tv U.S. Senate Grassley on DOD Oversight CSPAN July 12, 2018 3:54am-4:19am EDT
the presiding officer: the senator from iowa. mr. grassley: i come to the floor today to discuss the continuing need for aggressive, hard-hitting oversight of the department of defense. that need for oversight is as great today as it ever was. waste is alive and very well at the pentagon. i have a poster here, a cartoon, a blowup of a cartoon published in "the washington post" in 1985, my early years in the united states senate. it shows ernie fitzgerald, a
famous whistle-blower, confronting what is quite obvious, his chief adversaries, the big spenders at the pentagon. as a senior air force official, ernie fitzgerald committed a crime, and he says his crime was that he committed truth. ernie fitzgerald's famous for in 1968 exposing a $2.3 billion cost overrun on the c-5 aircraft program. in those days, having a senior pentagon official like ernie fitzgerald speak the truth about a cost overrun on a high-visibility program was unheard of. in fact, it was dangerous.
it was so dangerous that it cost ernie fitzgerald his job. that's why i like to call ernie fitzgerald the father of whistle-blowing. the cartoon also depicts the infamous $640 toilet seat that made history back in those days as one example of the terrible waste at the defense department. that happened in 1985 when i as a first-term senator began watchdogging the pentagon after a report uncovered the $640 toilet seat and a $400 hammer, i began asking very tough questions. something like how could the
bureaucrats possibly justify paying such exorbitant prices? i'm still waiting for a straight answer. a lot has changed since the 1980's. the internet, which was in its infancy in the 1980's, is now part of everyday life. mobile phones back then were once the size of bricks. now those mobile phones can fit in the palm of your hand and do a lot more work in helping you make telephone calls. but one thing hasn't changed in all those decades -- wasteful department of defense procurement practices. since i began my work on this issue, there have been six
presidents and 12 secretaries of defense, yet the problem of wasteful spending at the defense department just keeps going on. since those earliest revelations, there has been a steady flow of new reports on spare part rip-offs. no political party is immune from these horror stories. during the administration of george h.w. bush, oversight efforts uncovered soap dishes that cost $117 and pliers that cost nearly $1,000. in some cases, the department of defense admitted some high prices didn't even pass the smell test. true, better deals were negotiated. people tried to make some changes, but to offset losses on
lower prices, the contractors jacked up overhead and management charges, making the overall contract price the same. exercising oversight on these contracts is like working with a balloon. you know the famous balloon. you squeeze it in one place and the problems pop out someplace else. under president bill clinton, a report by the government accountability office, as we know it here, the g.a.o., revealed one defense contractor paid its top executives more than $33 million a year, an amount that was reimbursed by the federal government as part of the contract. now, i happen to agree that a company has the right to pay its executives whatever it wants. however, when the government enters into cost reimbursement contracts, those happen to be contracts in which the
government directly repays the company for costs incurred instead of paying a fixed price, the contractor loses incentive to control costs, and top executives draw sky-high salaries at the taxpayers' expense. i introduced -- if you want to know my history in this area, i introduced an amendment in 1997, a defense authorization bill, to curb executive compensations billed directly to the taxpayers, but as you might expect, with the respect that the defense department has in this body, that amendment was voted down. during the bush administration in the early 2000's, i worked with the g.a.o. to expose abuse of government charge cards by
department of defense employees. we found some truly egregious expenditures. examples -- over $20,000 at a jewelry store. over $34,000 on gambling, and over $70,000 on tickets to sporting events and broadway shows. in some cases, employees who spent thousands of these taxpayer dollars on personal expenses way beyond anything that was ordinary business expense were not only not asked to repay the money to the taxpayers, but oddly were promoted, and even issued new charge cards. instead of being held accountable, it's quite obvious they were rewarded for their illegal activity.
