Unaccountable

November 23, 2013 3:14 AM

Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China’s economic output last year. -- Reuters journalist Scot J. Paltrow investigates how the US military's bad accounting not only wastes taxpayers money, but helps ruin the life of ordinary soldiers and veterans.

As an example of how bad accounting and obsolete systems impact soldiers and veterans, Paltrow provides the case study of U.S. Army medic Shawn Aiken:

Aiken, then 30 years old, was in his second month of physical and psychological reconstruction at Fort Bliss in El Paso, Texas, after two tours of combat duty had left him shattered. His war-related afflictions included traumatic brain injury, severe post-traumatic stress disorder (PTSD), abnormal eye movements due to nerve damage, chronic pain, and a hip injury.

But the problem that loomed largest that holiday season was different. Aiken had no money. The Defense Department was withholding big chunks of his pay. It had started that October, when he received $2,337.56, instead of his normal monthly take-home pay of about $3,300. He quickly raised the issue with staff. It only got worse. For all of December, his pay came to $117.99.

[...]

The money the military took back from Aiken resulted from accounting and other errors, and it should have been his to keep. Further, even after Aiken complained, the Defense Department didn't return the bulk of the money to Aiken until after Reuters inquired about his case.

The Pentagon agency that identified the overpayments, clawed them back and resisted Aiken's pleas for explanation and redress is the Defense Finance and Accounting Service, or DFAS (pronounced "DEE-fass"). This agency, with headquarters in Indianapolis, Indiana, has roughly 12,000 employees and, after cuts under the federal sequester, a $1.36 billion budget. It is responsible for accurately paying America's 2.7 million active-duty and Reserve soldiers, sailors, airmen and Marines.

It often fails at that task, a Reuters investigation finds.

posted by MartinWisse (39 comments total)

But... but... if we run government like a business, it will all be better!

(We could just hide the waste and errors in dummy armies set up for that purpose.)
posted by GenjiandProust at 3:40 AM on November 23, 2013 [13 favorites]

Inexcusable!
posted by Katjusa Roquette at 4:06 AM on November 23, 2013 [1 favorite]

So the military hasn't figured out that they should be doing this in the Cayman Islands like everyone else?
posted by localroger at 5:18 AM on November 23, 2013

But... but... if we run government like a business, it will all be better!

Based on the horror stories my daughter tells of her work doing audits for her accounting firm, this is how businesses are run.
posted by Thorzdad at 5:25 AM on November 23, 2013 [31 favorites]

You can't hide money if you're telling' people where it goes.
posted by blue_beetle at 5:32 AM on November 23, 2013 [6 favorites]

I don't think running stuff businesslike is necessarily a problem. It's just a smidge more of a problem if your business model is Enron.
posted by Sequence at 5:37 AM on November 23, 2013 [3 favorites]

There is a reason why the origin of so many 'dysfunction' acronyms is millitary:
SNAFU, FUBAR and BOHICA are three of my favorite.
posted by lalochezia at 5:53 AM on November 23, 2013 [2 favorites]

This is not how businesses are run. A business that regularly stole earned pay from its employees on this scale would be destroyed by the lawsuits. Amazon has a huge, complex inventory, but they don't lose track of hundreds of millions of dollars worth of stuff because they cannot operate like that and survive.

Efficiently managing an organization of this scope is an incredibly hard problem. Under the current setup, there is no consequence for failure and no reward for success... Of course they're failing!

I'm not saying the Pentagon should be run like a business - profit and national defence aren't compatible goals. But there needs to be some sort of incentive for fixing this mess, or the goalposts will keep moving back, and the status will remain quo.
posted by Turbo-B at 6:03 AM on November 23, 2013 [11 favorites]

There are pretty well-defined practices for non-profit accounting (and thus for government accounting). One of them is auditing, both internal and external. This isn't an accounting issue or a government issue, it's a Pentagon issue. Thousands of Very Large non-profit entities which have confidential programs manage to comply with non-profit accounting standards every year. It's work, yes, which is why you hire enough accountants, and you should have all this in-house so that you're confident that everyone is capable of confidential work, and you should have long-term staff, and year-end is still a bear and a half, but it's perfectly doable. I have some familiarity with this whole accounting-for-large-non-profits business.

