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Eyes Peeled on Lynn's Financial Management

With Bill Lynn's confirmation hearing to be deputy defense secretary just a tick tock away, I tried scanning the horizons for likely problems he may face as the man who runs the day to day business of the Pentagon. Only one issue came up, and it's not worries that he may be too nice to industry given his years as Raytheon's top lobbyist. (Though it will be interesting to see how hard Sen. Carl Levin, chairman of the Senate Armed Services Committee, hammers away at this issue given how he grilled Bush appointees coming in from industry.)

One of the most difficult issues for Lynn, in the face of the global financial crisis, is the intractable problem the Pentagon has faced for years -- improving its financial management systems sufficiently so the country actually knows what money gets spent where and on what.

The Obama administration must try -- once and for all -- to fix the Defense Department's inventory and accounting systems if it is to have any chance of reining in acquisition costs. Winslow Wheeler, once a top Republican defense budget expert in the Senate, says Bill Lynn worked very hard to loosen the financial and accounting standards the Pentagon must comply with when he was comptroller and head of PA and E.

This came up in a discussion GAO's latest report slamming the Army for sloppy management of its logistic stockpiles.

"Quick; alert Bill Lynn, the new DepSecDef. Tell him that it turns out that his efforts as Comptroller in the 1990s to exempt DoD from the CFO Act and other financial management requirements were completely successful and DOD remains unable to perform even minimal inventory control. The issue is not that this is occurring; it has been for years; the issue is if anyone is ever going to do anything about this fundamental kind of problem. This kind of issue is fundamental for the former Clinton managers now being promoted to bigger jobs in the Obama/Gates Pentagon to explain in detail in their confirmation hearings this and next week exactly what they are going to do about it.," Wheeler said in an email.

I spoke with a Senatorial aide who confirmed his boss is watching Lynn closely on this issue. They are combing through his actions and testimony from his time in the building to see how best to ensure that this fundamental issue is better addressed in this administration.

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