GRASSLEY: Department of Defense has flunked another test of fiscal fitness

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I’m here today to report on the Pentagon’s most recent audit. Unfortunately, I don’t come with tidings of comfort and joy.

Instead, I come with tidings of bad news. The Department of Defense has flunked another test of fiscal fitness, yet again.

Last year, Congress authorized more than $700 billion dollars for the Department of Defense.

That’s a lot of money. And that’s why it’s a big deal the Pentagon is unable to account for the hundreds of billions of taxpayer dollars it spends from one year to the next.

Every dollar Congress approves for the Defense Department is crucial to our national security. We must ensure America’s sons and daughters in uniform are well-paid and well-equipped to defend this country.

And that’s why I work tirelessly to hold the Pentagon accountable. The good news is, I’m Iowa stubborn. And as a taxpayer watchdog, I won’t let go of this bone until I see results.

The bad news is, the Pentagon’s books are a big fiscal mess.

In fact, the Defense Department is the last federal agency to comply with a federal law requiring an annual audit. It took 28 years after Congress enacted a law requiring every federal agency to conduct an annual audit for the Pentagon to get its ducks in a row. Unfortunately, the results are not what it’s quacked up to be.

As required by the 1990 Chief Financial Officers Act, the bean counters at the DoD disclosed their financial assessments for fiscal year 2019 to the Office of Inspector General. Then, the IG deployed 1,400 auditors to 600 sites around the world.

They surveyed $2.9 trillion in assets and tallied $2.8 trillion in liabilities. After spending $1 billion to conduct the audit, the DoD IG was unable to issue a clean opinion.

Year after year, the Pentagon is unable to account for tax dollars coming in and tax dollars going out.

Let me clarify for everyone listening just what happens when big spenders aren’t held accountable. Tax dollars are ripe for wrongdoers to harvest. And in the sprawling bureaucracy of the Defense Department – with bases and contractors stationed around the globe – Pentagon spending is vulnerable to waste, fraud and abuse.

As a Pentagon watchdog, I’ve approached this podium nearly 50 times over my years of service here in the United States Senate to call attention to wasteful spending. I’ve written countless oversight letters and launched scores of investigations. I’ve encouraged my colleagues to ramp up their oversight work so we can work together and fix what’s broken.

The top dogs at the Pentagon have undertaken countless reform efforts. They’ve issued endless promises. They’ve testified that real solutions are underway.

And yet, the results of the fiscal 2019 audit leave this Iowa senator underwhelmed. Tax dollars are still leaking through the Pentagon ledgers like a sieve. The plumbing is broken. When the fiscal faucets are cranked wide open – at full throttle – with no internal controls welded in place to prevent leaking – tax dollars are flushed down the drain.

Over my many years of oversight, dozens of top dogs at the Defense Department and the top brass of the U.S. military have come to my office to offer explanations for wasteful spending, particularly after the Pentagon is on the receiving end of unflattering headlines.

They’ve polished their skills to dodge tough questions posed in my oversight letters. They’re also well-prepared to rationalize hundreds of billions of dollars for their budget. It’s entirely reasonable and the responsibility of every lawmaker to expect they also have the ability show us where the money goes.

I’ve approached dialogue with our nation’s military leaders in good faith. But time and again, I’ve been disappointed. The Defense Department’s inability or unwillingness to make necessary and overdue changes is unacceptable.

The buck stops here. We owe it to the American people.

The Defense Department is the largest federal agency. Over time, the bureaucrats get wrapped up in a culture of go along to get along. Some insiders take the brave step to blow the whistle on waste, fraud, and abuse. However, many are afraid to do so.

That’s why it’s so important to inject a dose of reality into the swamp. What’s really needed is a massive transfusion to change the mindset. Let me remind my colleagues. Washington is an island surrounded by reality. And when it comes to fiscal responsibility, the Pentagon operates on its own special fantasy island.

That’s why Congress can’t rubber stamp the Defense Department’s budget with no accountability for how the money is spent.

Every time a new defense authorization or funding bill is due in Congress, military leaders speak to the ever-changing threats facing our country. They plead for additional funding to defend our nation, fight our enemies, and protect our interests abroad.

They discuss the growing threats of cyber-attacks, aging or obsolete equipment, and say that cuts to their budget would hurt our men and women in uniform.

National defense is the number one priority of the federal government so Congress is understandably reluctant to deny money that military leaders say is needed. That, in turn, is the reason why earning a clean audit is shoved to the back burner at the Defense Department.

Congress and the Pentagon need to reach an understanding – fiscal accountability and military readiness are not mutually exclusive. It’s not an either/or scenario. Earning a clean bill of fiscal health would strengthen military readiness and boost support for necessary increases to defense spending in Congress and among the American people.

Money gets “lost” at the Defense Department. It’s unreasonable to concede that it’s okay for military inventory to vanish into thin air. It boils down to sloppy bookkeeping and antiquated accounting systems that can’t generate reliable transaction data.

