members -- you stated service members that should be required to repay their bonuses should be made to do so. can you describe in more detail in what cases would service members actually have to repay the bonuses and -- that they've received, especially since in most cases it seems they got the bonuses through no fault of their own. >> it would be in those cases where the service member egregiously violated the contract for which they said that they would serve. for example, they signed up and never went to basic training or they signed up for six years and only performed two years of guard duty and then either went awol or left the guard for some reason. >> the gentleman's time has expired. >> thank you. >> mr. chairman, general baldwin, annually you put together a list of priorities

through your office, that's something you do every year? >> that's correct. >> when you do you starting on that? >> generally we start working in the late fall, early spring in order that we can present those legislative priorities to the congress around the march time frame so they're ahead of the mark. >> and i've got here in front of me your list from fy-'15. if you would have started this in spring of '14, addressed congress later that year. >> we would have presented in the the spring of 14, started working on in the the fall of '13. >> so you have your fy-'15 ndaa priorities when? >> march of 2014. >> so you start working on that in 2013? >> that's right. >> and this year in particular, fy-'15 you list as priority number six, your final priority, service member debt relief

equity. i was surprised to see in fy-2016 your list of priorities it wasn't in here. you've got six priorities and this debt repayment was not one of them. why did it fall off the list? >> it fell off because in 2014 the item had been scored by the cbo and we weren't successful in getting it through because of the cost that was involved. it was a tough sequestration year. in 2015. >> well, we're still under a tough sequestration year. >> i understand that, congressm congressman. i regret not including in the the 2016 year and i'm very encouraged that the committee again with your leadership assisting is helping to get this legislation passed. >> why wasn't it included in 2017? you would have started working on that two years ago, correct?

>> that's correct. again, we felt that we had asked -- we were not able to take that ball across the goal line so we directed our time and nrds towards traying to help soldiers that we could influence. in retrospect, in hindsight, you're right, i should have continued to make this a priority. >> is that a -- your list of priorities, is that at your sole discretion or does the governor weigh in on that? >> ultimately it's my list and i take responsibility for list. >> >> in the language that we've included in the ndaa, we have resolution to this. my concern has been as a member of congress i don't get a list from the d.o.d. on who has -- who they're going after for this debt forgiveness, i don't get a -- any idea of who's having to

repay this, who's been harassed until they call my office so somebody who has now repaid their debt, how do they go about filing to resolve this issue going forward? what is the process? how does the process work to make somebody financially whole that has now taken a second out on their house and repaid a debt they didn't owe. >> i think the second panel would be able to address much of that. we still have our financial -- our soldier assistance team in place. there is a 1-800 number that we have posted on our web page that people can call so we can get to work that if they have suffered the this or they are on the list of people that potentially may have had a problem with it, that we can refer them to the lawyers and the people whether in california or at the army or osd to get help. >> and what if there is an individual that is still serving that either in the guard or

reserves it is being asked to repay a debt but in their chain of command they're asking them not go to a legislator or a member of congress. what would your opinion of that be? >> well, that violates the policies in place that are both osd policies and policies i have that that are in the military department. no one can interfere with an individual's right or ability to make a protected communication between themselves and their elected officials. >> thank you, i'll look forward to following up with you on that as we resolve this issue for a constituent. one final question. you and i had a discussion about this earlier. i have a big concern with -- when somebody takes a government document, a private e-mail, and puts that out for the press to

s see, my concern in this case wasn't about the legislation itself, my concern is what the issue with recruitment and retention has now had on the department of defense and even in the v.a. in this case. i'd like to follow up with you on this release of e-mails from your subordinates to get a further clarification on why they felt the need to go outside of their chain of command on this issue as well. >> i look forward to that, congressman, and if there's anyone in the california military department that violated any laws, rules, policies or regulations, we'll take the appropriate action. >> thank you. >> i'd like to thank both of you for taking the time to be here to review this important issue. at this time we'll switch out the panels and hear from representatives from the office of secretary of defense.

