DOGE To Confront the DoD Checkbook
With unprecedented zeal, Special Government Employee Elon Musk and his DOGE team have descended upon multiple agencies to execute its cost cutting agenda. Secretary of Defense Pete Hegseth has said DOGE will be welcomed at the department but simply accessing its accounting systems will not provide the visibility needed. The Department of Defense has failed seven consecutive audits, its financial information systems are a disaster, and solutions have been elusive.
Thou Shalt Be Audited
In 1990, Congress passed The Chief Financial Officer Act and one provision required every agency to be audited in full. Between 1991 and 2013, DOD only subjected itself to partial audits. In 2014, Congress required DOD to comply in full by 2018.
Unsurprisingly, DOD failed this first audit. The DOD Inspector General identified 20 material weaknesses, which are shortcomings that, in simple terms, means errors will occur but they won’t be caught or corrected before it is too late.
For the next seven years, audits never reported less than 25 material weaknesses. The associated “notifications of findings and recommendations” would average almost 2,500 reissued and 850 new NFRs every between 2019 and 2023.
Big Checkbook, Antiquated Calculators
Two major deficiencies have persisted throughout — the Fund Balance with Treasury (the department’s checking account) and Information Technology.
In the former, the department can’t balance its $800 billion-plus checkbook and lacks the tools to research discrepancies or produce the receipts.
On the latter, the department simply has too many obsolete systems; in 2021 the DODIG reported the department wouldn’t be retiring 140 legacy systems until 2036.
In 2017, the department’s Chief Financial Officer began using a data platform called Advana to build the missing universe of transactions so desperately needed to support auditability.
However, Advana is a data repository, not a tool for validating data; reliability is the responsibility of system owner from which Advana is drawing. Moreover, Advana does not have access to data across the entire department.
To overcome these challenges, the Deputy Secretary of Defense “decreed” in May 2021 that data sharing would be maximized. More pointedly, Advana would be the “single source of truth” for objective, informed decision-making.
Beginning with the 2022 audit, the DODIG began recommending the department use Advana to address the aforementioned Fund Balance with Treasury deficiency.
In May 2023, the Government Accountability Office credited the department with progress but noted its remedial plans still lacked basic details, such as interim dates to track the steps taken to achieve auditability.
Similarly, the DODIG identified problems with Advana. In October 2024, the DODIG examined whether billions of dollars in Ukraine assistance had been used in accordance with federal law.
The DODIG tersely reported “DOD did not.”
The DODIG found the department did not have documentation for $1.1 billion in outlays. More notably, the DODIG identified the amount as Questioned Costs, those transactions that may constitute legal or regulatory violations.
To date, Congress has appropriated $111 billion in Ukraine assistance
In 2025, the DOD budget totals $850 billion and the Senate Armed Services Committee Chair is aggressively pursuing a $200 billion increase.
Even a conservative (e.g. generous) projection of ten percent in questioned costs would mean almost $100 billion in transactions that could be violations of law or regulations.
Follow the Blockchain …
To extract itself from its fiduciary quagmire, DOD should embrace blockchains.
Blockchains are a secure means of executing and recording transactions without the need for a central authority. Per its protocols, transactions are recorded transparently and permanently; the data is synchronized in real time and shared in full by all stakeholders.
Inherently immutable, blockchains ensure data integrity, transparency, and above all, auditability.
To its credit, Congress has encouraged DOD to use the technology. According to a 2018 congressionally-mandated study, adoption would improve cybersecurity, supply chain efficiency, continuity of operations, and, most importantly, auditability.
An Air Force Institute of Technology publication from 2022 also examined the advantages of employing blockchains.
First and foremost, the publication acknowledged DOD blockchains could not mirror Bitcoin, which permits anyone to have access and the ability to record transactions. Instead, the sensitivity of data and need to restrict user rights dictated that a DOD blockchain would be a “permissioned private” database, not Bitcoin’s permissionless public variant.
To demonstrate its effectiveness, the publication summarized its application by Walmart, a common comparison given the company’s size and logistical sophistication.
In 2020, Walmart launched the “world’s largest blockchain industrial application solution” to date.
Under its existing system, disputes over Canada-based invoices occurred in approximately 70% of deliveries and required labor-intensive investigations taking six and eight months to resolve. While Walmart found paying the disputed amount easier, it also meant paying a 38 percent overage.
The contracted provider configured a blockchain within eight months and conducted a two-month pilot. The results were such that Walmart swiftly moved all seventy of its Canadian suppliers on the blockchain by 2022. The blockchain reduced disputes to 1.5% of all deliveries, dispute resolution times shortened, and the company saved millions.
The provider was DLT Labs, a small Canadian company founded in 2017 – not a major prime charging hundreds of billions.
The blockchain was a distributed ledger architecture that had been developed by a non-profit launched in 2015 by the Linux Foundation — not a multi-year acquisition program.
The publication also demonstrated how the Walmart blockchain outperformed current DOD accounting systems in terms of lifecycle costs, transaction throughput, and error rates.
Lastly, the publication catalogued how blockchains satisfied existing regulatory regimes governing information technologies and would address its audit deficiencies.
While the confrontation between a trillionaire and a trillion-dollar entity will be epic, the brutal reality is neither will win because defense spending is the quintessential unknown unknown.
In the thirty-four years since the first required audit, DOD has lived down to the low expectations ascribed to government bureaucracies. Congress is now requiring the department to pass an audit by 2028.
The department’s financial systems are marred by unreliable data and archaic technologies. Blockchains constitute an elegant solution to these failings and more.
R. Jordan Prescott is a private contractor working in defense and national security since 2002. He has been published in The National Interest, Small Wars Journal, Modern War Institute, 19fortyfive, and RealClearDefense.
This article was originally published by RealClearDefense and made available via RealClearWire.
