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Audit: Air Force wasted billions

Published Oct. 16, 2005

The Air Force has "grossly understated" costs of major weapon programs by tens of billions of dollars because of inaccurate and unreliable accounting systems, an exhaustive government audit has found. The investigation raises major questions about the weapons costs the Air Force has supplied to the Defense Department, Congress and U.S. Treasury for much of the past decade, according to a draft report of the massive audit recently completed by the General Accounting Office (GAO), the congressional watchdog agency.

"The Air Force accounting systems do not provide reliable information on Air Force weapon systems, which include aircraft, missiles, engines, satellites and other major components," said the 168-page draft of the report, a copy of which was provided to the Washington Post. It added, "The reported costs of all military hardware are grossly understated and the actual costs could not be determined. . . . "

The Air Force, in a statement Wednesday, denounced the audit, saying in part that it "creates a faulty impression of waste and mismanagement." GAO auditors found that the Air Force understated the cost of the nation's frontline fighter and bomber fleets by more than $27-billion, and mismanaged its inventory record-keeping so that it bought $18-billion in unneeded equipment.

The financial audit, the largest performed by the GAO, said that in other cases, "unsupported and arbitrary adjustments totaling billions of dollars" were made to correct account imbalances without regard to whether the discrepancies were the result of mismanagement, fraud or abuse.

The report, titled "Financial Management: Billion Dollar Decisions Made Using Inaccurate and Unreliable Air Force Data," was the result of almost three years of investigation by more than 100 auditors, officials said. It has not been publicly released, but has been circulated among top Pentagon officials for several weeks.

Investigators cite rampant problems in many of the Air Force's 131 accounting and financial management systems, ranging from the faulty methods for tracking weapons cost to sloppy oversight of multibillion-dollar equipment inventories.

"The Air Force has serious disagreements with both the content of the draft report and GAO's handling of the audit," the service said in a statement issued Wednesday in response to questions about the report. Air Force officials also said the service has instituted programs to help resolve some of the problems reported by the GAO.

House and Senate leaders, responding to the audit, called Wednesday for hearings before at least four committees and said the findings likely will lead to major amendments to the Bush administration's proposed defense budget for fiscal year 1991.

Rep. John D. Dingell, D-Mich., chairman of the Energy and Commerce Committee's panel on oversight and investigations, called for joint hearings with the House Armed Services Committee.

Dingell said the audit found "instances of gross waste, abuse and downright dishonesty" that show the defense acquisitions system is "in chaos and out of control."

Sen. John Glenn, D-Ohio, chairman of the Senate Committee on Governmental Affairs, hastily called a Friday hearing on the findings. Glenn, who has monitored the study, said the GAO selected the Air Force for the extensive project because "it was supposed to be the best of the services" in its financial record-keeping. The House Government Operations Committee also plans hearings.