DOD Makes $1.1 Bil in “Erroneous Payments” in One Year

Though it may seem inconceivable to the taxpayers that fund this atrocity, a major government agency with a monstrous annual budget loses such large sums of money to waste and fraud each year that it has no idea how much and nothing has been done to stop the hemorrhaging.

What we do know, thanks to a federal audit released this month, is that the amount of public funds lost to waste and fraud amounted to at least $1.1 billion in one recent year alone though it’s likely much higher. The actual figure will never be pinned down because financial management shortcomings at the agency, the Department of Defense (DOD), are too severe.

The estimates “were neither reliable nor statistically valid because of long-standing and pervasive financial management weaknesses and significant deficiencies in the department’s procedures to estimate improper payments,” according to the audit. This means that, unbelievably, the enormous $1.1 billion waste figure listed in the report for fiscal year 2011 isn’t even credible due to “missing invoices and other flawed paperwork, as well as errors in arithmetic.”

Imagine if a private business, or even a household for that matter, was run in this manner. But this is the Pentagon and it has a never-ending cash flow that allows it to spend about a trillion dollars annually like it’s no big deal. The $1.1 billion in “erroneous payments” that year went to a variety of things, including overpayments of military health benefits, civilian, travel and commercial pay to vendors. It’s like a free for all, with large wads of cash distributed everywhere and little to no oversight.

The DOD doesn’t seem terribly worried about it and appears to have no sense of urgency to correct the problem. Investigators from the Government Accountability Office (GAO), the investigative arm of Congress, found that the DOD hasn’t bothered performing a required risk assessment to identify programs susceptible to significant improper payments or that the agency has implemented procedures to identify root causes of improper payments. Furthermore, the Pentagon hasn’t conducted recovery audits for any of its wasteful programs.

You can’t help but get the feeling that the DOD simply doesn’t care about correcting this rather large problem, which has been documented over two decades in a variety of federal probes. Just a few months ago the DOD Inspector General revealed that a company that had “overbilled” the Pentagon an astounding $757 million was rewarded with a monstrous no-bid contract extension worth more than $4 billion. A Florida lawmaker, John Mica, investigating the matter offered this assessment during a congressional hearing: “This has to be one of the prime poster childs for a government contract spun out of control.”

Prior this that the DOD has been under fire for wasting large sums of money, including $70 billion on dubious projects unrelated to its mission. This includes billions on research that has little or nothing to do with national defense or medical needs related to military service, including $5.2 billion to study fish that overcome political polarization and $1.4 million to create beef jerky treats. You can’t make this stuff up!

Who could forget the billions wasted in Iraq reconstruction efforts? Audit after audit has exposed how the DOD projects are rife with waste, fraud and abuse and that the spending is so out of control the government has lost track of a large portion of the money.  At last count at least $6 to $8 billion earmarked to rebuild Iraq by training local police, building schools, hospitals and transportation systems could not even be accounted for. 

On the heels of that unbelievable revelation Americans learned that the Pentagon had somehow lost $475 million worth of oil destined for the Afghan National Army. It simply vanished with no trace. It’s unlikely we will ever know how the oil disappeared because the DOD improperly shredded records that could solve the mystery, according to federal auditors.