ONE TRILLION DOLLARS MISSING...ANOTHER BUSH SCANDAL TO GO ALONG WITH INVADING A
COMPLETELY DEFENSELESS WMD--FREE COUNTRY....Military waste under fire
$1 trillion missing -- Bush plan targets Pentagon accounting
Tom Abate, Chronicle Staff Writer
The Department of Defense, already infamous for spending $640 for a toilet seat, once again finds itself
under intense scrutiny, only this time because it couldn't account for more than a trillion dollars in financial
transactions, not to mention dozens of tanks, missiles and planes.
The Pentagon's unenviable reputation for waste will top the congressional agenda this week, when the
House and Senate are expected to begin floor debate on a Bush administration proposal to make
sweeping changes in how the Pentagon spends money, manages contracts and treats civilian
employees.
The Bush proposal, called the Defense Transformation for the 21st Century Act, arrives at a time when
the nonpartisan General Accounting Office has raised the volume of its perennial complaints about the
financial woes at Defense, which recently failed its seventh audit in as many years.
"Overhauling DOD's financial management operations represent a challenge that goes far beyond
financial accounting to the very fiber of (its) . . . business operations and culture," GAO chief David Walker
told lawmakers in March.
WHAT HAPPENED TO $1 TRILLION?
Though Defense has long been notorious for waste, recent government reports suggest the Pentagon's
money management woes have reached astronomical proportions. A study by the Defense Department's
inspector general found that the Pentagon couldn't properly account for more than a trillion dollars in
monies spent. A GAO report found Defense inventory systems so lax that the U.S.
Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units.
And before the Iraq war, when military leaders were scrambling to find enough chemical and biological
warfare suits to protect U.S. troops, the department was caught selling these suits as surplus on the
Internet "for pennies on the dollar," a GAO official said.
Given these glaring gaps in the management of a Pentagon budget that is approaching $400 billion, the
coming debate is shaping up as a bid to gain the high ground in the battle against waste, fraud and abuse.
"We are overhauling our financial management system precisely because people like David Walker are
rightly critical of it," said Dov Zakheim, the Pentagon's chief financial officer and prime architect of the
Defense Department's self-styled fiscal transformation.
Among the provisions in the 207-page plan, the department is asking Congress to allow Secretary of
Defense Donald Rumsfeld to replace the civil service system governing 700,000 nonmilitary employees
with a new system to be detailed later.
The plan would also eliminate or phase out more than a hundred reports that now tell Congress, for
instance, which Defense contractors support the Arab boycott of Israel and when U.S. special forces train
foreign soldiers, as well as many studies of program costs.
The administration's proposal, which would also give Rumsfeld greater authority to move money between
accounts and exempt Defense from certain environmental statutes, prompted influential House
Democrats to write Speaker Dennis Hastert last week complaining that the proposals would "increase the
level of waste, fraud, and abuse . . . by vastly reducing (Defense) accountability."
"The Congress has increased defense spending from $300 billion to $400 billion over three years at the
same time that the Pentagon has failed to address financial problems that dwarf those of Enron," said
Rep. Henry Waxman, D-Los Angeles, one of the letter's signatories.
Saying critics of the bill "were arguing for more paperwork," Hastert spokesman John Feehery said his
boss would support the Bush reforms on the House floor. "The purpose is to streamline the Pentagon to
become a less bureaucratic and more efficient organization . . . while also making it more accountable,"
Feehery said.
PROCESS WILL TAKE MONTHS
The debate will center around the defense authorization bill, the policy- setting prelude to the defense
appropriations measure that comes up later in the session. With the House and Senate considering
different versions of the transformation proposals, it will be months before each passes its own bill and
reconciles any differences.
But few on Capitol Hill would deny that, when it comes to fiscal management,
Defense is long overdue for "transformation."
In congressional testimony Rumsfeld himself has said "the financial reporting systems of the Pentagon
are in disarray . . . they're not capable of providing the kinds of financial management information that any
large organization would have."
GAO reports detail not only the woeful state of Defense fiscal controls, but the cost of failed attempts to fix
them.
For instance, in June 2002 the GAO reviewed the history of a proposed Corporate Information
Management system, or CIM. The initiative began in 1989 as an attempt to unify more than 2,000
overlapping systems then being used for billing, inventory, personnel and similar functions. But after
"spending about $20 billion, the CIM initiative was eventually abandoned," the GAO said.
Gregory Kutz, director of GAO's financial management division and co-author of that report, likened
Defense to a dysfunctional corporation, with the Pentagon cast as a holding company exercising only
weak fiscal control over its subsidiaries -- the Army, Navy, Air Force and Marines. Today, DOD has about
2,200 overlapping financial systems, Kutz said, and just running them costs taxpayers $18 billion a year.
"The (Pentagon's) inability to even complete an audit shows just how far they have to go," he said.
Kutz contrasted the department's loose inventory controls to state-of-the- art systems at private
corporations.
"I've been to Wal-Mart," Kutz said. "They were able to tell me how many tubes of toothpaste were in
Fairfax, Va., at that given moment. And DOD can't find its chem-bio suits."
CRITICS CALLED UNPATRIOTIC
Danielle Brian, director of the Project on Governmental Oversight, a nonprofit group in Washington, D.C.,
said waste has become ingrained in the Defense budget because opposition to defense spending is
portrayed as unpatriotic, and legislators are often more concerned about winning Pentagon pork than
controlling defense waste.
"You have a black hole at the Pentagon for money and a blind Congress," Brian said.
But things may be changing.
GAO's Kutz said Rumsfeld has "showed a commitment" to cutting waste and asked Pentagon officials to
save 5 percent of the defense budget, which would mean a $20 billion savings.
Legislators are also calling attention to Defense waste. "Balancing the military's books is not as exciting
as designing or purchasing the next generation of airplanes, tanks, or ships, but it is just as important,"
Sen. Robert Byrd, D-W.V., said last week. In a hearing last month about cost overruns, Rep. John
Duncan, R-Tenn., of the House Committee on Government Reform said: "I've always considered myself
to be a pro-military type person, but that doesn't mean I just want to sit back and watch the Pentagon
waste billions and billions of dollars."
But while Capitol Hill sees the need, and possibly has the will to reform the Pentagon, the devil remains in
the details, and the administration aroused Democratic suspicions when it dropped its 207-page
transformation bill on lawmakers on April 10 -- leaving scant time to scrutinize proposals that touch many
aspects of the biggest department in government.
"We have as much problem with the process as with the substance," said said Rep. John Spratt, D-S.C.,
who co-signed Waxman's letter calling the transformation bill "an effort by the Department to substantially
reduce congressional oversight and public accountability."
Defense's Zakheim counters that the reform proposals would "remove the barnacles of past practices
(and provide) DOD with modern day management while preserving congressional oversight and
prerogatives."
But Waxman, a critic of the administration's handling of Iraqi reconstruction contracts, called the
proposals "a military wish list" to take advantage of "the wartime feeling."
"Secretary Rumsfeld is hoping to march through Congress like he marched through Iraq," Waxman said.
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