during the presidency of president obama, i pressed the pentagon to answer for a $43 million gas station built in afghanistan. this project was revealed as part of an audit conducted by the special inspector general for afghan reconstruction. when i pressed for answers, the defense department responded by saying that the direct cost was actually only $5 million, but that the number didn't include the massive overhead costs charged to the project, which pushed the overall price tag up to that $43 million. now, anybody anywhere else outside of this beltway knows that that doesn't meet the smell test, and that's not even a
commonsense answer to my overall question, how did we waste $43 billion there? even more alarming is what happened to the rest of the $800 million provided for other business development projects in our efforts to help afghanistan recover. auditors could only find documentation to support about half of the money spent, leaving about $400 million unaccounted for. this kind of sloppy bookkeeping means that we may never, never know how the rest of the money was spent. was it used for unauthorized purposes or pocketed by crooked people? we'll probably never know. and now under the presidency of donald trump, over 30 years since all of this started with me, the overpriced airborne
toilet seat has really gained altitude. instead of the $60,040, the new price tag reported by the air force was reported to be $10,000, and that was only for the lid of the toilet stool. any american can tell you that $10,000 for a toilet seat cover is ridiculous. americans work too hard to see their precious tax dollars flushed down the toilet. i asked the department of defense for confirmation that the seats costs $10,000. they still haven't answered my letter, but after my inquiry, the department of defense has changed their story. they clarified to the media that
there are now 3-d printing the toilet seat lid for much less. but they never answered my question. we don't know how many seats were prached at the -- purchased at the $10,000 price tag. we don't know when they moved to 3-did printing -- 3-d printing. and we don't have the documentation on the price of two toilet seats and especially just for the lid. but if the issue of the toilet seat has been sorted out, it is clear -- even if the issue has been sorted out, it is the clear that the department of defense still does not have a grip on spending. other spare parts o.i.g. reports
revealed that the pentagon frequently overpays for simple parts and does not perform adequate kotion cost a -- adequate cost analysis. one of the primary culprits here is for this continuing waste and misuse of tax dollars is the department of defense noncompliance with congressional mandate to pass an audit. the department of defense has a very bad record. they stand out as the only department of government. it's impossible to know how much things cost or what is being bought when nobody is keeping good track of the money being shuttled out the door. for nearly 30 years we've been pushing the pentagon to earn a
clean opinion on any of their audits. way back in 1990 congress passed a chief financial officers act which required all departments of the government to present a financial statement to an inspector general for audit by march 1992. all departments have complied and earned clean opinions except one, that's the department of defense. instead of clean opinions, the department of defense has earned a long string of failing opinion, and these happen to go by the name of disclaimers. but it boils down to the fact that the books at the department of defense are unaudittable.
now 20 years later after that 1990 congressional action, so now 2010, congress finally got fed up and passed a new law requiring the pentagon to be ready for audit by december 2017. the department was given seven long years to get its act together and to meet the same requirements as every other federal agency entrusted with the public money. well, obviously that deadline has come and gone like other deadlines have come and gone. according to the controller and the chief financial officer mr. david norquist, a clean audit is still at least ten years away. so ten years of not being able
to follow the money, and if you can't follow the money, you don't know whether it's spent legally. there is a longstanding underlying problem preventing the pentagon from reaching the goal of a clean audit. this is the so-called feeder system. i won't describe a feeder system. but feeder systems are supposed to capture transaction data, but those feeder systems are broken. auditors cannot connect the dots between contracts and payments. you can't follow the money. that's because there is no reliable transaction data and little or no supporting documentation and you tend to spend money without knowing what you even bought. the pentagon will never earn a
clean opinion until those accounting principles are able to produce reliable financial data that meet accepted standards. over the last 25 years the department of defense has spent billions trying to fix these outdated accounting systems but with no success. how is it then that the very mighty pentagon can develop the most advanced weapon systems in the world but can't seem to acquire something as simple as an accounting system? we need to get to the bottom of this problem and fix it. so i'm working with my colleagues on the budget committee to get the government accountability office to conduct an independent review of the pentagon's efforts to acquire
modern accounting systems. what's the problem is what we're trying to find out? should the defense department keep trying to fix the antiquated feeder systems or is it time to develop new fully integrated systems that can deliver reliable financial information? we need and we want some answers. the department of defense is currently attempting to conduct a full financial audit. secretary mattis has directed all employees to support the audit and the results are expected in november. although the new chief financial officer appears to be making good-faith effort to get a handle on the problem, he also happens to be spending hundreds of millions of dollars a year for audits with a zero
possibility of success could be very wasteful spending that kind of money if they don't have a feeder system in place. the first priority of our federal government remains and ought to be national security. we must ensure that our military force remains strong -- strong enough to deter any potential aggressor, and as a result, preserve the peace. the men and women on the front lines deserve fair compensation and the best weapons and equipment money can buy. we want to feel the most capable -- fill the most capable military force in the world because national defense is so very important, congressional
watchdoing of -- watchdogging is very expensive. we don't want one dollar to be wasted, not even a penny, until the department of defense can earn a clean opinion, we have no idea if the d.o.d. dollars are being spent wisely. report after report show that precious defense dollars are being wasted, misused, and unaccounted for. reforms have been made but the -- clearly, very clearly, the war on waste has not been won. much more work needs to be done. from my oversight posts in the united states senate, i'll continue to apply pressure on the pentagon to step up the war
on waste. i don't expect much help from the inspector general, mr. fein seems to be awol on waste. i raised the issue of the $10,000 toilet seat cover to him over a month ago and still haven't received an answer. his office found the time to update the media on the toilet seat cover, yet my letter has gone unanswered. however, after revelations about the $43 million gas station, secretary mattis' reaction was music, sweet music to my ears. he issued an an all-hands memo. in that memo he stated flat out -- i think these are his word directly -- i will not tolerate that kind of waste.