FP’s Situation Report: Cooked books and “plugs” at DOD; Upheaval across the ME; Is Kerry going his own way?; Are Graham’s holds loosening?; Mullen: troops didn’t die in vain; A Marine artist dies; and a bit more.

By Gordon Lubold

Plugging: The Pentagon routinely fudges its numbers through the use of "plugs" – false numbers – according to a Reuters investigation of the Defense Finance and Accounting Service. Reuters’ Scot Paltrow: "…At the DFAS offices that handle accounting for the Army, Navy, Air Force and other defense agencies, fudging the accounts with false entries is standard operating procedure, Reuters has found. And plugging isn’t confined to DFAS (pronounced DEE-fass). Former military service officials say record-keeping at the operational level throughout the services is rife with made-up numbers to cover lost or missing information. A review of multiple reports from oversight agencies in recent years shows that the Pentagon also has systematically ignored warnings about its accounting practices. ‘These types of adjustments, made without supporting documentation can mask much larger problems in the original accounting data,’ the Government Accountability Office, the investigative arm of Congress, said in a December 2011 report."

Bottom line: "Plugs also are symptomatic of one very large problem: the Pentagon’s chronic failure to keep track of its money – how much it has, how much it pays out and how much is wasted or stolen."

"In its investigation, Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known. And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies.

"The consequences aren’t only financial; bad bookkeeping can affect the nation’s defense. In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units. Affected units ‘may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies,’ the Pentagon inspector general said in a September 2012 report.

And there’s this: "Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China’s economic output last year." Read the rest here.

There’s a problem with the LCS’ comms package. Bloomberg’s Tony Capaccio breaks this: "The U.S. Navy’s Littoral Combat Ship lacks the robust communications systems needed to transmit critical data to support facilities ashore, according to an unreleased congressional audit, the latest in a succession of troubles for the $34 billion shipbuilding program. The lightly manned vessel relies on ship-to-shore communications to help crews monitor the ship’s condition, perform repairs and order medical supplies, the U.S. Government Accountability Office said in its latest review of the LCS. The audit found that the communications systems lack the necessary reliability, speed and bandwidth. The communications deficiencies add to criticism of the vessel, which is intended to be small, speedy, and adaptable for patrolling shallow waters close to shore in areas such as the Persian Gulf and South China Sea." More here.

Mac Thornberry sees "50 years of frustration" when it comes to acquisition reform – and Congress doesn’t get a pass, either. Breaking Defense’s Sydney Freedberg reporting on Thornberry’s visit to CSIS in Washington: "For ‘at least 50 years of frustration,’ the Vice-Chairman of the House Armed Services Committee said this morning, people have kept trying to fix the Pentagon’s procurement problems, but the problems keep on getting worse. It’s time to stop layering one band-aid atop another and look at the system as a (dysfunctional) whole, said [Thornberry] – and part of that dysfunction comes from Congress itself."

Thornberry doesn’t want new layers of oversight and mandates. "What we’ve done so far has not worked out so well," Thornberry said at CSIS. "We’re not going to make things better by piling on new mandates, new oversight offices, new micromanagement."

Instead Thornberry "wants to sit down with the Defense Department and defense contractors to winnow through the accumulated regulations ‘line by line,’ and ‘go through, thin those out, and try to simplify and rationalize.’ More of Freedberg’s story here.

Welcome to Tuesday’s edition of Situation Report. If you’d like to sign up for Situation Report, send us a note at gordon.lubold@foreignpolicy.com and we’ll just stick you on. And if you like what you see, tell a friend. Register free for Situation Report and other FP products here. As always, if you have a report you want teased, a piece of news, or a good tidbit, send it to us early for maximum tease, because if you see something, you gotta say something — to Situation Report. One more thing: please follow us @glubold.

Block-by-block: the fight for Syria’s streets in Lebanon’s northern capital. FP’s Ty McCormick and Sophia Jones: "…Resentment in Lebanon’s northern capital runs deep: Alawites, marginalized under Ottoman rule, enjoyed special privileges during the French mandate period, but entered a long era of political oblivion with the independence of the Lebanese state in 1943. Numbering less than 120,000 — the majority of whom live in or around Jabal Mohsen — the sect represents a tiny minority in Lebanon and has maintained strong ties to neighboring Syria, where Alawites have ruled since 1970. Residents of Bab al-Tebbaneh and Jabal Mohsen fought against each other in Lebanon’s 1975-1990 civil war, with the Alawite stronghold backing the Syrian regime. Today, the fighting persists largely because there isn’t anything else to do in what are two of the most impoverished communities in Lebanon. The arrival of civil war in Syria hit this region hard, depressing cross-border trade, crippling tourism, and leaving many young men without work — and vulnerable to recruitment by leaders of the so-called ‘axes’ in Tripoli’s internecine war." Read the rest here.

