[Page S513]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                         Department of Defense

  Mr. GRASSLEY. Mr. President, every so often, I come to the Senate 
floor to bring my colleagues up to date on the lack of financial 
management system in the Department of Defense.
  I am here again to address what I consider a festering bureaucratic 
sore. The Pentagon can't keep track of the taxpayers' money. And as I 
just indicated, I speak about this many times. In 30 years of 
watchdogging, little or nothing has happened.
  Internal controls over the taxpayers' money remain weak or 
nonexistent at the Department of Defense. And I am here today to speak 
specifically about a recent inspector general's audit, driving home 
that point. Specifically, auditors discovered $1.1 billion in 
undocumented payments by the Pentagon using funds Congress provided to 
assist Ukraine.
  They examined 479 transactions for the calendar year 2022, totaling 
$2.1 billion dollars. The auditors determined that 65 percent of the 
transactions could not be verified for a lack of documentation.
  If the sample were doubled in size, the inspector general estimated a 
staggering 94 percent would be unsupported.
  Now, we all agree that is unacceptable; or if we don't agree that 
that is unacceptable, there is something wrong with our thinking.
  The rules are crystal clear. Supporting documentation is required 
when paying bills. Proper documentary support should include a 
contract, travel authorization, invoice, receipts, payment voucher, or 
things like that.
  And I don't mean you have to have all those available to pay a bill, 
but you ought to have at least one of them or more before you spend the 
taxpayers' money.
  Now, taken together, these records form an audit trail essential for 
payment verification and fraud detection.
  If the documents match up, a bill is ready to pay. So $1.1 billion 
went out the door, and there is no documentation to back it up.
  I want to make very clear: That is an audit report, not Chuck 
Grassley saying that. So we don't know how that money was used. Was it 
spent to assist Ukraine as required, or was it misused or stolen? We 
simply don't know.
  Clearly, unsupported payments leave the door wide open to fraudsters. 
Paying bills without documentation shows neglect and indifference. It 
is reckless and should not be tolerated.
  These undocumented expenditures occurred on the watch of Chief 
Financial Officer--or as we know him CFO Mike McCord. Though Mike 
McCord has departed the Department, he and his deputies are 
accountable. They failed to exercise due diligence over the public's 
money.
  Such gross mismanagement is made worse by the Pentagon's pitiful 
accounting system--or as I said in my opening, the lack of a financial 
management system.
  Top managers turned a blind eye to this problem as well, just like a 
long line of their predecessors. Instead of modernizing, they kept 
pouring out billions down a rathole to upgrade ancient systems that 
belong on the junk heap.
  Why did such smart, experienced managers go down that rabbit hole? 
Why did they fail to acquire modern systems that could produce reliable 
information, effective controls, or clean opinions? Why has this 
problem not been fixed?
  There once was a bravehearted watchdog in the Air Force's 
Comptroller's who claimed to know the answer. Ernie Fitzgerald was that 
person's name. I knew him in the 1980s. He worked in the Defense 
Department until he retired maybe 20 years ago, and he probably died 
about 3 or 4 years ago.
  He had this to say:

       Leaders in the Pentagon don't want to fix it. Sloppy 
     accounting gives them flexibility to hide their shenanigans.

  When there is no audit trail to follow, it is easy to make sneaky 
accounting adjustments to cover your backside. Pentagon managers have 
some explaining to do, and I am all ears. I want to give you just one 
recent example, and I am following up with the inspector general in the 
Pentagon to get some answers on this.
  Over a period of 6 years, until earlier last year when she pleaded 
guilty to--can you believe this--stealing $106 million out of the 
Defense Department. She was buying all kinds of homes and all kinds of 
expensive cars, and I don't have a long list of where $106 million 
went, but can you believe over a period of 5 years, there was nobody in 
the Defense Department who caught it? Eventually, after 6 years, the 
IRS discovered it, but she got away with it for 6 years. Now, she is 
prosecuted and 15 years in prison. She wasn't prosecuted--she pled 
guilty.
  But so I write to the IG to get an explanation of how come they have 
a financial management system--or a lack thereof--that doesn't catch 
somebody stealing $106 million. So I sent along, with those questions I 
am asking the IG, a report that I put out in 1998 that was a report of 
people stealing money at the Air Force base in Dayton, where they had 
this check-writing machine, and we found out that the person managing 
that check-writing machine could make checks out to people in his 
family. And there was about $5 million stolen at that particular time.
  And so we went to Dayton to study what was wrong, and what was wrong 
is exactly what this audit report shows today, they were writing checks 
without invoices.
  Now, you see, we pointed something out, what, 26 years ago or 
something like that, that was wrong with financial management in the 
Defense Department, and I--so I guess you could say the Defense 
Department has learned nothing in the last 26 years.
  And I just hope that they would take my report of 1998 and what is 
wrong with Janet Mello stealing $106 million and try to change the 
system.
  Now, we, in the Congress, with our power of oversight, or as you 
study in high school government, checks and balances of government, we 
appropriate money, we pass laws, but we don't enforce those laws. We 
have a constitutional responsibility to point out when the executive 
branch of government or the people in the executive branch of 
government aren't faithfully executing the laws that we pass or 
properly appropriate spending the money the way we appropriated.
  So we don't enforce the laws; we make the laws. We have oversight.
  But what do you do? You come to the floor of the U.S. Senate and try 
to raise Cain about it and get some changes made. But the Defense 
Department is a little bit different than any other Agency of the 
Federal Government because they are the only Agency of the Federal 
Government that has never had a clean audit.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. MURPHY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.