by Deb Cupples | According to Congressional Quarterly, Pentagon officials want a $450 billion funding increase 
over the next five years. Certainly, a well-funded military is a good idea.
At the same time, Pentagon (a.k.a, Defense Department or DoD) officials should more wisely use existing funds before we taxpayers throw billions more their way.
What am I talking about? Two things: 1) DoD's failure to adequately keep track of things our tax dollars have bought; and 2) DoD's abysmal record of handling government contractors -- which goes back a long and wasteful way.
Custodial Failures
In December 2007, CBS News reported that about $1 billion worth of military equipment was simply unaccounted for. Among other things, Pentagon auditors audited a sampling of $643 million worth of equipment contracts but found audit trails for only $83 million's worth of equipment. Also, auditors simply could not account for 12,712 out of 13,508 weapons, including machine guns and grenade launchers.
In August 2007, the Washington Post reported 190,000 weapons went missing in Iraq back in 2004-05. That's about 30% of the weapons we taxpayers provided to Iraqi security forces. Poof. The weapons included AK-47s and grenades.
It's not just expensive equipment that slips through the cracks. In 2007, Vanity Fair reported that we taxpayers sent about $12 billion to Iraq, about $9 billion in cash is unaccounted for. Again, Poof!
Contracting Failures
For years, the Government Accountability Office (GAO) has begged the DoD to more accurately assess its needs and to negotiate taxpayer-friendly (as opposed to contractor-friendly) contracts. 'To no avail.
A GAO report from last year found that DoD has trouble getting its money's worth from contractors, partly because DoD does not adequately monitor contractors. Apparently, DoD had cut its staff, hired contractors to do their work, then found itself without enough staff to properly monitor the contractors.
Below are just four of many examples of what unmonitored contractors might get up to:
A Pentagon report found that Halliburton/KBR overcharge us taxpayers $108 million for importing fuel into Iraq. KBR asked the Pentagon to redact the report before publicizing it--and the Pentagon did. [See the redacted report: to see what was redacted, click on the blackened text].
Halliburton subsidiary KBR hired a subcontractor to provide meals for troops in Kuwait: Army auditors eventually found that dealing directly with the subcontractor would save the taxpayers $31 million a year. Translation: just for playing middleman, KBR added millions each year to the taxpayers' tab.
From 1994-2007, the U.S. Navy gave $885 million to a contractor to build a hybrid submarine for Navy SEALS. As of May 2007, the sub still didn't work. The GAO said that Navy officials simply did not hold the contractor accountable.
Army auditors found that Halliburton/KBR got paid $1 billion for "non-credible" costs (i.e., without providing receipts or other documentation).
Those three, itty-bitty examples total more than $2 billion of wasted taxpayer funds -- money that could have instead been spent on giving our troops raises, giving them adequate health care, or giving them the equipment they need.
A May 2007 GAO report addresses whether DoD contractors cost us taxpayers more than if government employees were providing the same services. DoD officials said contractors were a better deal, but the GAO found DoD's claim questionable because 1) DoD did not have a good system for tracking and assessing costs, and 2) DoD's data "included inaccurate and unsupported costs."
And I haven't even addressed contractor-fraud cases yet, but I'm about to.
Contractor Fraud Cases
Contractor fraud is an old issue, which is why Congress passed the False Claims Act (FCA) in 1863. The FCA allows people to sue (on the government's behalf) contractors that defrauded the government. Under Qui Tam provisions, the person bringing suit gets a cut of the money the government recovers from the suit.
Between shoddy work and over-charging, defense contractors have seen their share of Department of Justice (DoJ) contractor-fraud lawsuits. Below are a few of many, many examples:
In 2006, General Electric (and 2 subcontractors) paid $11.5 million to settle a government suit alleging that GE had sold defective blades for the engines of U.S. military planes and helicopters.
In 2003, Northrop Grumman settled for $80 million government fraud suits alleging the following: 1) that a Northrop subsidiary had overcharged the government for research and design work, and 2) that Northrop knowingly sold the Navy unmanned aerial vehicles that had defective parts.
In 2000, Boeing settled a fraud suit for $54 million after allegedly putting defective gears in Chinook helicopters sold to the Army. One Chinook crashed during a 1988 mission in Honduras, killing five service men. Another crashed in Saudi Arabia during Operation Dessert Shield, injuring 2 people. In 2000, the Chinook fleet was partially grounded.
In 1998, the DoJ sued Hunt Building Corp. for $45 million after Hunt allegedly built uninhabitable housing at a South Dakota Air Force base. According to Texans for Public Justice, Hunt settled the case for $8.8 million.
In 1997, the Pratt & Whitney Group settled a government suit for $14.8 million after allegedly conspiring to funnel $10 million in U.S. military aid into an Israeli Air Force officer's personal slush fund.
A settlement doesn't necessarily indicate guilt. In cases where a company's conduct was fraudulent, it's possible that the company settled for far less than the company had fraudulently taken from us taxpayers.
Wrapping up here: before we taxpayers grant funding increases, Pentagon officials should:
1) Beef up accounting systems, so as to keep better tabs on the expensive equipment and supplies that we taxpayers furnish; and
2) Set up better systems for negotiating contracts and monitoring contractors.
By cutting and preventing waste, the Pentagon could get far more bang for our bucks -- and would likely need a smaller increase over the next five years.
Related Buck Naked Politics Posts:
* Congress Probes the High Cost of Private Contractors
* $23 Billion Lost in Iraq Due to Contractor Fraud or Mismanagement
* Iraq Contacts: $7.8 Billion Spent, Little Evidence of Finished Work
* Contractor Get's $30+ Million but Didn't Build Anything
* Pentagon Spends $885 Million, Hybrid Submarine Still Doesn't Work
* Contractor Takes Millions, Fails to Finish Buildings
* Contractor Supplies Bad Ammo, Gets Hundreds of Millions
* Contractors Offering Bribes & Kickbacks to Army Personnel?
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