Chuck Grassley: “While Secretary Cohen and Chief Financial Officer Lynn, the nominee now under consideration, both assured me over and…”

“While Secretary Cohen and Chief Financial Officer Lynn, the nominee now under consideration, both assured me over and over that they were taking steps to tighten internal controls--I am shocked to say this--they were already quietly moving in the opposite direction. They were busy pushing other policies to weaken and undermine internal financial controls. So I want to get into that. In 1998, when Mr. Lynn was chief financial officer, something we call pay-and-chase was the Pentagon lingo used to describe the Department of Defense vendor paying process. With pay-and-chase, the Pentagon paid bills under $2,500 first, and then worried about chasing down receipts later. You get it--pay-and-chase: pay without worrying about what you are buying or the invoice and then, after you pay, go out and find some justification for the payment. Ever wonder why there is waste in the Defense Department? Sometimes receipts were found under pay-and-chase, sometimes not. Nobody seems to care either way. This is how the Department of Defense ended up with not $2,500 here and there but with billions of dollars in what they refer to as unmatched disbursements--another big control problem with which chief financial officer Bill Lynn was thoroughly familiar. Pay-and-chase accurately characterized the core DFAS problem I witnessed during my review of internal controls from 1997 through 1998. I saw pay-and-chase up close and personal.”