Decades later, military still unable to account for its spending
May 13, 2014
WASHINGTON — The military is still running behind in its decades-long quest to audit its spending and rein in waste, Department of Defense comptrollers testified Tuesday to the Senate.
Army, Air Force, Navy and Marine Corps financial managers will be unable to fully meet a midpoint deadline set by the secretary of defense this year for mandated accounting benchmarks. Meanwhile, “serious continuing deficiencies” remain in the accounting efforts, according to a Government Accountability Office report issued Tuesday.
Nearly three decades after U.S. taxpayers gasped over $640 toilet seats and other Cold War military waste, the Department of Defense remains the last federal department still unable to conduct a financial audit despite laws passed in the 1990s that require the accounting.
After another era of military buildup following 9/11, Congress mandated in 2010 that the DOD be ready for an audit by 2017. Former Secretary of Defense Leon Panetta set 2014 as a deadline for passing some initial accounting tests.
“Meeting this goal has been more of a challenge than I expected,” said Robert Hale, undersecretary and chief financial officer for the DOD. “We’ve made more progress in the last few years than any other period.”
Hale and others said they were determined to eventually be audited during testimony before the Senate Homeland Security and Government Affairs Committee, which is led by Sen. Tom Carper, D-Del., and budget hawk and ranking member Sen. Tom Coburn, R-Okla.
“We understand, after 20 years of unauditable financial statements, Congress is skeptical” about DOD progress, Hale said.
By September, each of the services will likely meet an initial accounting test of tracking the current year spending, but some agencies inside the DOD will not be prepared, he said.
That is not the 2014 goal ordered by Panetta, who directed the military to be able to fully record and track what money it receives, owes and spends — including past years.
Hale said the DOD modified the requirement because the services had trouble calling up accounting records of the past years’ funds.
“Our formidable task is to stimulate a cultural shift in our department’s worldwide business operations,” said Susan Rabern, assistant secretary of the Navy (financial management and comptroller).
The Navy comptroller said she is “cautiously optimistic” that by next year the Navy can meet Panetta’s goal for tracking current and past years’ finances.
The Marine Corps, which falls under the Navy department, has also made significant steps and passed the benchmark for tracking the current year’s funds in December, according to the committee testimony. The other services are also working on the initial effort to account for all current year funds.
The DOD spends roughly $2 billion per day and has $1.5 trillion in physical assets. Various agencies inside the department have been considered at high risk for fraud and waste by the GAO since 1990.
Carper said reported incidents of waste are still common. In 2013, the DOD had $754 million worth of items on order but not yet delivered that the military services “simply did not need,” he said.
Coburn’s office produces the “Wastebook,” a DOD-focused look at irresponsible spending. The December 2013 issue pointed out decisions such as a $297 million, football field-sized blimp for surveillance of the Afghan battlefield — after it canceled the program, the Army sold the airship back to the contractor for $301,000 — and the National Guard’s $29 million promotional contract with NASCAR driver Dale Earnhardt Jr.
The GAO said in its report issued Tuesday that the long-standing accounting weaknesses mean the defense department still cannot account for its total assets or estimate improper payments.
The problems have created “inconsistent and sometimes unreliable” reports to Congress on the costs of weapons systems, according to a GAO report released Tuesday during the hearing.
As Congress considers tough decisions on cutting servicemembers’ pay raises and benefits due to leaner budgets, Carper said a full defense audit is more needed than ever to determine how to decrease wasteful overspending and preserve valuable programs.
“We can’t tolerate this continuing level of mismanagement and waste,” he said.
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