The findings come as president Trump prepares to propose a funding boost for the DoD © PA Images
The findings come as president Trump prepares to propose a funding boost for the DoD © PA Images

Pentagon procurement agency 'lost track of $800m'

6 February 2018

A division of the US Department of Defence (DoD) “could not account for” more than $800m (£571m) in construction spending, according to an internal audit.

The audit, carried out by Ernst & Young and first obtained by Politico, showed the Defence Logistics Agency (DLA), a subsection of the DoD, misstated at least $465m worth of construction projects in its records.

It also lacked sufficient documentation – or had no documentation at all – for another $384m in spending for construction projects deemed “in progress”. 

In addition to the hundreds of millions of dollars in construction projects that remained unaccounted for, the agency also could not produce secondary evidence for several purchases, including $100m in computer systems.

Another $46m in computer assets were “inappropriately recorded” as belonging to the DLA, the audit said.

The audit findings come just as president Donald Trump and congressional Republicans plan to propose billions of dollars in additional funding for the DoD. 

DLA, which has a budget of $40bn per year, handles procurement of supplies, materials and other purchasing needs of the US military from prime vendors. DLA purchases for the military range from water, fuel, pharmaceuticals and food to construction materials and spare parts.

It is responsible for overseeing 100,000 orders daily from the Army, Navy, Air Force Marine Corps, as well as other agencies.

In a statement, Patrick Mackin, a spokesman for DLA, said the agency concurs with Ernst and Young’s assessment of its failures to properly account for and track funding to specific construction projects. 

“While there were shortcomings in documentation, there was no loss of accountability of real property or associated funding,” he said.

“DLA is the first of its size and complexity in the Department of Defence to undergo an audit so we did not anticipate achieving a ‘clean’ audit opinion in the initial cycles. 

“As part of DLA’s responsibility to achieve audit compliance, DLA has already taken steps to correct this shortcoming. The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximise the value from the audits.”

The audit’s findings also come as the entire DoD, which has an annual budget of $700bn, begins its first department-wide audit – a move that has been backed by Capitol Hill.

Unlike many government agencies, the DoD has historically not been subjected to audits, however the first such audit of the Pentagon was launched in December.

In 2010, members of Congress threatened to withhold funding if the Pentagon did not produce financial statements in seven years. David Norquist, the Pentagon’s top budget official then promised that the Pentagon would undergo yearly audits starting 2018. 

At the time, Dana White, chief pentagon spokeswoman, told reporters that the audit “demonstrates our commitment to fiscal responsibility and maximising the value of every taxpayer dollar that is entrusted to us”.

The Pentagon estimates its department-wide audit would cost about $367m in 2018 and another $551m to fix problems. Around 1,200 auditors are participating in the process of assessing books and records, according to the DoD.

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