Pentagon's deep dysfunction exposed by 30 years of financial failure (1 of 2)
Imagine the following scenario: The year is 1990, and you have been selected by the IRS to undergo an audit. Unfortunately, you are unable to provide adequate documentation tracking either your income or expenses. No worries, says the IRS, you can try again next year. Now, repeat this scenario every year through 2019, and you will have matched the financial track record of the Department of Defense. The department remains the sole federal agency that has not undergone a clean audit under the Chief Financial Officers Act of 1990. On Nov. 15, 2019, the Pentagon released its fiscal year 2019 financial report and again failed its attempt at a clean audit.
As usual, the Pentagon supplied some highly entertaining quotes in the aftermath of its financial review. On Nov. 15, 2018, following the previous failed attempt, then-Deputy Secretary of Defense Patrick Shanahan stated, “We failed the audit, but we never expected to pass it.” Exactly one year later, acting DOD Comptroller Elaine McCusker stated, “I think the department has been pretty open with the fact that it’s got material weaknesses, it’s got things that need [to be] fixed … but, you know, our ability to really demonstrate solid progress, I think is the headline.” The latest financial review consisted of 24 individual audits, of which seven, or 29.2%, came back clean. This improvement over the six clean sections from last year’s audit is presumably what acting DOD Comptroller McCusker means by “solid progress.”
As usual, the audit turned up evidence of remarkably poor record keeping, including $280 million in improperly tracked material at the Jacksonville Naval Air Station. Among this total was $81 million worth of items that the Navy had no idea it possessed. The service freed up 200,000 square feet of storage space in Jacksonville by clearing out unusable materials. While the DOD spent approximately $1 billion to undertake the audit, it did not disclose how much money turned up missing. Considering the figures involved ($2.9 trillion in assets, $2.8 trillion in liabilities, and a budget of $716 billion in fiscal year 2019), that amount is likely to be substantial. The necessity for the Pentagon to get its financial house in order is revealed on a regular basis. Approximately 17% of the federal government's total spending went to defense spending in fiscal year 2019, and numerous problems have cropped up over many years.
A July 26, 2016, the DOD inspector general report noted that the Defense Financing and Accounting Service, which provides payment for military and civilian personnel and retirees, could not adequately document $6.5 trillion worth of year-end adjustments to general fund transactions and data. The books are so bad that areas within the DOD have been on the Government Accountability Office’s list of programs at high risk for waste, fraud, abuse, and mismanagement since 1995.
The acquisition side of defense spending is also a mess, where cost overruns, delays, and poor performance have created multiple procurement disasters, such as the F-35 Joint Strike Fighter and the Littoral Combat Ship. In addition, the DOD has become notorious for budgetary gimmicks such as the Overseas Contingency Operations account, which was initially intended to cover the cost of wars, but ballooned into a slush fund for noncombat spending while bypassing spending restraints. Over the years, the Overseas Contingency Operations account grew to such an extent that it dwarfed the total amount appropriated for most federal agencies. After the DOD’s most recent failure, it appears the agency is still years away from passing a clean audit. While it is highly unlikely that the IRS would allow private citizens to get away unpenalized with 30 years of financial ineptitude, legislators have long been more charitable to the Pentagon. They need to apply consistent pressure, or it may take another 30 years until the DOD finally gets its financial house in order.
https://www.washingtonexaminer.com/opinion/pentagons-deep-dysfunction-exposed-by-30-years-of-financial-failure
Pentagon fails its first-ever audit, official says
https://www.reuters.com/article/us-usa-pentagon-audit/pentagon-fails-its-first-ever-audit-official-says-idUSKCN1NK2MC
The Pentagon completed its second audit. What did it find?
https://www.defensenews.com/pentagon/2019/11/16/the-pentagon-completed-its-second-audit-what-did-it-find/?utm_source=Sailthru&utm_medium=email&utm_campaign=EBB%2011.18.19&utm_term=Editorial%20-%20Early%20Bird%20Brief