Accounting improvements underway at Pentagon

The Pentagon is making progress getting its financial books in order, but senior officials said Wednesday that they still do not know when they will wrap up an audit of Defense Department spending.

It may take at least four or more years, they said.

Concerned that billions of dollars in the defense budget are squandered each year, Congress has pressed Defense officials to account for all dollars -- from health care to program development costs -- spent by DoD.

During a Senate Armed Services Readiness Subcommittee hearing Wednesday, Pentagon Comptroller Tina Jonas said she hopes to resolve many of the lingering financial issues by 2009, but would not put a firm date on when an audit could be completed.

Jonas and Pentagon acquisition chief Kenneth Krieg said the department has begun several accounting reforms spelled out in the fiscal 2005 defense authorization act, including creating a committee to oversee management of defense business systems.

The oversight committee and several technology upgrades have helped the Pentagon save money and streamline its business practices, the officials said. For instance, recent attempts to pay defense contractors on time have saved the Pentagon $50 million annually in interest payments, they said.

"This is not a bean counting exercise," Readiness Subcommittee Chairman John Ensign, R-Nev., said of the changes.

Ensign added that the department's work this year is "far and away" the most encouraging news Congress has received on the issue, but admitted "the bar was pretty low before."

Even with the improvements, the Pentagon performed financial reviews that have failed to meet all the requirements in the fiscal 2005 authorization, said Randolph Hite, GAO director of information technology architecture and systems.

The Defense Department has a "long way to go before its business operations are on par with its warfighting operations," Hite said.

Hite has recommended the Pentagon establish a new senior-level position to oversee changes in its business processes and practices.

On Tuesday, the Senate passed an amendment to the fiscal 2006 defense authorization bill to study whether a deputy defense secretary position should be created to oversee the department's financial management.

There are "billions of dollars in spending that neither improves our national security nor returns value to our taxpayers," Appropriations ranking member Robert Byrd, D-W.Va., the amendment's sponsor, said Tuesday. "It is as if this huge amount of money just vanishes -- vanishes into thin air."

Pentagon officials acknowledged at Wednesday's hearing that they have laid the "foundation" and "blueprint" for financial overhaul, but have not yet met all goals.

"We are far from done," Krieg said.