HELLMAN: Why don't we start with the problems with accounting over at the pentagon? What do you see ... how does this impact um.. our ability to judge whether sufficient funding is going into the military at this point in time?

DEGENNARRO Yeah, The bottom line for taxpayers now is that we shouldn't be throwing more money at the Pentagon until they can tell us what they've done with the money we already gave them. Uh, the truth is the Pentagon's accounting systems and invoicing systems are a complete mess. Um, the Department of Defense admits that it can not account for 18 billion dollars in specific expenditures. It can't match those expenditures with an invoice. Doesn't know what the money was spent for. The general accounting office says that that number may be low, it may be up to 43 billion dollars that the Pentagon spent but nobody knows where the money went. Um, that's outrageous.

Um, Senator Fred Thompson who chairs an investigative committee in the Senate has said that DOD can not pass an audit and will remain at risk of misspending taxpayers fund so long as it's accounting systems are uh can not account for its' current operating funds and so long as DoD can not account for its current assets; all the equipment that it has.

HELLMAN: And these types of problems are sort of endemic to the military. It's businesses don't have .... are not in a position where they can operate under these types of conditions are they? I mean this is something that's really an anomaly in the private sector.

DEGENNARRO: Sure. I mean there's no questions that the Pentagon - there's no question that America's military is different from our private companies. And the military will have unique needs and circumstances but there's no reason why the military can't tell taxpayers what it did with 18 billion dollars of our money. You know, every American taxpayer has to be ready to pass an audit by the IRS, but the nations military can not pass an audit.

And let me tell you something, I testified at a special, um, accounting board that oversees military accounting standards. I talked to one of the top officials in the Department of Defense on their accounting mess and he told me that the mess will not be fixed in five years. He said that I need to be more patient, that they won't find the millions of dollars, even in five years. I think that's outrageous.

HELLMAN: Yeah. That's good. Do you want to say anything more about accounting or shall we move onto something else?

DEGENNARRO: Uh, lets talk about their billing system. 

HELLMAN: Ok good, alright, and problems with billing.

DEGENNARRO: Yeah, Uh, Uh, let me get these numbers in my head.

HELLMAN: Yeah.

DEGENNARRO: You know it's no wonder that the Pentagon can't find 18 billion dollars in expenses 'cause their billing system is in complete chaos. Senator Fred Thompson, the Republican chairman of the investigative committee noted that after eight years of spending almost 20 billion dollars on a reform initiative for accounting the Pentagon had achieved little of the 36 billion dollars in savings it originally had projected to save.

Um, moreover the General Accounting Office has noted that the Pentagon is highly paper dependant. In other words, 25,000 loose contracts switch in and out of the files each week in the pentagon billing system. The Pentagon invoicing computers, uh, paying computers, can't talk to the Pentagon b - uh, ... The Pentagon purchasing computer can't talk to their uh.... The Pentagon's purchasing computers can't talk to the payment computers. They have to rely on paper. They have to do a lot of things by hand. That drives up their labor costs horribly.

You know, in the private sector it costs and average of about $3 in direct labor costs to process an invoice. At the Pentagon it costs about $44 in direct labor cost to process an invoice. In the private sector the average person can process 16,400 invoices per year. At the Pentagon, the average staffer can only process 1,000 invoices per year. No wonder the Pentagon is wasting money and can't even find a lot of the money we spend.

HELLMAN: Good. Uh why don't we move on to the issues of base closures. Uh, as you're aware, uh, the secretary of defense has requested an additional 2 rounds of base closures in an effort to reduce infrastructure and save some money, uh, and yet there has been substantial resistance in congress to that.

DEGENNARRO: Yeah, uh. One way the Pentagon has asked to save money... You know, what people don't understand is that the Pentagon has identified itself ways it can save money. For example, base closures. Uh, the Pentagon has already closed 222 major bases in the last couple of decades and saved 29 billion dollars in taxpayer money - that, that we don't have to spend keeping open the bases, paying people to, to keep operating them, and we don't need them. Um, If we carried out 2 more rounds of base closures, as proposed by Secretary of Defense Cohen, he estimates that we could save 20 billion dollars by year 2015 and 3 billion dollars a year there after. What did congress do? This year the United States Senate voted to make it harder to close bases - not easier - and rejected Senator Cohen's request. 

HELLMAN: Now what's the basis for congressional resistance to what seems to be a very sound fiscal and strategic move on the part of the pentagon. 

DEGENNARRO: At the same time some Senators are pounding the table and complaining about National Security is at risk because we don't have enough money at the pentagon. They are stopping the pentagon from closing unneeded bases in their states and their congressional districts that could save taxpayers money right away. 

HELLMAN: Uh, Congress is also taking the lead on a number of uh, funding for a number of uh, controversial programs. Some of which the military itself is reluctant to accept. Um, ... the B-2 bomber is one example. Do you want to speak to some of these programs?

DEGENNARRO: You know, even the Air Forces says that it doesn't want to buy any more B-2 Bombers. Uh, they cost 2 billion dollars a piece, they don't work real well when they're wet in the rain. Um, and we've already spent 45 billion dollars in taxpayers money on the B-2 bomber. Each one cost more than its weight in gold. But, the contractor wants uh, the Pentagon to buy more B-2 bombers.

