MARY LOUISE KELLY, HOST:
The logistics arm of the military hasn't properly documented how hundreds of millions of dollars have been used. A reporter at Politico got his hands on an internal audit that finds the Defense Logistics Agency has no paper trail for more than 800 million in construction projects. That Politico reporter is Bryan Bender. I asked him to explain what this part of the Pentagon does.
BRYAN BENDER: The DLA, as the Pentagon calls it, is basically the Walmart of the Pentagon. It is a defense agency that serves as the main purchasing agent, particularly in buying bulk items. So whether it's poultry for the mess halls or spare parts for aircraft or even toilet paper - lots and lots and lots of things, about a hundred thousand orders per day on average and an annual budget of about $40 billion.
KELLY: Forty billion dollars - OK, so the audit that you got your hands on - how did you get your hands on it, by the way?
BENDER: Well, you know, there are a lot of government officials who are engaged in this gargantuan effort to audit the Pentagon. And this is something that Congress has really demanded for almost 20 years. The Pentagon has never passed an audit. There are those who feel like the Pentagon really isn't moving the ball very much. And that's one of those people who slipped me a copy of this and said, hey, you know, we're putting a lot of effort in this, but it's not getting a lot of attention. And oh, by the way, as we turn over these rocks, we're finding some really bad things.
KELLY: Well, and you mentioned that what is coming is a financial audit for the entire Pentagon, which is going to be quite some effort. You report that that will - that's expected to require more than a thousand auditors, costs more than a billion dollars - stunning numbers there. Is there any cause for hope that the rest of the Pentagon's books will fare better than the DLA audit did?
BENDER: I think what's so concerning to many about the Defense Logistics Agency is that it was seen as the test case for whether the entire Pentagon could pass an audit. And so given the problems they found just in one agency in one year, I think the anticipation is that there will be lots more problems that will come to light.
And I think the argument on the part of some is that, yes, the Pentagon may not ever be able to do this. In other words, they may not be able to replicate what a Fortune 500 company could do if the IRS came in and audited them. They'll never be able to pass it with a clean bill of health. But the process of trying to do it in and of itself is worth doing even if you can't get to the goal line.
KELLY: Is there any talk of consequences here?
BENDER: You know, I asked Senator Chuck Grassley, who's on the budget and finance committees, who's been hounding the Pentagon about this for years. Are there consequences? And he basically said, listen; it's a catch-22. In the case of the Pentagon, depriving the military of funding could affect national security. So I think even though the Congress wants to push the Pentagon to do this, they don't have a lot of options to sort of hold their feet to the fire other than to just embarrass them and constantly be asking the questions and seeking answers as to what the Pentagon is doing to try and fill these holes.
KELLY: Bryan Bender, thanks so much.
BENDER: Thank you.
KELLY: Bryan Bender is national security reporter for Politico. We did reach out to the Defense Logistics Agency. I'll read their statement in full. Quote, "while there were shortcomings in document traceability, there was no loss of accountability of real property or its associated funding. The Defense Logistics Agency can account for funding for specific construction projects and can verify the funding was used for appropriate purposes. But as auditors pointed out, we did not meet independent public audit accounting standards. We are using auditor feedback to focus our remediation efforts and corrective action plans and maximize the value from the audits," end quote.
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