>> i'd like to introduce our second panel, we have mr. peter levine from the department of defense, ms. alyssa starzik and theresa mckay. mr. secretary, you're recognized for five minutes. >> mr. chairman, ranking member davis, thank you for holding this hearing and appreciate the discussion that i heard with the first panel. it shows serious engagement on what is really an important

issue. i would also like to join your colleagues, mr. chairman, in thanking you for your service. you've been very gooded to the department of defense. your focus on these personnel and readiness issues has been important to us and helpful to us so thank you. i can't -- i'd also like to, if i may, thank chairman thornberry for being here and continuing to listen on occasion to my good friend mr. similar monos who i see also in the back row. you have my written statement and i won't read any of it. there are a few points i would like to focus on, some of which have been discussed but some i think deserves attention. recoupment is an ordinary fact of life in the military. our pay systems aren't as perfect as we would like them to be and we run into any number of issues from the person we heard about earlier who might be divorced and still getting bah as if they were married to somebody who has the wrong paycheck or fails to pay a bill, fails to pay a travel bill.

we're recouping against as many as 100,000 soldiers, sailors, airmen and marines at any given time. civilians as well. the california army national guard cases are a -- particularly the ones that have been in the press, have been reported in the press, are particularly egregious cases but i wouldn't want members of this committee to think this is the nature of recoupment and that we always have this problem with recoupment. there are a number of reasons why the cases we've read about in the press are particularly troublesome. one is that many of them are based on a technical deficiency. we've heard about wrong mos cases where the soldier may have been misled as to whether that wrong mos mattered, technical absence of paperwork which seems like a pretty minor reason for recoupment, particularly in the case -- in cases like this what is we have service members who made a commitment on the basis

of a bonus and then served out that commitment so when we come in later after somebody has fulfilled their commitment and question on a technical ground why they received a bonus in the first place, that's a particular hardship. what i hope you'll understand is that that's not all the cases we're dealing with even with the california national guard. we heard about some of the medical professionals who may have received bonuses and not served out their commitment. we have a significant number of other cases in this pile of recoupment cases where we had service members make a commitment and receive a bonus on the basis of commitment and not fulfill that commitment. so as a matter of basic fairness to those who did serve out their commitment we need to look closely at those cases. those would tend to be cases in which we would expect to uphold -- in most cases uphold recoupment if the service member didn't fulfill the terms of the contract. second point i would like to focus on briefly is how the

process of recoupment sets up. we read in the press that the pentagon ordered recoupment. the pentagon means a lot of different things to a lot of people. it could the secretary or osd or people in washington or the entire department of defense. the way we work on these kinds of issues, it's not just limited to recruitment or pay issues, we have an auditor look at an issue, they identify a problem and they have standards to which they work to identify those problems. auditors do not make decisions for the department of defense. they do not determine we're going to recoup or not. auditors make recommendations. if you're in a contract matter, they would make a representdation to a contracting officer and they would make a decision. in this case, the auditor would make a recommendation to the property and financial accounting official who is technically an employee of the national guard bureau but is appointed by the california national guard and is a california national guard member

appointed by the california national guard but then serves a federal role because they're activated when appointed to that position. as we look at the way these cases set up, we had the army audit agency do an audit and make a recommendation with regard to a limited number of cases and found an error rate of 50 something percent. california national guard looked at that. we have when we look at these things, we have discretion, enforcement discretion. we don't have to say yes, the auditor said to do this. we're going to do every one of these things before we get to a point of establishing a debt we can determine whether it's in our interests. as we've looked at other states, we see some of the other states with the national guard where you had eight cases only two were sent for coupment or 40 cases only five were sent for recruitment. some states sent all the cases. they make those judgments. what california did and it was is within their discretion and

given that they said they did another review and found a 91% error rate, i can't say it's wrong for them. they've not only referred all the cases they had for recruitment but said we're going to do 100% review of everybody es. we're not only going to refer those case fwlz our sample, we'll go to the rest of the universe which brought in about 17,000 more individuals. i think what the california national guard discovered over a period of years after they did that was that they didn't have the bandwidth to deal with those cases and dealt with some of those cases and put some into recoupment. they should have put into recroupment, some maybe not but left thousands of other cases hanging out there with the threat of recoupment over them which adds to the unfairness of this process. i have to say, we have oversight over the california national guard. army has audit -- as oversight. national guard bureau has oversight. we were not an aware of this till we read it in the

