GAO raps Pentagon for chronic failure to track assets loaned to contractors
"This long-standing issue affects the accounting and reporting of [government furnished property] and is one of the reasons DOD is unable to produce auditable financial statements," according to new watchdog report.
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The Department of Defense has not made sufficient efforts to correct chronic deficiencies in monitoring the disposition of equipment loaned to department contractors, or "government furnished property" (GFP) in federal procurement jargon, according to a Government Accountability Office report.
The GAO report to congressional committees found the department's decades-long GFP tracking failures have led to billions of dollars' worth of lost equipment.
"For years, the Department of Defense (DOD) has struggled to accurately account for government property in the possession of contractors, known as government furnished property (GFP)," the GAO reported. "DOD has repeatedly revised its planned dates to address a GFP-related material weakness since auditors first reported it in 2001."
"This long-standing issue affects the accounting and reporting of GFP and is one of the reasons DOD is unable to produce auditable financial statements," according to the report. In its last audit in November 2022, the DOD could only account for 39% of its $3.5 trillion in assets.
The DOD loans out GFP to its contractors — vendors the department has contracted with for services such as weapons development, intelligence gathering and transportation, explains OpenTheBooks.com.
"These GFP assets include property furnished for repairs, maintenance, overhaul, or modification of military equipment," the GAO report explains. "Specifically, contractors can possess assets such as ammunition, missiles, torpedoes, component parts for these end-items, and equipment for specific uses associated with these items."
In 2014, the Pentagon estimated the value of such "government furnished equipment" at $220 billion, according to the GAO, an estimate the report calls "likely significantly understated."
Despite some steps the DOD has taken to address the GFP-related material weaknesses, the GAO found that "department-wide efforts have not been comprehensive and sufficiently detailed."
A 2021 Pentagon powerpoint presentation explained what's at stake by failing to effectively track GFP in these concise terms: "Currently: We don't know what we own; we don't know where it is; we don't know what it's worth. Therefore: We don't get the most value out of what we own."
"It’s not only fiscally irresponsible for the Pentagon to lose track of $220 billion in assets, it’s a risk to national security when the Pentagon loans out weapons without ever following up on what happened to them," wrote OpenTheBooks.com CEO and founder Adam Andrzejewski.
The GAO made three recommendations to remedy DOD's GFP tracking weaknesses. The DOD concurred with one and partially concurred with two of them.
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