Defense Spending

Damning Audit Says Pentagon Cannot Account for $800 Million

Meanwhile, Trump and congressional Republicans want to remove spending caps for the Defense Department.


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The Pentagon failed to track more than $800 million in construction spending adequately, according to an internal audit of one of the Defense Department's largest agencies.

That audit, obtained and published by Politico on Monday, shows that the Pentagon's Defense Logistics Agency (DLA)—described as "the military's Walmart" because it's responsible for processing supplies and equipment—lacks a paper trail for millions of dollars of spending, making it impossible for auditors to determine how funds were used. "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," Politico reported.

The audit, conducted by Ernst and Young, was meant to be a test case for whether a full audit of the Pentagon's $700 billion annual budget should be conducted. Based on the results, it would seem the answer to that question is both "yes" and "hoo boy, you are not going to like the results."

The audit, completed in December, found misstatements on the DLA's books totaling $465 million. Another $384 million lacked sufficient documentation and sometimes had no documentation at all. Gaping holes in the Pentagon's bookkeeping suggest there is even more waste that remains unknown.

"Ernst & Young could not obtain sufficient, competent evidential matter to support the reported amounts within the DLA financial statements," the Pentagon's inspector general said in a statement attached to the audit's release.

At least this audit was allowed to see the light of day. When a 2015 review of the Pentagon's personnel costs turned up more than $125 billion in bureaucratic waste, Defense Department officials tried to bury the report. Among other things, it found that the average administrative position received over $200,000 in compensation, including benefits.

Such atrocious financial management in the largest department of the federal government should be shocking to—well, to hardly anyone, actually. But the audit's timing should raise yet more questions about whether the Pentagon really needs more funding, as President Donald Trump and congressional Republicans keep claiming. Maybe what it really needs is a thorough reevaluation of how it's using the assets it already has. Trump, to his credit, campaigned on a promise to audit the Pentagon's books. But he's also called for additional military spending, and Republicans in Congress want to lift spending caps as part of a long-term budget deal.

Here's a fun thought experiment. Take the first sentence of this article and substitute literally any other hugely expensive government program in place of "Pentagon." Try "Medicaid," or "Department of Transportation." Then ask yourself how Republicans in Congress would respond to news of such an audit. I'm having a hard time picturing Paul Ryan making a case for budget increases, but maybe that's just me.