[Congressional Record Volume 143, Number 57 (Tuesday, May 6, 1997)]
[Senate]
[Pages S3983-S3985]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        SUPPLEMENTAL APPROPRIATIONS AND RESCISSIONS ACT OF 1997

  The Senate continued with the consideration of the bill.
  Mr. GRASSLEY. Mr. President, I would like to talk about our efforts 
to eliminate problem disbursements at the Department of Defense [DOD].
  Problem disbursements are payments that were not matched with 
obligations before the bills were paid.
  As we have learned in recent years, the failure to follow this very 
elementary internal control procedure leaves the Pentagon's financial 
accounts vulnerable to theft and abuse.
  It leads to underpayments, overpayments, erroneous payments, and even 
fraudulent payments.
  It leads to overdisbursed accounts.
  That is when payments exceed available appropriations.
  When that happens, you have a violation of the Anti-Deficiency Act. 
That is a felony.
  Right now, Mr. President, the Defense Finance and Accounting Service 
[DFAS] Center at Columbus, OH, has about 2,700 contracts that are 
overdisbursed.
  Those contracts have negative cash balances of $900 million-plus.
  In a nutshell, the Pentagon's financial books are in a shambles.
  Mr. President, that's not the Senator from Iowa talking.
  That's coming straight from the horse's mouth--the DOD inspector 
general [IG] and the General Accounting Office [GAO].
  That's what their audit reports say. They say: DOD's books are in 
such a mess that they can't be audited--as required by law--the Chief 
Financial Officers Act of 1990.
  When the auditors can't conduct an audit, they issue a ``disclamer of 
opinion.''
  Well, guess what?
  DOD gets one disclaimer after another--year after year. It's a 
disgrace.
  One way to clean up the books is to start matching disbursements with 
obligations before payments are made.

[[Page S3984]]

  This is the stuff that's taught in basic accounting course 101 in 
college. It's square one, I know, but it's the right place to start.
  And that's what the Senate has been telling DOD to do since 1994.
  For 3 years now, we have been telling DOD to get on the stick and fix 
the problem.
  This was done with the leadership and support of my friend from 
Alaska Senator Stevens, and my friend from Hawaii, Senator Inouye.
  I thought we were really making progress--until I saw the new GAO 
report.
  That's a May 1997 report. It says DOD is underestimating the dollar 
value of problem-disbursements by at least $25 billion.
  DOD says it's an $18 billion problem.
  That means we're really staring at a $50 billion problem--or worse.
  Why would DOD grossly underestimate the problem like this, Mr. 
President?
  We're looking at a classic bureaucratic trick. Blowing smoke to 
conceal the problem: Redefining the problem to make it look smaller.
  This makes the Senate think the problem is getting fixed.
  They want the Senate to ease up on the pressure. That's the goal, Mr. 
President, reduce the pressure.
  Unfortunately, with problem disbursements at the $45 to $50 billion 
level, we right about where we started in 1994.
  So this is no time to ease up on the pressure.
  The unwanted pressure is being generated by our legislative 
initiatives.
  We have gradually turned up the pressure in three successive 
appropriations bills as follows:
  Fiscal year 1995 act--section 8137.
  Fiscal year 1996 act--section 8102.
  Fiscal year 1997 act--section 8106.
  Mr. President, I ask unanimous consent to have printed in the Record 
those sections of the law.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

PUBLIC LAW 103-335--SEPT. 30, 1994

                           *   *   *   *   *


       Sec. 8137. (a)(1) The Secretary of Defense shall develop a 
     plan for establishing and implementing a requirement for 
     disbursing officials of the Department of Defense to match 
     disbursements to particular obligations before making the 
     disbursements. The Secretary shall transmit the plan to 
     Congress not later than March 1, 1995.
       (2) The Inspector General of the Department of Defense 
     shall review the plan and submit the Inspector General's 
     independent assessment of the plan to the congressional 
     defense committees.
       (b)(1) Not later than July 1, 1995, the Secretary of 
     Defense shall require that each disbursement by the 
     Department of Defense in an amount in excess of $5,000,000 be 
     matched to a particular obligation before the disbursement is 
     made.
       (2) Not later than October 1, 1995, the Secretary of 
     Defense shall require that each disbursement by the 
     Department of Defense in an amount in excess of $1,000,000 be 
     matched to a particular obligation before the disbursement is 
     made.
       (c) The Secretary shall ensure that a disbursement in 
     excess of the threshold amount applicable under subsection 
     (b) is not divided into multiple disbursements of less than 
     that amount for the purpose of avoiding the applicability of 
     such subsection to that disbursement.
       (d) The Secretary of Defense may waive a requirement for 
     advance matching of a disbursement of the Department of 
     Defense with a particular obligation in the case of (1) a 
     disbursement involving deployed forces, (2) a disbursement 
     for an operation in a war declared by Congress or a national 
     emergency declared by the President or Congress, or (3) a 
     disbursement under any other circumstances for which the 
     waiver is necessary in the national security interests of the 
     United States, as determined by the Secretary and certified 
     by the Secretary to the congressional defense committees.
       (e) This section shall not be construed to limit the 
     authority of the Secretary of Defense to require that a 
     disbursement not in excess of the amount applicable under 
     subsection (b) be matched to a particular obligation before 
     the disbursement is made.
                                                                    ____


