“The Department of Defense is preparing for its first-ever audit.
The nation’s most sprawling and expensive bureaucracy and the world’s largest employer—has yet to undergo a formal, legally mandated review of its finances.
[It] has become a preoccupation for members of Congress intent on demonstrating their fiscal prudence even as they appropriate more than $600 billion annually to the Pentagon.
“Like Waiting for Godot,” one Democratic senator, Jack Reed of Rhode Island, quipped about the absent audit at a recent hearing. The lack of formal accountability has left unanswered basic questions about how the military spends taxpayer money, like the precise number of employees and contractors its various branches have hired. Cost overruns have become legendary, none more so than the F-35 fighter-jet program that has drawn the ire of President Trump. And partial reports suggest that the department has misspent or not accounted for anywhere from hundreds of billions to several trillion dollars.
After years of missed deadlines, the mounting political pressure and a renewed commitment from the Trump administration might finally result in an audit. For the first time last year, both major political parties called for auditing the Pentagon in their campaign platforms. That unites everyone from Hillary Clinton and Elizabeth Warren to Ted Cruz and the House Freedom Caucus. And last week, Trump’s nominee to serve as comptroller for the Pentagon, David Norquist, testified at his Senate confirmation hearing that he would insist on one whether the department could pass it or not. “It is time to audit the Pentagon,” Norquist told members of the Senate Armed Services Committee in his opening statement.
As comptroller for the Homeland Security Department a decade ago, Norquist, the brother of the anti-tax advocate Grover Norquist, undertook the first successful audits of that much younger federal agency. The Defense Department is unlikely to meet a statutory deadline to be “audit-ready” by the end of September. But Norquist said he would begin the process even if the Pentagon’s financial statements were not fully in order, and he committed to having the report completed by March 2019.
What has prevented the Pentagon from being examined this way before? The answer lies somewhere “between lethargy and complexity,” said Gordon Adams, a distinguished fellow at the Stimson Center who was the top budget official for national security in the Clinton White House. “It hasn’t been done ever,” he told me, “partly because it’s incredibly complicated to do and also because there’s not a great, powerful will in the building to do it.”
The complexity of the project dates back to the Civil War, Adams said, when the Army and the Navy set up their own separate accounting systems. The Air Force also went its own way after its creation following World War II, and the military build-ups of the last four decades scrambled the department’s financial records many times over. The explosion of military contractors since 9/11 has made scrubbing the books harder still. Adams estimated that an audit would have to account for 15 million to 20 million contracting transactions each year. The Pentagon has spent several billion dollars over the last seven years just trying to consolidate its accounting systems in preparation for a potential audit.
Despite the ramp-up costs, the project has never risen to be a top priority; the Pentagon has simply been too busy fighting wars. “The military has repeatedly argued that they need to focus on the war effort and accountability can come later,” said Kori Schake, a fellow at the Hoover Institution who previously served in a variety of national-security positions in the government. That excuse carried more weight with lawmakers in the years when the United States had hundreds of thousands of troops fighting in Iraq and Afghanistan.
Now, top Republicans like Senator John McCain of Arizona, chairman of the Armed Services Committee, are pressing for an audit with more urgency. “This has been a very public continuing failure for the Department of Defense, in large part due to the failure of senior management to make this a priority for the department and invest the necessary time and will to get it done,” McCain said at the outset of Norquist’s hearing. “This must end with you,” he told the president’s nominee.
Yet those fiscal hawks hoping that the long-awaited report will spur substantial reforms to defense spending are just as likely to be disappointed. An audit by itself won’t dismantle the “military industrial complex” that former President Dwight Eisenhower famously warned about, nor will it lead members of Congress to stop fighting to protect the bases and weapons systems that are manufactured in their districts—and the jobs that come with them. Several times in recent years, it has been congressional lobbying that has kept up production of weapons and equipment that the military no longer considers necessary.
“An audit does not raise the big issues,” Adams said. “It doesn’t tell you that we’re not getting the right bang for the buck. It doesn’t tell you anything about whether we’re getting the right forces for the threat. It doesn’t tell you how well the forces perform. It doesn’t tell you where we are wasting capability that we don’t need.”
“What it allows a member of Congress to do,” he continued, “is to look tough on defense and spend a lot on defense at the same time.”
Spending a lot on defense is what the Trump administration wants to do, even as it pledges its support for a Pentagon audit. The White House has asked Congress for a $54 billion increase in the military budget over the next year and secured about $15 billion of that in the recent spending deal. “It’s harder when there’s a big inflow of cash to focus on something like the audit,” said William Hartung, director of the arms and security project at the Center for International Policy. “There’s still that incentive to just push the money out the door.”
There’s some hope among audit advocates that the administration’s demand for more money will give congressional spending hawks leverage to insist on progress toward the accounting milestone in exchange for a budget increase. But they also don’t believe leverage should be necessary to demand that a department with a workforce pegged at more than 3 million people commit, at long last, to some basic bookkeeping. “We would never accept the argument that the Department of Education is too big and too complicated to be accountable,” Schake argued. “Why do we accept that for Defense?”