Sen. Carper to Panetta: Clean up military’s financial management

A Senate subcommittee chairman is urging Defense Secretary Leon Panetta to cut costs by reforming the way the military buys spare parts and correcting flawed battlefield contracting practices.

As Congress looks for ways to trim federal spending and pare the deficit, Sen. Tom Carper (D-Del.) told Panetta in a letter obtained by The Hill that “every aspect of the federal budget — from entitlements to education to defense – has to be on the table.”

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The Homeland Security Federal Financial Management, Government Information, Federal Services and International Security subcommittee chairman said that officials and lawmakers “should first look in every nook and cranny of the federal government to make sure that we’re getting the most bang for our buck.”

In short, Carper told Panetta that “we need to get better results for less money in almost everything we do.”

To that end, Carper laid out several things in the letter, dated Thursday, that the chairman said would “generate substantial savings from the DoD’s budget without causing undue harm to our military men and women or their families.”

Carper noted that the Pentagon inspector general and government auditors have “detailed many recent examples of wasteful [Defense] spending” that have led to “billions of dollars of taxpayer funds being wasted annually.”

Correcting these problems, Carper wrote, might spawn “substantial savings if properly addressed.”

One longtime defense analyst called Carper’s letter a significant moment in the ongoing defense budget debate.

“While I would describe the depth and seriousness of DOD's inability to understand its own spending — past, present and future — in less polite terms, Sen. Carper's gentle reminder to Secretary Panetta that he sits atop a federal agency with literally uncounted amounts of inappropriate spending is a significant sign,” said Winslow Wheeler, a former congressional aide with the Center for Defense Information.

“The overwrought hand-wringing Secretary Panetta has so publicly been expressing about further cuts in the defense budget has pushed some in the middle of the political spectrum too far,” Wheeler said.

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Since taking office three months ago, Panetta has surprised some in the defense sector with his staunch warnings against Pentagon budget cuts beyond $350 billion set in motion by the August deal to raise the federal debt ceiling.

Defense analyst and consultant Loren Thompson recently wrote in a blog post that liberal Democrats also have been shocked by Panetta’s budget talk.

“Panetta thinks that the Pentagon is doing enough to reduce the government’s budget deficit, and future cuts need to come elsewhere,” Thompson wrote. “Those comments elicited a firestorm of criticism among progressive political operatives, who saw Panetta’s defense of the military as a betrayal of party principles. … The president’s reelection prospects would probably be better served if Panetta simply avoided talking about the subject, since right now he is aggravating the Democratic Party’s liberal base.”

Specifically, the Carper letter cites a recent Pentagon IG report that concluded the department had failed to recoup around $200 million in delinquent debts “due to poor, but basic, record keeping.”

Carper added the IG also reported that the Army has routinely overpaid “millions” for spare parts.

“For an $8.00 helicopter door part, for example, the DoD paid $284.00,” according to the letter. “In another instance, the Army paid five times too much for a $1,500.00 rotor part that turned out to already have been in stock in the military warehouses.”

Government documents reveal “there is roughly a billion dollars in spare parts on order that the department simply does not need, but the Pentagon inventory system doesn’t allow for the order to be changed.”

The subcommittee chairman also highlighted the Commission on Wartime Contracting’s finding earlier this month that between $31 billion and $61 billion has been lost to “waste and fraud” due to bad contracting practices in Iraq and Afghanistan. Those losses are “avoidable,” Carper wrote.

He also criticized the Pentagon’s much-maligned acquisition system.

The Government Accountability Office “has also detailed billions of dollars in cost-overruns for major weapon systems,” Carper told Panetta. “The GAO noted that several factors, including major inefficiencies in the defense acquisition system, have led to $402 billion in total major weapon system cost overruns. This total is up from $42 billion in fiscal year 2000 and $295 billion in fiscal year 2007.”

The examples cited in the letter all are products of “identifiable shortcomings in oversight and management and represents a much greater problem than even the large dollar amounts cited,” wrote Carper, who was in the Navy for nearly three decades.

The Pentagon needs to clean up its financial management as the nation grapples with its fiscal woes, he told Panetta, a former Office of Management and Budget chief.

“Many of these DoD waste and fraud problems likely result from the very poor state of basic financial management at the department,” the letter states. “As you know, DoD’s finances have been on GAO’s high-risk list since 1995, in part due to pervasive management deficiencies that would never be tolerated in a private sector business and, in fact, aren’t tolerated even in most federal agencies.

“These deficiencies make it difficult, if not impossible to know for certain how and when the DoD spends its money," Carper wrote.