New Report Shows Pentagon Has Lost Track Of More Than $8.5 Trillion In Taxpayer Money Since 1996

| by Jonathan Wolfe

It’s no secret that fiscal efficiency is not the U.S. government’s specialty. But just how wasteful are our government agencies?

A new investigation by Reuters sought to pin data to these long held assumptions about financial inefficiency in the government. The results of the investigation are even worse than most of us thought.

According to the report, the Pentagon has accumulated more than $8.5 trillion in unaccounted taxpayer money since 1996. Congress passed a law in 1996 requiring all government agencies to be subjected to an annual audit, but the Department of Defense (DOD) has not been forced to comply with the law. The DOD has been given until 2017 to ready itself for an audit, but Pentagon officials doubt they can meet the deadline.

The report shows that the DOD has more than $500 billion in outstanding, unaudited contracts. No one has a clue how much of that $500 billion has actually gone towards contracted services. The Defense Logistics Agency (DLA), which buys and distributes much of the DOD’s supplies, estimates that they have around $14 billion in inventory. According to DLA director Navy Vice Admiral Mark Harnitchek, at least half of the $14 billion is not needed.

“We have about $14 billion of inventory for lots of reasons, and probably half of that is excess to what we need,” Harnitchek said.

The report details the thousands of dated inventory and accounting platforms the DOD uses to track supplies and spending. The Pentagon estimates that at least 2,200 different accounting systems are used throughout the different military and defense agencies. Many of these systems were implemented in the 70’s and 80’s and feature obsolete computer languages like COBOL. It is nearly impossible to search for and retrieve files on these systems.

“There are thousands and thousands of systems,” former Deputy Secretary of Defense Gordon England told Reuters in an interview. “I’m not sure anybody knows how many systems there are.”

The Pentagon has spent tens of billions of dollars to upgrade to modern, audit-ready information systems, but — not surprisingly — most of these systems have failed or proved incapable of handling the task they were designed for.

To balance their budget each year, the DOD has a standard operating procedure for entering in “plugs” — which is a pleasant term for fake numbers. In 2012 alone, the Pentagon entered in $9.22 billion in these plugs.

As for the future? American University foreign policy and defense specialist professor Gordon Adams doesn’t expect much to change. Asked about the DOD’s 2017 audit goal, Adams gave a less-than-optimistic response.

“We'll get to 2017,” Adams said, “and if past is prologue, the Defense Department will just move the goal posts again.”

Sources: Reuters, Yahoo Finance