newspaper. that's on us. we missed this. but when we became aware of this, the secretary specifically directed me go in and address this. do this fairly do, this expeditiously. get it done by next summer. so we're going through a process where we're going to be looking at these cases to figure out which ones should be subject to recoupment and do it as expa dishly as possible. we're going to favor the soldier wherever possible but we're going to count for the differences in different types of cases. we have two basic categories of cases we have to deal with. one is those cases already determined to have a debt and sent to defas for recruitment. that's sort of the receiver here. they get the cases and implement it. so we have about 1400 cases in that category. we have a second category of cases essentially put under suspicion or threat of recoupment about 16,000 more

cases in that category. for those cases that are in recoupment, we have the question are we going to dismiss the case, fib the debt, repay the soldier if we decide it was improper. we are -- we put those through a screening process. we've already had the army audit agency look at all 1400 cases through a preliminary screening through that preliminary screen, we think that we can eliminate about a quarter of them which we will be able to recommend for forgiveness without further action. we're going to go through a second review which will get us into more detailed review to look at those cases. it's my hope we can pear those cases down by about half before we put the remainder in front of a further review process. it's my hope we can get from 1400 down to about 1700 before we just based on our review the paperwork without involving the soldier at all and tell half of them you're off the hook. that's a goal. i don't know the exact numbers we get to.

turning to the second category, 15,000, the larger category, in that case we have greater discretion because we haven't yet established a debt. we have enforcement discretion at this point. we're going to establish a number of rules of thumb which were referred to earlier and these will be my recommendati s recommendations. it will be up to the secretary of the army to accept those but i expect he's going to have the same objective that i do and the secretary of defense does which is we want to pear these cases down to the most serious ones. so we're going to screen out cases that are more than 10 years old kick with your legislation. i expect we're going to screen out cases with some exceptions. we're going to have be careful about soldier who have gone awol or have other kinds of processes but basically screen out cases with a debt of $10,000 or less. most of the cases with enlisted members and lower ranking members, members without prior service on the basis that this unlikely they would have a basis to know they were going to be --

to read and understand their contract. this was an issue that came up earlier. as we go through those screens, we will get from that second universe of 16,000 or so cases i expect to reduce that by about 90% so we get down about 10% of those. something between something on the order of 2,000, 1500 to 2,000 cases. we'll put that universe through the kinds of screens, substantive review of that and i hope to get that down further. it's my hope by the end of the year, we will have something between 1,000 and 2,000 cases total out of the total universe of 17,000 that are subject to review. those are the cases that we will then put in front of bcmrs and allow soldiers to come in and make their case they shouldn't stb subject to recoupment. but the objective is to find the easy ones first, get rid of those. tell people we're not pursuing you so we don't have to tell you you have to come in, you can come in a bcmr.

we're done with you and do that on the basis of the paper so we can focus our resources on those cases that are most significant where we need to understand the facts better. the army has already staffed up the bcmrs, identified the people who will be serving in this role. we're going to add resources. they're in the training process. we expect to be up and running by beginning of the year. the staffing numbers they've established we believe are sufficient so if we have 2,000 cases we'll be able to handle that number of cases by the july 1st deadline that was set by the secretary. that concludes my testimony, mr. chairman. i'd be happy, we'd all be hanes to answer your questions. >> miss starazk, do you have any opening comments? thank you for taking time to be here and running us through the process. so one of the questions that i asked general baldwin which he deferred to the second panel of those 400 they had recommended being relieved but lost, did not

get, seek i guess was not granted relief, do they have another appeal avenue or is that it? they're done. >> first, i don't necessarily track all of general baldwin's numbers, not that they're wrong. we're trying to develop our own database and go through the numbers. i can't identify necessarily those cases. what i can say is we will provide an afternoon knew for everybody here. in the cases of those who have been committed who have been convicted of fraud, that may be a narrower avenue. we'll provide an avenue for everybody. >> my only other question, for those in collections let's say and having wajz gan nished by the irs or turned over to a credit agency, where is the rose getting pinned to make sure the irs stops taking money or we get credit ratings restored. >> this is a defast function. that's been taken care of in terms of stopping action.

