EXECUTIVE MEMO
Accounting For A Military Buildup
he Defense Finance and Accounting Service is having trouble accounting for its decision to open five new offices it admits are not needed.
In September 1995, the General Accounting Office evaluated the Defense Department's justification and cost analysis for consolidating more than 300 accounting offices into 5 existing finance centers and 20 new sites called "operating locations." The GAO challenged the need for 20 operating locations when DoD's own analysis showed operations could be consolidated into as few as 6. In addition, the Pentagon had not considered additional efficiencies expected from business process reengineering initiatives and some planned sites were to be on bases that were being closed or realigned, requiring about $173 million worth of renovations.
"In short, we believed the planned infrastructure would be larger and more costly than necessary," wrote GAO's David Warren in an April report. And for the most part, the Defense Department concurred with his assessment. Officials at DFAS, which controls the finance centers and operating locations, said five of the operating locations were no longer needed. (Fourteen of the sites were opened in 1995.)
Nonetheless, the Defense Department officially opened two of these unneeded facilities in February and March and plans to spend $32 million renovating them. The department also planned to spend about $19 million to open two other unneeded facilities in 1999 and 2001. No military construction funds are needed to open the fifth facility.
Why would the Defense Department open facilities it says it doesn't need? It felt compelled to open the first two facilities based on the language of the National Defense Authorization Act for fiscal 1996, says John Barber, director of external relations for DFAS. But GAO interpreted the act differently, believing it allowed DoD to go ahead and open the facilities but did not require it to do so.
As for the other three facilities slated to be opened, Barber says DoD has now decided not to open them because they don't see a pressing need for them.
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