[Congressional Record Volume 141, Number 52 (Tuesday, March 21, 1995)]
[Senate]
[Pages S4207-S4208]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             INTEGRITY OF THE DEPARTMENT OF DEFENSE BUDGET

  Mr. GRASSLEY. Mr. President, you are chairman of the Senate Armed 
Services Committee. I do not often have an opportunity to speak when 
the distinguished Senator from South Carolina, also the chairman of the 
Armed Services Committee, is in the chair. I am in the middle of a 
series of speeches on the defense budget, and I know that the Senator 
from South Carolina is very much for a strong national defense. I am 
also for a strong national defense. But I have some questions about the 
amount of money we ought to spend and whether or not it has been used 
in the most well-managed way. And so I am addressing that issue.
  So today I wish to resume my presentation on the integrity of the 
Department of Defense budget.
  (Mr. DeWINE assumed the chair.)
  Mr. GRASSLEY. Mr. President, yesterday I provided some background 
information on how I got involved in defense issues in the early 1980's 
and have been involved with them since. I talked about how the spare 
parts horror stories convinced me that President Reagan's defense 
buildup would lead to waste on a massive scale. I talked about how the 
spare parts horror stories drove me to the job of watchdogging the 
Pentagon.
  Today I wish to begin discussing the accuracy of the Department of 
Defense budget and accounting data. Each year, Congress debates the 
Department of Defense budget for days. I do not expect this year to be 
much different. In fact, the debate may intensify. It may intensify 
because some of my Republican colleagues are bent on pumping up the 
defense budget again by billions of dollars. I am flat baffled by their 
proposal. I do not understand it. They want to start back up the 
slippery slope toward higher defense budgets 
[[Page S4208]]  when there is no reason for doing it. The Soviet threat 
is gone. The cold war is over. The defense budget should be leveling 
off, not going up. But I do not intend to debate that issue today. That 
is better debated when we are working on the appropriations and 
authorization bills for the Department. My purpose today is to suggest 
that we cannot make meaningful decisions on the defense budget until we 
get more reliable information.
  I wish to talk about the soundness then of the Department of Defense 
information base. I wish to talk about the integrity of Secretary 
Perry's budget. The Department's financial records are the foundation 
for this budget. Like a house or building, if it is going to stand the 
test of time and if the building is going to serve its intended useful 
purpose, then a budget's foundation must likewise be built upon very 
solid rock.
  Secretary Perry's accounting and budget numbers should be accurate 
and complete. Sadly, however, every shred of evidence I have tells me 
that Mr. Perry's budget structure is built on sand.
  Do they understand that? I believe they do. I believe that there are 
some people over there intent upon changing this, who right this very 
minute are working toward doing that. But the point is that job is a 
long way from being done, because it is in such a sad state of affairs. 
We are going to be called upon in the next couple months to make a 
decision whether to spend $50 billion more than what the President 
proposed on defense. I do not see how we can make that decision with 
the information on which the budget structure is formed if this is all 
built on a foundation of sand. I will document the basis for that 
assertion in a moment.
  Mr. Perry's financial records, the Department's budget books and 
accounting books are in a shambles. Mr. Perry has no way of knowing 
which numbers are true and which are false.
  Inaccurate and misleading budget numbers erode our process of checks 
and balances, and they undermine accountability.
  Bad information leads to bad decisions and hence bad Government.
  The accounting books should provide a full and accurate record of how 
the money was spent, what was purchased, and how much each item cost.
  The accounting books should provide a historical record of past 
expenditures.
  The budget, by comparison, is supposed to tell us what is needed in 
the coming year in the way of money and material.
  The future years defense program, or FYDP, in turn, projects the 
future consequences of our budget decisions. All these books--the 
future year's defense program, the budget, as well as accounting book--
should hang together.
  The books should be bound together by a common thread--accurate, 
consistent data.
  The budget should be hooked up to the accounting books, and the 
future year's defense program should be hooked up to the budget.
  The books need to hang together for one very simple reason:
  Much of what will be bought and done in the years ahead were bought 
and done last year and the year before.
