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Pentagon's mess hurting U.S. troops
by DAVID WOOD NEWHOUSE NEWS SERVICE
Detroit Free Press
July 23, 2004

WASHINGTON -- The Pentagon's finances are in such a shambles that no one knows precisely how much of the $450 billion that the Defense Department spends each year goes astray -- or what happens to the bills it pays or the equipment it buys.

SENATE APPROVES MORE PENTAGON FUNDING WASHINGTON -- The Pentagon would get an additional $25 billion for wars in Iraq and Afghanistan and 7 percent more for the rest of its programs in a $417.5-billion defense bill the Senate approved 96-0 on Thursday.

With money for 39 more Army Black Hawk helicopters, a Virginia-class attack submarine and a 3.5-percent raise for the troops, the measure for 2005 illustrated strong wartime support for the military.

House passage is expected.

The Pentagon will need an additional $12.3 billion through September to pay for missions in Iraq and Afghanistan and its worldwide effort to fight terrorism, congressional auditors have estimated.

Administration officials said that by moving money among accounts, they expect to have enough through September.

Congress provided $87 billion last November for Iraq and Afghanistan. This year, the White House began insisting it would need no extra money until next year. Under congressional pressure, it requested $25 billion in May to use beginning next October, when the government's new budget year begins.

Federal auditors poring over the Defense Department's conflicting financial statements, missing data and accounting discrepancies said they cannot provide an accurate check of the Pentagon's books -- for the seventh consecutive year.

The department is wasting or losing billions of dollars annually, said auditors with the congressional Government Accountability Office.

Although the Pentagon has had a problem with misspending or misplacing money for decades, in the midst of a war, the GAO and outside experts said, the problem is directly hurting soldiers in combat.

"This is no longer a matter that you can shunt aside" as unavoidable inefficiency, said Cindy Williams, a research scientist at the Massachusetts Institute of Technology and an expert on defense budgeting. "This is a problem that is affecting soldiers every day, as well as the military's ability to conduct combat operations."

The Pentagon lost $1.2 billion worth of the war material it shipped to Iraq, according to a July 8 report by the GAO, formerly called the General Accounting Office.

Among other recent issues the GAO turned up:

*Unpaid soldiers: Pay for National Guard soldiers deployed to fight in Iraq was so mismanaged that many soldiers and their families went unpaid.
*Bad sales: A Pentagon agency mistakenly sold GAO agents equipment that could be used for making biological weapons.
*More bad sales: Another Pentagon agency mistakenly sold chemical warfare suits on the Internet for $3 each while a separate office was struggling to fill shortages with new suits it bought for $200 each.
*Insurance glitches: Military hospitals have failed to collect tens of millions of dollars from insurance companies on behalf of their patients.
*Poor records: Because of inaccurate records, ship repairs ordered by the Navy couldn't be completed because it lacked the parts.

Accounting errors and omissions are so common that the Pentagon has had to hire outsiders to fix them, at a cost of $34 million in 2002, the most recent figure available.

The Pentagon's budget mess, U.S. officials acknowledge, stems in part from the hundreds of competing agencies, services and bureaucratic fiefdoms.

So far, the Pentagon has discovered that it is operating with more than 4,000 separate accounting systems. Many are incompatible, meaning some purchase orders cannot be tracked.

As a result, none of the military services can pass an independent financial audit, David Walker, comptroller general of the United States, told Congress earlier this year. The Pentagon's accounting systems are "fundamentally flawed," the GAO said.

The agency said a key problem is "a lack of sustained leadership." Top officials change every three or four years. Another problem is "cultural resistance to change" inside defense bureaucracies, the GAO said. Thus, Defense Secretary Donald Rumsfeld's $200-million, 3-year reform initiative has had no significant impact, it found.

"Weaknesses are being addressed," Linda Springer, of the White House budget office, said during a July 8 congressional hearing. "Progress is being made, but it is important to recognize that long-standing issues are not easily remediated."

Lawrence Lanzillotta, undersecretary of defense for management reform, told the committee that "we are making progress" but that it "will take years" to fix the problems.

The outflow of unaccounted cash is "not a trickle of coins -- it's a deluge of dollars," said Sen. Peter Fitzgerald, R-Ill. "This money should be equipping our troops in the war on terror, or securing our homeland from attacks, instead of disappearing into the abyss of government balance statements."

Congress is just finishing work on next year's budget for the Pentagon. But nothing in the legislation appropriating $418 billion for the 2005 fiscal year, which begins Oct. 1, demands more strict accounting or requires that accurate reports be submitted before the Pentagon gets the money.

Contact DAVID WOOD at David.Wood@newhouse.com.

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