After failing its past eight audits, the Department of War is on track to pass an audit by 2028, the Pentagon said recently. Achieving this goal will meet a statutory requirement and demonstrate sound stewardship of the half-trillion dollars American taxpayers annually entrust to the Pentagon.
On the way to achieving this goal, defense officials have rooted out mistakes and wrangled massive numbers of independent operations. In one case, a capital O typed in place of a zero caused the Army to believe it had more trucks than it actually did. Until recently, the Navy and Air Force operated 1,900 separate business systems.
Now, the Pentagon says, it has a digital dashboard that gives officials real-time vision into the agency's numbers.
This is good news. But there is an opportunity for the Pentagon — and every government agency — to achieve greater efficiency and accountability by drawing on an untapped source of financial intelligence: their contracts.
The Department of War manages one of the largest and most complex contract portfolios in the world, obligating roughly $445 billion annually through lifecycle management of some 226,000 active contracts. Those contracts govern the delivery of ships, software, satellite components, fuel, food, translation services and 10,000 other things. An audit asks whether those obligations were fulfilled. To answer that question at scale, an auditor needs to read the contracts, understand what was promised, match delivery records to the original terms and verify that invoices correspond to performance.
The future of government financial management begins with a simple realization. Contracts aren't just legal documents. They're financial assets.
Every dollar appropriated by Congress ultimately becomes a contractual obligation. Every supplier relationship, pricing commitment, performance milestone, renewal option and financial risk is defined there first. Anyone who has spent time inside federal procurement understands that contracting officers manage portfolios they cannot fully see.
DOGE focused on visibility into spending. So does Congress. That is correct as far as it goes. But spending visibility without contract visibility is incomplete.
For decades, both public and private organizations have treated contracts primarily as legal documents. They were negotiated, signed, filed away and revisited only when something went wrong or came up for renewal.
Fortune 500 companies increasingly recognize that contracts are financial assets. Every contract defines future cash flows, supplier commitments, pricing rights, performance obligations, renewal opportunities, compliance requirements and enterprise risk.
The question is no longer whether this information exists. The question is whether leaders can access it.
The people aren't the challenge. The scale is. No team, regardless of experience or size, can manually understand millions of contracts on a continuous basis. And it's unlikely the Pentagon can pass an audit without vision across and into all of those contracts.
Much of today's IT infrastructure was built over decades to support procurement, finance, logistics and asset management as separate functions. Those systems perform critical roles, but they were never designed to transform millions of contracts into a unified source of financial intelligence.
Contracts might be the largest untapped financial asset inside the government because they are the source of financial truth. Invoices originate from contracts. Supplier obligations originate from contracts. Renewal rights, pricing terms, compliance requirements and audit evidence all originate from contracts. Contracts establish the commitments against which financial activity is measured.
Until recently, extracting this intelligence at agency-wide scale required enormous manual effort and was often impractical. Half of a trillion dollars in the Pentagon’s contractual commitments remain locked inside millions of PDF documents and disconnected systems.
A signed contract should become a living financial asset, one that continuously informs procurement, finance and operations decision-making. For the first time, AI makes that possible.
This is already happening across the commercial sector. Organizations are using artificial intelligence to improve forecasting, strengthen supplier performance, reduce unnecessary spending and accelerate audits.
The Department of War now has the opportunity to make that same transition.
This isn't about replacing people. Their expertise remains indispensable. AI should augment their judgment by eliminating manual analysis, surfacing hidden insights and providing agency-wide visibility that has never before been possible.
Passing future audits is an important milestone and a statutory requirement. It demonstrates responsible stewardship of taxpayer money. But the bigger opportunity is creating a continuously intelligent, real-time data insights system where every contractual commitment can be understood, measured, and optimized throughout its lifecycle.
America asks the Department of War to operate the most sophisticated military in history. It should be able to turn that sophistication inward, toward the management of its contracts, to determine if taxpayers are getting what they pay for. It’s good policy and good politics.
Brandon Card, CEO and Founder of Terzo, is a specialist in the application of AI to financial management.