PUBLIC LAW 104-61--DEC. 1, 1995

                           *   *   *   *   *


       Sec. 8102. (a) Not later than October 1, 1995, the 
     Secretary of Defense shall require that each disbursement by 
     the Department of Defense in the amount in excess of 
     $5,000,000 be matched to a particular obligation before the 
     disbursement is made.
       (b) The Secretary shall ensure that a disbursement in 
     excess of the threshold amount applicable under subsection 
     (a) is not divided into multiple disbursements of less than 
     that amount for the purpose of avoiding the applicability of 
     such subsection to that disbursement.
       (c) The Secretary of Defense may waive a requirement for 
     advance matching of a disbursement of the Department of 
     Defense with a particular obligation in the case of (1) a 
     disbursement involving deployed forces, (2) a disbursement 
     for an operation in a war declared by Congress or a national 
     emergency declared by the President or Congress, or (3) a 
     disbursement under any other circumstances for which the 
     waiver is necessary in the national security interests of the 
     United States, as determined by the Secretary and certified 
     by the Secretary to the congressional defense committees.
       (d) This section shall not be construed to limit the 
     authority of the Secretary of Defense to require that a 
     disbursement not in excess of the amount applicable under 
     subsection (a) be matched to a particular obligation before 
     the disbursement is made.
                                                                    ____


PUBLIC LAW 104-208--SEPT. 30, 1996

                           *   *   *   *   *


       Sec. 8106. (a) The Secretary of Defense shall require not 
     later than June 30, 1997, each disbursement by the Department 
     of Defense in an amount in excess of $3,000,000 be matched to 
     a particular obligation before the disbursement is made.
       (b) The Secretary shall ensure that a disbursement in 
     excess of the threshold amount applicable under section (a) 
     is not divided into multiple disbursements of less than that 
     amount for the purpose of avoiding the applicability of such 
     section to that disbursement.

  Mr. GRASSLEY. Mr. President, under the law, DOD was required to start 
making the matches on checks over $5 million, and then gradually 
ratchet the thresholds down to zero.
  At the $5-million level, DOD is really just scratching the surface.
  DFAS/Columbus is where it happens.
  DFAS/Columbus writes fewer than 1,800 checks per year that are $5 
million or more. So what's the big deal? Matchups on 1,800 checks 
should be a piece of cake.
  But when it came time to start phase 2 and lower the threshold to the 
$1 million checks, DOD balked.
  DOD said ``No''--even though it makes fewer than 11,250 payments over 
$1 million annually. DOD asked for more time.
  Making the matchups on 11,250 checks ought to be Mickey Mouse stuff. 
Banks routinely do 500,000 to 1 million each day.
  Mr. President, for 11,250 DOD checks versus up to 1 million checks 
for U.S. banks and DOD can't do it.
  Why can't the Pentagon do it--with all its technological know-how?
  Mr. President, I can't help but think that, maybe, the Pentagon 
bureaucrats don't want to clean up the books.
  They like the mess. That way no one knows what is really going on, 
including them, and no one gets in trouble.
  Well, thanks to the committee's determined leadership last year, our 
legislative reform effort is back on track. We regained some momentum.
  DOD must now make matchups on all checks over $3 million, starting 
next month--June 30.
  At the same time, DOD is supposed to be developing a detailed plan 
for moving first to the $1-million mark, and then on down to zero.
  The IG is reviewing that plan right now and should be submitting an 
assessment to the committee soon.
  After we study this report, we should be in a position to decide on 
how to proceed in the fiscal year 1998 bill.
  I would like to mention one disturbing new development.
  I was recently provided with evidence--DOD documents--that clearly 
indicates that DOD is not on board 100 percent with our effort.
  This material pertains to program payments made at the DFAS/Columbus 
Center. It shows that DOD is using several random-allocation procedures 
for matching payments with appropriated moneys.
  This procedure subverts the appropriations process and is guaranteed 
to create more unmatched disbursements--big time--along with a host of 
other legal problems.
  I will have more to say on this later, once I have all the facts.
  This new information tells me that we will need to apply more 
pressure to get the job done. I yield the floor.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.

[[Page S3985]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HOLLINGS. Mr. President, I am fully aware that my colleague from 
Minnesota has made a motion to strike----
  Mr. STEVENS. Will the Senator yield for a moment for a housekeeping 
matter?
  Mr. HOLLINGS. Certainly.


             unanimous-consent agreement--amendment no. 54

  Mr. STEVENS. Mr. President, I ask unanimous consent that at 2:15 
today there be 5 minutes of debate equally divided between Senator 
Grams and the ranking member, and at the expiration or yielding back of 
the time, the Senate proceed to vote on the Grams amendment. That would 
make the rollcall vote at approximately 2:20 today.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. STEVENS. I thank the Senator.
  May I inquire, is there any indication between you and Senator 
Wellstone that we might have some timeframe on this?
  Mr. HOLLINGS. I will check and inform the chairman.


                         Privilege of the Floor

  Mr. HOLLINGS. Mr. President, I ask unanimous consent that Bill Pratt, 
a fellow assigned to Senator Daschle, be given floor privileges during 
the consideration of S. 672.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HOLLINGS. Mr. President, momentarily, while we see what may or 
may not be worked out with respect to the particular amendment----
  Mr. BOND. Mr. President, may I ask consideration of my colleague to 
interrupt for a procedural question?
  Mr. HOLLINGS. Yes.
  Mr. BOND. Mr. President, I have a number of technical amendments and 
things that I will need to insert, and I will need a brief time period 
sometime between now and lunch. I wondered if the distinguished 
colleague from South Carolina would indicate if there is a time when I 
may do that.
  Mr. HOLLINGS. I will be very brief.
  Mr. BOND. I thank the Senator.

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