The Bunker: Pentagon Bookkeeping Bloopers!

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This week in The Bunker: keeping track of the nearly $1 trillion the Defense Department gets from U.S. taxpayers every year has never been as high as it should be on the Pentagon’s priority list, and more.

“FOLLOW THE MONEY”

It’s what makes the Pentagon go ‘round

Deep Throat never actually told Bob Woodward to “follow the money” during their clandestine chats a half-century ago in that Virginia parking garage not far from the Pentagon. But those who follow the Defense Department know such guidance is critical to getting the biggest bang for the buck. Yet following the money in and around the Pentagon is even tougher than finding common sense on Capitol Hill. Lately we’ve been learning just how far we’ve got to go to help ensure U.S. taxpayers are getting their money’s worth:

CAPE FEAR

Pentagon budget shop could be collateral damage

The House Armed Services Committee wants to shutter (PDF) a tiny Pentagon office that keeps track of how and where the Defense Department is spending our money. The panel reportedly believes the Cost Assessment and Program Evaluation (CAPE) office isn’t sufficiently pliable when it comes to paying attention to lawmakers.

Now granted, Major League Pentagon shops like the Army, Navy, Air Force and Marines often butt heads with Congress, but lawmakers don’t try to abolish them. Yet CAPE, a 160-strong band of in-house Pentagon bean-analyzers, is puny and easier to intimidate. It has been around, in one form or another, for more than 60 years. Its mission is its name: CAPE assesses programs and their costs, trying to evaluate how to get the biggest bang for the buck. When Congress steps in to shut it down, you know it’s hitting a nerve.

Turns out, the House Armed Services Committee has got its nosecone out of joint because the Pentagon’s 2024 budget proposal doesn’t fund the 31 amphibious ships in the future fleet that the lawmakers want. The Navy prefers to fully fund a slightly smaller armada, at least temporarily, to avoid creating a hollow fleet that’s bigger but weaker. “House Republicans viewed the lack of ships in the five-year projections as counter to the guidance they gave” the Pentagon last year, Defense One reported June 16. The House panel is basically charging CAPE with mutiny, or at least insubordination, and wants it to walk the plank.

Each year, as the Pentagon assembles its budget proposal, each CAPE analyst reviews about $30 billion in defense spending (3% of the total defense budget) and recommends shifting about $1.5 billion of that to other priorities. “Perhaps understandably, those who benefit from the status quo are often uncomfortable with this detailed scrutiny by a team of highly skilled and independent analysts,” three former CAPE chiefs say. “But it is indispensable to have a smart and effective defense in a rapidly changing world.”

On June 22, the House panel ordered CAPE dispatched to Davy Jones’ locker. But the very next day, the Senate Armed Services Committee threw CAPE a life preserver. “The Office of Cost Assessment and Program Evaluation (CAPE) is vital to U.S. defense acquisition,” the panel said (PDF), “and requires new responsibilities for CAPE to improve the methods and effectiveness of its analyses.”

This, ahem, slight difference of opinion will be ironed out over the summer, as members of both houses meet to draft a single 2024 defense authorization bill for the president’s signature.

MISSING MONEY

A sudden $6.2 billion more for Ukraine

Apparently, the Pentagon doesn’t have its own version of the Kelley Blue Book, that recognized authority on what used and new vehicles are worth. If it did, it would know the value of the stuff the U.S. has been sending to Ukraine to battle Russia’s invasion.

Until recently, the Pentagon thought it had approved sending about $40 billion (PDF) in military gear to Kyiv. But it actually has roughly OK’d only $33.8 billion, 15% less. “During the department’s regular oversight of our execution of presidential drawdown authority for Ukraine, we discovered inconsistencies in equipment valuation for Ukraine,” Pentagon spokeswoman Sabrina Singh explained June 20. “In a significant number of cases, services used replacement costs rather than net book value, thereby overestimating the value of the equipment drawn down from U.S. stocks and provided to Ukraine.”

Bottom line on this bottom line: the Pentagon pegged the cost of some weapons bound for Ukraine from Pentagon stockpiles as the cost of replacing them with the latest models, and not accounting for their age, depreciation, and condition (and, as The Bunker noted two weeks ago, some of that equipment was in sad shape). This means the Pentagon can send $6.2 billion more to Ukraine without getting prior congressional authorization. No word yet on what weapons were over-valued, or what Ukraine might get with the newly found money.

CAN’T COUNT IT ≠ CAN’T ACCOUNT FOR IT

Pentagon sums still don’t add up

A bipartisan group of senators is proposing (PDF) that all components of the Defense Department need to pass an audit by October 1, 2025, or start paying the piper. Frustration is building on Capitol Hill over the Pentagon’s persistent inability to track where its money is going. Last fall, it conceded it had failed to pass its fifth audit in a row, which is particularly depressing once you know the Defense Department has conducted only five audits. That latest audit, which cost $218 million, couldn’t account for 61% of the Pentagon’s assets. Only nine of the 27 mini-audits of the assorted Pentagon departments and agencies that make up the Defense Department got a so-called “clean audit.”

“That is absolutely unacceptable,” Senator Bernie Sanders (I-VT), lead sponsor of the bill, said June 21. “If we are serious about spending taxpayer dollars wisely and effectively, we have got to end the absurdity of the Pentagon being the only agency in the federal government that has never passed an independent audit.” House members have proposal similar legislation (PDF).

At least some members of Congress, which has spent decades feeding carrots to the Pentagon, are brandishing a stick: the legislation would require any part of the Defense Department with a dirty audit to return up to 1% of its budget back to the U.S. Treasury.

Well, maybe a twig.

WHAT WE’RE READING

Here’s what has caught The Bunker’s eye recently

Sink or swim?

The Navy’s inability to develop warships on time and budget represents an opportunity for a major retooling of U.S. maritime strategy, Dan Grazier of the Project On Government Oversight argued June 21.

After-action report

Yale historian and European scholar Timothy Snyder details what he sees as the key lessons from Yevgeny Prigozhin’s aborted march to Moscow. “Often there are plots without a coup,” he wrote on his Substack page June 25. “This seemed like a coup without a plot.”

Post-uniform gigs

Senators introduced legislation to clamp down on retired U.S. military personnel going to work for foreign countries, the Washington Post reported June 20, following up on work done by the newspaper and POGO’s Julienne McClure.

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