Since 2005, the Pentagon has been carrying out what it says is the most comprehensive reform ever. Undersecretary of Defense Tina Jonas, who is now the comptroller and chief financial officer, is heading up an elaborate effort—once again—to develop compatible systems to share information seamlessly. A 2007 department report foresees the Pentagon becoming "as nimble, adaptive, flexible, and accountable as any organization in the world."

Unfortunately, flawed planning and internal resistance have hampered the current reform effort. Far from being nimble, the bureaucracy set up by Jonas and her staff seems nearly as convoluted as the financial systems that it's supposed to streamline. Beginning at the top, there is the Defense Business Systems Management Committee, which oversees a committee of principal staff assistants, and under that, the Business Transformation Agency, which is made up of eight separate directorates.

Early initiatives have done little to inspire confidence. For example, the Army is introducing an overall accounting system for its general fund that is expected to be fully operational in 2011. "By all the measures one can usually rely on to predict success, this one is doing fine," the Army's acting undersecretary, Nelson Ford, said in a November interview. Just weeks later, though, the Defense inspector general found that the new system was "at high risk for incurring schedule delays, exceeding planned costs, and not meeting program objectives."

Overburdened by wars in Iraq and Afghanistan, the individual services remain reluctant to commit staff members and money to Jonas' financial-reform effort. The Navy stymied Jonas' plan to create a single Defense Department system for military pay. While the Army is already converting to this common pay process, Navy Secretary Donald Winter says the new system doesn't meet his service's particular needs. The Navy will eventually adopt it, he says, but only after it has been thoroughly tested and debugged. At the same time, the Army and the Defense Logistics Agency—a separate branch of the Pentagon—are each going ahead with costly new systems for tracking billions of dollars' worth of supplies and replacement parts from purchase to their ultimate delivery to military units, even though government auditors say neither one yields reliable data. Together, the two systems cost about $2 billion.

Jonas says that her approach is working and that eight small Pentagon branches, like the Army Corps of Engineers, have now passed audits. "I think we're making good progress," she says.

Nevertheless, the four military services still can't be audited, and Jonas declines to predict when the entire Defense Department will finally pass an audit. "We don't know what we don't know," she says.