Defense Contractors Return $200 Million in Self-Reported Waste

A little over 10 years ago, it became mandatory for Department of Defense contractors to self-report potential fraud, waste, or abuse.  Now the department’s inspector general reports that defense contractors have returned more than $200 million over the last decade in self-reported waste.

Until November 2008, the Defense Department had a voluntary program for contractors to disclose potential violations.  Congress then passed a law to make such disclosures compulsory or the contracting company could risk suspension or disbarment when there is evidence of criminal wrongdoing.

There is a lot of waste in the budget for the U.S. military. At $717 billion for FY2019, the U.S. has by far the largest budget of any military in the world.  The second-highest spender on the military is China, but even China’s spending is three times less than the U.S. budget.  The military now accounts for one-sixth of federal spending.

The astronomical amount of U.S. military spending has not led to military preparedness.  Our armed forces have seen a decline in mission-capable aircraft, the Navy continues to produce ships that it doesn’t want and says do not meet its mission standards, the Pentagon continues to suffer from security issues with its information technology systems, and the department lacks inventory accuracy.

The necessity for the Pentagon to get its financial house in order is a constant reminder, as numerous problems have cropped up in recent years.  A July 26, 2016 DOD OIG report noted that the Defense Financing and Accounting Service, which provides payment for military and civilian personnel and retirees, could not adequately document $6.5 trillion worth of year-end adjustments to general fund transactions and data.  The books are so bad that areas within the DOD have been on the GAO list of programs at high risk for waste, fraud, abuse, and mismanagement since 1995.

The recovery of $200 million in self-reported overpayments is a good start, but much more remains to be done to get the Pentagon’s fiscal house in order.