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Audit the Pentagon

October 8, 2010

Precious treasure remains in the house of the wise,

but the fool devours it.  Proverbs 21:20 NRSV

I have a little bedsit in Virginia and my landlady finds my new-found obsession with the federal budget mystifying.  But hidden in the chaos of reports on my desk are the stories of real people, with real concerns. One of the most troubling I’ve read is the story of an anonymous worker at the Department of Defense Office of the Inspector General (DOD OIG) that slipped letters over the transom at night into Senator Chuck Grassley’s office.

This whistle-blower’s allegations of dysfunction and inefficiency compelled Sen. Grassley’s office to investigate, and later produce a report, which was released last month. I knew that unlike other government agencies, the Pentagon was not required to pass an audit. I knew that the Pentagon was unprepared for a full-scale audit, but before reading this report I was unaware of just how little internal accountability there was at DOD.

The poor quality of the accounting data and missing or non-existent records hinders, and in some cases, blocks and obstructs the completion of credible audits. The situation has deteriorated to the point where OIG auditors are no longer able or willing to conduct full-scope contract audits. This, in turn, keeps the OIG from performing its primary mission – to detect and report fraud, waste, and abuse. OIG is allowing DOD’s broken accounting system to essentially cripple or disable one the IG’s primary oversight weapons – the audit – leaving huge sums of the taxpayers’ money vulnerable to fraud, waste and outright theft.[emphasis added]

Congress has not lived up to its Constitutional obligation to oversee the military budget, leading to many incidents of negligence and possible fraud. The report mentions several cases that highlight the dysfunction of DOD OIG.

The auditors needed payment data, but the contracting officer (CO) did not keep copies of DynCorp’ “interim public vouchers” that were submitted for payment. So instead of going to the primary payment source – the Defense Finance and Accounting Service Centers — to verify payment data, the audit team opted for a shortcut. The auditors chose to rely on the data provided by DynCorp, the target of the audit. How did ACM know that the information provided by DynCorp was accurate and complete? How could such a procedure meet accepted government auditing standards? . . . 31 USC § 1501. . . requires that a financial obligation be supported by a written, binding agreement (contractual document) that specifies what goods and services are to be delivered. Without that kind of specificity, a contract would be the equivalent of a blank check. The report stated: the government did not know what it was paying for … The government may have paid for services DynCorp did not perform. … It may have overpaid for services.” In other words, the government did not know what it had ordered, what was delivered, or what it was actually buying or paying for. [emphasis added]

The report cited an email from the contracting officer (CO) to DynCorp that seems to say that the valve on the big DOD money spigot was wide open. In this email, the CO told the contractor:

“Go ahead and send me a ‘draft P00034’ bid schedule and I will get it[the modification] done. One question, I hope you can move money in CLIN 0302 to cover as we don’t need to get any more FY 02 money. We have so far secured additional $29M for FY 03 so don’t worry about money at this point, keep spending [emphasis added], just have to put in right place.”

The CO never questioned any of the contractor’s costs or cost overruns.

All of this taken together appears to suggest that DynCorp may have received $161.1 million in unauthorized and/or improper or even fraudulent payments. But the report’s findings are inconclusive.

Since the publication of this report on September 7, there has been some movement on this issue. People  who read the report and were shocked have spread the word. The Pentagon announced at the end of September that it is bringing in new software — 12 years late and $6.9 billion over budget. The Pentagon has a deadline of 2017 to be audit ready, but in the past it has always been able to secure an indefinite extension. Will this audit happen? This is a question that our 2010 candidates must answer.

This is a problem that affects more than just the frustrated whistle-blower at DOD OIG. It affects millions of Americans who would benefit from the government’s underfunded social programs. This summer, you may have read the news story about $8.7 billion “missing” from the Iraqi reconstruction budget. Consider that the $500 million TANF fund (a job-subsidy program responsible for 250,000 jobs), extension was just allowed to expire.

The federal budget represents our priorities as a nation, and doing nothing about the waste in the Pentagon is a choice. It is our responsibility to stand up and demand accountability.

Let the Candidates Know What You Think:

What the candidates hear on the campaign trail this fall will influence how they vote if they are elected. The economy and the deficit are on many people’s minds right now.  One question you might consider asking is:

As Defense Industry Daily noted in 2009, “It’s not that the US Department of Defense fails audits. The problem is more fundamental: it is not currently possible to audit it, and any comprehensive audit would be a first-ever event in modern times.” The Pentagon spent 33 cents of every income tax dollar I paid in 2009. Will you require the Pentagon to account for that money like every other government agency?

FCNL’s 2010 Questions for  Candidates:

One Comment leave one →
  1. Jessica Halperin permalink*
    October 11, 2010 4:30 pm

    You can contact your local candidates via FCNL’s website!

    Click here to ask your local candidates about auditing the Pentagon:

    Click here to write to your candidates about reducing the Pentagon budget:

    Nice work, Rachel!

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