MENU

Reason.com

Free Minds & Free Markets

Damning Audit Says Pentagon Cannot Account for $800 Million

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

Glowimages Glow Images/NewscomGlowimages Glow Images/NewscomThe 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.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • chemjeff||

    Among other things, it found that the average administrative position received over $200,000 in compensation, including benefits.

    Well it's nice to know that John is getting well paid, I suppose.

  • Juice||

    Wow, that's the fucking average.

  • BestUsedCarSales||

    How you doing Chemjeff?

  • timbo||

    United States' largest spending items:

    Entitlements(SSI and Medicare)
    Military spending

    $20 Trillion in debt and clearly insolvent.

    2 things that are held sacrosanct by both parties and never mentioned in real conversations or debates. Any American who really thinks there is a difference between dems and republicans needs to be hit over the head with a tack hammer. And any dumbass who thinks the FED and the MIC doesn't really run this country should have to spend a night in Tony's basement while Palin butt reads Marx's manifesto.

  • MWill||

    Anyone who doesn't recognize a serious difference between the party of BLM and Antifa, and the party that at least has several members such as Amash and Paul, is an idiot.

    One of them is at least sometimes open to libertarian ideals. The other is completely opposed to everything libertarianism professes to stand for. Chose wisely.

  • Citizen X - #6||

    One party is completely opposed to everything libertarianism professes to stand for. The other one is too, but every once in a while, it pretends it isn't.

    The wise choice is "neither of the above, and fuck both y'all houses."

  • MWill||

    Unfortunately those are the only two choices that our system provides us.

    As Ken Shultz has pointed out before, elections in our system are not about what we'd most like to see in perfect fantasy land. It's about two imperfect choices. If you don't vote republican, you are effectively endorsing Marxist rule until such time as the democratic party regains it's senses.

  • Citizen X - #6||

    That is not an accurate statement.

  • BestUsedCarSales||

    If you can't stand by your principles on something as inconsequential as your vote, then I question whether you really believe those principles at all.

  • JoeBlow123||

    Sheep argument created by wolves to coerce the sheep to hand away their rights as citizens.

    If you do absolutely nothing to place pressure on the system, how do you suppose anything will happen? The powers that be have no reason to budge if you do not provide them a reason to.

  • $park¥ leftist poser||

    Big deal, it's not even a billion dollars.

  • IceTrey||

    This is nothing. The Pentagon has lost trillions.

  • BestUsedCarSales||

    But if even one person was saved from terrorism it was worth it.

  • Citizen X - #6||

    The Pentagon failed to track more than $800 million in construction spending adequately

    Come on now. For the Pentagon, that's pretty good.

  • timbo||

    I thought the article was going to talk about the pentagon bombing civilians in huts for the past 15 years.

  • Rich||

    Defense Logistics Agency ... lacks a paper trail for millions of dollars of spending

    Due to the Paperwork Reduction Act?

  • Citizen X - #6||

    They must not have read the part where they were supposed to track it in a spreadsheet or something.

  • JoeBlow123||

    If I had to guess, DLA is probably staffed by former logistics active duty. If you have ever worked with any of these people this would concern you.

  • ||

    the federal govt is WAY TO BIG, AND NEEDS PUT BACK INTO ITS CONSTITUTIONAL LIMITS, and all UNCONSTITUTIONAL AGENCIES NEEDS BANNED.

  • AD-RtR/OS!||

    $800MM?
    Put Starbucks "Off Limits" and you'll save that in 6-mos.

  • John B. Egan||

    This is not a new issue.. Congress has been trying to get the Pentagon to finalize audits for a decade now... in fact, this was news the last 2 years:

    Audit: Pentagon Cannot Account For $6.5 Trillion Dollars Is Taxpayer Money : http://bit.ly/2msYpmr

  • vek||

    It's entirely wishful thinking, but wouldn't it be hilarious if the Pentagon just had trillions of dollars of investments sitting around in shell companies that they were saving for bailing out the country when it goes broke? LOL

    Unfortunately the truth is a bunch of it was probably spent on illegal black ops, stolen by personnel, or just generally spent in stupid ways that weren't properly accounted for. If the Republicans ever want to be taken seriously, they need to whip the DOD into shape. This kind of shit is unacceptable. I'm okay with us spending more money than anybody else in the world on defense... But it's HOW it's spent, and how much overall that is bunk. We could easily cut spending by half and still obliterate anybody else on the face of this earth.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online