Cause and Effect?

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DoD photo / Robert D. Ward

Pentagon comptroller Robert Hale

From a Tuesday hearing before the Senate Appropriations Committee’s defense subcommittee:

Senator Dick Durbin, D-Ill.: Do you dispute this finding that the average contract employee costs two to three times as much as the average DOD civilian employee?

Robert Hale, Pentagon comptroller: No, it sounds about right…I’m hiring a lot of contractors because they know how to do audits. We don’t yet.


The DOD, like every other agency in the Executive Branch, runs on a budget and must (accordingly) do budgetary accounting:  i.e., accounting designed to make sure that it is executing the Obligation Authority it receives each year in its approved budget in accordance with the authorization and appropriation bills passed by the Congress each year.  What the DOD does NOT need to do is private-sector-style financial accounting (i.e., produce balance sheets and income statements able to win unqulfied opinions from auditors ) as if it were a publicly-traded  business trying to make money.  And yet the Congress has insisted since 1990 (when it passed the CFO Act) that the DOD must do the latter kind of private-sector-style financial accounting in the mistaken belief that doing so would make the DOD more "accountable."  When Mr. Hale says "we don't know how to do audits yet," what he means is:  we're a public-sector government agency that  does budgetary accounting-- we're not a business -- so we are still trying to figure out how to do our accounting as if we were (even though that doesn't make any sense), and we are contracting with a lot of expensive private-sector accounting firms  to help us figure out how to do that.  

The snide title of this article indicates a lack of understanding on the author's part of:  a) how the DOD (as an executive branch agency in the federal government) works and b) a naive willingness on the part of the author to "blame" the DOD for the size of its budget, when, in fact, the Congress is to "blame" for that situation since, in the end, it controls the purse strings.

Always fun to take a cheap shot at the DOD, though. 


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