Shock and Audit: Mission Impossible

This is Part V in a Mother Jones special report on the defense budget. Click the links for Parts I, II, III, and IV.             

Is defense reform a lost cause? To answer that question, MoJo talked to defense experts, mined years of GAO reports and congressional testimony, and found that the same themes crop up again and again. Here are the main problems that defense reforms almost always fail to truly address:

• The Pentagon doesn't know where its money goes. In fact, its accounting systems are so spectacularly busted that it's impossible to even conduct an audit of the agency, which has been on the Government Accountability Office's high-risk list since 1995. Its computer programs are prehistoric and don't connect the money that comes in with the money that goes out. There is no reliable way to detect when contractors are overbilling. DOD's various agencies and services maintain 2,480 different systems to manage procurement, finances, and logistics, many of which aren't interlinked.  Often, reams of vital data must be entered by hand. All of this creates myriad possibilities for fraud and abuse. Over the past few decades, the government has spent billions to modernize the DOD's bookkeeping, but to no avail. Consequently, no one really knows for sure how much the Pentagon has spent, is spending, or should spend on weapons. Instead, the government essentially relies on information from private contractors to make budget decisions.

• A report by the Defense Science Board Task Force on Developmental Test and Evaluation found that between 1997 and 2006, 67 percent of Army systems flunked testing requirements, yet many were put into development anyway. The notion that the Pentagon should "try before it buys" has been on the books since at least the 1970s, but DOD officials and Congress have never properly enforced it. For all Robert Gates' encouraging talk about reform, he is set to make the same mistake by fast-tracking production of the F-35.
• Military brass often order up futuristic equipment that is fantastically complicated—"exquisite," in Pentagon parlance—but scientifically unproven.
• The Pentagon routinely enters into contracts based on hopelessly unrealistic cost and schedule estimates. This isn't just the contractor's fault. Military officials have a powerful incentive to sign off on lowball estimates, because if they revealed the true cost at the outset, they'd never get their dream toys.  Every once in a while Congress or the White House will demand a new office to produce independent cost estimates, but it's extremely difficult to make such initiatives genuinely independent because of the cozy relationship between Pentagon officials and the defense industry. And in recent years, this relationship got a lot cozier as the department has relaxed conflict of interest rules for Pentagon officials who move on to the private sector. In 2006, 2,435 former DOD officials, generals, and contract staff were employed by defense contractors, and at least 400 of those may have worked on contracts directly related to their former agencies.
• There are no consequences for screwing up. When contractors run years behind schedule and billions over budget, they still get paid. By law, Congress must be notified about programs that run 30 percent over budget, and programs costing more than 50 percent must be recertified or terminated, but lawmakers grant exceptions as a matter of routine.