IG Audit Finds Persistent Gaps in Pentagon Tracking of Contractor-Held Government Property

Watchdog warns ineffective remediation steps threaten DOD’s ability to produce accurate financial statements and meet its FY2028 audit goals.

A new watchdog audit warns that the Pentagon still lacks reliable accountability for government property in the possession of contractors (GPIPC) — a long-standing material weakness that jeopardizes accurate financial reporting and could slow the Defense Department’s path to a clean audit opinion.

The Department of Defense Office of Inspector General (DOD OIG) released a report-in-brief on Monday documenting significant shortcomings in the Pentagon’s efforts to fix its GPIPC tracking systems. The review evaluated the effectiveness of DOD’s corrective action plan to remediate its financial statement material weakness — and concluded that current actions are “ineffective.”

GPIPC includes government-owned equipment — from aircraft components to specialized tools — furnished to contractors or acquired by vendors under DOD contracts. These items remain federal assets even while used in commercial facilities.