The Bridge: The Pentagon Can’t Keep Track of Its Money

Delivered to our subscribers on Thursdays, the new version of The Bridge is an email exclusive product that wades through the jargon of our government and gets straight to the key insights. Sign up here.

Too much money, too little oversight.

The Senate sent the annual defense policy bill to President Joe Biden’s desk last week, approving a defense budget $45 billion over what the Biden administration requested. Not only do we believe the Pentagon’s budget is bloated, we’re also deeply troubled by the Defense Department’s inability to spend its incredibly large budget efficiently. And Congress shouldn’t keep throwing more money at an agency that can’t spend those funds well.

In this edition:

• The Pentagon can’t even pass an audit
• Lawmakers encourage out-of-control spending
• A glimmer of hope for accountability

This year, the Pentagon failed its fifth audit in a row. This means that the Pentagon cannot keep track of the money it spends. All other federal agencies have passed their audits each year since 2013, and yet for fiscal year 2021, auditors were unable to account for a whopping 61% of the Pentagon’s assets. I cannot overstate how problematic that is.

Unaccountable

Because the Pentagon cannot keep track of the money it’s spending, it’s impossible to know just how much waste, fraud, and abuse there is and where it’s taking place. And without that crucial information, it’s incredibly challenging to hold the Pentagon accountable.

We do know, of course, that there is lots of waste at the Pentagon — Spurthi wrote about the billions of taxpayer dollars burned developing the troubled F-35 fighter jet, and my colleague, Center for Defense Information Analyst Julia Gledhill, has written about how the Pentagon massively overpays for spare parts. Those are just two examples of Pentagon waste. So imagine just how much we don’t know about if we can’t account for over half of the Pentagon’s assets.

Read: Lawmakers work to Prevent Military Price Gouging

To be clear, if the Pentagon does pass an audit, that will not mean it is spending taxpayer dollars well. It would just give watchdogs the information they need to identify the waste, fraud, and abuse in the agency’s spending.

Mystery warehouse

One example from 2018 illustrates just how beneficial an audit can be. During the 2018 Pentagon audit, the Navy discovered a warehouse they didn’t know existed. The warehouse contained $126 million in aircraft parts the Navy needs to maintain and repair several aircraft, including ones that had not been in service for more than a decade.

It's a shocking story that certainly has me wondering what other stockpiles the Pentagon has lost track of that haven’t been discovered in an audit.

Out-of-control spending

I also want to tell you about one of the many ways in which lawmakers on Capitol Hill enable the Pentagon to spend so much money with so little accountability. Congress requires the Pentagon to submit “wish lists” each year with items apparently in need of funding that didn’t make it into the official administration budget request. This year, the Pentagon actually submitted two wish lists , with the second one coming right at the very end of negotiations on the defense policy bill.

Because the request came at the last minute (and because congressional leaders held final negotiations about the defense policy bill behind closed doors), debate was nearly impossible, as my colleague, Julia Gledhill, wrote in a recent op-ed.

No other federal agency is required to submit these “wish lists,” and yet the Pentagon submitted two this year, totaling $49 billion. (Just to put that in context, this is almost double the entire 2023 budget for NASA.) This process hardly encourages the Pentagon to get its financial house in order.

As Julia put it, “Who writes a second letter to ask for more when they’re already on the naughty list?”

Read Julia's op-ed in Breaking Defense

Progress toward accountability 

It’s irresponsible for lawmakers on Capitol Hill to authorize such massive increases in Pentagon spending when they don’t even know what the Pentagon did with the money they approved last go-around.

Luckily, there have been a couple of promising developments recently when it comes to Pentagon accountability.

This month, the Senate confirmed a permanent watchdog to oversee the Defense Department for the first time in nearly seven years. Up until then, the Environmental Protection Agency inspector general had been splitting his time between running the EPA and Defense watchdog offices. It’s easy to imagine that a full-time watchdog will be more effective than a part-time one.

The confirmation vote came shortly after my colleagues sent a letter to Senate leaders urging them to hold a vote. We’re hopeful that the new Defense Department inspector general, Robert Storch, will bring greater oversight to a department desperately in need of accountability and help the Pentagon finally pass an audit.

Lawmakers on Capitol Hill also introduced legislation last week to ban Pentagon “wish lists.” Undoing this practice would encourage robust debate on the Pentagon budget in Congress and promote some discipline at the Pentagon when it comes to spending requests.

The Pentagon is a terrible steward of taxpayer dollars, and we’re glad to see Congress taking steps to improve accountability for defense spending. Hopefully, next year, Congress will take additional steps to curb the out-of-control Pentagon spending and stop perpetuating this cycle of waste, fraud, and abuse.