DoD Financial Management Improves, But Problems Remain

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Dozens of Army reservists and National Guardsmen received checks totaling more than $900,000, despite failing to report for duty, according to Congressional investigators.

A separate investigation found that the Pentagon has issued checks to the deceased former spouses of military retirees.


Payment problems are just part of the huge financial management challenges faced by an agency as large as the U.S. Department of Defense (DoD). DoD has assets and liabilities that exceed those of Exxon, IBM, Ford and Wal-Mart combined, Government Computer News reported. Its operating budget is more than $400 billion. Improvements, considering the number of players and layers of bureaucracy involved, can take years.

Here's what two recent probes revealed. More than 77,800 former spouses receive a portion of a member's military retired pay as part of a divorce settlement, reported. The investigation found 14 cases where retired pay was not terminated after the ex-spouse's death.

In the payments to deserters case, the problem is also limited—the U.S. Government Accountability Office (GAO) found 75 reservists who somehow remained on the military payroll, despite failing to report for duty as ordered, the Virginian-Pilot reported. GAO recommended that the Army and reserves come up with a strategy to promptly stop payments to troops identified as deserters.

The House Government Reform Committee has been scrutinizing military payroll systems, asking GAO to probe complaints that some troops have been underpaid, that their checks have been delayed, and other problems. The Senate is also pressuring DoD to improve.

The country's top auditor, Comptroller General of the United States David Walker, noted progress at a recent Senate hearing. He pointed to DoD's development of a plan to improve financial practices and its work on computer modernization, Government Computer News reported.

The department says it has modernized 200 business systems, saving $1 million with each upgrade. Also, 95 percent of DoD's vendor payments now are done electronically, up from 86 percent in 2001, saving more than $6 million.

“The approach that they are taking now is vastly superior to the approach that they were taking before,” Walker told lawmakers.

However, Walker, who heads GAO, is a frequent critic of DoD's financial management. He urged the department to “declare a war on waste” and to embrace a “total business transformation plan,” which would outline performance goals across the entire enterprise. But he acknowledged that the massive size of the department makes reform especially challenging.

“Because of decades-old problems, the Defense Department wastes billions of dollars every year,” Walker said.

Sen. Tom Coburn (R-Okla.) agreed with Walker's assessment. He is chairman of the Senate Homeland Security and Government Affairs Subcommittee on Federal Financial Management, Government Information, and International Security.

“If DOD was a privately owned company, it would have been bankrupt a long time ago,” Coburn said.

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