Seriously, when you find a large and well-established entity not complying with accounting rules, that's because they do not want to and have enough power to avoid them. US accounting standards allow for an amazing amount of subjectivity and fiddle, IMO, so I am completely sketched out when places won't do the minimum.
posted by Frowner at 6:20 AM on November 23, 2013 [30 favorites]

Turbo-B: A business that regularly stole earned pay from its employees on this scale would be destroyed by the lawsuits.

This kind of thing happens more often than you'd expect. (Not comparing The Pentagon's likely inefficiencies with structural wage theft, just pointing out that it happens.)
posted by sneebler at 6:40 AM on November 23, 2013

We should all ignore this and squeeze some money out of some orphans instead. No good scroungers, always after double gruel.
posted by Artw at 6:42 AM on November 23, 2013 [3 favorites]

I find it sad that the lack of accountability and millions (billions?) of wasted taxpayer dollars -- without a peg about how it also ruins veterans lives -- aren't enough to justify this story.
posted by nowhere man at 7:02 AM on November 23, 2013 [1 favorite]

Fun fact! DFAS also handles payroll for employees of Veterans Affairs, the EPA, and Health & Human Services (which includes the FDA, CDC, and NIH among others).
posted by zennie at 7:03 AM on November 23, 2013 [3 favorites]

I understand journalists picking an emotional example to curry interest in a dry subject but I have a suspicion that the hugest abuses of the system are hidden in plane sight. Contractor buddies are becoming wealthy, really iffy strategic decisions, fake wars, useless high tech equipment, plain theft.
posted by sammyo at 7:17 AM on November 23, 2013 [3 favorites]

$8.5 Trillion eh? Add the F-35 to that and you got the majority of the deficit. Why does the Pentagon budget not get as much scrutiny as that OMFG IT'S BANKRUPTING US program known as Social security?
posted by edgeways at 7:18 AM on November 23, 2013 [6 favorites]

lets not forget how accountable the post office has to be as well eh?
posted by edgeways at 7:19 AM on November 23, 2013 [3 favorites]

Why does the Pentagon budget not get as much scrutiny as that OMFG IT'S BANKRUPTING US program known as Social security?

Because defence is big business, and big business runs the US and will continue to do so until enough people get pissed off about that to get serious about rebuilding the labor movement, which won't happen because OMG COMMUNISM.

Propaganda works.
posted by flabdablet at 7:26 AM on November 23, 2013 [12 favorites]

Why are these people questioning Pentagon finances? We need to make sure our troops have what they need to do their jobs!

And you keep hearing things like that from the people who think military budgets are sacrosanct. If the Pentagon's needs are considered to be that important, it's naturally going to follow that there will be no accountability.

But let's drug test welfare recipients. Someone may be getting a benefit they don't deserve and this country can't afford that.
posted by azpenguin at 7:31 AM on November 23, 2013 [6 favorites]

...billions the Pentagon has spent on repeated efforts to fix its bookkeeping, with little to show for it.

Not on people, not on training, not on bombs, just trying to fix it's books. whew.

Can't we just pay off our enemies, shut down the Pentagon and save trillions?
posted by sammyo at 7:39 AM on November 23, 2013 [2 favorites]

I sometimes like to sit and imagine a drone program where instead of missiles the planes are fitted with ATM-style note dispensers that scatter the cash equivalent.
posted by flabdablet at 7:56 AM on November 23, 2013 [16 favorites]

Around a quarter of the defense budget goes to "the troops," ie anything that would have been useful in Iraq or Afghanistan. The vast majority goes to insane overbudget programs like stealth fighters and missile defense and the NSA. It's possible to give the troops a raise while still substantially reducing overall expenses.
posted by miyabo at 8:03 AM on November 23, 2013 [1 favorite]

I look forward to the Republicans shouting about Welfare Generals and demand ever increasing rules and regulations to make it harder and harder to get federal funding for military supplies.
posted by symbioid at 8:40 AM on November 23, 2013 [6 favorites]

PROTIP: It's called "Black Budget" and assholes like the NSA, DIA, etc... get a big chunk of it.
posted by symbioid at 8:40 AM on November 23, 2013 [4 favorites]

