A single agency within the Department of Defense (DOD) can’t account for hundreds of millions of dollars’ worth of spending, boding poorly for the Pentagon’s first ever department-wide audit, a report on the results of which is promised to come by November.
An internal audit by Ernst & Young found that the Defense Logistics Agency (DLA), tasked with supplying U.S. armed forces and offering other logistics support, couldn’t document more than $800 million in construction spending alone, as Politico first reported.
The federally-mandated round of audits taking place now were initially postponed by Congress in 2010.
Institutional resistance to auditing is not a new revelation, either—in 2011 the Government Accountability Office (GAO) said it couldn’t draw substantive conclusions on the federal government’s financial statements that year, in part because of “serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable.”
Congress first required federal departments to submit their financial statements annually in the 1990s, but the Department of Defense was never able to. In the 2010 National Defense Authorization Act, Congress gave the Pentagon seven more years to get its act together.
Despite the DOD’s decades-long inability to submit to an audit, presidents and Congresses have largely continued to increase its budget.
When Washington politicians push for more military spending uncritically, without holding the Pentagon bureaucracy to a higher fiduciary standard, they are missing an opportunity to achieve savings as well as better results.
The Defense Department, for example, did not start preparing for sequestration introduced in the 2011 budget control law, which limited the rate of growth of government spending, until a month before it went into effect.
And in early 2017, the GAO again found “serious financial management problems at the Department of Defense that have prevented its financial statements from being auditable.”
A few months before that, the Washington Post reported that the Pentagon had buried an internal 2015 study that found $125 billion in “administrative waste” at the department, out of fear that Congress would cut its budget.
The DOD has faced few consequences for any of this, continuing to enjoy broad support for more spending.
But austerity can be a powerful auditor, forcing bureaucracies like the DOD to curb their fiscal profligacy out of necessity.
Neither will this first ever audit of the Pentagon come cheap—1,200 auditors are set to cost nearly $1 billion, David Norquist, the Defense Department Comptroller, told Congress in January. The audits themselves could cost more than $350 million, while fixing the problems they find could cost more than half a billion dollars, Norquist testified.
Meanwhile, the DLA is trying to put a positive spin on the Ernst & Young audit.
“The initial audit has provided us with a valuable independent view of our current financial operations,” the agency’s director, Lt. Gen. Darrell Williams, said in a written response to the audit, according to Politico. “We are committed to resolving the material weaknesses and strengthening internal controls,” he continued.
Williams insisted the agency knew all along it could not achieve a “’clean’ audit opinion in the initial cycles.”
“The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits,” he added.
Sen. Chuck Grassley (R-Iowa), a long-time advocate of auditing the Pentagon, isn’t buying it.
“I think the odds of a successful DOD audit down the road are zero,” Grassley told Politico. “The feeder systems can’t provide data. They are doomed to failure before they ever get started.”
“If you can’t follow the money, you aren’t going to be able to do an audit,” Grassley said.
Yet Congress keeps giving the DOD more of it.
A slogan commonly attributed to service members of the various branches of the U.S. armed forces suggests it’s a phenomenon the defense bureaucracy should be somewhat familiar too: “Marines have done so much with so little for so long, that now we can do anything with nothing forever,” the custom inscription on one marine’s lighter in the Vietnam War read.
A variation of the slogan had also been used by the Tactical Air Command of the U.S. Air Force, and another was reported as the “official motto” of the delivery boys of the U.S. Navy.
Yet, with President Trump’s enthusiasm for increasing military spending, the prospects of asking the desk jockeys at the Pentagon to emulate the kind of attitude whose value is understood in the field appear dim.