Dallas Morning News

The U.S. military loves acronyms. JDAM, AWOL, GI and CENTCOM all are part of the Pentagon lexicon. Yet, despite an increasingly tight federal budget and American taxpayers’ desire for fiscal responsibility, the military still doesn’t get GAAP.

Our overwhelming superiority in the Iraq war proved once again that the U.S. military is better educated, better trained and better armed than any other fighting force on Earth. Its planes, vehicles and ships can drop precision bombs on practically any target by using guidance systems steered by satellites. So, why can’t the Defense Department do the easy stuff – like balance its books?

Thirteen years after Congress passed the Chief Financial Officers Act of 1990 – a law that was designed to assure that every federal agency was accountable for every dollar it spends – the Pentagon is no closer to providing a reliable set of auditable financial statements than it was during the administration of President Bush’s father.

Every year, the Defense Department’s inspector general looks at the books. And every year, the inspector general says there are “major deficiencies” that prevent it from certifying the Defense Department’s financial statements.

On April 8 – exactly one week before taxpayers sent their income tax filings to the Internal Revenue Service – David M. Walker, head of the General Accounting Office, told a House subcommittee that the Defense Department has “an inability to compile financial statements that comply with generally accepted accounting principles” – or GAAP.

In an era where we are demanding that corporate America be more accountable to shareholders, why can’t we taxpayers expect the same from the Pentagon? After all, if the Defense Department were a corporation, it easily would be the biggest on Earth.

The word “gargantuan” falls a couple ZIP codes short of doing the Defense Department justice. America’s military is 50 percent larger than retailing giant Wal-Mart and twice the size of General Motors. It employs 2.1 million people, is spread over 146 countries and operates 250,000 motor vehicles, 15,000 aircraft and 1,000 ships.

This year, the Defense Department will spend about $385 billion. Yet it can’t – in fact, it never has been able to – properly account for its assets, liabilities and expenditures. That, despite the fact that defense accounts for 18 percent of the federal budget.

The General Accounting Office found the Defense Department couldn’t comply with financial reporting requirements for its property or inventories, couldn’t predict its liabilities for future health care costs or environmental cleanups and couldn’t provide any cost accounting for its major divisions and programs.

In looking at the Defense Department’s books, the General Accounting Office found $615 million in accounting adjustments that “shouldn’t have been made, including $146 million that were illegal.”

Given the lack of good accounting, it isn’t surprising that the Defense Department is wasting more than a little cash. One example that Mr. Walker cited involves chemical and biological protective clothing for soldiers. The General Accounting Office found that the Defense Department was selling perfectly good, unused chemical suits for $3 apiece while it also was buying several hundred thousand nearly identical chemical suits that cost more than $200 apiece!

My desire to have the U.S. military comply with the Chief Financial Officers Act has nothing to do with the war in Iraq. It has nothing to do with the merits or costs of privatizing certain military duties and giving them to companies like Halliburton. It is about accountability. Politicians always talk about accountability, but there is a double standard in Washington: the rules that most federal agencies follow and the rules the Pentagon follows.

In 2002, 21 of the 24 federal agencies that are supposed to comply with the Chief Financial Officers Act did so. That is a big improvement over 1996, when only six agencies complied with the law. The federal bureaucracy is getting better at managing itself. It is becoming more efficient, and it is doing so quickly. The Pentagon, alas, is not.

Simply put, Congress and the White House haven’t been forceful enough in demanding that the Pentagon justify every dollar it spends. I am all for running government more like a business – a business that complies with good old rules like GAAP. What is good enough for Wal-Mart, General Motors and every other company in America should be good enough for the Defense Department.

Robert Bryce of Austin is the author of Pipe Dreams: Greed, Ego and the Death of Enron.


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