Why Hezbollah loves the U.S.-Iran nuke deal, by FP’s David Kenner, here.

23 killed in a blast near the Iranian embassy in Beirut this morning. The WSJ: "Two blasts that struck near the Iranian Embassy in Beirut on Tuesday killed 23 people, among
them an Iranian diplomat, in what Iranian and Lebanese officials described as a direct assault on the embassy. The attack broke three months of relative calm in an area of southern Beirut, much of it a stronghold of the Shiite group Hezbollah, that was the target of a series of rocket and car bombs this summer. The targeting of an embassy would mark an escalation in the sporadic violence that has rocked Lebanon since the war in neighboring Syria has bled over the border and drawn Hezbollah into the fight." More here. 

There were three prominent killings in the Middle East. The bombing in Beirut also took the life of an Iranian attaché: The Independent: "…Iranian Ambassador Ghazanfar Roknabadi identified the dead diplomat as Sheikh Ibrahim Ansari. Speaking to Hezbollah’s Al-Manar TV, he said Ansari took his post in Lebanon a month ago and was overseeing all regional cultural activities." More on that here. And Syrian rebel commander Abdulkader al-Saleh was killed. The NYT’s Anne Barnard, Karam Shoumali and C.J. Chivers: "…He was a Syrian rebel commander who led homegrown fighters like himself and had a prescient view of the conflict: a Syrian insurgency with nowhere else to turn, he said nearly a year ago, would tilt toward foreign fighters and Al Qaeda. The commander, Abdulkader al-Saleh, 33, was a recognized and accessible leader in a fragmented insurgency that has few. He managed to gather ragtag local militias into the Tawhid Brigades, for a time one of the most organized and effective rebel battle groups, and to bridge the gap between relatively secular army defectors and Islamist fighters. But when he died Thursday of wounds from an airstrike in Aleppo, he and Tawhid were months into a slow decline from the peak of their influence." More on that here.

And in Egypt, gunmen shot and killed a national security officer in Cairo. The AP: "A statement from the ministry said gunmen opened fire on a car carrying Lt. Col. Mohammed Mabrouk of the national security agency, killing him on the spot near his home in the eastern Cairo suburb of Nasr City. Mabrouk worked in the agency’s branch in charge of monitoring Islamist groups, including the Muslim Brotherhood, a security official familiar with Mabrouk’s work said." More here.

Is John Kerry going his own way on Egypt? The Daily Beast’s Josh Rogin: Before Secretary of State John Kerry’s recent trip to Cairo, National Security Adviser Susan Rice told him to make strong statements in public and private about the trial of deposed President Mohamed Morsi. On his own, Kerry decided to disregard the White House’s instructions. The tension between the national security adviser and the secretary of state spilled over into public view in the past week, when Rice laid out her critical appraisal of the Egyptian government, which contradicted Kerry’s assessment that Egypt was ‘on the path to democracy.’ The now public rift has been simmering behind the scenes for months and illustrates the strikingly divergent Egypt policies the White House and the State Department are pursuing. The turf battles and internal confusion are hampering the administration’s approach to Egypt, say lawmakers, experts, and officials inside both governments. An administration official tells Rogin: "John Kerry doesn’t agree with Susan Rice on big portions of our Egypt policy, and he made a deliberate and conscious decision not to mention Morsi in his Cairo meetings… Susan Rice wasn’t happy about it." Read the rest here.

In Libya, militias blamed for the worst unrest since Tripoli fell have abandoned the city as Libyan army units took up positions around the city. Reuters’ Ghaith Shennib and Patrick Markey: "…The withdrawal of one powerful set of fighters, though, may leave Libya’s fragile government to face more competition among the militia groups that remain in the city. Western powers, worried about anarchy in a major oil producer and further insecurity in the region, are promising more expertise to build up Libya’s army. The country is being closely watched by its North Africa neighbors, worried about violence spilling across porous borders, especially with al Qaeda militants sheltering in southern deserts where Tripoli has less influence." More here.

No one died in vain in Gettysburg, or anywhere else, Mike Mullen writes in the WaPo today. Former Chairman of the Joint Chiefs of Staff Mullen: "Even now, long after I have taken off the uniform, grieving mothers, fathers, sons and daughters approach me and ask, ‘Was it worth it? Did his death mean anything?’ I tell them it did. I tell them it mattered. How could it be otherwise? How could it be that in a democracy – a free society – men and women may risk their lives to defend that freedom and lose those lives in vain? It cannot be so. Regardless of the terms of the treaty, the surrender, the withdrawal, the defeat or the victory, no American who sheds blood to preserve that which his ancestors fought to establish can ever be said to have made that sacrifice without meaning."

