Defense Budget: How It Works

At the DFAS [Defense Finance and Accounting Service] offices that handle accounting for the Army, Navy, Air Force and other defense agencies, fudging the accounts with false entries is standard operating procedure, Reuters has found. And plugging isn’t confined to DFAS (pronounced DEE-fass). Former military service officials say record-keeping at the operational level throughout the services is rife with made-up numbers to cover lost or missing information.

  Reuters

I don’t see the problem. That’s how it’s done at the Rosenberg Library.

The Defense Department’s 2012 budget totaled $565.8 billion, more than the annual defense budgets of the 10 next largest military spenders combined, including Russia and China. How much of that money is spent as intended is impossible to determine.

[...]

[T]he Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known.

[...]

In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units.

[...]

Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for.

[...]

The main reason is rooted in the Pentagon’s continuing reliance on a tangle of thousands of disparate, obsolete, largely incompatible accounting and business-management systems. Many of these systems were built in the 1970s and use outmoded computer languages such as COBOL on old mainframes. They use antiquated file systems that make it difficult or impossible to search for data. Much of their data is corrupted and erroneous.

And my guess is they like it that way. Otherwise, why would they have thousands of (five thousand according to one accounting) different accounting systems?

The secretary of defense’s office and the heads of the military and DFAS have for years knowingly signed off on false entries. “I don't think they're lying and cheating and stealing necessarily, but it's not the right thing to do,” Pentagon Comptroller Robert Hale said in an interview.

Yeah, well, they’re definitely lying. Cheating and stealing are possibilities.

The Pentagon has spent tens of billions of dollars to upgrade to new, more efficient technology in order to become audit-ready. But many of these new systems have failed, either unable to perform all the jobs they were meant to do or scrapped altogether - only adding to the waste they were meant to stop.

Mired in a mess largely of its own making, the Pentagon is left to make do with old technology and plugs - lots of them. In the Cleveland DFAS office [...], for example, “unsupported adjustments” to “make balances agree” totaled $1.03 billion in 2010 alone, according to a December 2011 GAO report.

In its annual report of department-wide finances for 2012, the Pentagon reported $9.22 billion in “reconciling amounts” to make its own numbers match the Treasury’s, up from $7.41 billion a year earlier.

But we’re sorry that we can’t extend unemployment benefits for you. Or give you food stamps.

Defense Secretary Chuck Hagel declined to comment for this article.

I bet he did.

And what just happened in that “budget deal”?

Representative Paul Ryan and Senator Patty Murray announced a budget deal yesterday. The deal replaces $63 billion in sequester cuts over two years and cuts an additional $23 billion in long term deficits. The deal will restore defense spending. The funding comes from increased fees for air travel and cuts to federal worker pension programs.

[...]

[N]ot a single tax loophole was closed.

[Emphasis mine.]
  FDL

...but hey, do what you want...you will anyway.