By DAN VALENTI

PLANET VALENTI NEWS AND COMMENTARY

(FORTRESS OF SOLITUDE, THURSDAY, DEC. 5, 2013) — Before we present Part 2 of Reuters‘ excellent  piece of investigative journalism dealing with waste and fraud at the Pentagon authored by Scot Paltrow, THE PLANET injects this local note.

Yesterday and so far today, our wires have been humming with some intriguing as well as instructive political news. We hesitate to call it shocking, since nothing shocks any more. We can’t say much more at this point, but we do tell tea-leaf watchers this much: Keep your eyes on the action at Superior Court today. Something may or may not happen there related to local politics. If it does, you might gasp. If it doesn’t … well, that’s why you have THE PLANET.

Stay tuned to THE PLANET, because you won’t be reading about it anywhere else.

No other local press medium has access to both the breadth and depth of our sources, and even if they did, they would avert their eyes at the proper (and improper) moments before sharing a word of it. The presiding GOB would demand it of them. No demands can be made upon us, however.

Oh, to be independent now that Daniel is here!

Oh, and by the way, don’t tell anyone because you aren’t supposed to know, but our peeps tell us that Amy Lane, the city accountant, has resigned. Our peeps inside the building tell us she “can’t stand working for [city finance director] Sue Carmel.” If nothing else, this does suggest Lane has not only good sense but great taste.

Fortunately, the talented Lane will not be lost to taxpayers, since she has landed a position on with the public schools. Let’s see, we’ve lost count. Is that two or three city accountants lost since Dan Bianchi has been mayor?

With that, THE PLANET presents Part 2 of Paltrow’s “must-read” probe of Defense Department spending.

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By  Scot J. Paltrow

Reuters News Service

Part 2 of 3 parts

(LETTERKENNY ARMY DEPOT, Chambersburg, Pennsylvania) — Senators Tom Coburn, an Oklahoma Republican, and Joe Manchin, a West Virginia Democrat, introduced legislation earlier this year that would penalize the Pentagon if it isn’t audit-ready by 2017. Under the proposed Audit the Pentagon Act of 2013, failure to meet the deadline will result in restrictions on funding for new acquisition programs, prohibit purchases of any information-technology systems that would take more than three years to install, and transfer all DFAS functions to the Treasury.

“The Pentagon can’t manage what it can’t measure, and Congress can’t effectively perform its constitutional oversight role if it doesn’t know how the Pentagon is spending taxpayer dollars,” Coburn said in an email response to questions. “Until the Pentagon produces a viable financial audit, it won’t be able to effectively prioritize its spending, and it will continue to violate the Constitution and put our national security at risk.”

TOO MUCH STUFF

The practical impact of the Pentagon’s accounting dysfunction is evident at the Defense Logistics Agency, which buys, stores and ships much of the Defense Department’s supplies – everything from airplane parts to zippers for uniforms.

It has way too much stuff.

“We have about $14 billion of inventory for lots of reasons, and probably half of that is excess to what we need,” Navy Vice Admiral Mark Harnitchek, the director of the DLA, said at an August 7, 2013, meeting with aviation industry executives, as reported on the agency’s web site.

And the DLA keeps buying more of what it already has too much of. A document the Pentagon supplied to Congress shows that as of September 30, 2012, the DLA and the military services had $733 million worth of supplies and equipment on order that was already stocked in excess amounts on warehouse shelves. That figure was up 21% from $609 million a year earlier. The Defense Department defines “excess inventory” as anything more than a three-year supply.

Consider the “vehicular control arm,” part of the front suspension on the military’s ubiquitous High Mobility Multipurpose Vehicles, or Humvees. As of November 2008, the DLA had 15,000 of the parts in stock, equal to a 14-year supply, according to an April 2013 Pentagon inspector general’s report.

And yet, from 2010 through 2012, the agency bought 7,437 more of them – at prices considerably higher than it paid for the thousands sitting on its shelves. The DLA was making the new purchases as demand plunged by nearly half with the winding down of the Iraq and Afghanistan wars. The inspector general’s report said the DLA’s buyers hadn’t checked current inventory when they signed a contract to acquire more.

Just outside Harrisburg, Pennsylvania, the DLA operates its Eastern Distribution Center, the Defense Department’s biggest storage facility. In one of its warehouses, millions of small replacement parts for military equipment and other supplies are stored in hundreds of thousands of breadbox-size bins, stacked floor to ceiling on metal shelves in the 1.7 million-square-foot building.

Sonya Gish, director of the DLA’s process and planning directorate, works at the complex. She says no system tracks whether newly received items are put in the correct bins, and she confirmed that because of the vast quantities of material stored, comprehensive inventories are impossible. The DLA makes do with intermittent sampling to see if items are missing or stored in the wrong place. Gish also says the distribution center does not attempt to track or estimate losses from employee theft.

The Pentagon in 2004 ordered the entire Defense Department to adopt a modern labeling system that would allow all the military branches to see quickly and accurately what supplies are on hand at the DLA and each of the services. To date, the DLA has ignored the directive to use the system. William Budden, deputy director of distribution, said in an interview that the cost would have exceeded the potential benefits, and that the DLA’s existing systems are adequate.

