DOD grapples with tangled financial web

The tangled web of Defense Department financial systems has grown even more complex now that DOD officials have found another 200 financial management systems above and beyond the 673 they already knew existed, Pentagon officials said recently. Tina Jonas, deputy undersecretary of Defense for financial management, said that DOD "just discovered" the additional systems.

In addition to the 873 financial systems, DOD has more than 1,500 interfaces that connect all those systems, she told the House Government Reform Committee's Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee during a March 20 hearing.

Auditors from the General Accounting Office and the DOD inspector general's office generally praised DOD's efforts to fix the problem, but they noted that it is a long-term problem that will take sustained, senior-level attention to solve. Even optimistic projections are that DOD will not have auditable books for five to 10 years. DOD has even stopped trying to pass an audit, officials confirmed — a move that GAO praised.

In the past, the department has undertaken Herculean efforts to present auditable books, said Gregory Kutz, GAO's director of financial management and assurance. "But DOD is so large, there is no way to go through the heroic tasks to make that happen," he said.

The efforts were largely a waste of time and money, just to come to a conclusion that DOD's books are not auditable, Jonas said. Abandoning the audit would save $24 million a year — money that could be spent more wisely, she said. Instead, DOD is taking the necessary steps to "get to the root cause of the problem," Jonas said. The goal is to produce accurate and timely financial data.

GAO and the DOD inspector general praised the department's initiative to create an enterprise financial management architecture — a $100 million effort due to be awarded soon. Officials expect the architecture to be finished by March 2003. DOD will then test the solution developed with the architecture in early 2004 at six pilot program sites, Jonas said.

DOD has requested another $96 million in fiscal 2003 for the pilot programs. That architecture targets the "uncontrolled proliferation of antiquated and stand-alone financial management systems and the inefficient business process they support," Jonas said. Lawmakers expressed impatience and frustration with the Pentagon's long-standing financial management problems.

"Unfortunately, this isn't news," said Rep. Janice Schakowsky (D-Ill.), the subcommittee's ranking minority member. "We've heard lots of talk. We just haven't seen any action."

Rep. Dennis Kucinich (D-Ohio) even proposed an amendment to the Pentagon's budget that would have frozen DOD spending — other than for homeland security — until the department could produce auditable books. That amendment was later withdrawn when Rep. Christopher Shays (R-Conn.) agreed to hold a hearing on the problem. That hearing is scheduled for next month, a Kucinich spokeswoman said.