All those teachers who always reminded you to check your work obviously should have spent a little more time with the folks at the Department of Defense Finance and Accounting Service (DFAS.) A simple data entry error by a DFAS contractor cost taxpayers $30 million dollars and 650 people their jobs. This is just another glaring example of why the Department of Defense needs to get its fiscal house in order, fast, before any more taxpayer dollars wind up under the couch cushions.

The recipient of the $30 million grand prize was Affiliated Computer Services, a Dallas-based company that won the contract to manage military payments to retired personnel and the survivors of troops. AFC offered to do the job for $364.7 million, outbidding the government, the only other bidder, by $1.9 million.

The problem is that the government could have done it for $334.8 million, a savings of $29.9 million over what AFC bid and $31.8 million over what the government itself bid. The incorrect estimate was caused by a simple data-entry mistake. In estimating personnel costs, 1 employee salary needed to be indexed for inflation and 502 did not. Instead, 502 positions were indexed and 1 was not, resulting in $31 million being added to the government estimate.

Mistakes happen, but what is shocking about this mistake is just how many opportunities there were to avoid it. The government estimate was done by a team of consultants at Mevatec Corp., who received $218,474 for their work. The estimate was then reviewed by DFAS and certified three times by the independent auditors of the Department's Inspector General's Office. This is the same department that, at Congressman Kucinich's (D-OH) request, audited the report again and finally found the error, on the fourth review of the report. This is a clear indictment of the Department of Defense Inspector General's own processes of supervision.

The purpose of the Inspector General's Office is to be “the principal adviser to the Secretary of Defense for matters relating to the prevention of fraud, waste, and abuse in the programs and operations of the Department.” Having missed the boat the first three times, the office is under a new director and has produced substantial improvement, first and foremost the audit that revealed the error. Additionally, the Inspector General's office has implemented several procedures to avoid this error in the future.

RELATED ARTICLE
Budget Gimmicks and the U.S. Debt Problem

The DFAS, however, shows no such willingness to change. As the party most responsible for the contract, it is clearly responsible for fixing its mistake. AFC's contract is subject to renewal every year for ten years. Either AFC needs to reduce its costs by $30 million, or their contract should not be renewed. Yet while not disputing the audit, DFAS's director has made no plans to change the contract or contractors. This lack of accountability is intolerable. It's time the Department of Defense stopped operating like a closed club and started showing some financial responsibility to the public.

RELATED ARTICLE
The Highway Trust Fund Crisis

Share This Story!

Related Posts