Pay Errors Impoverish Some Soldiers, Enrich Others
Nearly $47B in reported fiscal year 2011 active duty military payroll includes Army service members who received pay to which they weren't entitled and others who didn't receive the full pay due them.
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By Scot Paltrow and
Kelly Carr,
Reuters
July 10, 2013

As Christmas 2011 approached, U.S. Army medic Shawn Aiken was once again locked in desperate battle with a formidable foe. Not insurgents in Iraq, or Taliban fighters in Afghanistan - enemies he had already encountered with distinguished bravery.

This time, he was up against the U.S. Defense Department.

Aiken, then 30 years old, was in his second month of physical and psychological reconstruction at Fort Bliss in El Paso, Texas, after two tours of combat duty had left him shattered. His war-related afflictions included traumatic brain injury, severe post-traumatic stress disorder (PTSD), abnormal eye movements due to nerve damage, chronic pain, and a hip injury.

But the problem that loomed largest that holiday season was different. Aiken had no money. The Defense Department was withholding big chunks of his pay. It had started that October, when he received $2,337.56, instead of his normal monthly take-home pay of about $3,300. He quickly raised the issue with staff. It only got worse. For all of December, his pay came to $117.99. All Aiken knew was that the Defense Department was taking back money it claimed he owed. Beyond that, “they couldn’t even tell me what the debts were from,” he says.

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At the time, Aiken was living off base with his fiancee, Monica, and her toddler daughter, while sharing custody of his two children with his ex-wife. As their money dwindled, the couple began hitting church-run food pantries. Aiken took out an Army Emergency Relief Loan to cover expenses of their December move into a new apartment. At Christmas, Operation Santa Claus provided the family with presents – one for each child, per the charity’s rules.

Eventually, they began pawning their possessions – jewelry, games, an iPhone, and even the medic bag Aiken used when saving lives in Afghanistan. The couple was desperate from “just not knowing where food's going to come from,” he says. “They just hit one button and they take your whole paycheck away. And then you have to fight to get the money back.”

PAYMASTERS HOUND A MASTER SERGEANT
Aiken’s injuries made that fight more difficult. He limped from office to office to press his case to an unyielding bureaucracy. With short-term and long-term memory loss, he struggled to keep appointments and remember key dates and events. His PTSD symptoms alienated some staff. “He would have an outburst ... (and) they would treat him as if he was like a bad soldier,” says Monica. “They weren’t compassionate.”

They were also wrong. The money the military took back from Aiken resulted from accounting and other errors, and it should have been his to keep. Further, even after Aiken complained, the Defense Department didn’t return the bulk of the money to Aiken until after Reuters inquired about his case.

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The Pentagon agency that identified the overpayments, clawed them back and resisted Aiken's pleas for explanation and redress is the Defense Finance and Accounting Service, or DFAS (pronounced “DEE-fass”). This agency, with headquarters in Indianapolis, Indiana, has roughly 12,000 employees and, after cuts under the federal sequester, a $1.36 billion budget. It is responsible for accurately paying America’s 2.7 million active-duty and Reserve soldiers, sailors, airmen and Marines. It often fails at that task, a Reuters investigation finds.

A review of individuals’ military pay records, government reports and other documents, along with interviews with dozens of current and former soldiers and other military personnel, confirms Aiken’s case is hardly isolated. Pay errors in the military are widespread. And as Aiken and many other soldiers have found, once mistakes are detected, getting them corrected - or just explained - can test even the most persistent soldiers (see related story).

“Too often, a soldier who has a problem with his or her pay can wait days, weeks or even months to get things sorted out,” Democratic Senator Thomas Carper of Delaware, chairman of the Homeland Security and Governmental Affairs Committee, wrote in an email. “This is simply unacceptable.”

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At the time, Aiken was living off base with his fiancee, Monica, and her toddler daughter, while sharing custody of his two children with his ex-wife. As their money dwindled, the couple began hitting church-run food pantries. Aiken took out an Army Emergency Relief Loan to cover expenses of their December move into a new apartment. At Christmas, Operation Santa Claus provided the family with presents – one for each child, per the charity’s rules.

Eventually, they began pawning their possessions – jewelry, games, an iPhone, and even the medic bag Aiken used when saving lives in Afghanistan. The couple was desperate from “just not knowing where food's going to come from,” he says. “They just hit one button and they take your whole paycheck away. And then you have to fight to get the money back.”

PAYMASTERS HOUND A MASTER SERGEANT
Aiken’s injuries made that fight more difficult. He limped from office to office to press his case to an unyielding bureaucracy. With short-term and long-term memory loss, he struggled to keep appointments and remember key dates and events. His PTSD symptoms alienated some staff. “He would have an outburst ... (and) they would treat him as if he was like a bad soldier,” says Monica. “They weren’t compassionate.”

Reuters found multiple examples of pay mistakes affecting active-duty personnel and discharged soldiers. Some are erroneously shortchanged on pay.

