Posted in Defense Contract Accounting

Your Money is Touching My Money

October and half of November got away from me without a post, which isn’t surprising.  As is often the case at this time of year, I have been swamped at work.  Government contract accounting isn’t quite as seasonal as public accounting, but there are certain points when everything is more than a little crazy.  September 30th is the fiscal year end for the federal government, so October is spent in pursuit of the following:

1) Figuring out where the money was spent

2) Figuring out how to spend money in the upcoming year

3) Making sure you were the only one spending last year’s money

4) Trying to spend any leftover money from last year

Yes, it’s all the taxpayers’ money, but one of the things that sets government accounting apart from private industry is the use of fund accounting.  You are given a pot of gold for a specific program or purpose, and this pot is surrounded by cherubim with flaming swords, leprechaun optional.  Only those holding the holy password get to spend this money, and they certainly don’t want you touching their Foreign Military Sales money with your icky old F-35 expenditures.  (Should you wish to sell those same F-35’s to a foreign government, well, that’s a completely different program.)  If you fail to spend the pot of gold in a specified amount of time, it disappears.

Think I’m exaggerating?  Talk to an active duty Air Force doctor who spends a third of his day trying to convince the powers-that-be to authorize the use of prescriptions not carried in the base pharmacy.  The funds that pay for prescriptions filled through non-military pharmacies come from a different pot of money than the funds that stock the base pharmacy.  One set of funds is controlled by Godzilla, and the other is managed by King Kong, leaving the doctor scrambling to avoid getting trampled during the fight.

On second thought, that might not be the best example, because civilian physicians encounter much the same when dealing with the insurance companies.  A better explanation might be found on the runway, where the aircraft and the weapons it carries belong to separate programs.  One program is flush with cash because it resides in a district that just happens to belong to a prominent member of the House Armed Services Committee, and the other program is underfunded because it just isn’t sexy enough to attract attention.  The end result is the [REDACTED], with the losers being the pilot who has to fly the un-friendly skies and, of course, the taxpayer.  The winner is the accounting profession, because tracking all of these millions of pots of gold will keep us bean-counters employed for a very long time.

Creative types are also the winners, since all of this provides an endless source of plot material:


    1. Executive Hotshot at Defense contractor Ginormous Aerospace, Inc. plays a round of golf with soon-to-be-retired General Armchair.  Executive casually mentions likelihood of a possible impending disaster, and wonders aloud if there shouldn’t be some sort of disaster preparedness measures taken, complete with an ARK (Agile Rescue Kayak).
    2. General Armchair has dinner with Representative Bringhomethebacon, currently serving on the House Armed Services Committee.
    3. Congress passes the Impending Disaster Act, which calls for the building of a fleet of 20,000 National Defense ARKs.  Buried in the Impending Disaster Act is an unfunded mandate demanding state and local government agencies also purchase ARKs, as well as a pig-feed subsidy.
    4. Funding appropriations are granted for a contract to design and build the ARKs.  The contract is written to precise specifications, which happen to utilize a process used only by Ginormous Aerospace.
    5. Contract is awarded to Ginormous Aerospace, but the competing defense contractors immediately file a protest against the award.
    6. Three years later, the protests are discontinued and the contract award stands as is.
    7. Retired General Armchair is hired as a consultant by Ginormous Aerospace.
    8. Within a year of the actual contract production start date, seventeen contract modifications have been issued.  One of the mods increases the number of ARKs to be delivered from 20,000 to 50,000.  Twelve of the mods are to add functional variations to accommodate the differing needs of the Army and Marine Corps.  The Navy is happy with the design, but wants to add Individual Collection Units, or ICUs, built specifically to attach to the ARK and deploy in the event of someone falling overboard.  This additional work becomes a direct award/non-competitive set-aside to a small/disabled veteran/woman-owned/minority business from Representative Bringhomethebacon’s district.  The business is on record as being owned by Jojo Attagirl, but her husband financed the business and makes all operational decisions.
    9. Significant design flaws are uncovered when the prototype ARK sinks during its maiden voyage.  The contractor blames the Navy, claiming the last-minute modifications have altered the stability of the craft.  The Navy claims Ginormous Aerospace used faulty parts in the construction.  Both sides lawyer-up while work continues.
    10. The Air Force decides they need their own ARKs, so further modifications are made to the design.  In the interim, the ICU contract has received seven contract mods, each increasing the size and capabilities of the individual craft.  The two companies neglect to inform each other of the design changes.  The first manufactured ICU, which is now almost as large as the ARK, falls off during testing, claiming the lives of three engineers and causing an electrician to stub his left toe.  The United Brotherhood of Defense Contract Electricians promptly calls a strike, citing unsafe working conditions.  The deceased engineers are replaced by foreign nationals, who used to work for their country’s Department of Military Acquisitions.
    11. Ten years, 302 modifications and 878 million dollars later, the first 200 ARKs are delivered to the military.  The Air Force decides they want their model ready for outer-space deployment, and the contract is extended another five years.
    12. The troops in the field quickly discover the ICU is more useful than the ARK.  The military cancels their remaining orders, but the state and local governments are still required to purchase the units.  The military passes their existing units down to the National Guard and Reserve.
    13. The foreign workers return to their country’s Department of Military Acquisitions.  They’ve found no military or trade secrets worth stealing, but they did take the opportunity to visit Disney World.  One of the workers stays in America, because he’s already committed to coaching his daughter’s soccer team.
    14. Both the ARK and the ICU programs are cancelled in the next round of budget cuts.  The engineers are hired for other contracts, and the accountants spend the next twelve years untangling the money.  Both groups continue to pay their taxes, some of which go to fund the new Orbiting Strategic Naval Armed Paddleboard, or O-SNAP.
    15. Rinse and repeat.

    I’d write more, but I have to come up with some kind of a cover story in case my boss reads this.  I think I’ll use the ‘aliens invaded and took over all of the accountants’ brains’ excuse, which makes sense if you think about it.  We don’t have a world leader, so why not go after the ones who handle the money?



I'm just a bean-counter with an over-active imagination.

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