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Reform Party of California Commentary: DoD’s Unacceptable Accounting Practices

On September 10, 2001 defense secretary Donald Rumsfeld said that the Department of Defense (DoD) was unable to account for $2.3 trillion tax dollars. Of course, the next day was September 11, 2001, better known as 9/11. Whatever fallout might otherwise have come from secretary Rumsfeld’s amazing comment simply vanished in the ensuing chaos.

Reuters investigative journalist Scot Paltrow picked this “lost” issue up. Reuters is in the midst of publishing a series of his reports on how DoD deals with its accounting and budgets.[1] Although DoD itself says its practices are clean and accurate, the agency is not audit ready and probably won’t be for quite some time. Paltrow’s research suggests that DoD errors in paying personnel is common, despite DoD’s denials. In 2011, former defense Secretary Panetta issued a directive requiring DoD to become audit ready by 2014.[2] However, given the circumstances that is unlikely to happen.

Not surprisingly, there are some personal tragedies and outrages that come with the mess. Some of our soldiers were not paid what they were owed. That sometimes forced them to sell personal belongings and get food from charities. When confronted with questions about why pay was being withheld, DoD personnel sometimes could not answer because they did not know and apparently did not have any way to find out.

Part or much of the problem seems to stem from (i) DoD’s accounting technology and (ii) the fact that working on things like accounting and budget control do not advance anyone’s military career. DoD’s Defense and Accounting Service (DFAS; http://www.dfas.mil/) is responsible for accounting and budgets, but they are using equipment that is over 40 years old, including ancient IBM mainframes. In 2010, DoD scrapped a 10 year effort to modernize it’s accounting procedures. By the time DoD abandoned its attempt to upgrade its systems, it had spent $1 billion. What benefit to taxpayers or the DoD, if any, came from that $1 billion effort is unclear.

DoD’s assertions that it knows what it is doing are simply hard to accept, given the scope of the problem and how long it has existed. Since there are no formal audit data, no one knows the real situation. Maybe that is intentional and maybe it isn’t. Regardless, Rumsfeld’s $2.3 trillion estimate came in 2001. Since then a whole lot of money has passed through the DoD. Given that, it is reasonable to guess that the amount unaccounted for in 2013 is about $3-4 trillion. Of that, $100-200 billion could have been stolen. No one knows the amounts because there have been no audits. As mentioned above, there have been no audits because the DoD cannot be audited.

So what?

It is reasonable to ask why anyone should care about a story like this. After all, there are more important issues to think about. The Reform Party does not speak for the Democratic or Republican Parties. However speaking for itself, $3 trillion is far too much to be left unaccounted for. And, the Reform Party does not consider a potential theft of $100-200 billion to be insignificant. The Reform Party does not even consider either the $1 billion lost in the upgrade attempt or the inept treatment of our veterans to be insignificant.

This situation has existed for years and presumably it is worse now than it was when secretary Rumsfeld tried to raise it in 2001. In Reform Party opinion, that represents a series of failure by two-party politics, including the politicians from both parties who have been involved. It represents a major failure by the executive branch to manage its operations. In that time there have been democratic and republican presidents. It also represents failure by a congress that always was overwhelmingly composed of democratic and republican politicians. Those politicians in congress failed in their duty to oversee DoD operations. Maybe the failure arose from congress’ perception that the problem was not worth their time or effort. Whatever the reasons, they all failed.

It is also fair to characterize this as a failure to two-party politics. If two-party politics had been more focused on service to the public interest than on service to special interests, then the situation may never have arisen. Of course, there is no way to know that. According to Paltrow, some special interests both inside the DoD and outside of government were vested in the failed status quo. If that is true and self-interests really were a significant factor in creating and maintaining this mess, then it is more evidence of how profoundly broken two-party politics really is.

The “So what?” in this is simple. If you want more fine service like this from the democratic and republican parties, simply keep voting for their politicians and sending them money. You will continue to get the fine quality service that gave us a DoD that cannot be audited and that sometimes treats our veterans like garbage. If, on the other hand, you suspect that something might be amiss, the only option is to walk away from the two parties. As argued elsewhere [3] there are several reasons why they cannot and will not change.

Footnotes:

1. Link to Scot Paltrow’s first Reuters story: http://www.reuters.com/article/2013/07/09/us-usa-pentagon-payerrors-special-report-idUSBRE96818I20130709; Julie Mason’s interview with Paltrow: https://soundcloud.com/juliemasonpolitics/scott-paultrow-from-reuters.

2. Link to Panetta’s directive: http://www.defense.gov/News/NewsArticle.aspx?ID=116014.

3. Self-interest and politics: http://reformparty.org/reform-party-of-california-essays-self-interest-vs-public-interest/; ideology and politics: http://reformparty.org/reform-party-of-california-essays-what-is-the-proper-size-and-scope-in-government/.

One Comment


  1. Oct 2, 2013
    10:02 am

    Jeff

    Good read. Could you imagine being a part of the audit on the DoD? My first guess is that it’s virtually ‘unauditable’. Walking into a regular company is difficult enough – how much more knowing beforehand of the politically charged transactions that we all know exist in the DoD?

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