Keeping track of stuff can be hard

The US government — by virtue of being a large bureaucracy that builds and buys stuff — owns stuff. And when the US government contracts with contractors to do things, the US government sometimes gives those contractors the government's stuff so that the contractors can do things for the government.

With me so far? Government gives its stuff to contractors so contractors can do things. This is called providing "government-furnished property" or "GFP" to contractors.

As you can imagine, there are rules around government-furnished property because it's the government's stuff! And one of the things you're not supposed to do with government-furnished property is lose it!

But it happens! By analogy: normal people, like you or me, might have stuff that we lend to people like books. And from time to time, I'll go looking for a book and forget that I lent it out. It's not that big of a deal, books aren't that expensive, so if I forget, it's not a huge problem.

So, here's a fun headline:

The DOD has struggled for decades to accurately account for government property in the possession of its contractors. DOD estimated that the value of such unaccounted property is over $220 billion—but that amount is likely significantly understated.

Two hundred and twenty billion dollars of stuff! Unaccounted for! Likely significantly understated!

How can you not account for $220 billion dollars of stuff?! That's a lot of books.

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.


Again, how?

Now, before I go to far. There's a really really really important fact that probably needs to be stated: DOD is probably not actually missing $220 billion worth of stuff. It just can't account for the at least $220 billion worth of stuff that, at some point, it's given to contractors.

For emphasis: the amount of government-furnished property that is missing is likely (hopefully?) far far less $220 billion. Let's say, for argument sake, it's 1% of that. That would still be $2.2 billion!

In this hypothetical world of $2.2 billion, you might imagine that DOD would probably want to do something about this?

As we and other auditors have previously reported, serious control issues
preclude DOD from having accurate and complete GFP records and,
therefore, reliable and auditable GFP-related financial information. As a
result, DOD financial statement auditors continue to identify a material
weakness related to DOD’s accounting for its GFP. DOD and the military
departments have taken some steps to mitigate the DOD-wide GFP
material weakness. Despite these efforts, DOD has made minimal
progress in the past 2 decades to remediate the identified deficiencies.

It's taken 20+ years with minimal progress? That's, uh, not great?

Now, to be fair, the DOD has a lot going on. Defense spending is over $847 billion in the current fiscal year budget. I honestly would much rather that SecDef's headspace be more focused on the military winning than on DOD losing stuff. Seriously, a rational read of this situation is that it's one of those things in the "Eisenhower matrix" of important, but not urgent.

And, to be fair, the GAO report is basically a case study in "change management is hard". There were memoranda, shifting deadlines, subsequent memoranda, data calls, strategic plans, and more memoranda (GAO literally wrote: "DOD management continues to issue memorandums aimed at accomplishing the same objective"!) There were confused officials about the terminology used in those memoranda. There were working groups and committees, and quarterly meetings that maybe didn't happen (?), and meetings where people didn't show up. There are roadmaps and high-level strategies.

It all sounds hard and I'm sure that there are many people in northern Virginia who are doing their level best to try and get this fixed.

But, still:

In its Understanding the Results of the Audit of the FY 2021 DOD
Financial Statements, the DOD OIG reported that DOD had not made
significant progress in remediating its GFP-related deficiencies because it
relies too heavily on its contractors to maintain inventory records on its
behalf. In addition, the OIG also reported that DOD does not always verify
that contractor’s inventory records are complete and accurate.

That's correct. DOD can't keep track of its stuff because the DOD relies too heavily on contractors to keep track of the DOD's stuff.

Maybe a working group is not the solution that DOD needs? Just sayin'? Whatever. Damn the torpedoes!

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