miss olympic cave may want to respond. >> that's correct. when the secretary asked us to stop recoupment, we were able do that within a week for cases identified to us by the california national guard. that included the cases that we had internal to defast where we were recouping from their military pay as well as any voluntary repaints that were under way as well as any cases we are had turned over to the treasury for recoupment and that would include the category of private collection agencies. we also took action to rescind any report together credit reporting bureaus. and so those for those cases that were identified by the california national guard to us, those credit ratings have been restored as if these debts never occurred. >> thank you very much. >> the one thing i'd like to add is in terms of the one week, there are a handful of cases that lag the one week only because we had trouble

identifying the individual involved. we had erroneous social security numbers and things like that we've been trying to clean up as we went along. >> miss davis? >> thank you, mr. chairman. thanks for being here. of all the changes that have been suggested and some are in the legislation and that you've been working on, is there an area that you have seen have i virtue of correspondence from guardsmen or women or others that is still hanging out there still an issue that you're not sure that you could tell me confidently that you've resolved? >> congresswoman, i'm confident we have the authority we need to clean up the situation. we need to put the resources into it we're now putting into it. we will dress this i think in a way that is fair to everybody. the -- we would of course, always prefer to see legislation before it goes into law.

because we can help head off unintended side effects. we believe we can work with the legislation you've enacted and do what we need to do. >> anybody else have a concern? okay. one of the issues and we had the opportunity to see a number of pieces of correspondence from those who were really affected by this. some from california not necessarily all. and certainly our offices had had several inquiries and we had casework around this but minimally so there wasn't a sense this was anything systemic that the particular time. and i think the issue over you know, whether or not it was number six on a list of issues that the guards were looking at, but we do have a number, you know, quite a bit of correspondence i think you all have received over the course of time that suggests to me that perhaps it wasn't followed through on a number of

occasions. so to what extent do you take another look at some of that correspondence and see what was happening in if the lives of the men and women who were writing? why they weren't getting any response whatsoever, whether the hot line or either the and the assistance center wasn't responding. why was that? >> honestly, i don't know the answer to that. i've been asked by the secretary to take a forward look and clean this thing up going forward. i have not been asked to go back and retrace the history of how we got to where we are today. i agree with you that we and that's why i pointed out we have an oversight role here. i think that we should have seen this before now. and i don't know why we didn't. >> uh-huh. thank you. so i guess going forward because i'm for that, as well. i think that that's what's really important. we don't want this to happen again. but i am a little concerned that

we have these cases and do you receive inquiries on the part of the men and women for additional assistance whether it's mental health or financial assistance, whatever that may be? does there seem to be that a group of individuals who clearly this made a difference in their lives. >> so we obviously have all sorts of mechanisms through the department of defense for receiving complaints. there were any number of avenues of appeal for these soldiers that are established avenues of appeal. appeal to defas, appeal to the secretary of the army and bcmr. those are official chachbls they can go through. indation we have abilities to complain to members of congress to, go to hot lines. we have pressure valves for those kinds cuff things. i can't tell you why those pressure valves didn't raise this case to a higher level

before now. don't know the. >> going forward and as this is law changes, and we can be grateful that at least in the numbers that we've seen we're not going to see this kind of occurrence i hope again, but we still have all these cases out there that in fact, perhaps people really could have used some assistance and can still use assistance. how do we deal with that. >> going forward the national guard bureau really has taken important steps in instituting this automated system which will, which should automatically pop up places where we have improper payments and insubstituting a double-check system so you don't have the one person who can sign off something and get into the kind of problems we will in california there. while i can't be 100% confident we're going to avoid any problems, i think we are much more likely to identify these kind of famt errors early and i think the big problem here was not we had the payment errors.