The problem starts at the top and filters down throughout the five corridors of the Pentagon.

Let’s consider the recent debacle with the TransDigm Group. In February, the Defense Department’s Office of Inspector General released a report on spare parts the Pentagon purchased from TransDigm. The results of that report exposed the rinse-and-repeat fiscal shenanigans corroding the accounting systems at the Pentagon.

In the report, the IG analyzed 113 contracts between January 2015 and January 2017. It reviewed 47 spare parts the Defense Department purchased from TransDigm. In that window of time, TransDigm overcharged the Defense Department by more than $16 million.

I’ll got out on a limb and suggest Americans would rather spend $16 million on our men and women in uniform rather than overpaying for spare parts rip-offs to a defense contractor.

Congress can’t sign blank checks to the Defense Department. We must work to ensure every dollar is present and accounted for. The nation’s strongest military in the world is managed by a Defense Department where taxpayer dollars vanish without explanation, without receipts, and without accountability.

Over the years, I’ve collected a laundry list of Pentagon waste, fraud, and abuse. From $436 hammers, to $640 toilet seats, $117 soap dish covers and $999 pliers. Most recently, I’ve exposed $1,200 re-heatable coffee cups, and $14,000 toilet seat lids. The dirty laundry just keeps piling up and soaking the taxpayer.

These wasteful expenditures represent the tip of an iceberg. The simple truth is the Defense Department can’t keep track of – or doesn’t seem to care – where taxpayer dollars are spent. Internal controls are weak or non-existent.

And that’s been reinforced by this second audit for which the DoD IG can’t give a clean opinion.

The Defense Department is the only agency that hasn’t been able to deliver a clean audit, despite spending billions of dollars to modernize its accounting systems.

All that investment hasn’t produced better systems.

No one, except me and a few others, ever talk about this.

But it needs to be talked about. Deliberately and often.

Congress can’t allow the Defense Department to sweep this issue under the rug. Year, after year, after year.

The TransDigm fiasco is just one example. Price-gouging has been going on for years. At the expense of the taxpayer and military readiness. Top-level managers know all about it. But they aren’t doing a dog-gone thing to fix it.

People must be held accountable for missing receipts, for lost financial information, for wasteful spending approvals, for questionable contracting agreements, and every other abuse of power that leads to more taxpayer dollars being squandered.

American households across the country scrutinize their spending and keep tabs on their bills. The Defense Department should approach spending no differently.

That’s why I pushed for an amendment to the latest defense authorization bill that would have required the Pentagon to keep better track of its contracts, and report to Congress. While this amendment was ultimately not included in the bill, I will continue to push for more accountability.

Throughout my years of oversight, Pentagon officials claim they want to reverse the cycle of cost-overruns, to clean up the books, and to hold people responsible. And yet, it never happens. Although I’m encouraged by the conversations I’ve had so far with Defense Secretary Esper, the proof is in the pudding.

From one administration to the next, it’s the same old story. Business goes on as usual. From the top of the chain of command to the rank-and-file, there’s a pervasive mindset that assumes no one is watching and that no one cares.

For four decades, this senator has been watching. And this senator cares. I am disgusted each time I discover another example of wasteful spending.

So, I’m here today, once again, to ask my colleagues in both the Senate and the House of Representatives, to join me in my crusade to stop wasteful spending at the Pentagon.

There’s a saying that says: No Guts, No Glory. Well, wasteful spending is gutting our military readiness and goring the taxpayer. There’s no glory in that.

People might wonder why I bother. I’ve fought fiscal mismanagement at the Defense Department for four decades. I’ve launched investigation after investigation and come to the floor of the Senate to talk until I’m blue in the face.

Billions of dollars have been poured into a decades-long effort to right the fiscal ship at the Defense Department. The Pentagon has shelled out billions for several hundred partial audits, two complete audits, and endless technology updates to modernize its IT and accounting systems.

And yet, no one can tell us when a clean opinion might be possible. How can this be?

Nearly 30 years of effort and no solution. The DoD can develop the most advanced weapons the world has ever known.

But it can’t seem to deploy something as simple and common as an accounting system that’s capable of capturing payment transactions and generating reliable financial data.

That’s why it’s a cakewalk for crooks to rip into the Pentagon’s money sack from both ends and use a front end loader to freeload their way through this money pit. Without a clean audit on the foreseeable horizon, there’s no evidence to catch anyone’s hands in the Pentagon’s cookie jar.

The only way we will root out fraud and wasteful spending is by knowing where the money is being spent. That brings up back to square one: We need a clean audit and reliable accounting systems.

Like I mentioned earlier. I’m Iowa stubborn. And by God, I’m willing to work with my colleagues and go toe to toe with any administration. I’ll work as long as it takes for us to see eye to eye to hold the Defense Department accountable, once and for all.

Author: Press Release


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