Members of Congress have yet again failed to force the Department of Defense (DOD) to improve its woeful financial management.

On October 18, 2021, the Senate Appropriations Committee released its version of the DOD Appropriations Act for fiscal year (FY) 2022, which would increase defense spending by 5 percent over FY 2021 levels.  The $740 billion bill matches the amount provided in the House version and exceeds the Biden administration’s request by $24 billion.

This budget growth was provided with no strings attached for increased efficiency and effectiveness when spending the additional money.  It also comes when the U.S. military’s footprint abroad is at its smallest in a generation.  As a result, the Biden Administration eliminated the Pentagon’s Overseas Contingency Operations (OCO) account nearly 20 years after its inception, which is one of the few positive development in the bill.  Originally intended for emergency defense spending in response to the attacks of September 11, 2001, the OCO transitioned into a slush fund designed to inflate spending at the DOD far above the baseline budget and for purposes unrelated to foreign wars.  The OCO received $68.7 billion in FY 2021.

The need for the Pentagon to get its fiscal house in order remains high.  It remains the sole federal agency that has not undergone a clean audit under the Chief Financial Officers Act of 1990.  The Pentagon now estimates that it will not fully pass a clean audit before 2027, or 37 years after it was required to do so by law.

The books are so bad that areas within the DOD have been on the Government Accountability Office’s (GAO) list of programs at high risk for waste, fraud, abuse, and mismanagement since 1995.  A July 26, 2016 DOD Inspector General report noted that the Defense Financing and Accounting Service, which provides payment for military and civilian personnel and retirees, could not adequately document $6.5 trillion worth of year-end adjustments to general fund transactions and data. 

The acquisition side is also a mess, with several high-profile weapons systems suffering from staggering cost overruns and poor performance.  Chief among them is the F-35 Joint Strike Fighter (JSF), which has been on the GAO’s High-Risk List since 1990.  The program has been under continuous development since the contract was awarded in 2001 and has faced innumerable delays and cost overruns.  Total acquisition costs now exceed $428 billion, nearly double the initial estimate of $233 billion, with projected lifetime operations and maintenance costs of $1.727 trillion.

Nevertheless, the JSF maintains strong support in Congress, likely because the contractor has strategically spread manufacturing across a wide array of legislative districts.  According to a Lockheed Martin website detailing the F-35’s economic impact across the country, the only states that do not have at least one supplier for the aircraft are Hawaii and North Dakota. 

An October 20, 2021 letter from 89 members of the congressional JSF Caucus, chaired by Reps. Mike Turner (R-Ohio) and Marc Veasey (D-Texas) argued for even money for the F-35.  Predictably, the legislators emphasized the importance of maintaining the domestic industrial base, where the JSF supports 1,800 suppliers and 254,000 employees.

Finite defense spending should never be used to support a jobs program.

Before increasing spending, Senate appropriators should have first identified savings within the existing budget that could have been reapplied within the DOD (a good idea for every other appropriations bill).  The many financial irregularities and wasted spending at the agency present a target-rich environment.  Furthermore, it is highly likely that the increased funding will include a significant increase in earmarks, which take money away from more significant defense and national security needs. 

The Pentagon has long displayed a disinclination to adhere to the same financial standards of other federal agencies.  The lack of pressure from Congress will ensure that this behavior continues well into the future.