‘Ridiculous’: Navy comptroller on contractors stiff arming his auditors

WASHINGTON — The US Navy’s comptroller says it’s “ridiculous” certain industry contractors believe they can stiff arm the service from auditing its own property, and vowed that the Navy will explore ways to compel vendors to comply — or pay up.

“When my audit team shows up and goes, ‘Hey, where are these solid rocket motors that you own?’ The prime contractor says, ‘Oh, that’s not in our contract. We don’t have to tell you that,” Russell Rumbaugh, the assistant Navy secretary for financial management and comptroller, said during an event at the Stimson Center on Monday.

Such occurrences are not rare, he added. With the most recent fiscal year having just ended, the service is in the midst of its routine annual audit, and in just the past two weeks, Rumbaugh said two contractors gave his team this kind of cold reception when they attempted to take inventory of government assets.

“How can you possibly keep a straight face and say that?” he said. “That’s ridiculous.”

The comptroller said that “contract renegotiations” are “absolutely on the table,” but acknowledged they take time.

“You are holding a piece of government-furnished equipment and you can’t produce it. Can I just bill you right then and there?” Rumbaugh said. “There is a standard blurb in the FAR, the Federal Acquisition Regulations, that says … ‘You’ve got to keep a hold of your government-furnished [equipment].’ Is that enough for me to sue a contractor?”

The Navy, and more broadly the Pentagon, have been trying to produce a “clean audit” since 2018 — and have largely failed. At a basic level, a “clean audit” would imply the services have comprehensive and accurate inventories of all their assets, buildings and properties stationed around the world, nothing extra and nothing missing. That is not a small feat when dealing with a government agency now touting an annual budget of more than $800 billion.

Producing such a “clean audit” has proven difficult for the Defense Department. Military leadership have previously offered timelines to meet that goal; the latest was in 2021 when the Pentagon’s financial leaders set their sights on 2028.

But the inherent problem with those goals is the officials who make them often are not in their posts when its time to check their work. Such was the case for former Navy Secretary Richard Spencer who in 2018 told lawmakers the Navy would produce a clean audit “within five to six years.” Spencer hasn’t been in the service secretariat since late 2019.

Rumbaugh praised the Marine Corps in particular, saying it has made remarkable progress due to the commandants taking personal ownership of the need to be “auditable.”