Pentagon Comptroller Mike McCord. “Not the kind of progress I would have hoped for.”

DoD Fails Audit, Sees Ukraine as ‘Teachable Moment’ in Accountability

Joe Gould / Defense News & Air Force Times

WASHINGTON (November 16, 2022) ― As the Pentagon racked up its fifth comprehensive audit failure, its chief financial officer on Tuesday said Ukraine’s fight against Russia offers a “teachable moment” for the US military to accurately tally its weapons and property.

In a call with reporters to release the results of the audit, Defense Department Comptroller Mike McCord said he told Pentagon personnel to envision US troops in the position of their Ukrainian counterparts — dependent on precise tracking of their arsenals.

“To me its a really great example of why it matters to get this sort of thing right, of counting inventory, knowing where it is and knowing when it is [arriving],” McCord said.

“The process over many years,” McCord said of the audit, “should be helping us make sure that we don’t have the kind of problems of having something on our records that doesn’t exist in reality or having a having big discrepancies.”

Accurate inventories help the military avoid buying things it already has and ensure items are where troops need them, he noted.

The legally required audit has helped the Pentagon shore up gaps in cybersecurity, find lost inventory, and spurred it to consolidate and modernize its accounting systems. This year, the Defense Logistics Agency, which manages millions of items, accomplished its first complete inventory, McCord said.

But he added that the DoD is still struggling with how it values its inventory and how to account for government property that’s in the possession of contractors ― particularly with the F-35 Joint Strike Fighter, which is mostly built using a government-owned plant run by Lockheed Martin.

What Did the Audit Find?
The audit, which covered the department’s $3.5 trillion in assets and $3.7 trillion in liabilities, involved 1,600 auditors conducting 220 in-person site visits and 750 virtual site visits. The Pentagon inspector general and independent public accounting firms performed the audit, which was expected to cost $218 million this year.

The 27 individual audits that comprise the effort yielded nine clean opinions, one modified opinion and disclaimers for the rest, which McCord said was on par with last year’s results. The number of the DoD’s material weaknesses also stayed steady at 28.

“I would say we failed to get an ‘A,’ ” McCord said. “I would not say that we flunked. The process is important for us to do, and it is making us get better. It is not making us get better as fast as we want.”

The Pentagon launched its first-ever independent financial audit in 2017 and has yet to pass one. Observers have said that process could mirror the 10-year climb the Department of Homeland Security took, and achieve a clean audit in 2027.

McCord said he and other Pentagon leaders would have preferred to see more progress this year, but noted the department has addressed most of the easier problems, leaving successive audits to spotlight more difficult ones.

McCord credited the DoD’s broader use of Advana, its big-data platform for advanced analytics and the growing use of automated processes, or bots. More than half of its 607 bots are deployed to perform financial management processes.

Both represent an “undeniable trend,” but because leaders and the workforce may be unfamiliar with them, they’re also a “cultural issue” for the DoD to overcome, he said.

Stephen Losey contributed to this report.

Here’s All the Military Planes that
Keep Falling Short on Readiness

Rachel S. Cohen / Air Force Times

WASHINGTON (November 16, 2022) — A new federal watchdog report has flagged a troubling trend among US military aircraft: More than two dozen fleets haven’t met their annual combat-readiness goals in at least a decade.

The Government Accountability Office studied 49 types of airframes across the Army, Air Force, Navy and Marine Corps for its Nov. 10 report. Those platforms make up the bulk of American military airpower.

Service officials set yearly benchmarks for a metric called the “mission-capable rate,” or how often a type of aircraft can fly and perform at least one of its combat missions, like close air support or target tracking. Those targets can vary by airframe and by year.

GAO found that 26, or about half, of the aircraft studied never reached their annual readiness goal between fiscal 2011 and 2021, despite the Pentagon spending tens of billions of dollars on aircraft maintenance each year.

That includes all three Army and nine Marine Corps aircraft in the report, six of 22 Air Force platforms, and eight of 15 Navy airframes. They span 10 types of rotorcraft, eight kinds of fighter jets, three tanker aircraft, three cargo planes and two command-and-control platforms.

Just five airframes met their mission-capable goals in at least half of the years studied, and only one — the Air Force’s Vietnam War-era UH-1N Huey helicopter — hit the mark every year.

In 2021 alone, just two of the 49 fleets reached their goals. Seventeen fleets fell short by up to 10 percentage points, while 30 missed the mark by more than 10 points, GAO said.

“The average mission-capable rate for the selected aircraft has fallen for the Air Force, Navy and Marine Corps, to varying degrees,” the watchdog said. “The average mission-capable rate for the selected Army aircraft has risen.”

For example, Air Force Times reported in February that, on average, seven out of every 10 planes were available as needed for combat missions, training or other routine operations last year. That number has barely budged in recent years despite concerted efforts to ready aircraft for war.

Lackluster mission-capable rates don’t necessarily mean an airframe can’t deploy.

But they can be a sign that part of a fleet is suffering while resources are focused on keeping the rest aloft, that the fleet is too busy for dedicated maintenance, or that they need to return for tune-ups after minimal flying.

Conversely, high rates can be a sign that airframes aren’t working hard enough. Air Force officials have noted that a jet’s mission-capable rate is highest when it’s freshly repaired and on the ground — not gathering wear and tear in flight.

Some leaders have begun shying away from those rates as a meaningful sign of combat readiness, saying that statistics like sorties logged and maintenance turnaround times offer more insight.

The Pentagon spent about $54 billion to operate and support the airframes reviewed in the study in 2020, nearly $3 billion less than in 2011, GAO said. However, maintenance grew more expensive by $1.2 billion in the same timeframe.

Changes in the size of aircraft inventories, as well as how often pilots are flying, were the biggest drivers of those shifts, according to the report.

Military officials are also trying to focus more on the supply chain and workforce issues that cause mission-capability shortcomings.

Staffing shortages, manufacturing delays for critical components, unscheduled maintenance and the dwindling number of companies that can support decades-old aircraft are among the most pressing problems.

The military also lags behind the commercial aviation sector in predicting when and how aircraft parts will fail, a crucial way to reduce maintenance delays or avoid them altogether.

The services are reviewing the health of each airframe’s sustainment enterprise as required by law, though not as quickly as GAO might like. The Air Force and Navy plan to finish those studies by 2026.

Defense officials argue that speeding up the reviews may overly strain staffers and wouldn’t necessarily fix problems faster.

“While the GAO recommends accelerating the pace of [reviews], this desire clashes with the considerable time, information and data validation requirements to properly conduct a sustainment review,” Vic Ramdass, deputy assistant defense secretary for materiel readiness, replied to the watchdog.

The 26 fleets that did not meet annual mission-capability rate goals at all from fiscal 2011 to 2021 include:

Army

• AH-64D/E
• CH-47F
• UH/HH-60

Air Force

• A-10
• C-17
• CV-22
• F-15C/D
• F-16
• F-22

Navy

• KC-130T
• C-2A
• C-130T
• E-2C
• E-2D
• F/A-18E/F
• MH-53E
• MH-60S

Marine Corps

• KC-130J
• KC-130T
• AV-8B
• F/A-18A-D
• F-35B
• AH-1Z
• CH-53E
• MV-22B
• UH-1Y

Rachel Cohen joined Air Force Times as senior reporter in March 2021. Her work has appeared in Air Force Magazine, Inside Defense, Inside Health Policy, the Frederick News-Post (Md.), the Washington Post, and others

Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.