Do you support the whoops?
posted by srboisvert at 8:55 AM on November 23, 2013 [2 favorites]

Around the time the Obamacare computer system made its pathetic debut, I flipped on the TV in a hotel room and found myself watching Fox News. The anchor was interviewing everyone's favorite tech loon, John McAfee. His thesis was that our government is fundamentally incapable of implementing a large system like this correctly because (1) there are thousands of pages of arcane regulations that a contractor must follow, (2) this limits the pool of eligible contractors to an inbred and incompetent bunch, and (3) the bureaucrats who make the selections don't understand anything about the tech, and they're probably just picking cronies anyway. I would add (4) there's very little accountability for the ensuing fiasco.

It's a weird day that I find myself agreeing with Fox News. This article makes a great case for a complete overhaul of the DoD's payroll and accounting systems, but I strongly suspect that the DoD is not able to effectively see such a project through to successful completion.
posted by qxntpqbbbqxl at 9:28 AM on November 23, 2013 [3 favorites]

There are pretty well-defined practices for non-profit accounting (and thus for government accounting).

It was my impression that non-profit accounting is closer to GAAP than government accounting (GAS). I could be wrong.

Of course we'd have a better shot at fixing the problem by bringing troops home and shrinking the size of the War Department to something more in line with our enemies real and imagined. Good luck with that.
posted by IndigoJones at 9:31 AM on November 23, 2013

The secretary of defense’s office and the heads of the military and DFAS have for years knowingly signed off on false entries. “I don't think they're lying and cheating and stealing necessarily,

Hilarious.

It's not attributable to a moral deficiency, like it would be if they were poor and on welfare.

I fear this country is fucked beyond repair.
posted by Sing Or Swim at 9:32 AM on November 23, 2013 [1 favorite]

I wonder if we could actually rely on the product of all of this profiteering in a real war. It seems to me that historically, large powers tend to lose wars because their once-mighty military is revealed to be a poorly led paper tiger when it counts the most. I don't look forward to the potential of an American Cannae, but the finances of the Department of Defense seem corrupt at the highest level, by design, and that just doesn't say anything positive about the rest of the organization, the undoubted rectitude of the rank and file notwithstanding.
posted by feloniousmonk at 10:18 AM on November 23, 2013 [2 favorites]

Efficiently managing an organization of this scope is an incredibly hard problem. Under the current setup, there is no consequence for failure and no reward for success... Of course they're failing!

This. And even in the private sector, the sorts of business technology modernization efforts the Pentagon needs often fail.

John McAfee. His thesis was that our government is fundamentally incapable of implementing a large system like this correctly because (1) there are thousands of pages of arcane regulations that a contractor must follow, (2) this limits the pool of eligible contractors to an inbred and incompetent bunch, and (3) the bureaucrats who make the selections don't understand anything about the tech, and they're probably just picking cronies anyway. I would add (4) there's very little accountability for the ensuing fiasco.

He's right. The model of hiring outside contractors to deliver you a custom IT system is a recipe for getting a very expensive piece of substandard crap, even in the private sector. Unfortunately, it seems that's the model the government uses to procure everything.

I would really like to see the government setup a few offices that are capable of implementing these sorts of systems on their own without outside help, so they don't have to contract everything out and can provide sufficient oversight when they do.
posted by cosmic.osmo at 10:41 AM on November 23, 2013 [7 favorites]

As Martin Luther once said: "All those who believe themselves certain of their own salvation by means of letters of indulgence, will be eternally damned, for wasting the taxpayer's money."
posted by gorbweaver at 10:46 AM on November 23, 2013

I wonder if we could actually rely on the product of all of this profiteering in a real war.

Well no, of course not, given that a real war would last a couple hours at best. It's been over fifty years since anyone could afford a real war, so it's been minor proxy actions and police actions all the way. That's no way to instill a sense of urgency in a military.
posted by happyroach at 11:28 AM on November 23, 2013 [1 favorite]

I don't think the overall chaos was intentionally planned, but I'm pretty sure that the resistance to fixing it comes from particular corners that benefit from black budgets, either legitimately (this is how we fund Secret Project X) or illegitimately (if we get audited they'll realise our department is redundant). This would be totally fixable if there were enough political will; there is nothing arcane about accounting.
posted by Joe in Australia at 3:01 PM on November 23, 2013 [1 favorite]

> Well no, of course not, given that a real war would last a couple hours at best.

