DoD invested $1.7 B in 2019, yet Guam's treasury has nothing to show for it

Muna Barnes asks OPA to audit military contracts



The Department of Defense poured a total of $1.7 billion into Guam for construction projects and corresponding payroll in fiscal 2019, according to a report released this year by the Office of Local Defense Community Cooperation.


However, the amount of defense spending on Guam is not reflected in the local tax revenue, Vice Speaker Tina Rose Muña Barnes said, requesting Public Auditor BJ Cruz for an audit on taxes collected on military contracts.


The military investments on the island accounted for 63 percent of DoD's $2.7 billion spending in fiscal 2019 for five U.S. territories, which also included American Samoa, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.


The three top defense contractors for Guam projects are Tutor Perini, CoreTech-HDCC-Kajima, and DZSP21.


The military spending on Guam comprised 28.4 percent of the island's gross domestic product, the highest of any U.S. state or territory, according to the report released in January.


"In order to rebuild a stronger, more prosperous Guam, we need to ensure our government processes are efficient and effective," Muña Barnes said. "For too long, the government of Guam has lost millions of dollars in uncollected taxes on military contracts - millions of dollars that could have gone to provide critical services to our people."


The contract undertakings are part of DoD's preparation for the relocation of 5,000 Marines from Okinawa to Guam. The troop realignment program is projected to cost about $8 billion, of which Japan has agreed to shoulder $2.8 billion.


A separate DoD report released in April identified the programs and operations funded with appropriated amounts made available for military construction on Guam during the Covid year. They are the following:


1. The DoD obligated $529.3 million and expended $365.1 million. Other federal agencies deobligated $15.5 million and expended $25.9 million.


2. The DoD identified 134 military construction projects and programs, totaling $333.3 million, with estimated completion costs of $1.1 billion. Other federal agencies identified 37 projects and programs, totaling $25.9 million, with estimated completion costs of $1 million on three ongoing projects and programs.


3. Japan contributed revenues of $367 million and earned $34.8 million in interest associated with revenues for the last 11 years.


4. The DoD identified operating expenses of $94.4 million. Other federal agencies identified operating expenses of $37,721.


5. The DoD identified a total of 223 contracts, grants, agreements, or other funding mechanisms totaling $424.1 million. Other federal agencies identified a total of 33 contracts, grants, agreements, or other funding mechanisms, with deobligations of $15.5 million of previously obligated but not expended funds.


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In a letter sent to Cruz, Muña Barnes cited several audits conducted by the Department of Interior's Office of Inspector General in 1998, 2008 and 2014.


Spanning three administrations, these audits concluded that the government of Guam was lost millions of dollars in potential revenue because of inadequate tax collections, especially on military contracts.

"In order to move forward, we cannot allow ourselves to get stuck in bad habits that left us so vulnerable to the economic devastation brought upon by this pandemic," the vice-speaker said.

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"This is why I asked Public Auditor Cruz to conduct an updated audit so we can take the necessary actions to improve our government and ensure it works for the people of Guam," the vice-speaker said.


Muña Barnes has also sent a draft bill that would increase the budget of the Office of Public Accountability and empower the public auditor to become an independent entity and go after delinquent taxes.


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