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Others are mistakenly overpaid and then see their earnings drastically cut as DFAS recoups the money, or, like Aiken, they are forced to pay money that was rightfully theirs. Precise totals on the extent and cost of these mistakes are impossible to come by, and for the very reason the errors plague the military in the first place: the Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other. The DFAS accounting system still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services.

In a December 2012 report on Army pay, the Government Accountability Office said DFAS and the Army have no way to ensure correct pay for soldiers and no way to track errors. These deficiencies, it said, “increase the risk that the nearly $47 billion in reported fiscal year 2011 Army active duty military payroll includes Army servicemembers who received pay to which they were not entitled and others who did not receive the full pay they were due.”

In a written response to the report, Robert Hale, the Defense Department’s comptroller, said, “I agree that we need to strive to improve payroll accuracy,” but added that the GAO had overstated the problem and mischaracterized some of the debts as errors.

NO-ACCOUNT ACCOUNTING
Pay errors are part of a larger phenomenon that Reuters will explore in a series of articles: the Defense Department’s endemic failure to keep track of its money – how much it has, how much it pays out and how much is lost or stolen.

The department’s authorized 2013 budget, after sequester, totals $565.8 billion - by far the largest chunk of the annual federal budget approved by Congress. Yet the Pentagon is literally unable to account for itself. As proof, consider that a law in effect since 1992 requires annual audits of all federal agencies – and the Pentagon alone has never complied. It annually reports to Congress that its books are in such disarray that an audit is impossible.

In this series, Reuters will delve into how an organization that fields the most sophisticated technology in the world to fight wars and spy on enemies has come to rely on an accounting system of antiquated, error-prone computers; how these thousands of duplicative and inefficient systems cost billions of dollars to staff and maintain; how efforts to replace these systems with better ones have ended in costly failures; and how it all adds up to billions of taxpayer dollars a year in losses to mismanagement, theft and fraud.

For all its errors, Pentagon record-keeping is an expensive endeavor. For fiscal 2012, ended Sept. 30, the Defense Department requested $17.3 billion to operate, maintain and modernize the more than 2,200 systems it uses to manage finances, human resources, logistics, property, and weapons acquisitions, according to an April 2012 GAO report. That amount does not include billions of dollars more in each of the military services’ “operations and maintenance” budgets used for upkeep of the systems. Nor does it cover all of DFAS's $1 billion-plus budget.

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The issue has yet to garner much attention in the political arena, despite continuing debate over the U.S. government’s deficits and efforts to restore fiscal order. More immediately, the mess in Pentagon pay in particular carries implications for national security. In its December 2012 report, the GAO recognized that fielding soldiers burdened with pay errors “may pose financial hardship for the soldiers and detract from their focus on mission.”

Officers complain that the difficulty of keeping track of personnel makes it harder to deploy men and women in times of war. Retired four-star Navy Admiral William J. Fallon says that while serving in 2007 and 2008 as chief of the U.S. Central Command, overseeing joint military operations in Afghanistan and Iraq, he had to maintain “an incredibly bloated staff” from each of the services to keep him informed of the numbers and availability of troops. “It is an incredibly inefficient, wasteful way of doing business,” he says.

This way of doing business has also proved resistant to change. A recalcitrant bureaucracy, competing priorities - war, among others - and until recently, congressional indifference have stymied any efforts to impose order. Most notable among those efforts: a project to install a new, unified pay- and personnel-management system that eventually ate more than $1 billion before the Pentagon killed it.

“If you look at the things this country has done, how hard is this?” says Daniel Denning, assistant secretary of the Army for manpower and Reserve affairs from 2002 to 2007 and now a consultant at MBO Partners LLC in McLean, Virginia. “If someone could put something like Facebook together or Google, one would think that bringing these decades-old military personnel and pay systems into the 2012 world shouldn’t be that hard.”

'FINGER-GAPPING'
The mistakes in soldiers’ pay may seem small - $1,000 here, a few hundred there. But for an Army private first class making a base annual salary of about $23,000, or a wounded veteran on disability, they can be devastating. Former soldiers have had their civilian wages and their Veterans Administration benefits garnished. They have been pursued by private collection agencies and forced to pay tax penalties. In other cases, too, deserters have continued to be paid for months, and sometimes years, after disappearing.

The Pentagon’s record-keeping tangle not only increases the potential for errors; it also forces DFAS to depend heavily on “manual workarounds,” another source of errors. Neither the Pentagon or DFAS or the military services can specify how many workers are used to handle these tasks, but “it takes a massive amount of human effort,” says Roy Wallace, an Army assistant deputy chief of staff.

“At last count, there were 167 manual workarounds” for the 40-year-old pay system used by DFAS and all the services except the Marines, he says. As a result, staff often must transcribe information from one system onto paper, carry it to another office, and hand it off to other workers who then manually enter it into other systems – a process called “finger-gapping” that Wallace faults as a further source of errors.

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