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Pentagon official grilled on inability to track costs

House Budget Committee Chairman Jim Nussle, R-Iowa, grilled the Pentagon's chief financial officer Thursday on future spending in Iraq and the global war on terrorism, chastising the Defense Department for its inability to predict how much money would be needed and to account for how it has spent funds in the past.

In his opening statement, Nussle said that lawmakers had a fundamental obligation to assure that the Pentagon spent money judiciously and with proper planning and oversight.

Two years into the war on terrorism, lawmakers have obligated $160 billion in emergency spending to pay for wars in Iraq and Afghanistan-money that is outside the budget. But while this money was necessary to fight the global war on terrorism, Nussle said, Congress could not continue to pay for the war efforts on an ad hoc basis.

Nussle called on Pentagon Comptroller Dov Zakheim, who testified before the committee, to deliver a solid plan to set spending priorities for the coming year, and asked Zakheim to provide details on one-time expenditures in the president's $87 billion Iraq supplemental, the length of time that the money is expected to last, and any future spending plans for Iraq. He also asked for an estimate of long-term budget needs for Iraq and other future contingencies related to the war on terrorism.

Zakheim declined to be specific but said that the $66 billion requested in the president's wartime supplemental for military operations in Iraq would last through the end of fiscal 2004, implying that another emergency supplemental request is anticipated in 2005. He also said that the $20.3 billion grant needed to rebuild Iraq was expected to be a one-time, front-loaded request that would help the country get back on its feet, adding that the administration would likely build any future costs for this purpose into the annual budget request.

Nussle expressed impatience with the Pentagon's perceived lack of a sound financial planning mechanism geared toward funding the war on terrorism.

"We're growing frustrated," he said, adding that the farther the Sept. 11 attacks recede into history, the more Congress hopes to see better fiscal planning for defense in the future.

Zakheim said that many new threats related to the war on terrorism were now accounted for in the Pentagon's planning, programming and budget process, and that military transformation was a key part of this effort. But he added that the unpredictable nature of military force levels in the future, particularly in Iraq over the coming year, made it difficult to estimate costs. "This is something that we are looking at now in the 2005 budget," Zakheim said.

Nussle also criticized the Pentagon's lack of financial accountability for military spending, despite its obligation under the 1990 Chief Financial Officers Act to verify through annual audits that money is spent in the manner that Congress intended.

Zakheim said that the internal auditing process mandated by the 1990 legislation had proved difficult to implement because of bureaucratic resistance and other obstacles, but he added that the department expected to have a complete and clean audit by 2007.

Nussle was underwhelmed with Zakheim's audit schedule, saying that the clarity of the administration's argument for additional wartime money is weakened by its inability to account for how those funds are spent.

"We're talking about following the law here," he said. "I don't consider 2007 a success."