Audit: Pentagon’s Logistics Arm Improperly Documented Hundreds of Millions of Dollars in Spending

In a Friday, Aug. 14, 2015 photo provided by the US Navy, Chief Warrant Officer 3, Jason Potts, on scene commander for Task Element CSS Georgia, supervises as a piece of casemate, made of railroad ties and timber, which served as the outer layer of armor for CSS Georgia, is …
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The logistical arm of the Department of Defense (DOD) has improperly documented hundreds of millions in spending on everything from construction projects to computers.

Politico obtained a partial audit of one of the Pentagon’s largest agen cies, which has an annual budget of $40 billion and a staff of 25,000 that deals with as many as 100,000 orders a day of everything from food to military equipment.

Politico reported:

Ernst & Young found that the Defense Logistics Agency (DLA) failed to properly document more than $800 million in construction projects, just one of a series of examples where it lacks a paper trail for millions of dollars in property and equipment. Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.

In one part of the audit, completed in mid-December, Ernst & Young found that misstatements in the agency’s books totaled at least $465 million for construction projects it financed for the Army Corps of Engineers and other agencies. For construction projects designated as still “in progress,” meanwhile, it didn’t have sufficient documentation — or any documentation at all — for another $384 million worth of spending.

The agency provides logistics for the Army, Navy, Air Force, Marine Corps, and some other federal agencies, Politico reported.

“But as the auditors found, the agency often has little solid evidence for where much of that money is going,” Politico reported. “That bodes ill for …  getting a handle on spending at the Defense Department as a whole, which has a combined $2.2 trillion in assets.”

The report, which covers the fiscal year that ended Sept. 30, 2016, also does not bode well for DOD and its $700 billion annual budget, which President Trump and Congress are proposing to increase in the 2019 federal budget.

But Army Lt. Gen. Darrell Williams, director of the DLA, said the audit would help the agency get its house in order.

“The initial audit has provided us with a valuable independent view of our current financial operations,” Williams wrote in response to the findings.

“We are committed to resolving the material weaknesses and strengthening internal controls around DLA’s operations,” Williams said.

Williams also defended his agency to Politico in a statement provided to the media outlet saying its “size and complexity” make the report not surprising.

“DLA is the first of its size and complexity in the Department of Defense to undergo an audit, so we did not anticipate achieving a ‘clean’ audit opinion in the initial cycles,” the written response said. “The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits.”

“That’s what we’re doing now,” Williams wrote.

President Donald Trump is poised to request a boost in military spending for 2019, according to a report by the Washington Post.

Breitbart News reported:

The budget request will reportedly ask for $716 billion for 2019, a 13 percent increase from 2017 defense spending, and a seven percent increase from the proposed 2018 budget, which has not yet passed.

However, after adjusting for inflation, it would only mark a five percent increase from 2018, according to Bloomberg News. It would be a two percent increase from the $700 billion that Congress authorized for 2018.

It would provide the Pentagon’s base budget with $597 billion, its war-funding budget with $90 billion, and other defense programs in other agencies with $29 billion.

But the Trump administration has said it plans to reign in these kinds of accounting problems at DOD.

“Beginning in 2018, our audits will occur annually, with reports issued Nov. 15,” the Pentagon’s top budget official, David Norquist, told Congress last month.

“That Pentagon-wide effort, which will require an army of about 1,200 auditors across the department, will also be expensive — to the tune of nearly $1 billion,” Politico reported.

Norquist estimated the cost to carry out the audits at $367 million to hire outside auditing experts, plus $551 to fix what’s wrong with the accounting systems.

“It is important that the Congress and the American people have confidence in DOD’s management of every taxpayer dollar,” Norquist said.


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