Prepared Floor Statement by Senator Chuck Grassley of Iowa
On the Need for Aggressive Oversight at the U.S. Department of Defense
July 11, 2018
Mr. President, I come to the floor today to discuss the continuing need for aggressive, hard-hitting oversight of the Department of Defense. That need is as great today as it ever was. Waste is alive and well at the Pentagon.
Here beside me is a blow-up of a cartoon published in the Washington Post in 1985. It shows Ernie Fitzgerald confronting his chief adversaries – the big spenders in the Pentagon. As a senior Air Force official, he “committed truth.” In 1968, he exposed a 2.3 billion dollar cost overrun on the C-5 aircraft program.
In those days, having a senior Pentagon official speak the truth about a cost overrun on a high visibility program was unheard of. It was dangerous. His courage cost him his job. That’s why I call Ernie the father of whistleblowing.
The cartoon also depicts the infamous 640 dollar toilet seat.
That happened in 1985, when I, as a first-term senator, began watch-dogging the Pentagon. After a report uncovered the 640 dollar toilet seat and 400 dollar hammer, I began asking tough questions:
How could the bureaucrats possibly justify paying such exorbitant prices? I’m still waiting for a straight answer.
A lot has changed since the 1980s.
The internet, which was in its infancy in the 80’s, is now part of everyday life. Mobile phones that were once the size of bricks can now fit in the palm of your hand and do a whole lot more than make calls.
But one thing hasn’t changed: Wasteful DoD procurement practices.
Since I began my work on this issue, there have been six presidents and twelve Secretaries of Defense, yet the problem of wasteful spending at the Department of Defense just keeps on going.
Since those earliest revelations, there has been a steady flow of new reports on spare parts rip-offs. No political party is immune from the horror stories.
During the administration of George H.W. Bush, oversight efforts uncovered soap dishes that cost $117 dollars and pliers that cost nearly 1,000 dollars.
In some cases, the Department of Defense admitted some high prices didn’t pass the smell test.
True, better deals were negotiated. But to offset losses on lower prices, the contractors jacked up overhead and management charges, making the overall contract price the same.
Exercising oversight on these contracts is like working with a balloon. Squeeze it in one place, and the problems pop out someplace else.
Under President Bill Clinton, a report by the Government Accountability Office (GAO) revealed one defense contractor paid its top executives more than $33 million dollars a year -- an amount that was reimbursed by the federal government as part of a contract.
Now, I agree that a company has a right to pay its executives whatever it wants.
However, when the government enters into cost-reimbursement contracts —contracts in which the government directly repays the company for costs incurred instead of paying a fixed price—the contractor loses the incentive to control costs. And top executives draw sky-high salaries at the taxpayers’ expense.
I introduced an amendment to a 1997 Defense Authorization bill to curb executive compensation billed directly to the taxpayers. But it was voted down by the Senate.
During the Bush administration in the early 2000’s, I worked with the GAO to expose abuse of government charge cards by Department of Defense employees.
We found some truly egregious expenditures: over 20,000 dollars at jewelry stores, over 34,000 dollars on gambling, and over 70,000 dollars on tickets to sporting events and Broadway shows.
In some cases, employees, who spent thousands on personal expenses, were not only not asked to re-pay the money, but were promoted and issued new charge cards. Instead of being held accountable, they were rewarded.
During the presidency of President Obama, I pressed the Pentagon to answer for a $43 million dollar gas station built in Afghanistan.
This project was revealed as part of an audit conducted by the Special Inspector General for Afghanistan Reconstruction.
When I pressed for answers, the Defense Department responded by saying that the direct cost was actually only 5 million dollars. But that number didn’t include the massive overhead costs charged to the project, which pushed the overall price tag to 43 million dollars.
Even more alarming is what happened to the rest of the 800 million dollars provided for other business development projects in Afghanistan.
Auditors could only find documentation to support about half the money spent, leaving about 400 million unaccounted for.
This kind of sloppy bookkeeping means that we may never know how the rest of the money was spent. Was it used for unauthorized purposes or pocketed by crooked people?
And now, under the Presidency of Donald Trump, over 30 years later, the overpriced airborne toilet seat has gained altitude.
Instead of 640 dollars, the new price tag was reported by the Air Force to be 10,000 dollars, and that’s for the lid only.
Any American can tell you that 10,000 dollars for a toilet seat cover is ridiculous.
