DOD better get serious about changing its spending habits; some Senators want to crack down
“We failed the audit, but we never expected to pass it.”
That is what then-Deputy Secretary of Defense Patrick Shanahan said in 2018 when the DOD participated in and failed its first ever financial audit.
Yes, the Pentagon has been going through financial audits for only three years. It failed all three times.
But a bipartisan group of senators has a plan to incentivize the DOD to pass future audits by penalizing failure with budget reductions.
Penalties for failed audits
Recently, Democratic Senators Bernie Sanders and Ron Wyden and Republican Senators Chuck Grassley and Mike Lee introduced the Audit the Pentagon Act of 2021.
The bill would require the Pentagon to pass an independent audit of all its agencies’ finances starting in fiscal 2022.
If any agencies don’t pass the audit, 1 percent of their respective budgets would be taken away and returned to the Treasury Department.
It’s a bold message being sent to the DOD that boils down to “get it together or lose part of your funding.”
Millions in unaccounted for equipment
The Pentagon is in dire need of a clean audit, as the department accounts for more than half of the federal discretionary budget.
Audit results would give the Pentagon and Congress a better understanding of how resources are being used and what spending reforms should look like.
But because the DOD’s departments and agencies can’t provide full, accurate details on assets and liabilities, there is no way to know how much the DOD is spending, much less what it’s spending money on.
What the failed audits have told us so far prove that a full, clean audit is necessary.
- The Defense Logistics Agency couldn’t account for more than $800 million in construction projects.
- A stockpile of missile motors at Hill Air Force Base was listed as unserviceable when, in reality, the parts were usable. Using those parts instead of buying new ones saved the Air Force $53 million.
- Auditors found a warehouse “no one knew existed” that housed $126 million worth of aircraft parts. Finding those parts allowed the Navy to fill more than $20 million worth of existing orders.
- More than 100 Black Hawk helicopter blades were categorized as ready to use when they were damaged.
- The Army found 39 UH-60 Black Hawks not accurately accounted for.
- The Air Force found 478 structures and buildings not recorded in its property system.
Readiness depends on a clean audit
The Department of Defense is a massive department built from dozens of agencies that manage billions of dollars in facilities, equipment, weaponry, and personnel.
While that complexity explains the difficulty in completing an audit, the complexity is also the reason an audit is so necessary.
How can the Pentagon make informed decisions about budget needs without knowing what it is working with?
How can it assess military readiness when it doesn’t even know what equipment it has?
It can’t, and that’s dangerous.
Last week, the Pentagon submitted its Fiscal Year 2022 budget proposal to Congress – $715 billion, part of President Biden’s $753 billion overall defense request. Our Executive Director Nate Anderson said the request “fails to recognize the long-term damage of unsustainable spending.” Based on the DOD’s inability to get a handle on what it already manages and spends, a larger budget not connected to national security needs would just fuel the fire.
If DOD and Congress don’t know what the defense department’s actual spending and readiness is, the military and the country are vulnerable.
The best next steps are for the DOD to complete a clean audit as soon as possible and for Congress to start reforms to the budgeting process in tandem with auditing.
Getting military finances under control is the best way to assess readiness and proactively make our country safer.
Read more about our solutions for smart and sustainable defense spending.