The chief federal government-wide watchdog warned on Wednesday that the Pentagon looks almost certain to fail a basic oversight test mandated by law.
Government Accountability Office (GAO) head Gene Dodaro told the Senate Budget Committee that the Defense Department is “not really fixing underlying problems” stopping the agency from being held to a full financial examination.
“They weren’t able to pass the test of an audit on one-year budget activity at the department,” the Comptroller General noted, citing Army, Navy and Air Force efforts in 2015. “The financial requirements are for a multi-year budget audit. They haven’t even started on a balance sheet or a net-cost statement.”
In 2009, Congress ordered the Pentagon to be able to subject itself to a full audit by Sept. 30, 2017. That deadline was set after the Defense Department repeatedly failed to fully account for its budget, as it was supposed to do before the turn of the century, per the Chief Financial Officers Act of 1990.
Dodaro said Wednesday he believed Congress could help the Pentagon promote transparency by assisting and directing it on personnel issues. “They don’t have necessarily all the talent that they need and experienced people. Congress could help there,” he said.
The Comptroller General also warned, notably, that the Department of Defense is “not estimating environmental liabilities properly, and they have huge potential exposure there.”
Dodaro took pains to stress, in response to questions from Sen. David Perdue (R-Ga.), that the US military is uniquely opaque. While other departments have had transparency problems, he remarked that they’ve persisted at the Pentagon since 1996, when Chief Financial Officers Act-mandated audits started being conducted.
Noting the Defense Department has 30 percent of the US government’s assets and that it accounts for 15 percent of federal net costs, Dodaro told Perdue that “DOD, really, is the main obstacle” to more effective government-wide transparency.
“They’re not fixing the internal control problems,” Dodaro concluded at the end of Perdue’s round of questioning. “They can’t reconcile the balance between what they say they have and what Treasury says that they have.”
Earlier in the hearing, Sen. Chuck Grassley (R-Iowa) commended Dodaro for the GAO’s prior work on Pentagon audit-readiness, decrying “all sorts of shenanigans going on over a period of two or three years” at DOD. He brought up the Pentagon’s touting of Marine Corps audit-readiness in 2012–a claim that was walked back in May 2015 after it was exposed as being completely untrue.
“It was just a fraud,” Grassley said. “I asked this agency to look into it, and because of their hard work, they made the Defense Department withdraw the Marine Corps audit until it gets it right.”
Last week, the Pentagon’s complete inability to hold itself accountable made the news, when the Center for Public Integrity (CPI) reported in Slate that the processing of a simple public records request on inventory would have cost DOD $660 million. It would have taken 15 million labor hours to gather the information, Pentagon officials had claimed.
CPI’s Lauren Chadwick noted that the problem arose due to the military’s use of comically-obsolete software. “[A]lthough the Pentagon maintains a database of all its contracts—in something called the Electronic Documents Access, or EDA, system—it cannot be comprehensively searched,” she wrote.
“The Electronic Documents Access system was switched on 18 years ago after being constructed at a cost of millions of dollars, and it now includes an estimated 30 million contracts,” Chadwick added.
