The Department of Defense (DoD) is preparing for a significant review of its financial practices as Elon Musk’s DOGE team sets its sights on the department’s accounting systems. Despite Defense Secretary Pete Hegseth’s welcoming stance, the task ahead appears daunting, given the DoD’s track record of seven consecutive failed audits and deeply rooted financial management issues.
The challenge dates back to 1990 when the Chief Financial Officer Act mandated comprehensive audits for all federal agencies. The DoD initially conducted only partial audits from 1991 to 2013 until Congress imposed a 2018 deadline for full compliance. The department’s first complete audit revealed 20 material weaknesses, and subsequent years saw this number increase to at least 25, accompanied by thousands of recurring and new findings.
Two persistent problems plague the department: its inability to reconcile its massive $800 billion-plus Fund Balance with Treasury and its reliance on outdated information technology systems. The department’s attempts to address these issues included implementing Advana, a data platform, in 2017. However, Advana’s effectiveness has been limited as it serves primarily as a data repository without validation capabilities and lacks complete departmental access.
The situation became more pressing when a 2024 Inspector General report on Ukraine assistance revealed troubling findings. The department failed to provide documentation for $1.1 billion in expenditures, categorized as “Questioned Costs” that might violate federal regulations. With total Ukraine aid appropriations reaching $111 billion and the current DoD budget at $850 billion – plus a proposed $200 billion increase – the potential scale of questionable transactions is concerning.
Blockchain technology emerges as a potential solution to these financial challenges. This secure, decentralized system offers transparent, permanent transaction recording without requiring central authority oversight. A 2018 congressional study endorsed blockchain adoption for improving various aspects of DoD operations, including auditability and cybersecurity.
Research from the Air Force Institute of Technology in 2022 proposed implementing a “permissioned private” blockchain system, different from Bitcoin’s public model, to protect sensitive data while maintaining security. The study cited Walmart’s successful blockchain implementation as a compelling example. The retail giant’s Canadian operations saw invoice disputes drop from 70% to 1.5% of deliveries after adopting blockchain technology, with significant cost savings and faster dispute resolution.
The Walmart case is particularly noteworthy as it demonstrated how a relatively small company, DLT Labs, could implement an effective blockchain solution using open-source architecture developed by the Linux Foundation. This success story suggests that blockchain implementation need not require extensive defense contractor involvement or complex acquisition programs.
As Congress sets a 2028 deadline for the DoD to pass an audit, blockchain technology presents a viable path forward. The technology’s ability to ensure data integrity, transparency, and auditability while meeting existing regulatory requirements makes it an attractive solution to the department’s long-standing financial management problems.
However, the upcoming confrontation between Musk’s DOGE team and the DoD’s entrenched systems highlights a fundamental challenge: despite decades of accountability requirements, the department has
consistently failed to achieve basic financial transparency. While blockchain offers a promising technical solution, its success will ultimately depend on the department’s willingness to embrace fundamental change in its financial management practices.