Executive Calendar

Floor Speech

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Mr. GRASSLEY. Mr. President, I come to the floor today to discuss the continuing need for addressing 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, a blowup of a cartoon published in the Washington Post in 1985, during my early years in the U.S. Senate. It shows Ernie Fitzgerald, a famous whistleblower, confronting what are quite obviously his chief adversaries, the big spenders at the Pentagon.

As a senior Air Force official, Ernie Fitzgerald committed a crime. He says he ``committed truth.'' Ernie Fitzgerald is 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 is why I like to call Ernie Fitzgerald the father of whistleblowers.

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 a $640 toilet seat and a $400 hammer, I began asking very tough questions, such as: How could the bureaucrats possibly justify paying such exorbitant prices? I am still waiting for a straight answer.

A lot has changed since the 1980s. The internet, which was in its infancy in the 1980s, is now a 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 than just making 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 6 Presidents and 12 Secretaries of Defense, yet the problem of wasteful spending at the Defense Department 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 that some high prices didn't 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--when you squeeze it in one place, the problem pops out someplace else.

Under President Bill Clinton, a report by the Government Accountability Office--we know it here as the GAO--revealed that 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 a contract.

I happen to agree that a company has a right to pay its executives whatever it wants; however, when the government enters into cost- reimbursement contracts, those 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 an amendment in the 1997 Defense authorization bill to curb executive compensation billed directly to the taxpayers, but as you might expect, with the respect the Defense Department has in this body, that amendment was voted down.

During the Bush administration in the early 2000s, I worked with the GAO to expose abuse of government charge cards by Defense Department employees. We found some truly egregious expenditures--for 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 taxpayer dollars on personal expenses--way beyond anything that was an 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 is 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 the number didn't include the massive overhead costs charged to the project, which pushed the overall price tag up to that $43 million. Anybody anywhere else--outside the beltway--knows that doesn't meet the smell test, and that is not even a commonsense answer to my overall question. How did we waste $43 million 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 we may never know how the rest of the money was spent. Was it used for unauthorized purposes or pocketed by crooked people? We will probably never know.

Now, under the Presidency of Donald Trump, over 30 years since all this started with me, the overpriced airborne toilet seat has really gained altitude. Instead of the $640 that this cost, the new pricetag was reported by the Air Force to be $10,000, and that happens to be 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 cost $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 they are now 3D printing the toilet seat lids for much less, but they never answered my questions. We don't know how many seat covers were purchased at the $10,000 pricetag; we don't know when they moved to 3D printing instead of purchasing; and we still don't have documentation or official confirmation on the true price of toilet seat lids.

Even if the issue of the toilet seat has been sorted out, it is clear the Department of Defense still does not have a grip on spending. OIG reports have revealed that the Pentagon frequently overpays for simple parts and does not perform adequate cost analysis.

One of the primary culprits for continuing waste and misuse of tax dollars is the Department of Defense's noncompliance with the congressional mandate to pass an audit. The Department of Defense has a very bad record. It is impossible to know how much things cost or what is being bought when nobody is keeping good track of the money being shoveled out the door.

For nearly 30 years, we have been pushing the Pentagon to earn a clean opinion on any of their audits. Way back in 1990, Congress passed the 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 and that is the Department of Defense. Instead of clean opinions, the Department of Defense has earned a long string of failing opinions called disclaimers. It boils down to the fact that the books at the Department of Defense are unauditable.

In 2010, 20 years after that 1990 congressional action, Congress finally got fed up and passed a new law requiring the Pentagon to be ready for audit by September 2017. The Department was given 7 long years to get its act together and to meet the same requirements as every other Federal agency entrusted with public money. Obviously, that deadline has come and gone like other deadlines have come and gone. According to the Comptroller and Chief Financial Officer, Mr. David Norquist, a clean audit is still at least 10 years away. That is 10 years of not being able to follow the money. If you can't follow the money, you don't know whether it is 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 will not 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 because there is no reliable transaction data and little or no supporting documentation. You tend to spend money without knowing what you even bought. The Pentagon will never earn a clean opinion until those accounting systems 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 that the very mighty Pentagon can develop the most advanced weapons 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.

I am working with my colleagues on the Budget Committee to get the Government Accountability Office to conduct an independent review of the Pentagon's effort to acquire modern accounting systems. What is the problem? That is what we are 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 a 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 probability of success. It 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 forces remain strong enough to deter any potential aggressor and, as a result, preserve the peace.

The men and women on the frontlines deserve fair compensation and the best weapons and equipment money can buy. We want to field the most capable military force in the world. Because national defense is so very important, congressional watchdogging of defense spending is very essential. We don't want one single dollar to be wasted--not even a penny.

Until the Defense Department is able to earn a clean opinion on a very regular basis, we have no assurance that Defense dollars are being spent wisely and, most importantly, according to law. Report after report shows that precious Defense dollars are being wasted, misused, and unaccounted for. Reforms have been made, but very clearly the war on waste has not been won. Much more work needs to be done.

From my oversight post in the Senate, I will 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. Fine seems to be AWOL on waste. I raised the issue of the $10,000 toilet seat cover with him over a month ago and still haven't received an answer. His office found the time to update the media about the toilet seat cover. Yet my letter has gone unanswered.

However, after revelations about the $43 million gas station, Secretary Mattis's reaction was sweet music to my ears. He issued an all-hands memo. In that memo, he stated flatout: I will not tolerate that kind of waste. Known for being a man of your word, Secretary Mattis, I am counting on you for your help. Maybe together we can wipe out the culture of indifference toward the American people's money by the Pentagon.

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