No one's going to start a nuclear war - there is no way to make money out of it. "Real" wars these days are like the Iraq and Afghanistan wars - that last for years, consume trillions of dollars, and come to no sort of decisive ending at all.
posted by lupus_yonderboy at 5:13 PM on November 23, 2013

Is this the admission that the missing 2 trillion announced on Sept 10th 2001 wasn't found?

And while other websites are comparing the state of drones in the military now to the late 1940's and nuclear weapons, another is talking about a trillion a year being hidden in a whistleblower suit, the website defenseone.com snarking on the Marines pack robot, and more NSA blowback via Snowden elsewhere there is one topic that I've not seen discussed that this very FPP brought to my mind.

This FPP somehow caused the advertising service to show an ad for PBAfacts.com. What the hell is PBA? The first line of the ad said asked if I had an uncontrollable urge to laugh or cry. Now the Pentagon and the antics being talked about sure is a "don't know if I should laugh or cry" kind of quote/response. But what's the topic I've not seen discussed?

What is the national security threat of what's been branded "Big Data"? Is it bad conclusions that would be acted on like the ad, data leaks, or something worse than "the panopticon"?
posted by rough ashlar at 6:52 PM on November 23, 2013 [2 favorites]

Around the time the Obamacare computer system made its pathetic debut, I flipped on the TV in a hotel room and found myself watching Fox News.

What is it about hotel rooms and Fox News? The only time I've ever watched it is in a hotel room. But I have on numerous occasions, without intending to. Is it something that lends itself to channel flipping (which I rarely do at home.)? Like the red angry face of Bill O'Reilly shouting down another naive but earnest guest is the baboons ass that something primitive in my brain demands I give attention to?
posted by [insert clever name here] at 9:53 PM on November 23, 2013

Why would they bother to disclose their finances? It's not like we're going to stop paying them. This "requirement" to audit themselves is completely toothless.

Could you imagine if it worked this way for the rest of us? "Uh, hi, this is the IRS, this will only take a minute. Could you please go over your taxes for last year and make sure you paid the right amount? Well, no, we're not going to do anything if you refuse, but it would be really nice, you know? Twenty years you say? Well, if that's the best you can manage, I guess it will have to do. Thanks, we appreciate your help."
posted by foobaz at 1:59 AM on November 24, 2013

This, in fact, getting very, very closely looked at right now by some folks on the Hill whose job it is to do so. It is arguable that someone(s) could go to jail - and should, because fraud.

Whether anyone with actual power will LISTEN to them when they're finished with their investigation is another matter entirely.
posted by Thistledown at 5:09 AM on November 24, 2013

The boondoggles I have seen.

At one point, in Afghanistan, I was in charge of 1.2 million dollars of equipment that could not be accounted for. Of course, that was something of a bluff. It was out there, somewhere, but nobody was really interested in showing me where, exactly. Not out of avarice, merely laziness.

You may be relieved to hear we got the final tab down to $177,000.

I had in my charge a shipping container full of laptops. Top to bottom, side to side, front to rear.

In my final months there, I received a brand-new office chair worth probably $800. So did everybody else. Earlier, big-screen plasma TVs intended for some TOC somewhere wound up in people's living quarters after my supply sergeant discovered a conex full of them. This caused a deep rift between my first sergeant and I, when I told him he needed to return his TV.

Most of this largesse was due to efforts of the unit who had preceded us. When the surge began, they became, for whatever reason, the ordering point for anything electronic for just about the entire theater.

I was one man, in one small unit, on one FOB, in the middle of nowhere.
posted by atchafalaya at 5:23 AM on November 24, 2013 [7 favorites]

Atchafalaya, if every single soldier in Afghanistan had received his own personal big-screen plasma TV and office chair, it would still not represent more than a fraction of one percent of the missing money. To put this in context, in Iraq they literally lost track of pallets of money. Huge bundles of cash they were shipping there to bribe warlords. There are undoubtedly some soldiers who will become unexpectedly wealthy a few years after returning home.
posted by Joe in Australia at 12:31 PM on November 24, 2013