The Department of Defense (DOD) is responsible for more than half of the federal government’s discretionary spending. Significant financial and related business management systems and control weaknesses have adversely affected DOD’s ability to control costs; ensure basic accountability; anticipate future costs and claims on the budget; measure performance; maintain funds control; prevent and detect fraud, waste, and abuse; address pressing management issues; and prepare auditable financial statements. These issues led to GAO’s designating DOD financial management as high risk in 1995. DOD is one of the few federal entities that cannot accurately account for its spending or assets and is one of three major impediments that prevent GAO from rendering an opinion on the annual consolidated financial statements of the federal government. Without accurate, timely, and useful financial information, DOD is severely hampered in making sound decisions affecting its operations. Further, to the extent that current budget constraints and fiscal pressures continue, the reliability of DOD’s financial information and ability to maintain effective accountability for its resources will be increasingly important to the federal government’s ability to make sound resource allocation decisions. Effective financial management is also fundamental to achieving DOD’s broader business transformation goals.

GAO Key Issues > High Risk > DOD Financial Management

Actions Needed to Address Deficiencies in Controls over Army Active Duty Military Payroll, GAO-13-28, Dec 12, 2012, GAO Report

The Pentagon agency that identified the overpayments, clawed them back and resisted Aiken’s pleas for explanation and redress is the Defense Finance and Accounting Service, or DFAS (pronounced “DEE-fass”). This agency, with headquarters in Indianapolis, Indiana, has roughly 12,000 employees and, after cuts under the federal sequester, a $1.36 billion budget. It is responsible for accurately paying America’s 2.7 million active-duty and Reserve soldiers, sailors, airmen and Marines.

It often fails at that task, a Reuters investigation finds.

A review of individuals’ military pay records, government reports and other documents, along with interviews with dozens of current and former soldiers and other military personnel, confirms Aiken’s case is hardly isolated. Pay errors in the military are widespread. And as Aiken and many other soldiers have found, once mistakes are detected, getting them corrected – or just explained – can test even the most persistent soldiers.

“Too often, a soldier who has a problem with his or her pay can wait days, weeks or even months to get things sorted out,” Democratic Senator Thomas Carper of Delaware, chairman of the Homeland Security and Governmental Affairs Committee, wrote in an email. “This is simply unacceptable.”

Reuters found multiple examples of pay mistakes affecting active-duty personnel and discharged soldiers. Some are erroneously shortchanged on pay. Others are mistakenly overpaid and then see their earnings drastically cut as DFAS recoups the money, or, like Aiken, they are forced to pay money that was rightfully theirs.

Precise totals on the extent and cost of these mistakes are impossible to come by, and for the very reason the errors plague the military in the first place: the Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other. The DFAS accounting system still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services.

Pay errors are part of a larger phenomenon that Reuters will explore in a series of articles: the Defense Department’s endemic failure to keep track of its money – how much it has, how much it pays out and how much is lost or stolen.

The department’s authorized 2013 budget, after sequester, totals $565.8 billion – by far the largest chunk of the annual federal budget approved by Congress. Yet the Pentagon is literally unable to account for itself. As proof, consider that a law in effect since 1992 requires annual audits of all federal agencies – and the Pentagon alone has never complied. It annually reports to Congress that its books are in such disarray that an audit is impossible.

The mistakes in soldiers’ pay may seem small – $1,000 here, a few hundred there. But for an Army private first class making a base annual salary of about $23,000, or a wounded veteran on disability, they can be devastating. Former soldiers have had their civilian wages and their Veterans Administration benefits garnished. They have been pursued by private collection agencies and forced to pay tax penalties. In other cases, too, deserters have continued to be paid for months, and sometimes years, after disappearing.

The Pentagon’s record-keeping tangle not only increases the potential for errors; it also forces DFAS to depend heavily on “manual workarounds,” another source of errors. Neither the Pentagon or DFAS or the military services can specify how many workers are used to handle these tasks, but “it takes a massive amount of human effort,” says Roy Wallace, an Army assistant deputy chief of staff.

Special Report: How the Pentagon’s payroll quagmire traps America’s soldiers

A roadside bomb hit Sgt. Jerrald Jensen’s Humvee in Iraq, punching through heavy armor and shooting a chunk of hot metal into his head at several times the speed of sound, shattering his face and putting him in a coma. “I wasn’t supposed to live,” the veteran lisped with half a tongue through numb lips. “No one knows why I did. It’s shocking.” Even more shocking is what Jensen did next. After 16 surgeries, the sergeant volunteered to go back to combat in one of the most savage corners of Afghanistan, where he was injured again. Perhaps most shocking, though, is what happened when he got home.

Jensen returned to recover in a battalion at Fort Carson designed to care for wounded soldiers called the Warrior Transition Unit. In the WTU, the soldier with a heroic record said he encountered a hostile environment where commanders, some of whom had never deployed, harassed and punished the wounded for the slightest misstep while making them wait many weeks for critical medical care and sometimes canceling care altogether.

In 2011, a year after joining the WTU, just days after coming out of a surgery, Jensen tested positive for the drug amphetamine. The then-41-year-old asked to be retested, suggesting his many Army prescriptions might be to blame. His commander refused and instead gave Jensen the maximum punishment, cutting his rank to private, docking his pay and canceling surgery to fix his face so he could spend weeks mopping floors, picking weeds and scrubbing toilets.

Then, Jensen said, WTU leaders said he should be discharged for misconduct — the equivalent of getting fired — with an other-than-honorable rating that could bar him from medical benefits for life.

Left Behind: No break for the wounded

Ozymandias.

Forward!

Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading. Oh, and pay “public servants” what they are worth.