we made these and then let somebody be out their service and came back to them after they served out their service and said we want our money back. if we identify the problem in a timely manner, it's much more appropriate to recoup than when you come back five years later and say i want my money back. >> as we look at the time frame from 2011 until '16 under the general's command, i think that there are a lot of cases there that people were hurting. and i don't know whether there's also a mechanism within the guard. there should be to check up on people just the same way we collect up on people going through transition and have returned and who do not request the assistance of a mental health provider or any kind of health provider. there's a sense that they -- we have to check up on them. >> that is part of a commander's responsibility. >> okay. and i think going forward, i suspect that the committee's going to want to have another

opportunity really to talk about this perhaps in six months and see how everybody's doing. okay, thank you very much. >> mr. levine, if anybody else wants to answer this but i am surprised for members of the national guard that we would go for these let's call it deficiencies or whatever you want to call it that we were going after them civilly. and affecting their credit union. does that affect active duty people, as well when there's a mistake on a bonus? >> so again, this is a fairly unique case because we were going after people on technical grounds. some people at least on technical grounds years after this technical mistake was made when they had already issed out. we refer cases for recruitment all the time as i indicated. there are probably 100,000 cases under recoupment at any given time. we pursue them. they're large cases and small cases. the numbers show most of them

are relatively small kays. we could have cases for lost or damaged equipment. we could have recoupment cases because you had failed toe pay for travel. we could have cases because you were getting aviation incentive pay when you weren't a pilot. any number of different kinds of reasons we could have recoupment cases. when the debt is certifieded by in this case the property and financial officer for the national guard out in california, when the debt is certified it goes to defas and i believe defas would follow the same procedures in each case. i would defer to miss mackay to speak to that. >> yes, sir, you asked specifically about active duty. so as long as when a debt is established on an active duty members, it's handled within the military pay system. debts are recouped against the payments going to the military

members. at a predetermined statutory rate. and so it would come out of their active duty pay. as long as an account is not delinquent and in these cases there would be active collections against the debt, they're not considered delinquent. there wouldn't be any credit reporting against them. >> mr. levine, in your testimony, you address the comparative recoupment amounts between california and other states. as $11 million in california alone and i an total of only $2 million between all other states. i understand that a special audit team was sent to the state of colorado, washington, texas, and the territory of puerto rico to check 100% of the records in each of those states and territories. the records check revealed that the automated systems internal controls were not working as intended resulting in management of the system being bought to

the national guard bureau level as a short-term solution. would you describe for us how those systems were not working as intended and what the results of that were in each of those states particularly perhaps for the state of colorado. >> so i'm unable to answer the question as to the specific internal control deficiencies in the state of colorado. we did have the aaa and the national guard bureau conduct reviews across the states. they did determine that there were internal weaknesses, lack of oversight is, lack of multiple signoff the kinds of weaknesses we discovered in california. what we didn't discover was the exploitation of the weaknesses or systemic problems weaknesses where in california they determined there was fraud involved. with regard to colorado, i'm interested by the 100% review because again, as was florida, i asked the national guard bureau and the aaa to look at whatever

cases we had elsewhere and i've got a rack up of those which is what the $2 million comes from. i show the same thing for colorado i do for florida which is no cases of recoupment. if you have something different on that, on colorado recoupment, i would be interested in seeing that. i can't guarantee i've got 100% accurate information. i would like to know if there's a significant number of cases in colorado because i don't show any based on information we've gathered at this point. >> on the recruiting bonus side we do. >> if you have information, i'd appreciate if you would share it with us so we can go back and see where that fell through the cracks. >> i'd like to distinguish between the two. the recruiting bonuses are a different issue than the enlistment bonus issue. when aaa looked at the questions, it did an audit of several states. it was missouri it, indiana it, pennsylvania, and a couple others potentially this they did not find systemic problems. they identified some concerns with internal controls. the national guard bureau also had sent audit teams out to different states and asked their

internal folks to audit. those came out with some results but again, there was no finding of the type of systemic problems they had in california. >> having said that, the numbers that i got from aaa and national guard bureau are supposed to cover both reviews. if you have something else, i'd appreciate seeing it. >> thank you. >> i just want to before i yield back, i want to thank mr. chairman, thank you so much for your service to this committee. it's been a privilege to work with you despite the fact that you greatly outrank me in terms of being in the military. >> thank you again. >> the issue of counseling those who now have issues around their credit and the like, is that something that's going to be undertaken by the guard or by a separate office? >> we do financial counseling for members, for service members, generally we provide

