Pentagon forged financial documents amid failure to manage budget – investigation

A new report has revealed the Pentagon to be fundamentally incapable of managing its own books, with money and supplies unaccounted for and doctored ledgers masking billions of dollars of wasted spending.

An investigation by Reuters found that since 1996, the $8.5 trillion dollars of taxpayer money that Congress has allocated towards the US Department of Defense has never been accounted for.

According to those responsible for inserting the numbers into the books at the Defense Finance and Accounting Services (DFAS), military agencies failed to supply a clear monthly account of the money they spent. In a flurry of activity, DFAS would contact the appropriate personnel in order to record accurate data, but many numbers remained a mystery.

At this point, employees would be ordered to enter fake numbers, or “plugs,” that would match up accordingly with what the Treasury department expected to see.

“A lot of times there were issues of numbers being inaccurate," said former DFAS employee Linda Woodford to Reuters. "We didn't have the detail...for a lot of it."

While plugging the books was standard procedure at DFAS, Reuters’ investigation determined that of the $565 billion Congress budgeted for the Pentagon in 2012, it is “impossible to determine” how much of that money was spent the way it was intended to be.

The Pentagon’s inability to track its own needs has resulted in the purchase of unnecessary supplies and the storage of other items far past their expiration date. More than half a trillion dollars in unaudited contracts with private companies have been collected - and how much of that money has resulted in delivered goods and services remains unclear.

It’s not just the nation’s budgets that suffer from these failures, though. Between 2003 and 2011, the Army lost track of nearly $6 billion in supplies, the end result being that some units failed to receive the equipment necessary for proper training regimens. According to a 2012 report by the Pentagon inspector general, these units “may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies.”

Since the Department of Defense is the only federal agency that has yet to submit its records for proper auditing, Congress passed legislation in 2009 that required it to be ready to do so by 2017. Part of the books are scheduled for audits in 2014, but due to the agency’s reliance on thousands of different accounting systems – many of which were developed back in the 1970s – it is expected to miss the deadlines.

"There are thousands and thousands of systems," former Deputy Secretary of Defense Gordon England said to Reuters. "I'm not sure anybody knows how many systems there are."

"It's like if every electrical socket in the Pentagon had a different shape and voltage," added an unnamed former defense official.

The Pentagon’s problems are compounded by the fact that it has spent tens of billions of dollars trying to upgrade its systems with little to show for it. The Air Force began implementing a new, billion-dollar tracking system in 2005 only to find it inoperable during test runs in 2012. A statement released by the Air Force said an additional $1.1 billion would be necessary to get the program up and running by 2020.

Similar situations occurred in other departments, where many of the new systems either failed to work properly or were simply scrapped altogether.

Although Defense Secretary Chuck Hagel would not comment on the situation, in August 2013 he released a video to the Pentagon in which he said, “The Department of Defense is the only federal agency that has not produced audit-ready financial statements, which are required by law. That's unacceptable."

Some lawmakers have also begun to lose patience. Senators Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.) have introduced legislation that would limit funding for new programs and prohibit the purchase of new information technology if the Pentagon is not ready for audits by 2017. It would also bar the Defense Department from acquiring new IT which takes more than three years to implement.

"The Pentagon can't manage what it can't measure, and Congress can't effectively perform its constitutional oversight role if it doesn't know how the Pentagon is spending taxpayer dollars," Coburn said in an email response to Reuters. "Until the Pentagon produces a viable financial audit, it won't be able to effectively prioritize its spending, and it will continue to violate the Constitution and put our national security at risk."