The Pentagon has failed its seventh consecutive audit, unable to fully account for its $824 billion budget and $4.1 trillion in assets. As the largest federal agency, responsible for nearly half of the government’s annual discretionary spending, the Defense Department’s ongoing inability to pass a clean audit raises serious concerns about financial mismanagement, systemic waste, and fraud. Meanwhile, Congress continues to approve unprecedented increases in military spending, pushing the budget close to $1 trillion.
The latest financial review, conducted by independent public accountants and the Department of Defense’s (DoD) inspector general, found insufficient records to form an accurate opinion of the Pentagon’s accounts. Of the 28 reporting entities reviewed:
• 9 received unmodified audit opinions (indicating clean audits),
• 1 received a qualified opinion,
• 15 received disclaimers of opinion due to missing or incomplete data,
• 3 audit opinions remain pending.
The Pentagon characterized the results as a step forward, with Under Secretary of Defense and Chief Financial Officer Michael McCord declaring, “Momentum is on our side.” He further compared the findings to a “half good and half not good” report card, resisting the notion of failure. However, the overall result was yet another disclaimer of opinion, a designation highlighting the department’s ongoing inability to provide adequate financial records.
The goal of achieving a clean audit by 2028, as mandated by the National Defense Authorization Act, remains aspirational at best. Critics argue that repeated failures undermine public trust in the agency’s ability to manage taxpayer dollars responsibly.
The Pentagon has never passed a clean audit, a legal requirement for all federal agencies. Since its first failed audit in 2018, Congress has authorized trillions in additional funding for the Defense Department, raising questions about lawmakers’ commitment to accountability.
Military contractors, which now receive over half of the Pentagon’s annual budget, have long been criticized for over-billing and inefficiency. According to the Costs of War Project, the heavy reliance on private contractors exacerbates systemic waste. A 2015 Pentagon report, buried by department officials, identified $125 billion in administrative waste. The findings were hidden to avoid justifications for defense budget cuts.
Despite these revelations, Congress has consistently increased military spending, further insulating the Pentagon from scrutiny. The department’s inability to track expenditures raises concerns about how taxpayer funds are being allocated and whether they are effectively advancing national security.
Legislative efforts to hold the Pentagon accountable have repeatedly failed. Last year, Senator Bernie Sanders (I-Vt.) introduced an amendment to the National Defense Authorization Act that would have required the Pentagon to return a portion of its budget to the Treasury as a penalty for failed audits. The measure, like similar proposals in previous years, was blocked before it could receive a roll-call vote.
Warren Gunnels, Sanders’ staff director, expressed frustration with bipartisan opposition to reform, stating, “Year after year the establishment on both sides of the aisle have prevented these amendments from receiving a single roll call vote.”
Advocacy groups have also called for significant changes. Lindsay Koshgarian, director of the National Priorities Project at the Institute for Policy Studies, said, “The Pentagon’s latest failed audit is a great signal to the incoming administration for where they can start their attempts at slashing government spending. Instead of gutting veterans’ benefits or the Department of Education as planned, they should start with the one major government agency that has never passed an audit, the Pentagon.”
The Pentagon’s persistent audit failures have not slowed the growth of its budget, which is set to reach nearly $1 trillion next year. Since 2018, military spending has expanded significantly, with bipartisan support for defense appropriations. Critics argue that these increases divert resources from other urgent priorities, such as education, healthcare, and climate initiatives.
The unchecked expansion of the Pentagon’s budget reflects a troubling lack of fiscal responsibility. By contrast, proposals to reduce spending in areas like veterans’ benefits or social services often face immediate pushback due to their potential impact on vulnerable populations.
The Pentagon’s inability to account for its spending damages public confidence in federal institutions. As the agency responsible for defending the nation, its financial mismanagement raises serious concerns about whether resources are being effectively allocated to meet security needs.
Moreover, the opportunity costs of unchecked military spending are significant. Resources funneled into bloated defense contracts and administrative waste could instead support programs that directly benefit American citizens. Without meaningful reform, the Pentagon’s financial practices will continue to erode trust in government spending.
Reforming the Pentagon requires immediate action to impose accountability and ensure taxpayer funds are used effectively. Proposals to penalize failed audits, increase oversight of contractors, and enforce stricter financial controls must be prioritized by lawmakers. Advocacy groups and progressive legislators continue to push for reforms, but bipartisan resistance remains a significant barrier.
As Lindsay Koshgarian stated, “Instead of gutting veterans’ benefits or the Department of Education as planned, they should start with the one major government agency that has never passed an audit, the Pentagon.”
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