DoD Budget Uncertainty Can Result in Millions' Worth of Lost, Forgotten Gear, Norquist Says

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Deputy Secretary of Defense David Norquist listens to Sen. Tim Kaine asking questions, Nov. 20, 2019. (Military.com photo/Dorothy Mills-Gregg)
Deputy Secretary of Defense David Norquist listens to Sen. Tim Kaine asking questions, Nov. 20, 2019. (Military.com photo/Dorothy Mills-Gregg)

Lawmakers and Defense Department leaders were more concerned about the impact of Congress not passing another budget than the DoD failing its audit in all but seven departments.

"It's very disruptive, and the audit highlights that," Deputy Secretary of Defense David Norquist told senators during a Wednesday hearing about the DoD's second audit, "and then the whole effect on the mission side on the families, on the deployments. Those are pretty serious problems."

The Senate Committee on Armed Forces held a subcommittee hearing on the DoD's latest audit, which involved about 1,400 auditors analyzing billions of transactions to confirm inventory, contract payments and assets, among other things. While DoD staff managed to close about 23 percent of the 2,377 audit findings from last year, the fiscal 2019 audit found an additional 1,300-plus recommendations and findings.

"On the overall audit? Yeah, we didn't pass," Norquist said.

Despite this, some senators were more concerned with Norquist's comments that Congress' continuing resolutions (CRs) and sequestrations are hurting the DoD in the long term.

"There doesn't seem to be universal appreciation in Congress and in the administration for what the impact of a continuing resolution for the remainder of this year will be," said Sen. Jeanne Shaheen, D-New Hampshire.

Norquist said CRs make it impossible for DoD staff to make up for lost time on maintenance and service member training on installations.

"The CR is designed to be destructive. It's designed in order to get you to not want to do it," he said. "It is a misuse of taxpayers' money to manage it in this way."

As installation staff are uncertain when they will get funding during continuing resolutions, he said, they buy enough equipment for a three-month supply, but that can get lost or forgotten about with a change in command. That's like the case of the $81 million worth of active material "found" in the audit at Navy Fleet Logistics Center Jacksonville.

Related: Navy Audit Uncovered $126M in Aircraft Parts 'We Didn't Even Know Existed'

"What I was surprised by was, when you look at the money that the Navy has saved, the $167 million," he told senators, "and you look at the $316 million that the department was able to use data analytics to recover as we did our budget scripts, that's the cost of what we're spending on the audit and then some. So in terms of paying the audits, we're already recovering that."

Like last year, the audit cost "slightly less" than $1 billion. At 1/30th of the DoD's budget, that is on par with how much many of the top Fortune 100 companies pay for audits.

Norquist said the next step is to use the transaction-level data gathered to see what's affecting the costs and then lead to his goal of having private sector-like meetings within the DoD.

"Part of what I want to push for is we should be able to have a meeting in the Pentagon that looks like what you would have in a business company," he said. "Where all the business units are there, and you've got a report from your CFO [Chief Financial Officer] that there's no discussion about the report -- it is an accurate summary of the financial activities of the organization -- we're now going to have an accurate discussion about what it means."

-- Dorothy Mills-Gregg can be reached at dorothy.mills-gregg@military.com.

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