Pentagon audit to cost $367M in 2018

The Pentagon’s first full-scale audit will cost about $367 million in fiscal 2018 and an additional $551 million to fix identified problems, Defense Department Comptroller David Norquist told lawmakers Wednesday.

Norquist, who testified before the House Armed Services Committee, said the amount includes $181 million to pay independent accounting firms and $186 million for related infrastructure, including the cost of the salaries for people supporting the audit.

“The $181 million in audit contract costs is one-thirtieth of 1 percent of the [Department of Defense] budget,” Norquist said. “In addition, we anticipate spending about $551 million in 2018 fixing problems identified by the auditors.”

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When asked to respond to criticisms that the effort would cost the government too much, Norquist replied that the price tag is small compared to the Pentagon’s overall budget and is better than “operating in ignorance.”

Committee members on both sides of the aisle applauded the undertaking, which will examine every aspect of the department and its estimated $2.4 trillion in assets, from personnel and supplies to bases and weapons.

Chairman Mac Thornberry (R-Texas) acknowledged in his opening remarks that “it is likely that the result of the first audit will not be pretty,” but it will help direct Congress and the Pentagon on where it must apply improvement efforts.

“This issue is important, and this committee will continue to pursue it,” Thornberry added.

Ranking Democrat Adam Smith (Wash.), meanwhile, said the up-front cost “is going to be enormous,” but “if we’ve got to sort of suck it up for a couple years and absorb some costs to get back on track, it’s going to make significant improvements” long-term.

Norquist said that by early summer the Pentagon will have 1,200 auditors working on the effort, which will “likely be one of the largest audits ever undertaken and comprises more than 24 stand-alone audits and an overarching consolidated audit.”

Classified programs are under audit as well, as is the department’s Overseas Contingency Operations fund, criticized by many as a slush fund for Pentagon spending.

Lawmakers for years have argued that the Pentagon may be wasting millions of taxpayer dollars by failing to balance its books, and Defense Secretary James Mattis last year identified the audit effort as a top priority.

The audit, which began last month, will be conducted annually as a measure to cut down on waste, with reports issued at the end of each year, on Nov. 15, Norquist said at the time.