The effort is complicated by a leadership transition at the highest levels of the Pentagon. The first audit was spearheaded by David Norquist, an accountant and longtime official who serves as comptroller and chief financial officer. But after Shanahan was elevated, Norquist is now performing the duties of the deputy defense secretary.
Lawmakers said they are concerned that Norquist’s dual roles could draw his attention away from audit activities as the Pentagon functions without a permanent secretary. A Defense Department official speaking on the condition of anonymity to discuss internal staffing issues said Norquist is “still driving the audit” even as he takes on new duties, and that Deputy Under Secretary of Defense Elaine McCusker has been assuming a greater role in audit activities.
“Given the vast duties of the Deputy Secretary of Defense role, including managing the Pentagon’s day-to-day business, it is important that the responsibility of overseeing the DoD audit is not in any way neglected,” the lawmakers wrote. The letter was coordinated by the office of Sen. David Perdue (R-Ga.), who serves on the Senate Armed Services Committee.
Chris Sherwood, a public affairs officer with the Office of the Secretary of Defense, said the staff changes would not delay future audits.
“The FY 2019 audits are already underway and leadership changes have, if anything, elevated the priority," Sherwood said in an email. “The Deputy Chief Financial Officer, Ms. Elaine McCusker has all the appropriate authorities to carry out all the required functions of the Chief Financial Officer.”
In the meantime, lawmakers are closely watching how the Pentagon fixes the problems raised by the first audit. The monumental effort cost $400 million as an army of 1,200 accountants visited more than 600 locations, valuing the Pentagon’s collective assets at $2.7 trillion. In the letter, lawmakers noted that a total of $972 million has been spent on the 2018 audit, a figure that includes fixes for problems that it uncovered.
On the whole, the Pentagon received a failing grade: Only five Defense Department agencies received clean opinions. It found glaring shortcomings in the Department’s management of its IT systems, possibly making military information systems vulnerable to hackers. And it found that the Department did not have the necessary tracking systems to fully keep tabs on money flowing in and out.
The audit “was a critical first step to bring greater transparency and accountability to the Pentagon; however, more progress must be made to reach a clean opinion,” the lawmakers wrote in the letter released Thursday. “It is imperative that subsequent, annual audits continue as planned to properly measure progress.”
Defense Department Inspector General Glenn Fine said in an email that it is unsurprising that the Defense Department’s first full audit did not come back clean.
“The most important thing this year is not the opinion, but that the Department takes the audit seriously and seeks to fix the identified deficiencies, which the Department is doing," Fine wrote.
The department has fallen behind its schedule for fixing issues raised by the last audit. According to its most recent published timeline for completing the audit, the department was due to brief Congress on the findings and the status of its corrective action plan in January 2019. That briefing has not happened. A person speaking on the condition of anonymity to discuss how the department would respond said the Pentagon has asked for additional time to conduct the briefing. A spokesman for the Office of the Secretary of Defense, said in an email that the Department had completed its report on time and is “currently coordinating new dates for staff briefings due to the government shutdown.”
Watchdog groups questioned whether audit activities are still on track.
“I’m keeping my fingers crossed that this isn’t a delay tactic to try to put this off indefinitely,” said Dan Grazier, a former Marine Corps captain who is a military fellow at the Project On Government Oversight, a watchdog group. “Time will only tell based on the past performance of the Pentagon trying to avoid this process.”
Bill Greenwalt, a former Bush administration procurement official who now works as a defense consultant, said the missed deadline is “probably just a blip” and should not be cause for alarm.
“It’s probably just a leadership transition issue," Greenwalt said. “The department I’m certain will get it there and address whatever [the lawmakers’] concerns are.”
The “corrective action plan” prescribed as part of the audit process is also of interest to government contractors, who build the military’s advanced weaponry and maintain its IT systems.
“The standards that you’re looking for are the same as [contractors] would have in the private sector for their audit,” Norquist said in a recent interview. “So one way of thinking about this is the audit requires them to provide the same level of accountability for equipment provided by taxpayers as they’re required to provide to their own shareholders.”
As the department moves to fill the holes the audit revealed, some older computer systems might be swept out of the way.
“Either you’re part of the solution, helping us secure the system, improve it, reduce their vulnerabilities . . . or perhaps you’re the person who helped field it and it’s not up to standards and you’re going to be part of the accountability for bringing those up,” Norquist said.
This article has been updated to include comments from the Office of the Secretary of Defense and the Defense Department Office of Inspector General.