Special Report: The Pentagon's Doctored Ledgers Conceal Epic Waste

By Scot J. Paltrow/Reuters

The Army’s General Fund Enterprise Business System is often held up as an example of rare success. Up and running in 2012, GFEBS is now used in Army posts all over the world to handle basic accounting functions.

Some things it does well, but the inspector general said in March last year that the system didn’t provide department management with required information and may not resolve “longstanding weaknesses” in the Army’s financial management, “despite costing the Army $630.4 million as of October 2011.”

In 2000, the Navy began work on four separate projects to handle finances, supplies, maintenance of equipment and contracting. Instead, the systems took on overlapping duties that each performed in different ways, using different formats for the same data. Five years later, the GAO said: “These efforts were failures. ... $1 billion was largely wasted.”

The Navy started again in 2004 with the Navy Enterprise Resources Planning project to handle all Navy accounting - at first. The Navy later decided on a system design that would cover only about half of the service’s budget because a single, service-wide system would be too difficult and time-consuming, according to former Navy personnel who worked on the project. Accounting for property and other physical assets was dropped, too.

Now in use, the Navy ERP relies on data fed to it from 44 old systems it was meant to replace. “Navy officials spent $870 million ... and still did not correct” the system’s inability to account for $416 billion in equipment, the Pentagon inspector general said in a July 2013 report.

The Navy declined to comment.

Even an effort to coordinate all these projects ended in failure. In 2006, Deputy Secretary of Defense Gordon England established the Business Transformation Agency to force the military branches and other agencies to upgrade their business operations, adhere to common standards and make the department audit-ready.

Three years later, the Center for Strategic and International Studies said that while the Defense Department was spending “in excess of $10 billion per year on business systems modernization and maintenance, (o)verall the result is close to business as usual.”

Defense Secretary Gates shut it down in 2011 - after the Pentagon had spent $700 million on it. England declined to comment on the episode.


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