Wednesday, April 30, 2008

Bean Counting Gone Horribly Wrong

Put this on your outrage pile...

Since 2004, the Pentagon has spent roughly $16 billion annually to maintain and modernize the military's business systems, but most are as unreliable as ever—even as the surge in defense spending is creating more room for error. The basic defense budget for 2007 was $439.3 billion, up 48 percent from 2001, excluding the vast additional sums appropriated for the wars in Iraq and Afghanistan. According to federal regulators and current and former Pentagon officials, the accounting process is so obsolete and error prone that it's virtually impossible to tell where much of this money ends up. While the department's brass has made a few patchwork improvements, billions are still unaccounted for. The problem is so deeply rooted that, 18 years after Congress required major federal agencies to be audited, the Pentagon still can't be.

There are some wars going on--you'd think we'd see some cooperation:

Preoccupied with protecting their turf, the Army, Navy, Air Force, and Marines continue to maintain separate, increasingly outdated systems that can't talk to each other, trace disbursements, or detect overbilling by contractors. At the Indianapolis facility, as at the Defense Department's four other main U.S. centers for financial operations, accounting programs under the same roof can't share information without extensive jury-rigging, as though contracts, payments, and accounting had nothing to do with one another.

"In the Defense Department, what you have now are material weaknesses that are in every single area, in every part of the department, so deep and so wide you do not really have any way of figuring out where money is being spent," says Linda Bilmes, a federal budget expert at Harvard's Kennedy School of Government.

You have to read all the way up to page three to find this little nugget:

The Indianapolis center and other back offices are supposed to comply with a congressional mandate to track how much of each year's emergency appropriations are spent on the Bush administration's declared global war on terrorism. But a former senior official from the Indianapolis center, who requested anonymity, says that its outmoded systems can't be tweaked to produce such data. Instead, it's done offline by workers combing through computer data and pulling out what they think should be attributed to the war on terrorism. Their guesswork, the source says, is probably way off.

The dysfunction stems in part from the traditional independence of the military branches. Over several decades, they have cobbled together separate processes for identical functions, resulting in the uncontrolled growth of more than 4,000 accounting, financial, and inventory systems. Their names form an acronym soup: CAPS, Stanfins, IAPS, Somards, Samms, Mocas, HQARS, Stars. The department's primary system for handling weapons contracts and payments dates from 1958; a costly attempt to replace it was abandoned in 2002 as a failure. The Army's notoriously inaccurate main accounting system was created in 1966.

I would hasten to add that none of this is by accident. I happen to know there are certain DoD agencies that have sophisticated systems that are pretty complex. They're up to date, have vast capabilities, and use cutting edge technology. Whatever boondoggle exists in Indianapolis is largely an intentional design, combining the best efforts of thousands of planners to hide the money they're spending and keep Congress off of their turf.

The first task of the next Secretary of Defense is to designate the system that they're going to use, and give everyone two fiscal years to transition. And then every single computer, mainframe, desk lamp and lightswitch in Indianapolis gets shut off, permanently. Failure to do that means an instant 25% cut in funds for each year until the DoD is in compliance with Congress. Fix it, make everyone use it, and then shut that old system down forever.

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