Debunked: $8.5 Trillion Missing from the Pentagon

[Mick West]

This is a variation on an older story about $2.3 trillion "missing" from the pentagon in 2001.
https://www.metabunk.org/threads/de...annot-track-2-3-trillion-in-transactions.165/

The bottom line there is that the money was never missing, the transactions were simply not recorded with the correct level of accounting regulation compliance. This was mainly due to incompatibilities between the various computer systems used at the time.

The new story comes from a Reuters article:
http://www.reuters.com/article/2013/11/18/us-usa-pentagon-waste-specialreport-idUSBRE9AH0LQ20131118

BY SCOT J. PALTROW, Mon Nov 18, 2013
...
In its investigation, Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn't need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn't known. And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies.

The consequences aren't only financial; bad bookkeeping can affect the nation's defense. In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units. Affected units "may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies," the Pentagon inspector general said in a September 2012 report.

Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China's economic output last year.

Does this mean $8.5 trillion was lost? No, the $8.5 trillion is the entire pentagon budget from 1996 to 2012. That's the entire budget for 16 years, because the baseline budget is "only" about $0.5 trillion a year.

They did not lose the money. They spent the money. They even accounted for the money. They simply did not account for every single transaction in enough detail to satisfy the requirements for a full audit.

This is not to say everything is fine. It's not. There's a vast amount of waste, and quite possibly a vast amount of pork and fraud, likely totally billions over the 16 year period. But the suggestion that $8.5 trillion is missing is ludicrous - again, that's all the money the Pentagon (which is about half the budget of the DoD) has spent over those 16 years

 

[George B]

Yes, the lack of accounting accountability has fueled the belief that much of the truly "lost" money has been laundered into Black Operations and deeply classified programs . . . cannon fodder for many conspiracies . . .

 

[Mick West]

The Quakers have some good overviews of actual waste in the military, and suggestions for saving:
https://www.google.com/url?q=http:/...ds-cse&usg=AFQjCNH0FoVH1Fcb10JfTfL-P-K1WE-WLw
http://fcnl.org/issues/budget/

Cost Overruns. The Department of Defense (DoD) has 98 major weapons systems in its "portfolio." According to the Government Accountability Office (GAO), the cost of those weapons has grown by $135 billion beyond initial estimates, just in the last two years. More than half of the jump in cost comes from increased prices, rather than increased quantities. The Joint Strike Fighter program, for example, which is intended as a replacement for all the jets used by the Air Force, Navy and Marines, was a $284 billion program – and is now expected to cost $34 billion more. The GAO reports that 80 percent of the weapons programs are paying higher unit prices than originally bid.

Even when a program is being reduced or phased out, the costs stay high. Orders for copies of the F-22 Raptor were reduced by 70 percent, but total acquisition costs decreased by only 14 percent. Per unit costs nearly tripled, from $139 million to $412 million per airplane. (For more information, see "Defense Acquisitions: Assessments of Selected Weapons Systems," GAO-11-233SP, March 29, 2011, http://www.gao.gov/assets/320/317081.pdf. )

Losing Track of Inventory. The DoD Inspector General released two reports last year describing how the Army has overpaid millions of dollars for spare parts. For an $8.00 helicopter door part, for example, the Army paid $284.00. In another instance, the Army paid five times too much for a $1,500 rotor part that was already in stock in military warehouses. Sikorski, the manufacturer of the helicopter, was allowed to purchase contract items from the inventory held by the Defense Logistics Agency, and resell them to the Corpus Christi Army Depot to meet contract requirements, at an 85% markup. Sikorski made an excessive profit of nearly $1 billion between 2008 and 2010. (For more information, see: http://www.dodig.mil/Audit/reports/fy12/RIB DODIG-2012-004.pdf )

The DOD Inspector General and the GAO estimate that, at any given time, there is roughly a billion dollars' worth of spare parts on order that the Department simply does not need, but the Pentagon inventory system hasn't allow for the order to be changed. This is in addition to about $ 5 billion worth of unneeded spare parts already in the military warehouses. (For more information, see "Defense Logistics Agency Needs to Expand on Efforts to ... Manage Spare Parts," http://www.gao.gov/new.items/d10469.pdf )