What makes him think that? Mullen, citing Walt Whitman, a nurse during the Civil War, continues: "More than 6,500 Americans have ‘yielded up’ their young lives since these new wars began. Hundreds of thousands of others have returned home forever changed. Their families, too, have suffered yet endured. As we remember the carnage and the courage of the Civil War, let us likewise honor a new generation of soldiers. As we mourn the dead or spur the wounded to recovery, let us be willing to believe that in due time the meaning of these fresh sacrifices will appear to the soul – theirs and ours. Let us take comfort in the knowledge that, whatever the outcome in Iraq and Afghanistan, the precious blood these young people shed for that future shall not – cannot – have been shed in vain." More here.

Lindsey Graham’s hold on Obama noms seems to be loosening. The Cable’s John Hudson: "Last week, the South Carolina Republican renewed his pledge to place a hold on President Obama’s appointments with the exception of two State Department employees. He maintained that he wanted to interview more Benghazi witnesses to ask them about what they saw the night of the attack and would continue to place holds on nominees. However, he appears to have quietly released holds on four more Obama nominees…" More here.

The Pentagon doesn’t agree that pressure is mounting on Hagel to replace his sexual assault chief, Gary Patton. After a piece we shar
ed yesterday from military.com, a Pentagon official pointed out that there has been only one letter from POGO (the Project of Government Oversight) and three people’s complaints that have led to investigations by the DOD Inspector General. That investigation has not been made public and Patton’s case sits on the Secretary of the Army’s desk for his final disposition. A defense official familiar with the case told Situation Report: "The DoD IG has conducted an intensive, 18-month-long investigation, including multiple witness interviews and hundreds of pages of documents.  In addition, Maj. Gen. Patton testified before Congress on this subject in September 2012. These investigations have not impeded MG Patton’s ability to effectively lead the DoD Sexual Assault Prevention and Response Office for the past 16+ months, revise and direct the Department’s SAPR Strategy, and implement more than a dozen significant changes to the sexual assault prevention and response program, including dramatically increasing victims’ rights and enhancing legal support available to them."

Bob Work, who could become the next DepSecDef, and Richard Fontaine, both of CNAS, in the inaugural post on their new CNAS blog, "The Agenda" on how America’s security depends on fixing the house at home. Their BLUF: "The President and the Congress have before them a number of tasks in the coming months, ranging from tackling immigration reform to passing a farm bill. Important issues, all of them.  Yet no less pressing is the need to bridge the gaps in the politics of national security, to return to common sense defense and foreign affairs budgeting, to see more partnership between the White House and Congress and to articulate for the American people a sense of the country’s international role and how it connects to affairs at home. Now is the time to get started, before our political fractures threaten America’s security, dishearten our allies and friends, and diminish our standing in the world." Read the rest here.

US Institute of Peace’s Kristin Lord and the Center for the National Interest’s Paul Saunders, in a piece for CNN.com on America’s ideals and values inextricably tied to its power. Their BLUF: "Restoring the power of the American example will be no easy task – balancing immediate national security concerns, like transnational terrorism and cyber threats, with America’s overarching reputation and values, is simply hard to do.  But it might prove easier if American leaders remember that these values are fundamental to American power." Read their rest here.

ICYMI: Blackwater’s Erik Prince blames the U.S. for his troubles. The WSJ’s Dion Nissenbaum, here.

A judge says an Army artillery officer linked by DNA to a string of sexual assaults on young girls be allowed to blame his twin brother for attacks in two states. AP: "District Judge David Shakes ruled Friday it would be "inappropriate" to bar 1st Lt. Aaron Lucas’ attorneys from presenting his identical twin as an alternate suspect given the siblings’ shared DNA, according to the Colorado Springs Gazette." More here.

Artist Tom Waterhouse, who painted many a Marine motif after the Marines "found their Rockwell," dies. From an Obit on Dignity Memorial: "…Three tours of duty as a combat artist in Vietnam resulted in hundreds of on-the-spot drawings that were later turned into one large volume called Delta to DMZ. In 1973, at the age of 49, Waterhouse was brought back to active duty at the rank of major to create a series of 14 paintings of the Marines in the Revolution in celebration of the bicentennial. It was supposed to be a 9 month commission but the Marines had found "their Rockwell" and they kept him on until his retired on 19 February, 1991, the 46th anniversary of the landing on Iwo. By that time he had completed over 160 major works for the USMC, and had painted every campaign in the history of the Corps from its inception through Operation Iraqi Freedom." His obit, here. His Wiki page, here.