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It's Time to Audit the Pentagon
05-13-2014 at 08:08 am - Michi Iljazi - Posted in: Transparency, Taxpayers Protection Alliance, Spending, Sen. Tom Coburn, Sen. Tom Carper, Michi Iljazi, Defense, Congress - 0 Comment

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Last week, the Taxpayers Protection Alliance (TPA) highlighted how transparency should play a key a role in the markup of the upcoming National Defense Authorization Act (NDAA), and how such efforts to make the markup process more open would help make legislation better for taxpayers. With those same concerns for transparency in mind, the Pentagon should take a serious look at reforming the ways in which they manage their own finances and seriously cut down on the taxpayer money that is predominantly wasted at the Department of Defense. Auditing the Pentagon is a reasonable request, and considering the agency hasn’t had an official audit in more than a decade, it would stand to reason that the time has come for those handing the accounting at DoD need to seriously consider ways in which the trillions of dollars, yes trillions, can be carefully examined so that all citizens can see where the money is going.

The Pentagon, like any federal agency, only exists with the taxpayer money appropriated to it. The problem however, is that there has been no accurate accounting of how the money has been spent and that is why there is need for improvements and why those improvements must really take hold. Any entity that is not held to rudimentary standards when it comes to financial record keeping is essentially risking all the money it has been given.  A lack of accountability leads to money being wasted, and since the derelict bookkeeping is an epidemic at DoD, quite a bit of taxpayer money is at risk. Just recently, a Government Accountability Office (GAO) report surfaced showing $1 billion in ammunition was going to be destroyed by the Pentagon. Senator Tom Carper (D-Del.) tied this to the accounting issues at DoD:

“Despite years of effort, the Army, Navy and Air Force still don’t have an efficient process for doing something as basic as sharing excess bullets. This Government Accountability Office (GAO) report clearly shows that our military’s antiquated systems lead to millions of dollars in wasteful ammunition purchases.”

Senator Carper is correct. The report from the GAO highlighted that the waste is just an effect of the larger problem: bad financial practices. Last year, Reuters published a scathing and lengthy report detailing just how costly the lack of accurate bookkeeping has been over at the Pentagon. The report found that many years worth of shady accounting gimmicks and derelict financial management had become standard practice at DoD:

Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China's economic output last year.

Not to be outdone, citing efforts to improve efficiency at the agency, Reuters also found that DoD was actually causing more problems that ended up costing billions:

Fixing logistics is important - both to save money and to ensure that supplies are on hand when needed… the Pentagon's fragmented logistics systems "have contributed to longer lead times, excess inventory and stockpiling, duplicative activities and systems, inadequate performance measurements, and increased costs," according to a 2011 report by the Defense Business Board, a group of business leaders that advises the secretary of defense's office. The board found that the department uses more than 1,000 separate logistics systems, and that in 2010, logistics cost $210 billion, or about 30% of that year's defense budget.

The problems have clearly been identified regarding the waste, inefficiency, and lack of measurable and accurate accounting of the Penatgon’s financials. The only question that remains now is can the agency fix these issues? A full and faithful audit at DoD would go a long way to addressing these issues and there is movement now toward that goal. Last fall, Senators Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.) offered bipartisan legislation that would provide incentives and penalties tied to DoD meeting requirements for scheduled auditing. The bill, S. 1510: Audit the Pentagon Act of 2013, provides a framework that can address many of the issues facing the financial management (or lack thereof) at DoD right now. In the House, Congressman Mike Coffman (R-Colo.) sponsored H.R. 3184 Audit the Pentagon Act of 2013.

Seeing bipartisan, bicameral legislation being brought forth is certainly encouraging, but the question remains whether a genuinely accurate audit of DoD spending can be done. According to the former comptroller at the Pentagon, it absolutely can. Robert Hale, who began his tenure in 2009 but stepped down earlier this year, said in an interview with Government Executive that it was possible:

“Our next goal is to have all budget statements formally audit-ready by this September,” Hale said. “We’re still doing remediation, so we can’t know for sure, but most will be ready. We have long way to go toward 2017, but I think we’re on track.”

TPA is proud to be a charter member of a coalition urging a faithful auditing of the Pentagon. There has been some initial movement so far this year toward a clean auditing within DoD, and today the US Senate Committee on Homeland Security & Governmental Affairs will hold a hearing on improving the financial management practices at the agency. Hopefully more momentum, and better accounting, will be on the horizon.


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