Despite efforts to save billions by improving the way it does business, the Defense Department is not only still years away from being able to audit its books, its efforts have lost billions to mismangement, government watchdogs say.
In testimony before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, officials from the Government Accountability Office revealed that two-thirds of the systems DOD is putting in place to make its budget auditable have slipped years in implementation and doubled in cost to more than $13 billion. DOD is required by law to make its financial systems audit-ready by 2017, a date which has clearly slipped as well.
The worst offender appeared to be an integrated pay-and-personnel system for the military services intended to replace the Defense Integrated Military Human Resources System (DIMHRS)—another problematic program that was canceled earlier this year after failure to launch. The new system is $2.4 billion over budget and 12 years behind schedule. DOD outsourced construction of the new auditing systems to Lockheed Martin, General Dynamics and other companies responsible for such profligate weapons systems such as the F-35 Joint Strike Fighter and Expeditionary Fighting Vehicle.
An appendix in the GAO report states that DOD’s failures to pass an audit “not only affect the reliability of the department’s financial reports…they also adversely affect the department’s ability to assess resource requirements; control costs; ensure basic accountability; anticipate future costs and claims on the budget; measure performance; maintain funds control; prevent fraud waste, abuse, and mismanagement; and address pressing management issues.”
To illustrate their point, GAO provides the following examples:
- The Army can’t be sure that it doesn’t overdraw its personnel expenditures account, which funds soldier pay, enlistment bonuses and other benefits;
- DOD still can’t “reliably identify, aggregate and report the full cost of its investment” in weapons systems—currently estimated at more than $1 trillion—and doesn’t have enough information to manage and reduce the billions it spends each year on weapons operating and support costs;
- Databases tracking hundreds of millions worth of Army property are improperly managed, the DOD Inspector General has found.
The hearing took place on the same day that House Armed Services Committee Chairman Ike Skelton (D-MO) and Joint Chiefs of Staff Chairman Adm. Mike Mullen stated that cutting the defense budget would be dangerous in a time of war.
But—as lawmakers presiding over the hearing pointed out—the failure to track DOD dollars endangers not only soldiers awaiting equipment but our nation’s financial stability, which Mullen himself has repeatedly said is crucial to national security.