You could buy an Australian island for what the Pentagon says it would cost to take inventory — of one item

Introduction

The Pentagon dashed any hopes that it might soon be able to pass a simple audit, when it provided a surprisingly unhelpful response late last month to a simple question about how many widgets of a particular kind that it had in stock.

Understanding the worrying significance of the Pentagon’s statement that it essentially had no idea what the number is requires a bit of detail.

The widget that was being asked about has a narrow purpose: It’s basically a portable power station that looks like a small, plastic toolbox. Dubbed the HotPlug, it was crafted to allow government investigators to transfer suspects’ computers to their laboratories for forensic analysis, without first shutting the computers down. And so an Oregon-based software developer, Martin Peck, who worries about privacy issues and government secrecy, in July 2015 sent the Defense Department a Freedom of Information Act request, asking how many such devices it had in its possession.

Answering this simple question, the Pentagon said, would take the department — hold your breath now — 15 million labor hours. Doing so would cost — no, don’t breathe yet — $660 million, the Pentagon said.

While this sum is essentially chump change at the Pentagon — a bit more than one-tenth of one percent of its annual budget — in the world outside the five-sided building it’s enough to buy the Washington Nationals baseball team, a 600-acre island off the coast of Australia, twelve of the most expensive Ferrari racecars, or about as much as the Pentagon is currently spending to train Iraqi soldiers in combat.

Critics, including those who study modern business practices, say the reply spoke volumes about how poorly the Pentagon keeps track of its own purchasing and contracting. That issue lies at the core of persistent criticisms that the department cannot meet modern accounting standards, a circumstance that critics say opens the door widely for waste, fraud, and abuse in military expenditures.

Why does the Pentagon have so much trouble determining how many specific widgets it has in its possession?

In a two-page response to Peck, the department’s FOIA office said Robert Jarrett, the Pentagon’s Director of Operations, Defense Procurement and Acquisition Policy, had explained that although the Pentagon maintains a database of all its contracts — in something called the Electronic Documents Access (EDA) system — it cannot be comprehensively searched.

The Electronic Documents Access system was switched on eighteen years ago after being constructed at a cost of millions of dollars, and it now includes an estimated 30 million contracts. But the FOIA officer, signing the letter to Peck on behalf of FOIA chief Stephanie L. Carr, wrote in the response: “No method exists for a complete text search of EDA, as some documents are scans of paper copies.” The estimate that someone would need 15 million hours, or about 1,712 years, to come up with an answer — including any redactions required to keep company secrets out of the public domain — was based on the department’s presumption that the person doing the searching would have to read all of the contracts, and spend 20 minutes on each one.

“It makes me want to cry as a taxpayer and a citizen that DOD still doesn’t have working accounting systems,” says Rafael DeGennaro, a former congressional staff member who now directs the nonprofit Audit the Pentagon initiative, which presses for legislation to force better accounting of how the military spends its $580 billion annual budget. “They need this information to manage the place and they need this information to justify the burden of taxes we pay into the black box that is Pentagon accounting.”

It’s not the first time that the Pentagon’s inability to say what it’s got in its possession has been under a spotlight. It’s clear — even to top Pentagon officials — that one consequence is that a lot of money gets wasted buying things the Pentagon does not actually need to buy.

Because the Pentagon did not know how many spare parts it already had for a military transport airplane, called the C-130, it spent $6.6 million between July 2012 and June 2014 on parts that it did not need, according to a June 2015 Department of Defense Inspector General’s report. Similarly, partly because the Pentagon didn’t know how many useful spare parts it had on hand for its V-22 Osprey military helicopter, it spent $8.7 million between August 2014 and May 2015 on parts it did not need, according to a separate Inspector General report. It predicted that storing those extra parts would cost $700,000 over the next five years.

Paul Bracken, a professor of management at Yale University, said in an interview that nearly all successful organizations have searchable parts databases. “All businesses keep meticulous control of inventory, what the product is, what it costs, how long it’s been on the shelf,” he said. “A private corporation would have that information literally at their fingertips because they have relational databases to store it all. A relational database means you can search by any criteria you want.”

A 1990 law requires federal agencies to pass an annual audit, which requires among other things that they be able to account for all their possessions. But the Pentagon has never complied — it is the sole outlier, responsible for roughly half of all federal discretionary spending — and its deadline for passing such an audit keeps extending.

When Peck made a similar FOIA request to the Drug Enforcement Agency, for example, asking how many Harris Kingfish systems it had bought to track phone calls, the DEA replied within a month that it had two. A press spokesperson for the DEA, Barbara Carreno, said in an emailed statement that the agency uses a Department of Justice database called the Unified Financial Management System to track “contracts and accountable property.” The database has a search function.

Presidential candidates Ted Cruz and Bernie Sanders don’t agree on much, but bringing the Pentagon’s self-awareness up to modern accounting standards is one topic they both feel is urgent.

A bill they have co-sponsored with six other Senators would impose a series of graduated punishments if the Pentagon fails to pass an audit soon. These punishments include changing financial management positions if the Department fails to pass an audit for fiscal year 2016, and blocking the Defense Department from upgrading or acquiring certain new weapons if it fails to obtain an audit for fiscal year 2017. The bill has been referred to a committee, but no hearing about it has been scheduled.

Lauren Chadwick is a Scoville fellow at the Center for Public Integrity.

This story was co-published with Slate.