“I don't know what it's going to take to give top level Department of Defense officials a wake-up call.  This infuriates me and I think the American people will be infuriated as well,” Schakowsky said during the hearing.   

Schakowsky added that while hearings on the Pentagon’s financial mismanagement have been held in Congress on numerous occasions, the Department has failed to establish “the necessary systems, procedures, policies, and controls, and take the necessary managerial actions.”  She concluded by urging her colleagues to oppose the Department of Defense’s budget.  “Until DOD can get its financial house in order, it should not be rewarded with an increase,” Schakowsky said.

Below is Schakowsky’s full Subcommittee statement:
        
“Mr. Chairman, I thank you for holding this hearing.  However, I must say that I am disappointed that we have to meet once again to review why the Department of Defense (DOD) cannot get its financial house in order.  

“At our hearing on the consolidated financial statement on March 30, 2001, we learned that most agencies received "clean" or "qualified" audit opinions, while DOD received a disclaimer.  DOD’s books were so fraught with error that an audit could not even be accomplished.  Then at our financial management oversight hearing, on May 8, 2001, we heard that DOD was the biggest culprit of financial mismanagement.  Today we find that DOD is violating the law.  This is not to mention the two hearings in March 2001 of the Subcommittee on National Security, Veterans Affairs, and International Relations, on which I serve, on "Vulnerabilities to Waste, Fraud and Abuse" which found that DOD was the most vulnerable of the federal agencies.  Or the hearings held by you, Mr. Chairman, and your Democratic predecessors for well over a decade chronicling the serious financial mismanagement at DOD.
         
“Today, we will hear from the General Accounting Office (GAO) that DOD is illegally or improperly using its closed appropriations accounts.  Specifically concerned with DOD abuse, Congress passed a law in 1990 that states that appropriations accounts must close five years after the last year in which the money was available for obligation.  Yet, DOD seems to have ignored this law and has continued to use these closed accounts.  Let me just mention one such illegal use.  In 1999, DOD adjusted a 1992 account for $79 million.  Unfortunately, that 1992 account closed in 1998 and never should have been touched.  The law states that if DOD needed to make a payment on a 1992 account, it should spend 1999 dollars, not 1992 dollars that were no longer available.
   
“This blatant abuse of appropriations accounts is just one more example of DOD’s longstanding financial management problem.  Until DOD establishes the necessary systems, procedures, policies, and controls, and takes the necessary managerial actions, we will continue to hear about such missteps.  

“I do not know what it is going to take to give top level DOD personnel a wake up call. The General Accounting Office (GAO) has explained that DOD’s prospects for the future do not look favorable.  In GAO’s High-Risk Series Update, GAO stated, 

After having performed hundreds of reviews of major weapons systems over the last 20 years, we have seen many of the same problems recur –cost increase, schedule delays, and performance shortfalls.  These problems have proven resistant to reform in part because underlying incentives have not changed. 

“Mr. Chairman, because of its sheer size and the magnitude of money involved, one would think that DOD would have the most updated systems and controls in place and yet, it has the worst.  I can only hope that DOD will not have to stand before this Subcommittee a fourth time this year because of financial mismanagement.  I further hope that all members of the House will join me in opposing the Department of Defense’s budget.  Until DOD can get its financial house in order, it should not be rewarded with an increase.”