Americans work too hard to see their precious tax dollars flushed down the toilet.
I asked the DOD for confirmation that the seats cost 10,000 dollars. They still haven’t answered me, but after my inquiry, the DOD has changed their story.
They clarified to the media that they are now 3-D printing the toilet seat lid for much less. But they never answered my questions.
We don’t know how many seat covers were purchased at the 10,000 dollar price.
We don’t know when they moved to 3-D printing instead of purchasing.
And we still don’t have documentation or official confirmation on the true price of the toilet seat lids.
Even if the issue of the toilet seat has been sorted out, it is clear that the DOD still does not have a grip on spending.
Other spare parts OIG reports have revealed that the Pentagon frequently overpays for simple parts, and does not perform adequate cost analysis.
One of the primary culprits for continuing waste and misuse of tax dollars is DOD’s non-compliance with the congressional mandate to pass an audit.
It’s impossible to know how much things cost or what is being bought when nobody is keeping good track of the money being shoveled out the door.
For nearly 30 years, we’ve been pushing the Pentagon to earn a clean opinion. In 1990, Congress passed the Chief Financial Officer Act which required all departments to present a financial statement to an inspector general for audit by March 1992.
All departments have complied and earned clean opinions -- except for the Department of Defense. Instead of clean opinions, the Department of Defense has earned a long string of failing opinions called disclaimers.
The books are un-auditable.
Twenty years later, in 2010, Congress finally got fed up and passed a law requiring the Pentagon to be ready for audit by September 2017. The department was given seven more years to get its act together and meet the same requirements as every other federal agency entrusted with public money.
That deadline has come and gone. According to the Comptroller and Chief Financial Officer (CFO), Mr. David Norquist, a clean audit is still at least 10 years away.
There is a long-standing underlying problem preventing the Pentagon from reaching the goal. It’s the so-called feeder systems. They are supposed to capture transaction data but are broken.
Auditors cannot connect the dots between contracts and payments. That’s because there is no reliable transaction data and little or no supporting documentation.
The Pentagon will never earn a clean opinion until those accounting systems are able to produce reliable financial data that meet accepted standards.
Over the last 25 years, the Department of Defense has spent billions trying to fix these outdated accounting systems with no success.
How is it that the mighty Pentagon can develop the most advanced weapons in the world but can’t seem to acquire something as simple as an accounting system?
We need to get to the bottom of this problem and fix it.
So I am working with my colleagues on the Budget Committee to get the GAO to conduct an independent review of the Pentagon’s effort to acquire modern accounting systems. What is the problem?
Should the Defense Department keep trying to fix the antiquated feeder systems, or is it time to develop a new, fully integrated system that can deliver reliable financial information? We want some answers.
The Department of Defense is currently attempting to conduct a full financial audit. Secretary Mattis has directed all employees to support the audit, and the results are expected in November.
Although the new CFO appears to be making a good faith effort to get a handle on the problem, spending hundreds of million dollars a year for audits with a zero probability of success could be wasteful.
The first priority of our federal government remains national security. We must ensure that our military forces remain strong enough to deter any potential aggressor and preserve the peace.
The men and women on the front lines deserve fair compensation and the best weapons and equipment money can buy. We want to field the most capable military force in the world.
Because national defense is so important, congressional watch-dogging of defense spending is essential. We don’t want one single dollar to be wasted – not even a penny.
Until the Defense Department is able to earn clean opinions on a regular basis, we have no assurance that defense dollars are being spent wisely and according to law.
Report after report show that precious defense dollars are being wasted, misused and unaccounted for.
Reforms have been made, but clearly, the war on waste has not been won. Much more work needs to be done.
From my oversight post in the U.S. Senate, I’ll continue to apply pressure on the Pentagon to step up the war on waste.
I don’t expect much help from the Inspector General. Mr. Fine seems to be AWOL on waste. I raised the issue of the 10,000 dollar toilet seat cover to him over a month ago, and still haven’t received an answer.
His office found the time to update the media on the toilet seat cover. Yet my letter has gone unanswered.
However, after revelations about the 43 million dollar gas station, Secretary Mattis’ reaction was music to my ears. He issued an all-hands memo. In it, he stated flat-out: I will not tolerate that kind of waste!
Known for being a man of his word, I am counting on his help. Maybe together, we can wipe out the culture of indifference toward the American people’s money.
I yield the floor.