Losing Track of Leases. The Department of Defense incurred $720 million in
late fees for failing to return shipping containers when their leases were up.
The hundreds of millions in late fees were in addition to the cost of the actual
leases. Senator Tom Carper, as chair of the Senate Committee on Homeland
Security and Government Affairs, Subcommittee on Federal Financial
Management recently wrote to Deputy Secretary of Defense Ashton Carter,
urging the Department to find ways to keep better track of leased property.
(For more information, see: http://www.carper.senate.gov/public/index.cfm/2011/12/senators- urge-pentagon-to-address-millions-in-late-fees-from-leased-shipping-containers )

Losing Track of Money. The Commission on Wartime Contracting reported last fall that there was an estimated $31 to $60 billion in DOD waste and fraud related to the Iraq and Afghanistan wars. The Commission further described these losses as largely avoidable. The Inspector General issued a report specifically on payments made to contractors and others in Afghanistan, without information, controls, or reporting. (For more information, see http://www.dodig.mil/Audit/reports/fy12/DODIG-2012-023.pdf )

Shoddy Bookkeeping. The DoD Inspector General recently released a report on the Department's
inability to recoup up to $200 million in delinquent debts due to poor, but basic, record keeping. As of
June 2009, contractors owed DoD $3.1 billion. About $200 million of the uncollected debt was not in
dispute and was considered collectible, but DoD offices only had complete information on the
contractors for about half of the accounts. (For more information, see "DFAS (Defense Finance and Accounting
Service) Needs More Effective Controls Over Managing DoD Contractor Debt," http://www.dodig.mil/Audit/reports/fy11/11-084.pdf )

*The combined FY2011 budgets of the Departments of State, Interior, Commerce, Justice and Energy equaled about $97 billion. According to the above reports, a one-year loss for the Pentagon from these identified problems equaled about $102 billion.

Note the above are all from .gov and .mil sources, not simply the Quaker's opinions.

 

[George B]

This is one conspiracy I believe is plausible and requires a handshake and a wink between designated Congressional Staffers, the GAO, selected DOD Staffers and corporate bigwigs . . . overcharges are passed into or parked into project accounts based on standing contract weasel wording allowing contractors to charge hundreds of hours on performance contracts when only a few hours were required . . . this money is then shared between excess profit for the corporation and free, un encumbered, untraceable funds . . . allocated to projects DoD wishes to remain covert except for those with a need to know . . .

 

[Mick West]

This is one conspiracy I believe is plausible and requires a handshake and a wink between designated Congressional Staffers, the GAO, selected DOD Staffers and corporate bigwigs . . . overcharges are passed into or parked into project accounts based on standing contract weasel wording allowing contractors to charge hundreds of hours on performance contracts when only a few hours were required . . . this money is then shared between excess profit for the corporation and free, un encumbered, untraceable funds . . . allocated to projects DoD wishes to remain covert except for those with a need to know . . .

Doesn't the DoD have a significant black budget anyway?

 

[George B]

Doesn't the DoD have a significant black budget anyway?

Yes, but me thinks it is inadequate to meet all their desires . . . they need funds from the unclassified budget to supplement their allocated budget but they need it without the risk of an audit trail . . . and they also want to avoid the scrutiny of the Congressional Oversight Committee charged with the classified budget . . .

 

[Mick West]

Yes, but me think it is inadequate to meet all their desires . . . they need funds from the unclassified budget to supplement their allocated budget but they need it without the risk of an audit trail . . . and they also want to avoid the scrutiny of the Congressional Oversight Committee charged with the classified budget . . .

Has any of this ever come to light?

The only thing I can think of is Iran-Contra, and that seems rather more involved than a handshake and wink. It would seem like the potential for exposure of such a scheme would be vast - especially when involving the private sector contractors.

 

[George B]

Has any of this ever come to light?

The only thing I can think of is Iran-Contra, and that seems rather more involved than a handshake and wink. It would seem like the potential for exposure of such a scheme would be vast - especially when involving the private sector contractors.