that as a service. my expectation would be it would be done through the national guard bureau but i'd have to check for you. >> the national guard indicated to me they feel since they're in close proximity to them they would like to pursue providing that counseling. >> it would be my expectation that the normal course of events that it would be the california national guard that would counsel california national guard soldiers but again, we'll have to check that for you. >> all right. when the general was kind of running through those that were prosecuted and pending cases most of them from the u.s. attorney, when he referenced the court-martials, seven of them, six officers, one enlisted i guess, he made the statement that both because of the lack of evidence and just the ucmj itself prevented them from pursuing court-martials of those individuals. what would have to be changed in the ucmj in order to allow the

military justice system to work? >> the military justice system has the same presumption of innocence that the civilian justice system does. and so we have the same issues of proof that we have in the civilian justice system. and often they're cases which we might have asus pigs that somebody did something wrong. when we have prosecutors look at the case, they say there's not enough to pursue it to trial. i think at that point in time given the way our justice system works, that's to be expected. and i don't think that we're in -- that any of us want to change the fundamental premises of our justice system. >> no, but i wondered based on what he said whether there was something that we need to look. >> i don't think there's anything unique. i'd look to the difficulty of prosecuting cases where there's tough evidentiary issues which we run into in general. >> i guess finally, i'm still somewhat confused by the fact that this was a california only

problem. and it appears that the national guard chose to distribute these bonuses in a manner that was inconsistent with other national guards in an effort to i guess get their number up. but to somehow offer a recruitment bonus that is given 100% at the beginning of the tour as opposed to in increments seemed quite foolish. should there be more uniformity among the various national guards? >> so the way i would describe it is that we had a system at that time that was vulnerable to abuse that system was vulnerable not only in california but other states, too. it was in california they identified abuse and they went after it pursued it for that reason. it's not that the other states didn't have the same system. it's that they didn't find that same evidence of abuse that led

into this 100% audit and review they did in california. >> i see. but moving forward, that is not going to be able, that abuse cannot take place? >> i can never tell you we won't have mistakes or problems in the department of defense. i think we've addressed this one but where we'll make a mistake the next time, i can't tell you. >> thank you all for your service. i yield back. >> thank you. >> thank you, mr. lynn and miss starazk and miss mackay for being here. it's a difficult issue but we want to ensure we take care of the guard men and women in california and make sure we don't have similar issues across the defense enterprise. before we adjourn, i want to take a moment of personal privilege. this is my last subcommittee hearing and want to thank miss davis for all of her help over the last two years. when we set out an agenda for this congress, what we were going to accomplish in this subcommittee, we had quite a few major issues and people said we

were crazy for thinking we could get even one done. whether that be ucmj reform, retirement reform, health care reform, commissary reform and due to your support, the hard work of all the committee members and incredible staff, we got all four of them done. that would not have happened had it not been for the great working relationship we have. i want to thank mr. walz. standing beside every officer is an nco making sure he gets the job done right. he was that person for me. i really want to thank the staff, everybody who made the last two years as successful as it has been. it's been a great honor to serve and shows this committee's commitment to taking care of men and women in uniform, fair families, retirees and survivors. there being no further business, the hearing is adjourned.

president laengt donald trump today announced he's appointing montana congressman ryan zinke for interior secretary. mr. zinc kef serves on the natural resources committee which has oversight of the interior department. earlier this year he asked the current interior stkt sally jewell about the department's priorities. >> i'm sure we all agree the importance of our parks. by looking at your budget, we all know you're behind and i just got finished talk together superintendent of yellowstone.