The um, Congress, some in Congress are still pushing the Department of Defense to buy more B-2 bombers. Uh, about 29 billion dollars worth. Um, If we listen to the B-2.... If we listen to the Air Force on the B-2 bomber we could avoid spending tens of billions of dollars more on B-2 bombers we don't need and that don't work real well. 

HELLMAN: Are there other programs you might want to identify? We know you monitor votes in congress on specific issues and specific programs. Are there other ones you have identified as being problematic, similar in that regard?

DEGENNARRO: Yeah, um, the Pentagon is know ombark.... The Pentagon is now embarking on a shopping spree with taxpayer money to buy 3 new tactical aircraft. The plan is to spend 350 billion dollars in coming years on 4400 new tactical aircraft. These are duplicative aircraft we can not afford. Even the experts say you just can not afford to buy all three of these. We're upgrading the FA-18 E and F. We're buying a new F-22 and we're buying a new joint strike fighter. These are staggering amounts of money. Even at the Pentagon. We just can't afford them all.

HELLMAN: That's fine.

DEGENNARRO: Yeah, what's interesting is um, um, Senator Russ Feingold of Wisconsin uh last year offered an amendment in the senate to tell the department of defense to buy two three of those near uh, .. I am going to start over. You know in 19 um ... The plan to buy three new tactical air craft shows that the neither the department of defense nor the congress can set priorities and make tough cuts. Last year, in 1997, Senator Russ Feingold offered an amendment in the senate to say that the pentagon should buy two of the three new ter-tactical aircraft. To choose two of the three FA-18, F-22 and the joint strike fighter. But what happened? The senate rejected that amendment.

HELLMAN: Um. I'll put this down but I am going to read it and we can work from there which is... Is it an appropriate function of elected officials to promote the interests of major employers in their home districts? Um, and how do you identify which programs are not are, are wasteful and not necessary . Um, does, and further um, how does, um, the concept of supporting our national security work it's way into the equation?

DEGENNARRO: It's not acceptable for members of congress to waste billions of taxpayer dollars, keeping open unneeded bases or forcing the pentagon to build unwanted weapons especially at a time when some of those same members of congress claim that our national security is endangered by lack of money in the pentagon. That's not acceptable. 

HELLMAN: That's good. Um, I think we've covered what I wanted to do. Is there anything else that you wanted to bring into it that you want to add that we might want to use?

DEGENNARRO: Uh, The F-22 fly before we buy issue?

HELLMAN: Yeah, OK. And I can give you a lead on that. Um, one of the concerns about the tactical aircraft programs you mentioned, the F-22, is not only is it not necessary, but that it's being effectively being rushed into production. They want to get the production decision, the decision to go to production made. Understanding that once you cross that threshold it becomes that much more difficult to cancel a program. Um, what's the issue there and why this need, particularly now that the cold war is over, to speed up the production um, decision and basically agree to buy the plane with um, without doing much testing on it?

DEGENNARRO: You know, taxpayers know it never makes sense to throw money at a problem without knowing that that money is going to do some good. Unfortunately, uh, for example with the F-22 uh airplane that we are now buying, originally we were supposed to test it for more than 600 hours of flight tests in the air before we made the decision that we were going to buy the plane in large quantity. But, um, the plan now is to go ahead and start buying them in quantity long before they received adequate testing. In other words for the taxpayers, we should be flying before we buy, but for the military contractor and uh, those that are promoting this aircraft, we're going to buy before we fly. That doesn't make sense.

HELLMAN: That's great. Yeah. I think we're done. How we doing on tape? Is there anything else you want to do? Do you want to work the report into it in some way shape or form? Is the only other thing I was thinking.

DEGENNARRO: Um, yeah.

HELLMAN: I mean we can do that with the narrator as well so that not even a problem.

DEGENNARRO: I mean I guess you know what sort of what ... maybe the next question is what can we do about it?

HELLMAN: Yeah, right exactly.

DEGENNARRO: I mean, let me try this out on you. By the way this is a C-4. The only thing I've done so far is C-3 activity taxpayers for common sense would be..... If we get into the score card, this is a product of our 501 C-4 taxpayer for Common sense action and um, I don't know what your status is I got a feeling.

HELLMAN: We're Identifying you as a research and advocacy organization. That's fine. As long as we identify you as such, that's fine, it doesn't reflect on us in any way, shape, or form. We're OK with that. Uh, and it doesn't change your assessment portion of it.

DEGENNARRO: Um, 

HELLMAN: So what are the solutions? How do we go about dealing with this problem? 

DEGENNARRO: Um, The solution is for taxpayers to be just as hard headed about not throwing money at the Pentagon as they are about not throwing money at any other program. Taxpayers for Common Sense Action, uh our organization, monitors how Congress votes on all kinds of government waste issues including wasteful military spending on things such as keeping military bases open, buying fighters we don't need and things like that.

Um, We think that we need ... We think taxpayers need to hold their members of Congress accountable when they vote for wasteful expenditures like keeping military bases open that we don't need, or buying airplanes we don't need, or not testing the weapons before we buy them. Our score card, the Common Sense taxpayers score card um, ranks members on how they vote on these and other military spending and other government waste issues. 

HELLMAN: That's great.