A “Clean Out the Attic” program to jettison obsolete inventory is making progress, DLA Director Harnitchek said in an interview. But the effort is hindered because the lack of reliable information on what’s in storage makes it hard to figure out what can be thrown out.

The DLA also has run into resistance among warehouse supervisors who for years have been in charge of a handful of warehouse aisles and jealously husband their inventory. “I believe that the biggest challenge is helping item managers identify things we have in our warehouses that they can just let go of,” Budden said in an interview published in an undated in-house DLA magazine.

OLD AND DANGEROUS

A few miles away, amid the gently rolling hills of south central Pennsylvania, a series of 14 explosions interrupt the stillness of a spring afternoon, shooting fountains of dirt more than 100 feet into the air. Staff at the Letterkenny Army Depot – one of eight Army Joint Munitions Command depots in the United States – are disposing of 480 pounds of C4 plastic explosive manufactured in 1979 and at risk of becoming dangerously unstable.

If Woody Pike could have his way, the soldiers would be destroying a lot more of the old, unused munitions stored in scores of turf-covered concrete “igloos” ranged across the Letterkenny compound.

More than one-third of the weapons and munitions the Joint Munitions Command stores at Letterkenny and its other depots are obsolete, according to Stephen Abney, command spokesman. Keeping all those useless bullets, explosives, missiles, rifles, rocket launchers and other munitions costs tens of millions of dollars a year.

The munitions sit, year after year, because in the short term, “it’s cheaper for the military to store it than to get rid of it,” said Keith Byers, Letterkenny’s ammunition manager. “What’s counterproductive is that what you’re looking at is stocks that are going to be destroyed eventually anyway.”

Also, an Army spokesman said, the Pentagon requires the Army to store munitions reserves free of charge for the other military services, which thus have no incentive to pay for destroying useless stock.

To access ammunition and other inventory still in use, depot staff often must move old explosives, much of which is stored in flimsy, thin-slatted crates. “Continuing to store unneeded ammunition creates potential safety, security and environmental concerns,” Brigadier General Gustave Perna said in a 2012 military logistics newsletter, when he was in charge of the Joint Munitions Command. The cost and danger of storing old munitions “frustrates me as a taxpayer,” he said. Perna declined requests for an interview.

Sometimes the danger leads to action, as when the C4 was detonated. And the depot recently received funding to destroy 15,000 recoilless rifles last used during World War II, Pike says.

Yet, on the day of the C4 blasts, piles of Phoenix air-to-air missiles – used on Navy F-14 fighter jets that last flew for the U.S. in 2006 – had just been offloaded from rail cars and were waiting to be put into storage.

In 2010, as part of the Defense Department’s modernization effort , the Joint Munitions Command scrapped a computer system that kept track of inventory and automatically generated required shipping documents. It was replaced with one that Pike says doesn’t do either.

His staff now must guess how much inventory and space Letterkenny has. The Army built at additional cost a second system to create shipping documents and an interface between the two systems. “We’re having problems with the interface,” Pike says.

COSTLY REPAIRS

Media reports of Defense Department waste tend to focus on outrageous line items: $604 toilet seats for the Navy, $7,600 coffee makers for the Air Force. These headline-grabbing outliers amount to little next to the billions the Pentagon has spent on repeated efforts to fix its bookkeeping, with little to show for it.

The Air Force’s Expeditionary Combat Support System was intended to provide for the first time a single system to oversee transportation, supplies, maintenance and acquisitions, replacing scores of costly legacy systems. Work got under way in 2005. Delays and costs mounted. In late 2012, the Air Force conducted a test run. The data that poured out was mostly gibberish. The Air Force killed the project.

The system “has cost $1.03 billion … and has not yielded any significant military capability,” the Air Force said in a November 2012 announcement.

Fixing the system would cost an additional $1.1 billion, it said, and even then, it would do only about a quarter of the tasks originally intended, and not until 2020.

The Air Force blamed the failure on the main contractor, Virginia-based Computer Sciences Corp, saying the company was unable to handle the job.

Computer Sciences spokesman Marcel Goldstein said that the company provided the Air Force with important “capabilities,” and that “the progress we made, jointly with the Air Force, and the software we have delivered could be the foundation for the next effort to develop and deploy a logistics system for the Air Force.”

David Scott Norton, an expert in accounting systems who worked for CSC on the Air Force contract, said the project employed too many people, making coordination and efficiency impossible. “There were probably thousands of people, both Air Force and contractors, on it,” he says. High turnover among both Air Force and contractor staff hurt, too, he says; many of the people who worked on it weren’t the people who had conceived and designed it.

More than $1 billion was wasted when the Pentagon in 2010 ditched the Defense Integrated Military Human Resources System, launched in 2003 as a single, department-wide pay and personnel system that would eliminate pay errors. Interagency squabbles and demands for thousands of changes eventually sank it.

The Air Force’s Defense Enterprise Accounting and Management System was supposed to take over the Air Force’s basic accounting functions in 2010. To date, $466 million has been spent on DEAMS, with a projected total cost of $1.77 billion to build and operate it, an Air Force spokeswoman said. The system lacks “critical functional capabilities,” and its “data lacks validity and reliability,” according to a September 2012 Defense Department inspector general report. It now isn’t expected to be fully operational until 2017.

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Tomorrow, THE PLANET presents the third and concluding chapter in Scot Paltrow’s investigation of the Pentagon’s financial practices.