Some may but don't go too far because:


The key is there are the chosen few Beltway bandits who wheel and deal in this process and the practices are indistinguishable from any firm trying to maximize their legal profit. All significant contracts have provisions for cost over runs and allow modifications during implementation. But If things get hot the very few knowledgeable operatives within the companies just declare accounting errors and return the cash to DoD . . . no harm no foul . . . they cooperate because they make very nice profits and many feel they are part of the covert DoD system used to protect the national interests. . . . a patriot who gets richly rewarded for being a patriot. And profits because they keep their mouths shut!!!. . . it is actually low risk because the GAO, justice department , etc are just told there are national security issues involved and to go easy, delay, or drop an investigation . . . Most of the contract monitoring and money transactions are compartmentalized to usually one program contracting agent who specialize in all similar contracts . . . so one person could monitor and approve payments in the hundreds of millions. . . sometimes all the program manager knows at the business end of the stick is the job got done or it didn't . . . they quality control the work product not the costs or payments to the contractor . . .

 

[Mick West]

Seems rather unlikely that hundreds of these operations have gone on for decades without a leak.

 

[SR1419]

This is a variation on an older story about $2.3 trillion "missing" from the pentagon in 2001.

Does this have anything to do with the Leo Wanta story? This got a lot of traction a few years back but seems to have faded from the CT meme...although Wanta himself seems to remain active:

Mind the source: http://www.rense.com/general70/leo.htm

http://wantarevelations.com/

https://www.facebook.com/leeemilwanta

Leo Emil Wanta was made Ambassador of Somalia to the nations of Switzerland and Canada in 1993. His Investiture occurred in Paris at the Pullman-Windsor Hotel and was witnessed by such well-known international politicians as the Honorable Alain Jupee, former Defense Minister for France under the Sarkozy administration. On July 7, 1993, he was arrested in Lausanne, Switzerland where he was held in solitary confinement with no charges filed against him for 134 days before a coded letter from Yitzhak Rabin evidently startled the Suisse Sûreté. They put him on an airplane to New York City the next day and a New York Magistrate threw out the case the State of Wisconsin tried to bring against Wanta.

"The purpose of $23 trillion of the $27.5 trillion is to pay the debt of the United States," Wanta says. "It appears to have been effectively stolen by the U.S. government. The remaining $4.5 trillion represents my personal funds which will put an immediate $1.575 trillion in tax payments into the Treasury Department. My greatest personal desire is to use my after tax personal funds to build a national high-speed rail system for the American people. It will create 2 million jobs and will stimulate the economy at absolutely no cost to the people," he said.

 

[Mick West]

Does this have anything to do with the Leo Wanta story?

No. It's an entirely different story.

 

[George B]

Seems rather unlikely that hundreds of these operations have gone on for decades without a leak.

They haven't . . . there are investigations initiated all the time but every time a GAO inspector appears they focus on the quality of the work product, number of employees, contract duration, millstones met or not met, the total amount of hours charged, the amount charged per hour and number of hours charged . . . but bottom-line most performance contracts do not specify how many hours it will require to accomplish a specific job (especially if it is new, never performed before) nor the amount of administrative personnel that are required for the contractor to accomplish the unique job . . . unbelievable wiggle room used to its fullest . . . I have seen IMO $150k jobs costing $3.5M . . . no questions asked !!

An inspector files a report that recommends tighter contract monitoring and better wording in the next contract revision . . . that is about it . . . nothing more . . . as I said a low risk high reward practice . . . since no one knows how much or where the laundered money goes . . . the trail ends with the inspector's report.

 

[Poncho]

"Does this mean $8.5 trillion was lost? No, the $8.5 trillion is the entire pentagon budget from 1996 to 2012. That's the entire budget for 16 years, because the baseline budget is "only" about $0.5 billion a year"

Those numbers dont stack up or am I missing something?

 

[MikeG]

N

"Does this mean $8.5 trillion was lost? No, the $8.5 trillion is the entire pentagon budget from 1996 to 2012. That's the entire budget for 16 years, because the baseline budget is "only" about $0.5 billion a year"

Those numbers dont stack up or am I missing something?

I'm not sure what you mean. The original post shows the budget. I am sure that year-by-year numbers are available.

 

[DougW]

Ah - Earlier this year I had a 911 CT try to tell me that the missing 2.3 trillion was used to pay off trauma actors and any witnesses to the staging of 911 and the they used CGI enhanced video of the planes crashing into the buildings.
I was called a sheeple and told to wake up......certainly an eye opener for me!

