If the Defense Department can’t get its books straight, how can it be trusted with a budget of more than $800 billion per year?
Last week, the Department of Defense revealed that it had failed its fifth consecutive audit.
“I would not say that we flunked,” said DoD Comptroller Mike McCord, although his office did note that the Pentagon only managed to account for 39 percent of its $3.5 trillion in assets.
But what did raise some eyebrows was the fact that DoD made almost no progress in this year’s bookkeeping: Of the 27 areas investigated, only seven earned a clean bill of financial health, which McCord described as “basically the same picture as last year.”
Given this accounting disaster, it should come as no surprise that the Pentagon has a habit of bad financial math. This is especially true when it comes to estimating the cost of weapons programs.
The Pentagon’s most famous recent boondoggle is the F-35 program, which has gone over its original budget by $165 billion to date. But examples of overruns abound: As Sens. Jim Inhofe (R-Okla.) and Jack Reed (D-RI) wrote in 2020, the lead vessel for every one of the Navy’s last eight combatant ships came in at least 10 percent over budget, leading to more than $8 billion in additional costs.
And another major overrun is poised to happen soon, according to a recent report from the Congressional Budget Office.
The Navy plans to expand its ship production in an effort to maintain an edge over China, with a particular focus on a new attack submarine and destroyer ship. The Pentagon has proposed three versions of this plan at an average cost of $27 billion per year between 2023 and 2052, a 10 percent jump from current annual shipbuilding costs.
“[W]e could reach a $1 trillion defense budget five years sooner [than the CBO estimates], in 2027,” Lautz wrote.