Federal Manager's Daily Report

The Defense Department is committed to transformation and

improving business operations but overhauling the financial


management and related business operations represents a huge

challenge, the General Accounting Office has said.

It said DoD’s management weaknesses hinder its ability to

produce auditable financial information and to provide timely,

reliable information for management and Congress to make

informed decisions.

As a result, DoD needs an integrated business transformation

strategy, sustained leadership and resource control, clear

lines of responsibility and accountability, results-oriented

performance, appropriate incentives and consequences, an

enterprise-architecture to guide reform efforts, and

effective monitoring and oversight, said GAO.

It identified specific areas such as military pay as

problematic. Ninety-four percent of mobilized Army National

Guard soldiers it investigated had pay problems. These

problems distracted soldiers from their missions, imposed

financial hardships on their families, and had a negative

impact on retention, said GAO.

It said logistical problems such as asset visibility and

other support problems hampered mission readiness during

Operation Iraqi Freedom, and led to the cannibalization of

vehicles for parts.

Seventy-two percent of the over 68,000 premium class

airline tickets DoD purchased for fiscal years 2001 and

2002 were not properly authorized and 73 percent were not

properly justified, said GAO.

It also said chem-bio suits sold on the Internet for $3

while DOD purchased them for over $200 and that thousands

of defective suits were improperly issued to local law

enforcement agencies that are likely to be first responders

in case of a terrorist attack.

Echoing an earlier report, it said DoD contractors sometimes

get away with abusing the federal tax system. For example,

DoD had collected only $687,000 of unpaid contractor

federal taxes through a mandated levy program over the

last six years. At least $100 million could be collected

annually through effective implementation of the levy on

DoD contractor payments, said GAO.