i know the superintendent of glacier. i grew up in the backyard. you and i both have toured the parks. but in your budget, it doesn't seem like you prioritized the infrastructure. so if infrastructure is so important on road maintenance, why isn't it at the top of the list on your budget as far as of national parks? >> infrastructure and beginning to deal with the backlog is a very high priority in our budget. so it's in there not only in the discretionary budget but also our recommendations for the centennial initiative which would clear up the high priority maintenance backlog over ten years. >> would you say it's a top priority? as you look through it, there's a lot of other programs in there but it should be infrastructure first i would think before some of these other education programs, some of these ones that are less on the list. >> in our centennial year of the park service is, visitors experience also is very important. >> president-elect donald trump holds more victory rallies this week visiting states he won back in november.

today the president-elect heads to hershey, pennsylvania. you can watch that speech live on c-span starting at 7:00 p.m. eastern. tomorrow the victory tour will continue with a visit to the central florida fairgrounds in orlando. and then saturday president-elect trump holds a rally in mobile, alabama, all three rallies live on c-span. and then monday, presidential elect tors will be meeting in their state capitals. we'll have five coverage from four states as the elect tors cast their ballots or president and vice president. we'll have live coverage from springfield, illinois, harrisburg, pennsylvania, lansing michigan, and richmond, virginia. follow the transition of government on c-span as president-elect donald trump selects his cabinet and the republicans and democrats prepare for the next congress, we'll take you to key events as they happen. without interruption. watch live on c-span. watch on depend at c-span.org or

listen on our free c-span radio app. david davis is the british secretary of state for exiting the european union better known as the brexit secretary. he testified before a house of commons committee recently saying the government's brexit plan is still being worked on but won't be released until february at the earliest. >> there will be no time, mr. chairman. surely not. right. well, can i first of all welcome you, secretary of say the to what i am sure will be the first of many appearances before the select committee. we have a lot of ground to cover this afternoon. so colleagues, you can singt questions. mr. davis, you can singt answers would certainly be helpful. and i'm going to kick off.

following last week's debate in the house of commons and the motion that was passed, the government is now going to publish its plan for the negotiations before article 50 is triggered. when can we expect to see this? >> well, as soon as we can, chairman. once all of the research and policy is complete. i mean, the reason for the setting the final possible date on the 31st of march one of them was the determination to carry out all of the policy work first, consult properly and then bring -- >> so next month, january, february? >> it won't be next month. i mean, the policy work is still under way. quite a few decisions still to be made. we've carried out about 57 i think analyses each of which has

implications for individual path of 85% of the economy. and some those are still being concluded. we have work still to be done on -- it's a fair number of things still to do. it will be as soon as we're ready. >> can you confirm it will be a white paper when it is accompli published. >> what i say is we will present the plan. as you will remember from the -- from the motion, one of the constrictions in the motion in the government's amended motion which got through by 372 i think majority, was that i should do it in such a way or the government should do it in such a way that it does not undermine our negotiating position. we have to be very careful what we do publish. i want to be as open as we can be but we must sure we're not undermining our own position. >> but with respect, that's to do with the content of it. >> yes. >> now given that treatise as

was raise the in the debate indeed when we applied to join in '67, that's the form that publications of what the government is trying to achieve taken the form of a white paper on many occasions. i'm trying to understand why it wouldn't be. >> well, it will be appropriate to what the content is we're presenting. that's all. we'll decide on the format when we know exactly what we're going to present. >> right. can you confirm that you expect to be sitting opposite michel barnier when the negotiations initially begin and you intend them both to cover the divorce arrangements and the new framework for our relationship with the eu. >> yes. >> that's how that's going to work. now the chancellor said on monday there is an emerging there view among business, regulators and thoughtful politicians that would be generally helpful to have a longer period to manage the adjustment as really the european union. can we classify you secretary of state as a thoughtful politician when it comes to transitional arrangements?

