To Reign in Government Waste, the Pentagon Must be Audited

Ross Marchand

July 7, 2017

Taxpayers have grown accustomed to astronomical spending figures tossed around matter-of-factly at the Department of Defense (DoD).  The Pentagon, for instance, is expected to pour an astounding $1.5 trillion into the F-35 over the life of the program. The Overseas Contingency Fund continues to be a budget buster, despite declining operations in Iraq and Afghanistan. But, unlike other federal departments, watchdog organizations and concerned citizens have no official way of distinguishing “legitimate” spending programs from wasteful operations. The Pentagon has shielded its books from audits, taking advantage of an exemption from a process that all parts of government are expected to undergo each and every year. As a result, taxpayers are forced to foot the bill for erroneous expenses without knowing the full extent of the waste.

The DoD is not being singled out because fiscal mismanagement is endemic in all governmental functions. This year, the Government Accountability Office (GAO) flagged 22 agencies for making improper or dubious payments, with erroneous expenses totaling $144 billion. Exposing this waste to the public eye provides a powerful incentive for government bodies to cut out phony expenditures, yet the DoD is shielded from such pressures. Despite hearings by the Senate Budget Committee on “running the government for less,” Congress has made no real effort to shed light on mismanagement at the Pentagon.

While it’s all-too-common to encounter special pleading when attempting to reign in on government waste, the Pentagon seems well-aware of its fiscal follies. The Pentagon after all, has repeatedly documented failures in its procurement practices and business systems and practices. And, according to departmental bureaucrats, the scope of the problem would require a decades-long effort to right the organization’s fiscal ship. The DoD was first put on notice in 1995 by the GAO when systemic accounting “irregularities” landed the department on a list of agencies that are at high-risk of waste, fraud, abuse, and mismanagement.

More recently, a damning internal study at the Pentagon revealed that $125 billion in operational dollars landed in an opaque administrative black hole of waste.  Astoundingly, the Pentagon employed 1 million individuals in business operations, compared to a standing army of 1.3 million active troops. These large headcount figures translate into nearly $150 billion in overhead costs that could better be spent bolstering combat power, or better yet in taxpayers’ pockets.

Despite the potential $25 billion in savings identified in the report, and DoD’s successful track record in staff reductions, no meaningful action came from the findings. Departmental funding was left completely intact, as members of Congress voted to maintain historically high levels of defense spending.

At a time of federal deficits of more than $500 billion, waste and mismanagement at the Pentagon can no longer be tolerated. Representatives Michael Burgess (R-Texas) and Barbara Lee (D-Calif.) recently introduced the Audit the Pentagon Act of 2017, which would mandate the DoD to obtain an audit or face a budget reduction of .5 percent. And, as the bill makes its way through Congress, the necessary ingredients for a successful, department-wide audit are falling into place.

David Norquist, confirmed by the Senate two months ago as the Undersecretary of Defense, informed the House Armed Services Committee that the financial statements of the DoD on the whole (as well as agencies under the DoD umbrella) would indeed be subject to audit. Additionally, reports indicate that a department-wide effort is underway to prepare the necessary documents for a public inspection.

This progress, however, can easily be derailed by lawmakers fearful of unfavorable audit findings that could diminish the Pentagon’s credibility. But the DoD is already marred by perceptions of rampant waste and fiscal abuse. By bringing its books into the light of day, the department can ensure taxpayers that its critical mission comes at a reasonable, honest price tag.