Mr. President, today Senators Coburn, Grassley, and I are introducing the Department of Defense Financial Accountability Act of 2009, which imposes hard legislative deadlines on the Department of…
Mr. President, today Senators Coburn, Grassley, and I are introducing the Department of Defense Financial Accountability Act of 2009, which imposes hard legislative deadlines on the Department of Defense to finally fix its broken bookkeeping system. This legislation is not only necessary, it is long overdue.
The bill establishes a series of deadlines, beginning next year and running through 2017, for DoD and the Services to become audit ready. In particular, it compels the Services to account for military equipment, real property, inventory, operating materials and supplies, environmental liabilities, and fund balances with Treasury. Thereafter, DOD must undergo a full, independent audit of its financial statements. If DoD fails to meet any deadline set forth in the bill, it must timely document and explain its failure to Congress.
The Department of Defense is the most massive and complex of any organization, public or private. It is entrusted with more taxpayer dollars than any other federal department or agency. For fiscal year 2009 alone, Congress appropriated over $513 billion for DoD's base budget. It added an additional $7.4 billion for DoD in this year's so- called stimulus bill.
To support its business functions, DoD has thousands of separate business systems that it has layered upon one another for decades. They are archaic, overly complex, and error-prone. They are sometimes redundant and often lack standardization. It is no wonder that since 1995, GAO has classified the Pentagon's financial management as high- risk, which makes it vulnerable to fraud and waste. Indeed, according to GAO, DoD's accounting problems cost the American taxpayer $13 billion in 2005--that's $35 million a day.
This has been a problem for decades. In 1975, the Army disclosed that it had spent $225 million over its budget because of a serious breakdown in its accounting and financial management reporting system. For fiscal year 1986, the Navy failed to disclose $58 million in real property, $1.7 billion in guaranteed loans, and data on operating leases on ships. According to the Government Accountability Office, between 1970 and 1980, the Air Force incurred numerous over obligations in amounts up to $210 million of its industrial funds. This would never be tolerated in the private sector.
This is not only about numbers and audits--this is also about the security of our troops and our nation. These broken systems affect operations and endanger our troops. Over the years, the GAO has reported that the Pentagon's poor financial management has caused pay problems for National Guard and reservists; impeded delivery of food and other essential supplies to U.S. troops; and had the Pentagon scrambling to identify and locate 250,000 defective chem-bio suits, some of which were being sold over the Internet.
Let me read into the record one account of how this impacted ongoing operations in Iraq. According to a February 5, 2006 Star Tribune news article: ``When Perry Jeffries was serving in Iraq, the computers showed that his 4th Infantry Division troops had access to drinking water, a place to shower and working wheels on their vehicles. As the first sergeant came to understand when scrounging for water, towing immobilized tanks and driving to other posts or to Kuwait to pick up needed parts, the Pentagon's bookkeeping doesn't always match reality. Jefferies saw the real-life results of what has been a visible `accounting' problem in Washington--the Pentagon's inability to keep accurate track of transactions and assets.''
Congress has already enacted several laws mandating financial management reform and the Office of Management and Budget has issued circulars on internal controls over financial reporting and financial management systems. Notably, none contain hard deadlines for an audit.
Meanwhile, DoD has repeatedly promised Congress that it would fix the problem. In 1999 and 2000, then-DoD Comptroller William Lynn testified before Congress that financial management reform was his highest priority. In fact, Mr. Lynn's successor, Dov Zakheim, set a deadline to have the Department of Defense audit ready by 2007. Under DoD's latest Financial Improvement and Audit Readiness Plan, that deadline is now 2017.
I want to recognize that the Department has tried, with varying degrees of effort, to improve financial management, but DoD auditors and GAO continue to report significant weaknesses.
I appreciate that our military is engaged in ongoing operations in Iraq and Afghanistan. That is why Senators Coburn, Grassley and I have sought to be reasonable and realistic with the deadlines. They are the same deadlines in DoD's current Financial Improvement and Audit Readiness Plan.
It has been 19 years since the CFO Act was passed requiring DoD and other departments to have an audit. It will be 2019--nearly 30 years after the passage of the CFO Act--before the Department of Defense is able to get an audit opinion, if we hold them to their current timeline. If we do not, this may never happen.
The ultimate outcome of this legislation will be the implementation of effective financial management processes, efficient business systems and strong internal controls that are essential to producing timely, reliable and useful financial information. Quality information will allow DoD to make informed business decisions and ensure accountability on an ongoing basis.
Every dollar we save through improved financial management is another dollar for our troops--for body armor, for medical supplies, for veterans care. Improved financial systems will ensure that troops in the future do not find themselves in the same straits as the 4th Infantry Division, searching for supplies that a computer says they already have.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.