Tighter Ship for the Pentagon

Any enterprise that spends $22 billion a month--that’s $30 million an hour--had better be able to keep track of its money. Otherwise it is likely to find itself a victim of rip-offs. The Pentagon disburses that kind of money, but the efficiency of its financial management systems is apparently something less than world-class. So, no surprise, the government department that spends about $1 out of every $7 in the federal budget has been a target for some large-scale embezzlement.

Part of the problem, Senate committee investigators and the General Accounting Office found, is that as of last June fully 1,800 employees were able to perform all the steps--writing contracts, delivery orders and invoices--needed to generate payment. That included being able to enter new mail addresses. This was an invitation to a number of dishonest employees to defraud the system, in one case for about $3 million, in another for nearly $1 million.

Matters weren’t helped when the Pentagon last July cut back on audits, ending all routine scrutiny of contracts under $10 million. This was done in an effort to reduce red tape, a commendable aim. Unfortunately, with fewer audits, it’s easier for embezzlers to escape detection. The honor system may generally work at the military academies, but when it comes to keeping the Pentagon’s books there’s no substitute for close oversight. For example, a check of 200 invoices provided by the Air Force found that not one of the accounts should have been paid. In only six of the 200 cases did the Air Force even get a receiving report, verifying that the goods or services paid for had been provided.

The reports on the flaws in the Pentagon’s contract payment system were released just one day before the Joint Chiefs of Staff went to Capitol Hill to warn Congress, as their chairman, Army Gen. Henry Shelton, put it, that “our forces are showing increasing signs of serious wear,” with combat readiness “fraying” and arms modernization being dangerously delayed. The chiefs want modestly larger military budgets.

We have supported a boost in defense spending to raise service pay and help improve retention rates, to maintain readiness and to replace obsolescent weapons and equipment. At the same time we want to see Congress stop demanding--as the House did again this week--that the services buy planes and ships they don’t need. Do that, shut down the redundant bases that Congress also insists on keeping open and tighten the Pentagon’s loose bookkeeping procedures and some of the extra money the military is pleading for can no doubt be painlessly found.