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Why the Pentagon can’t fully account for all its assets — in Afghanistan or anywhere else

Incomplete audits make wasteful spending more likely

A CH-47 Chinook helicopter is loaded onto a U.S. Air Force C-17 Globemaster III transport plane at the Kabul airport on Aug. 28. (U.S. Central Command/Reuters)
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Following the withdrawal of U.S. forces from Afghanistan, the media and other critics began asking questions about the volume of U.S.-made weapons and equipment left in the hands of the Taliban. One U.S. official estimated that the Taliban controls more than 2,000 armored vehicles and perhaps 40 aircraft, including UH-60 Black Hawk helicopters.

Of course, the U.S. government prioritized the evacuation of people over military equipment — much of which belonged to the now-defunct Afghan National Defense and Security Forces. Yet the inability to quickly and precisely track what resources have been lost highlights a systemic problem that has plagued the Pentagon for decades: the inability or unwillingness to fully account for assets.

What the audit process entails

In 1990, Congress began requiring federal departments and agencies to produce annual audit reports — with the goal of greater transparency on government spending, along with decreased waste. Despite three attempts, the Department of Defense has never successfully outlined its total assets and liabilities. In fact, the department only began conducting audits in 2018.

Auditing the Defense Department’s $3 trillion in assets is no small undertaking — the department’s assets are located on 4,500 sites, across 40 countries and all 50 states. For each of the Pentagon’s 24 components, including military services and various defense agencies, auditors perform two types of on-the-ground testing.

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For “existence testing,” auditors verify that everything on paper exists in real life — that all the jets are in the hangar. “Completeness testing” takes the opposite approach — confirming that what exists on the ground is also recorded in the books. Last year, approximately 1,400 auditors were deployed across the department to examine assets and record keeping.

Audits help identify lost material

The audit is critical because the department receives nearly half of all federal discretionary spending each year — $740 billion in the current fiscal year. Lost or unutilized resources could be on the order of hundreds of millions of dollars. Additionally, if Congress doesn’t know specific resources are not being used, legislators might unwittingly allocate money on duplicative assets.

The Defense Department has not published an estimate of how much of its property was lost or destroyed in Afghanistan. But the past three audit attempts reveal the agency has a hard time keeping track of equipment, even when it’s within U.S. borders. During the first effort, auditors at Hill Air Force Base in Utah discovered 71 uninstalled missile motors, worth approximately $51 million. Once it identified the equipment and determined it was in working condition, the Air Force was able to use these motors.More recently, Thomas Harker, the acting Defense comptroller at the time, noted that as a result of the third audit, the Marine Corps “increased the accuracy of a lot of their property, plant and equipment balances, and their inventory and operating materials and supplies.”

As well as discovering mislaid material, the audit attempts have revealed informational gaps that have improved combat readiness. For example, the audit identified a database entry that listed buildings at an Army base as usable, but that were in fact broken down beyond repair.

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The potential for illegal impoundment

In addition to creating inefficiencies by not having a complete inventory of its resources, the Defense Department’s inability to fully account for its assets raises a legal concern: the possibility of unauthorized impoundment.

In government lingo, this isn’t the same as what happens to your illegally parked car — “impoundment” refers to when the executive branch refuses to spend funds appropriated by Congress to be spent for specific purposes.

Since the Jefferson administration, presidents have occasionally withheld federal funding to agencies, typically to reduce wasteful spending. But in the early 1970s, President Richard Nixon slashed billions in domestic federal spending, claiming he had constitutional authority to do so. Congress reacted by passing the Impoundment Control Act of 1974, which prohibits the president from rescinding or delaying appropriated funds without prior congressional approval.

A year later, the Nixon administration did not adhere to the new statute when it blocked funding to alleviate water pollution. The Supreme Court in Train v. City of New York ordered the president to disburse the funds.

Decades later, impoundment reentered the public discourse when the Trump administration temporarily withheld $391 million in military assistance to Ukraine. That move became part of the complicated backstory that led to President Donald Trump’s first article of impeachment.

In addition to traditional impoundment, another potential challenge to effective use of government funds is passive impoundment, which occurs when the administration purchases but does not use a resource. Otherwise, the executive branch could sidestep Congress’s power of the purse by complying with the appropriations law, but then refusing to employ the resource.

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Simply put, passive impoundments — even when they result inadvertently from financial mismanagement — undermine the constitutional authority of Congress to determine whether and how public funds are spent. Though Nixon (and later Trump) asserted that the president has independent constitutional authority under the Constitution’s take care clause to cut or temporarily suspend appropriations, the Supreme Court in the Train case held otherwise.

Will Congress get tough?

The Defense Department has tentatively targeted 2028 as the earliest date for achieving a clean audit; the need to modernize and consolidate its approximately 400 information technology systems may pose the greatest challenge. Lawmakers might be less patient. Earlier this year, a group of senators led by Bernie Sanders (I-Vt.) introduced the Audit the Pentagon Act of 2021.

This bipartisan piece of legislation would require any Defense Department component that does not “achieve an unqualified opinion on its full financial statement” after fiscal year 2022 to forfeit 1 percent of its annual funding. The secretary of defense would then have to return those funds to the Treasury Department to be used to reduce the federal deficit.

This added pressure suggests that the earlier the Defense Department can successfully complete a full-scale financial audit, the better. And it means Congress may be keeping a closer eye on those spending requests to ensure that the Pentagon is spending according to law — and also putting the military’s vast resources to use.

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Christian I. Bale (@ChristianIBale) is a former program examiner in the national security division of the White House, Office of Management and Budget, and former country director for Japan in the Office of the Secretary of Defense. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the official policy of any agency of the U.S. government.

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