Pentagon still at risk for fraud, misspending, watchdog warns

The Pentagon is good at running the military but bad at running the logistics, human resources and technology inside one of the world’s largest businesses, a government watchdog warns.

In fact, despite pouring $379 million over ten years into developing a “business enterprise architecture” to address prior concerns about its spending, Pentagon officials can’t show that the plan is being used, according to the Government Accountability Office, Congress’ watchdog agency.  

The Pentagon’s latest reports lacked performance measures, needed financial resources and time estimates for many of its business undertakings, the GAO said.

“DOD is one of the largest and most complex organizations in the world,” GAO reported. “In support of its military operations, the department performs an assortment of interrelated and interdependent business functions, such as logistics management, procurement, health care management, and financial management. Yet, we have previously reported that the DOD systems environment that supports these business functions is overly complex and error prone.” 

The Pentagon has a large business side to support its warfighting capabilities, and its headquarters in Arlington, Va., remains the largest office building in the world by volume of floor space.

Twenty years ago, in 1995, the GAO first cautioned that DOD business programs were at “high risk” for fraud.  Ten years later, the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 required the Pentagon to develop a framework for improving the business side of its duties, including better reviewing of high-cost programs and equipment purchases.

But today, DOD officials can’t show they’re using the framework. The problem could be compounded by the fact that the Office of the Deputy Chief Management Officer has been slow to fix issues related to human resources and needed hiring, the GAO said.

“Many of the positions needed to execute the department’s responsibilities remain unfilled,” investigators said, noting that the office has yet to study exactly what skills potential employees would need for many hiring positions.

Pentagon leaders largely disagreed with GAO, saying that recent improvements made are much greater than congressional investigators are giving credit.

“Every day the Department successfully operates one of the most complex and diverse business enterprises in the world, and DOD leaders routinely take deliberate actions to improve how the Department conducts its business,” said a response from Elizabeth McGrath, the Deputy Chief Management Officer.  “Rather than the slow improvement portrayed in the draft report, these changes have resulted in significant progress.”

McGrath warned against implementing a one-size-fits-all policy to Pentagon business management, noting that different offices and services have different needs and demands.

The business side of the Pentagon “is a complex, interconnected environment that is unprecedented  in size and critical to the Department’s overall national security mission,” she said.

The potential for mismanaged money is high.  For its 2013 budget, the Pentagon requested $6.3 billion for its business systems, and another $16.4 billion for IT infrastructure investments.

In fact, out of the 30 business management programs across the government GAO investigators have flagged as high risk, the Pentagon is connected to half of them, either on its own or in partnership with another agency.

Investigators want the Pentagon to better follow the business plan it has developed in order to improve the handling of human resources and ensure oversight of the business side of the military.

“Until the department takes such needed steps, it is unlikely that its approximately 1,200 business system investments…will be managed in an effective manner that maximizes mission performance while minimizing or eliminating system overlap and duplication,” the GAO said.

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