 

[LindaI]

The Office of the Inspector General released the following on July 26th, 2016.

http://www.dodig.mil/pubs/report_summary.cfm?id=7034

Finding

The Office of the Assistant Secretary of the Army (Financial Management & Comptroller) (OASA[FM&C]) and the Defense Finance and Accounting Service Indianapolis (DFAS Indianapolis) did not adequately support $2.8 trillion in third quarter journal voucher (JV) adjustments and $6.5 trillion in yearend JV adjustments1 made to AGF data during FY 2015 financial statement compilation.2 The unsupported JV adjustments occurred because OASA(FM&C) and DFAS Indianapolis did not prioritize correcting the system deficiencies that caused errors resulting in JV adjustments, and did not provide sufficient guidance for supporting system‑generated adjustments.

In addition, DFAS Indianapolis did not document or support why the Defense Departmental Reporting System‑Budgetary (DDRS-B), a budgetary reporting system, removed at least 16,513 of 1.3 million records during third quarter FY 2015. This occurred because DFAS Indianapolis did not have detailed documentation describing the DDRS-B import process or have accurate or complete system reports.

As a result, the data used to prepare the FY 2015 AGF third quarter and yearend financial statements were unreliable and lacked an adequate audit trail. Furthermore, DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions. Until the Army and DFAS Indianapolis correct these control deficiencies, there is considerable risk that AGF financial statements will be materially misstated and the Army will not achieve audit readiness by the congressionally mandated deadline of September 30, 2017.

Please show me where the Congressionally mandated audit, due Sept 30th, 2017 is for the years 1996 thru 2015?

 

[mazoola]

Has any of this ever come to light?

The only thing I can think of is Iran-Contra, and that seems rather more involved than a handshake and wink. It would seem like the potential for exposure of such a scheme would be vast - especially when involving the private sector contractors.

There was the National Reconnaissance Office's multi-billion-dollar slush fund in the 1990s. I'm not sure if it was funded in precisely the manner George B describes, and it took place entirely within the context of the black budget, but it *is* an example of a DoD-related agency taking advantage of auditing failures to fund other projects.

 

[BrightJ]

So, since I am sure you know best, please explain how $6.5 trillion has been unaccountably spent in 2015, according the Inspector General of the Department of Defense? Let me guess, Forbes, the Inspector General, Professor of economics-Mark Skidmore, etc. are all conspiracy theorists.

https://media.defense.gov/2016/Jul/26/2001714261/-1/-1/1/DODIG-2016-113.pdf

https://www.forbes.com/sites/kotlik...-21-trillion-of-our-money-without-telling-us/

On July 26, 2016, the Office of the Inspector General (OIG) issued a report "Army General Fund Adjustments Not Adequately Documented or Supported". The report indicates that for fiscal year 2015 the Army failed to provide adequate support for $6.5 trillion in journal voucher adjustments. According to the GAO's Comptroller General, "Journal vouchers are summary-level accounting adjustments made when balances between systems cannot be reconciled

 

[Keith Beachy]

So, since I am sure you know best, please explain how $6.5 trillion has been unaccountably spent in 2015, according the Inspector General of the Department of Defense? Let me guess, Forbes, the Inspector General, Professor of economics-Mark Skidmore, etc. are all conspiracy theorists.

https://media.defense.gov/2016/Jul/26/2001714261/-1/-1/1/DODIG-2016-113.pdf

https://www.forbes.com/sites/kotlik...-21-trillion-of-our-money-without-telling-us/

Conspiracy theorists, no, they explained it is sloopy accounting.

"While government budgets can be complex, our government, like any business, can track receipts and payments and share this information in ways that can be understood by the public. The ongoing occurrence and gargantuan nature of unsupported, i.e., undocumented, U.S. federal government expenditures as well as sources of funding for these expenditures should be a great concern to all tax payers. https://www.forbes.com/sites/kotlik...-our-money-without-telling-us/2/#ef64be966f04"

aka, sloopy/poor/bad accounting practices. Almost as bad as my accounting practices at home.

I guess this is why accountants make lots of money, when you use them.

 

[Mick West]

It wasn't spent money.