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Defense Spending Is Overstated, GAO Report Says

By Ann Scott Tyson
Washington Post Staff Writer
Thursday, September 22, 2005

The Pentagon has no accurate knowledge of the cost of military operations in Iraq, Afghanistan or the fight against terrorism, limiting Congress's ability to oversee spending, the Government Accountability Office concluded in a report released yesterday.

The Defense Department has reported spending $191 billion to fight terrorism from the Sept. 11, 2001, attacks through May 2005, with the annual sum ballooning from $11 billion in fiscal 2002 to a projected $71 billion in fiscal 2005. But the GAO investigation found many inaccuracies totaling billions of dollars.

"Neither DOD nor Congress can reliably know how much the war is costing and details of how appropriated funds are being spent," the report to Congress stated. The GAO said the problem is rooted in long-standing weaknesses in the Pentagon's outmoded financial management system, which is designed to handle small-scale contingencies.

The report said the Pentagon overstated the cost of mobilized Army reservists in fiscal 2004 by as much as $2.1 billion. Because the Army lacked a reliable process to identify the military personnel costs, it plugged in numbers to match the available budget, the report stated. "Effectively, the Army was reporting back to Congress exactly what it had appropriated," the report said.

The probe also found "inadvertent double accounting" by the Navy and Marine Corps from November 2004 to April 2005 amounting to almost $1.8 billion.

The report turned up aberrations in imminent-danger pay -- $225 a month offered to military personnel serving in Iraq, Afghanistan and other countries -- which had "little correlation with the numbers of deployed personnel." That pay totaled $38 million in April 2004, implying that 170,000 military personnel were receiving it, but by August 2004 it had mushroomed to $231 million, suggesting that more than 1 million U.S. troops were serving in danger zones.

The report comes as budgetary pressures are mounting on the Pentagon from Gulf Coast hurricanes and the ongoing fighting in Iraq. "This is a very expensive and long-term endeavor," said Sen. Jack Reed (D-R.I.) after a closed briefing on Iraq yesterday with Defense Secretary Donald H. Rumsfeld.

The Pentagon agreed "generally" with the GAO's recommendations, and announced it would take "immediate action" to strengthen procedures for reporting war costs, according to a letter from Undersecretary of Defense Tina W. Jonas.

Jonas, the comptroller, disagreed with a GAO proposal that the Pentagon issue guidelines to promote costs controlling by U.S. military commanders, and said it had partially accounted for some of the overstated costs.

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