[Congressional Record Volume 169, Number 73 (Monday, May 1, 2023)]
[Senate]
[Pages S1431-S1432]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                         Department of Defense

  Mr. GRASSLEY. Madam President, I am here to discuss the Defense 
Department's financial audits--or, more accurately, the lack of 
credible audits. My colleagues know that I am as stubborn as a mule 
when it comes to my oversight work of the Pentagon's accounting 
system--or lack of system.
  I wish I could stop sounding like a broken record when talking about 
the Pentagon's financial track record.
  The fact is that the Pentagon is pigheaded when it comes to 
accounting for taxpayer dollars. It keeps pouring billions of dollars 
into an antiquated accounting system that doesn't work.
  Late last year, I read an article that appeared in a national 
security blog. The blog is called War on the Rocks. This blog article 
is called ``The Pentagon Can't Count: It's Time to Reinvent the 
Audit.'' It was written by Steve Blank, a business professor at 
Stanford University.
  As a former member of the Defense Business Board, the professor calls 
for a whole new approach to defense auditing. The Pentagon is spending 
$1 billion a year--and these are his quotes--``to get incrementally 
better'' and still, according to him, clean opinions are nowhere in 
sight.
  He raises a legitimate question: Why is the Pentagon spending so much 
money for so little results--meaning money on audits?
  Thinking outside the box was not in the Defense Business Board's 
charter,

[[Page S1432]]

but Professor Blank allowed himself the luxury of thinking outside the 
box. He dreamed about doing the impossible, and he wrote this fairly 
long quote:

       What if we could invent the future? It dawned on me.

  Continuing to quote:

       If we tried to look over the horizon, we would discover 
     that the department could audit faster, cheaper, and more 
     effectively by inventing future tools and techniques rather 
     than repeating the past.

  The professor envisioned a ``5th generation of audit practices'' to 
break the cycle of audit failures at the Department of Defense.
  I give the professor very high grades for creativity and his search 
for new solutions but disagree with some of his thinking.
  However, when it comes to pinpointing the root cause of unending 
audit failures, the professor hits the nail on the head.
  So I quote from him:

       [The] Department of Defense needs to lead the audit 
     industry to create a 21st century integrated finance and 
     accounting system, including a U.S. Standard General Ledger 
     that provides reliable and complete data.

  ``Integrated systems'' and ``reliable data'' are the magic words.
  The experts, like the auditors, the financial managers, the inspector 
general, have known this truth for 30 years or more. They dutifully 
report it, wringing their hands in frustration, and then rinse and 
repeat the cycle from 1 year to the next year.
  Now, see here. We have the mighty Pentagon that develops the most 
advanced weapons systems the world has ever known. Yet, when it comes 
to deploying basic technology like an accounting system, it is 
buffaloed--or is it? Maybe they want the system to work that way so 
nobody knows what is going on and how the money is spent.
  After hundreds of billions have been poured into patching up old 
audit systems, the Department of Defense still can't perform the most 
elementary accounting tasks in the book. They don't capture 
transactions as they occur and post them to the correct accounts. So 
just go figure what is wrong.
  Well, there once was a true sage consigned to an attic cubbyhole at 
the Pentagon who claimed to know the answer. That person was A. Ernest 
Fitzgerald. We called him Ernie. Ernie was the Management Systems 
Deputy of the Air Force in the Comptroller's office. He blew the 
whistle on the C-5A cost overruns and, of course, got fired when 
President Nixon didn't like what he testified to before the Congress of 
the United States.
  Some years after being restored to his post--and he was restored only 
by court order--he was detailed to my staff for several years to lead a 
joint review of the internal controls over vendor payments. Ernie 
believed the Pentagon barons lorded over their financial fiefdoms for 
one reason and one reason only: They did not want to see the status quo 
go away. It is pretty simple. Keeping the books in disarray gives the 
Department of Defense the so-called flexibility to hide overspending 
and other financial shenanigans.
  Once upon a time, a promising fix lent credence to Ernie Fitzgerald's 
theory. It was called the Defense Corporate Database/Warehouse System. 
It was at the threshold of success when it got torpedoed--and torpedoed 
by whom? By the bureaucrats in the Defense Department. That system 
could have been a building block for a modern accounting system that 
might have delivered a victory to the American taxpayer.
  If the brass were truly committed to cleaning up the books, it would 
have happened long ago. The technology is there for the taking. To 
break out of the cycle of failures, we need to step back, hit the audit 
reset button, and chart a new course.
  As a first step, Secretary of Defense Austin should hold the Chief 
Financial Officer accountable for failing to have an accounting system 
that meets statutory requirements. That is as simple as accounting 101 
and accountability 101 in my book. If Secretary Austin holds the CFO's 
feet to the fire, just maybe we will finally see a course correction.
  As a lifelong family farmer, I can tell you that hope springs eternal 
at the start of every planting season. After four decades of working to 
weed out the fiscal mess at the Pentagon, it is a tall order to be 
optimistic. I am not going to give up. I am not going to give up this 
fight. With the help of a team of auditors under the leadership of the 
Government Accountability Office's general counsel, Emmanuelli Perez, 
and support from our allies, maybe together we can nudge the Department 
in a new direction. Otherwise, expect more of the same--a colossal 
waste on failed audits.
  I yield the floor.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. CORNYN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.