A Senate panel took the Pentagon’s comptroller to task Wednesday over years of delays in conducting the Department of Defense’s first-ever financial audit.
The Department of Defense is the only federal agency that has escaped undergoing an overall audit since Congress began requiring such examinations in the 1990s.
Now, as the Pentagon’s first audit is finally underway, the more than 20-year delay wasn’t lost on lawmakers during a Senate Budget Committee hearing on the matter.
“How in the world is it that in 2018, with all the massive capabilities the Pentagon has, this is the first time the Pentagon is able to conduct an audit? What is going on with the culture? What’s wrong?” Sen. Bob Corker, R-Tenn., asked top defense officials, including the Pentagon’s top financial chief. “We probably wasted hundreds of billions of dollars at the Pentagon through the years through poor management. Is that correct? That would be a low estimate would it not?”
The heated exchange marks the first Senate hearing on the Pentagon’s inaugural audit following an earlier House Armed Services Committee hearing in January.
Pentagon Chief Financial Officer David Norquist, who was on hand to testify before the Senate committee Wednesday, has said the effort will mark a cultural shift for the Department of Defense. The audit, which is now required by law under the National Defense Authorization Act, is aimed for completion by the end of the year.
Today, military leaders, led by Congress, have a newfound focus on ensuring the audit is completed, he said.
Previously, the Pentagon has not been “as focused on the back office as you would see in a private company,” Norquist said. Now, “there is an essential value to the taxpayer.”
The effort could cost nearly $1 billion and will entail the work of an estimated 1,200 auditors who will dig into the count, location and condition of military equipment, real property and inventory. The audit will also examine security vulnerabilities in the Pentagon’s business systems, validate the accuracy of personnel records and assess whether the department’s books and records present a true and accurate picture of financial health.
“I can’t explain this to my people back home every single one of whom support a strong defense,” complained Sen. John Kennedy, R-La. “But when I tell them that every other agency in the federal government undergoes an audit but the Department of Defense … they think I belong in a straightjacket.”
The actual financial review of the Pentagon will likely be the largest ever conducted, Norquist said. The cost of the actual review is estimated at $367 million while another $551 million will be used for accounting fixes throughout the various services, such as addressing computer software failures and glitches tracking inventory.
Kennedy said he’s concerned that there’s no accessible list of all the contractors and they might be taking advantage of the lack of audits.
“We’ve got … some hogs who have all four feet and their snout in the trough,” he said. “And we got to find out who they are gentlemen.”
Norquist, who was previously CFO for the Department of Homeland Security, said an unfortunate mindset has kept a Pentagon audit from being completed. But since a new renewed effort began to take shape at the end of the last administration, work is finally underway.
“In my perspective, we ought to have started” sooner, Norquist said. “I am glad that at least in the transition of administrations that the contracts were set in place that allowed us to begin now, rather than wait.”
Audits aren’t entirely new to the Pentagon, where numerous reviews of performance and contract costs have been conducted by the Government Accountability Office, the Defense Contract Audit Agency, the Department of Defense Office of the Inspector General and the services’ audit agencies. But the new, ongoing Pentagon audit will occur annually and mark a much more comprehensive review.
Norquist, however, has warned it will take time to implement necessary process and system changes to pass the audit, as in the case for Homeland Security, which took 10 years to get the first, clean result.
Sen. David Perdue, R-Ga., said the failure to finally reach this point in the Pentagon’s first audit actually falls on Congress.
“There’s one very easy reason why it’s taken years,” he said. “Congress didn’t do its job. It passed a law and then didn’t do anything to enforce it. That’s water under the bridge.”
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