The United States Navy’s goal is to have more than 355 ships in its fleet by 2030, and acting Naval Secretary Thomas Harker has suggested that one way to get there is by trimming the internal oversight office by as much as 70% in the coming years, and reducing the team from roughly 290 people to just 85. Harker said the cuts to the Naval Audit Service’s $45 million annual budget could be better used on shipbuilding. But Congress believes that the last thing the Navy needs is less oversight.
Money Saving Organization
The Naval Audit Service, which is a forward-thinking organization of Department of the Navy (DoN), is headquartered at the Washington Navy Yard in the nation’s capital, producing audit reports covering all facets of the DoN operations. That includes acquisition and contracting, infrastructure, personnel, and financial operations. The service also supports fraud-related investigations conducted by various agencies, including the Naval Criminal Investigative Service (NCIS), Acquisition and Integrity Office, and Marine Corps Inspector General.
The service is led by the Auditor General of the Navy, who serves as the principal advisor of the Secretary of the Navy, Chief of Naval Operations, and Commandant of the Marine Corps on all audit-related matters. It maintains field offices in Norfolk, VA and San Diego, CA.
While Harker suggested funding cut from the Naval Audit Service (NAS) could be directed to shipbuilding, the Navy Times reported in February that auditors at the internal oversight office had discovered underperforming technical schools, overpayment of benefits and nearly $5 million in potential fraud in fiscal 2020 alone, according to a recent annual report
The audit service has also conducted security evaluations for overseas port visits, submarine cybersecurity, and even the physical deterioration of the U.S. Naval Academy in Annapolis, Maryland.
Congress Not Happy with Planned Cuts
The planned cuts actually predated the Biden administration, and were first included in last year’s defense budget proposal. The service has warned that if the Navy were to implement the proposed cuts, NAS, “will not be able to accomplish its mission to provide Department of the Navy senior leadership with independent and objective audit and investigative support services targeted to improve program and operational efficiency and effectiveness while mitigating risk.”
Congress now will determine whether such sizable cuts make it into law.
On Wednesday, Rep. Stephen F. Lynch (D-Massachusetts), Chairman of the Committee on Oversight and Reform Subcommittee on National Security, and Reps. Elaine G. Luria (D-Virginia), Sara Jacobs (R-California), and Scott Peters (D-California) sent a letter to Harker requesting information about the Department of the Navy’s plans to reduce funding and eliminate staff for the NAS.
Rep. Luria had previously inquired to Harker on the matter of the proposed cuts, but has said that the navy has not provided the sufficient justification.
“These cuts, which were first proposed during the Trump Administration, are expected to degrade independent oversight of Navy expenditures and operations as fewer personnel and resources would be available to conduct the same amount of work. Instead, the department needs all hands on deck to prevent waste, fraud, and abuse,” wrote the Members.
“We are also concerned that the Navy has pursued these cuts without consulting with Congress and while simultaneously directing NAS to discontinue its audit and oversight work,” the letter added. “You have reportedly ordered NAS to reduce its staff by more than half by October and informed the Auditor General to ‘not begin any new audits this year.'”
The lawmakers also noted that according to the Department of Defense (DoD) Office of Inspector General (OIG), as of March 2020, the U.S. Navy had the most open OIG recommendations of any of the Pentagon’s components. The Department of the Navy surpassed the open recommendations of the Department of the Air Force and the Department of the Army.
The OIG also reported the number of open recommendations for the Navy increased 42% from 2019; while moreover compared to the Air Force and the Army, the Navy also had the most open recommendations outstanding from the Government Accountability Office (GAO).
The GAO reported that the Air Force and Army collectively had yet to close 84 recommendations, while the Navy still has 78 outstanding. A March 2020 report from GAO also reported that the Navy has repeatedly delivered ships “that require more effort to sustain than initially planned” and added that the Navy had underestimated sustainment costs for six shipbuilding programs by at least $130 billion.
Tax Dollars at Risk Without Accountability
In an editorial for Inside Sources, Gordon S. Heddell, former inspector general (IG) of the DoD, warned that Americans’ tax dollars are at risk without internal auditors.
“The Naval Audit Service performs the important role of holding the Navy accountable for how it spends its budget,” explained Heddell. “They independently assess agency operations, find and reduce risk, and advise Navy leadership on ways to save and spend money. In the past five years alone, the office accounted for roughly $2.3 billion in savings for the Navy, including identifying over $70 million in potential fraud and managed this on an average budget of $45 million per year.”
Heddell said that as the Navy seeks to reach its goal of 355 ships, the need for an internal audit service is more important than ever to stop significant misuse of taxpayer money. He said he was “extremely disappointed” to see the branch make such sweeping cuts to its oversight office, which could eliminate incentives to control costs.
“The bottom line is that the Naval Audit Service—and other functions like it—help identify fraud, waste, and abuse that can run rampant in the federal government, especially among massive spending projects like the new shipbuilding plan,” added Heddell. “Without oversight, there is simply too much room for bad actors to take advantage of the system and benefit from it at the expense of taxpayers.”