>> well, i'm not sure about the second qualification. i hope you can classify me as a thoughtful politician. let me be clear about where i think we're going. firstly, as a prime minister said a number of times, i said a number of times what we're after is a smooth and orderly exit. that's the overarching aim. and frustrated with us sticking to overarching ames. that's the purpose of at least part of the tactic and strategy of this. and within that box, we want to get the maximum market access for british companies with a minimum of disruption. and so we'll do what's necessary to that aim. >> what if all of those things can't be negotiated it could be 1 months depending on -- >> mr. barn yea said 18 months. and i think that it is all negotiable in that time.

i mean, that's the sort of core of this really. we have got a lot to do but that's one of the reasons you. may have thought perhaps my opening answer wasn't that helpful. but it's one of the reasons we are taking our time to get prepared on all fronts. that's why our 57 studies cover 85% of the economy. everything except sectors that are not affected by international trade. so we are aiming to get ourselves in position where we can negotiate within the article 50 process. it the article 50 process was written to allow departure from the european union. that's its purpose. plainly the architects of it, the authors thought it was time enough to do the job. so do i. >> it's one thing for the government to think, we'll be organized and ready to do a deal within 1 months. that may not necessarily be the case for the 27 countries you are negotiating with. if it isn't possible to do it within 1 months, then won't

there of necessity need to be transitional arrangements? >> you've been here long enough to know that's a hooipt hypothetical question. i'll do my best to answer even so. a transitional arrangement means many things to different people the way i saw it from what the chancellor said, the phrase he used was something like have been raised by businessmen, regulators and as you said, thoughtful politicians. i think the treasury afterwards added the word european but that's by the by. then seems to me what they're talking probably is some sort of implementation mechanism. however, whatever the rate is, we need to know where we're going before we decide on the transition. and if you build a privilege, you need to have both sides established before you build the bridge. we need to know where we're going. it seems to me it's perfectly possible to know what the end game will be in two years. >> so you're not as opposed to

there being transitional arrangements if they problem ultimately to be necessary. >> policemen implementation phase if it's necessary and only if it's necessary. the thing to understand here is that the british people want this doneing with some degree of expedition properly and soon. and that's what we're trying to doing. > now, it was reported, i mean you spoke to the city of london corporation on the 15th of november. i think what they described is their informal record of those discussions have been published. i don't know whether you've had a chance to a to read it and b to comment on it. it was indicated that the point that you were not particularly interested in the arrangements but were reported to have said if the eu wanted them, then you would be inclined to be kind to them. >> two things, mr. chairman. firstly, if i sometimes burst out laughing when i read what i'm supposed to have said in certain circumstances.

it's a syndrome you'll recognize as well as me i think. so i don't comment, never comment on these sorts of gossip. i never comment on that. i think what the substance of your question was, not the common, not the gossip. >> is whether you think by the way, as i understand it, it was their record of the conversation they had with you which is rather different than gossip. it's whether you think it the other 27 might. >> it doesn't correlate to have -- >> you made that very clear. >> it's whether the 27 might be interested in transitional arrangements. >> they may. >> okay. >> as the chancellor said, his group of people was businessmen, regulators, and he said thoughtful. i think he meant thoughtful european politicians. >> that may be true. i don't think that's true. well, that is true. you have to. >> for a reason. >> you'll have to protect me from the heckling, mr. chairman.

>> do you worry about the cliff edge that the prime minister acknowledged in answering the question? >> we've said in terms. we want to have a smooth and orderly exit. that's what we want. and i think like all these things, when you go into negotiation, you try to see where the issues are and you deal with them beforehand. you don't have to worry when you get to the end. that's the purpose. we have said to business over and over again, we're trying to get them the maximum opportunity for trade both within europe and outside europe and the minimum disruption. and that's what we're after. >> does the work that you are currently set, does it include a contingency plan in case we end up with no deal or say the deal -- say the deal were voted down by the european parliament. is the government thinking about what it would do in those circumstances if we exited with no deal whatsoever. >> il reiterate to you that is not our intention. we're aiming for a free access,

free the maximum free access to all possible markets. but we'll do contingency planning for all the likely outcomes. >> that's very helpful. finally from me before i turn to colleagues, on membership of the customs union you told the house last week, you said, and i quote, this is not a binary option. there are about four different possibilities, possibly more and we are still assessing them. briefly set out for us what those are. i'm not asking you to say what the government's conclusion will be because you haven't reached one yet. but what are the possibilities? >> i'll give you both ways of looking at it. they're both informative. first look at what actually exists at the moment. you have countries inside the customs union. that's clearly one. have you countries like turkey which has a arrangement which puts it inside the customs union for some of its economy and outside for others. allows it to do very led