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Pentagon's Finance Management "An Embarrassment"

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    Pentagon s Finance Management An Embarrassment A New Report Says the Pentagon s Finances are in Disarray By Drew Brown Knight Ridder Friday 12 May 2006
    Message 1 of 1 , Jun 3, 2006
      Pentagon's Finance Management "An Embarrassment"
      A New Report Says the Pentagon's Finances are in Disarray
      By Drew Brown
      Knight Ridder
      Friday 12 May 2006

      Washington - The Defense Department's accounting practices are in
      such disarray that defense officials can't track how much equipment
      the military owns, where it all is or exactly how they spend defense
      dollars every year, according to a report Thursday by a
      nongovernmental group.

      The report by Business Leaders for Sensible Priorities called the
      Pentagon's financial-management practices "an embarrassment" that
      wouldn't pass muster in the private sector.

      "Today, if the Defense Department were a private business it would
      be involved in a major scandal," said Kwai Chan, a former top official
      with the Government Accountability Office and the report's author.

      A Defense Department spokesman said officials hadn't had time to
      examine the report. "It would be inappropriate for me to comment on
      something that we have not had time to adequately analyze," Lt. Col.
      Brian Maka said.

      The nonpartisan group, made up of more than 600 current and
      retired business executives from U.S. companies, thinks that federal
      spending priorities are undermining national security. The group wants
      Congress to shift money from the defense budget to spend more on
      schools, health care, energy independence, deficit reduction and other

      Financial waste at the Pentagon lends credibility to defense
      analysts who argue that billions of dollars are wasted every year on
      weapons "that are irrelevant to fighting terrorists and the Iraq war,"
      Chan said.

      The United States plans to spend $441 billion on defense this
      year, excluding war costs, which are expected to top $120 billion in
      2006. That's an increase of about 48 percent since 2001, Chan said.
      U.S. defense spending this year will reach its highest level since the
      Korean War.

      The Bush administration says the money is needed to fight the war
      on terrorism, but some analysts estimate that more than $60 billion in
      fiscal year 2007 will be spent on weapons originally designed to fight
      the Soviet Union, including the F-22 stealth fighter, the
      Virginia-class submarine, the V-22 Osprey and ballistic-missile
      defenses. The Soviet Union collapsed in 1991.

      Nearly all the information in Chan's report came from government
      documents. A report this year from the White House's Office of
      Management and Budget found that 20 out of 23 defense programs that
      auditors looked at - including shipbuilding, missile defense, depot
      maintenance, housing, health, air, land and ship operations - didn't
      use strong financial-management practices.

      In reports to Congress in recent years, the GAO found:

      94 percent of Army National Guard and Army Reserve soldiers
      experienced pay problems in 2004.

      $100 million that could be collected annually from defense contractors
      who underpaid federal taxes. The federal government had collected less
      than 1 percent of that - less than $700,000.

      $1.2 billion in Army supplies shipped to Iraq that couldn't be
      accounted for. As a result, military units ended up short on "tires,
      tank tracks, helicopter spare parts, radio batteries and other basic

      $35 billion worth of excess supplies and equipment, plus an inability
      to track the movement of supplies.

      $100 million in airline tickets that were never used.
      Since 1990, Congress has required government agencies to apply the
      same "financial discipline" as private companies, but the Pentagon
      hasn't yet balanced its books under acceptable accounting standards.

      Much of the problem stems from the sheer size of the Defense
      Department and the extent of its activities. There are more than 1.2
      million people in uniform. More than 20,000 people work at the
      Pentagon alone.

      Lawrence J. Korb, who was a Pentagon official in the Reagan
      administration, said Defense Secretary Donald H. Rumsfeld has said he
      could save $20 billion a year alone by overhauling the Pentagon's
      procurement and business practices.

      "And I'm saying to myself, OK, why doesn't he do it," said Korb,
      who's now a defense analyst at the Center for American Progress, a
      Washington public-policy research group.

      The Defense Department's Office of the Inspector General has
      pronounced the department "un-auditable," Chan said. Officials have
      told Congress that the Pentagon is trying to streamline more than 250
      accounting systems it used a decade ago into several dozen.


      The report can be found online at sensiblepriorities.org.



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