  If we do not know what we bought last year and how much it cost, it 
will be impossible to figure out what we need next year. You cannot 
craft a good budget with bad numbers. It is as simple as that.
  There is no way to escape from this commonsense principle. If we do 
not know what last year's defense program cost, then how in the world 
can Mr. Perry figure out what he needs down the road--in the outyears?
  That is it in a nutshell.
  In the simplest terms, if we do not know where we have been and where 
we are, we cannot possibly figure out where we are going. We may be 
lost.
  Mr. President, all the DOD budget chains are broken. The essential 
links between the accounting records and the budget, and the budget and 
the future year's defense program, are busted. We have mismatches 
within mismatches within mismatches.
  Now, this is a very complicated subject, and my conclusions could be 
controversial. They could be challenged.
  So it is important that I document my sources.
  But I would like to warn my colleagues, these issues are not laid out 
in one single source. I have drawn on many different sources.
  I will cite the main ones. There are others but the main ones are as 
follows:
  First, U.S. General Accounting Office, ``Financial Management: Status 
of Defense Efforts To Correct Disbursement Problems.'' (AIMD-95-7. 
October 1994.)
  This work is continuing at the request of myself and Senators Roth 
and Glenn. I have used some updated data on disbursements and 
unreconciled contracts that does not yet appear in published reports.
  Second, DOD inspector general, ``Fund Control Over Contract Payments 
at the Defense Finance and Accounting Service--Columbus Center.'' 
(Report No. 94-054. March 15, 1994.)
  Third, U.S. Senate, Committee on Governmental Affairs. (Hearing on 
DOD Financial Management. April 12, 1994.)
  Testimony by Comptroller General Bowsher and Senator Glenn provided 
most of my information on overpayments to contractors.
  Fourth, DOD inspector general, ``Consolidated Statement of Financial 
Position of the Defense Business Operations Fund for Fiscal Year 
1993.'' (Report No. 94-161. June 30, 1994.)
  Fifth, U.S. General Accounting Office, ``Defense Business Operations 
Fund: Management Issues Challenge Fund Implementation.'' (AIMD-95-79. 
March 1995.)
  Sixth, U.S. General Accounting Office, ``Future Years Defense 
Program: Optimistic Estimates Lead to Billions in Overprogramming.'' 
(NSIAD-94-210. July 1994.)
  The GAO's evaluation of the FYDP is continuing at the request of 
Senator Roth and myself. The ongoing work has two objectives:
  Evaluate the data and methodology presented in Mr. Chuck Spinney's 
latest study, ``Anatomy of Decline'' and the role of DOD's Office of 
Program Analysis and Evaluation [PA&E]; and
  Review the fiscal year 1996 FYDP.
  Seventh, this is also by Chuck Spinney: ``Anatomy of Decline.'' 
Office of Program Analysis and Evaluation, Department of Defense. 
February 1995.
  In order to save time, I will not make a detailed reference every 
time I draw data from one of these sources.
  Instead, I will try to identify the source in a more general way as I 
go along.
  Mr. President, that concludes my statement for today.
  I will continue with more evidence tomorrow and Thursday and Friday.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous order the Senator from 
Alabama [Mr. Heflin] is recognized to speak for up to 10 minutes.
  The Senator from Alabama.
  Mr. HEFLIN. Mr. President, Senator Feinstein wishes to make some 
remarks. In the event her remarks are not begun or finished when the 
hour of 10 arrives, I ask unanimous consent that time for morning 
business be extended to allow her to complete her remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Alabama is recognized.
  Mr. HEFLIN. I thank the Chair.
  (The remarks of Mr. Heflin pertaining to the introduction of S.J. 
Res. 31 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')
  The PRESIDING OFFICER. Under the previous order the Senator from 
California [Mrs. Feinstein] is recognized to speak for up to 10 
minutes.
  Mrs. FEINSTEIN. I thank the Chair.
  (The remarks of Mrs. Feinstein pertaining to the introduction of S. 
580 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')


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