Pentagon Can't Reconcile Records With War's Reality

Pentagon can't reconcile records with war's reality
The problems mean some troops don't get what they need and aren't paid correctly. With the snarls, accountants aren't trying to audit the Defense Department's books.

http://www.startribune.com/484/story/226548.html

2/5/2006

WASHINGTON -- When Perry Jefferies was serving in Iraq, the computers showed that his 4th Infantry Division troops had access to drinking water, a place to shower and working wheels on their vehicles.

As the first sergeant came to understand when scrounging for water, towing immobilized tanks and driving to other posts or to Kuwait to pick up needed parts, the Pentagon's bookkeeping doesn't always match reality.

Jefferies saw the real-life results of what has for years been a visible "accounting" problem in Washington -- the Pentagon's inability to keep accurate track of transactions and assets.

A labyrinth of arcane and incompatible accounting systems has in recent years led the department to pay the wrong amounts to troops, civilian workers and contractors; to lose track of its equipment, even hard-to-misplace planes and tanks; and to improperly document trillions of dollars in transactions that leave tax dollars vulnerable to abuse, according to government reports.

A long-elusive "clean audit" sought by the Department of Defense -- for years pegged for 2007 -- is nowhere on the horizon. The agency's books are such a mess that its accountants have stopped wasting money trying to audit them.

"We don't know how badly managed it is," said Winslow T. Wheeler, director of a military reform project at the Center for Defense Information. "It's not that DOD flunks audits, it's that DOD's books cannot be audited. DOD aspires for the position where it flunks an audit. If this were a public company, it would have gone belly-up before World War II."

The accounting problems would cost taxpayers $13 billion in 2005, Gregory D. Kutz, a managing director for the investigative arm of Congress, the Government Accountability Office, told lawmakers last summer.

"That's $35 million a day," he added for emphasis.

Clogged stovepipe
At the heart of the problem is what government accountants like to call the agency's "stovepiped" setup, a tangle of 4,150 different business operations. (Until 2004, the department said it had 2,200 varied systems, but last year it reported finding an additional 1,900.) It has 713 different human resources systems, for example.

The business systems haven't been easy to integrate for a number of reasons, not the least of which are the sheer volume and complexity of the operation. For example, the Defense Department has at least 5.2 million inventory items, compared with 11,000 at Wal-Mart or 50,000 at Home Depot stores, said Thomas B. Modly, deputy undersecretary of defense for financial management.

"There's probably nothing like it in the world," said Jeffrey Steinhoff, managing director for financial management and assurance at the GAO.

The Defense Department has been unwieldy for decades. In 1960, President-elect John F. Kennedy decided he needed to tap a financial "whiz kid" from Ford Motor Co., Robert McNamara, to be defense secretary.

Goals of getting the Pentagon's financial house in order have evaded both Republican and Democratic administrations.

"No one has proven themselves strong enough to tackle it," said Danielle Brian, executive director of the Project on Government Oversight, a watchdog group.

The consequences have been well-documented in a relentless stream of damning reports by the GAO. Ineffective accounting systems have lost track of planes and tanks, left wounded soldiers without pay, and stranded troops without everything from meals and water to tires and generators.

The current administration recognized the real-world costs early on.

In a speech he gave on Sept. 10, 2001, Defense Secretary Donald Rumsfeld called the arcane accounting systems and bureaucracy one of the biggest threats to national security.

Little quantifiable progress
The Defense Department has spent hundreds of millions of dollars on new business systems and consultants to try to fix the problems. The latest effort is going well because the managers are doing a better job of showing staff how improvements can help troops, said Paul Brinkley, deputy undersecretary of defense for business transformation.

"By making the business process support the warfighter more efficiently, we are seeing a significant amount of momentum," Brinkley said.

Despite good intentions, there has been little quantifiable progress.

For example, two automation systems meant to resolve disbursement problems cost the government $179 million but failed, the GAO said.

"They're not close to the finish line," said the GAO's Steinhoff. "They have a long way to go."

As President Bush prepares to release his 2007 budget request this week, the department is likely to come under closer scrutiny to prove that it isn't just throwing good money after bad. Its auditing budget was slashed by more than $100 million in the 2006 appropriations bill signed by Bush in early January.

"One of the challenges for the department is to show that with the dollars being provided for business systems improvements, that there's actual return on that investment, not just more programs and more systems without any benefit at the end of the day," said Rep. Todd Platts, R-Pa., chairman of a House government oversight subcommittee that has held hearings on the subject.

Hunting for supplies in Iraq
The GAO said last year that inadequate information systems were one of many problems that "hindered DOD's ability to deliver the right items to the right place at the right time for the warfighter."

That would have come to no surprise to 1st Sgt. Jefferies, who served in Iraq in 2003 and is now retired from the Army and working for a defense contractor in Texas.

When his unit would order road wheels for their tanks, the computer would locate the parts "in theater" and "magically the tanks looked fixed," even though they were still out of commission and the parts were miles away.

"It looks like the system is working sometime," he said. "But there's all this additional effort going on. It's the soldiers that pay the brunt of that."