Despite years of modernization efforts that cost taxpayers billions of dollars, thousands of accounting, personnel and logistics systems at the Pentagon remain "fundamentally flawed" and have led to logistics and pay problems for forces serving in Iraq, according to a new report by the U.S. General Accounting Office.

The problems, primarily a lack of management oversight and investment control, stem from "long-standing" challenges to the Pentagon's business modernization efforts, GAO auditors told members of Congress Wednesday.

For example, more than 200 inventory-control systems at the Defense Department still aren't integrated, offering little or no visibility of the Pentagon's $1.1 trillion in assets, according to GAO. In addition, the Pentagon has no standard process for identifying critical business systems, nor does it even have a standard definition of what constitutes a business system.

"These problems have left the department vulnerable to billions of dollars of fraud, waste and abuse annually, at a time of increasing fiscal constraint," GAO auditors told Congress.

The Pentagon requested $19 billion for fiscal 2004 to operate, maintain and modernize its reported 2,274 business systems.

The Defense Department's IT management blunders have also adversely affected U.S. military units and service members, including those fighting in Iraq and Afghanistan, according to the GAO.

Because of the lack of IT management at the Pentagon, soldiers, sailors, airmen and Marines experienced "substantial logistical support problems as a result of weak distribution and accountability processes and controls over supplies and equipment shipments in support of Operation Iraqi Freedom," the GAO concluded. These weaknesses resulted in supply shortages, backlogs of material that sat in Iraq but never made it to the units in need, a $1.2 billion discrepancy between the amount of materiel shipped and the amount reported received by military units, cannibalization of vehicles and duplicate supply requisitions.

Lack of visibility into the supply chain may have also allowed sensitive military equipment to be sold on the open market, according to the GAO. Auditors discovered that the Pentagon had sold new chemical and biological protective garments on the Internet for $3 each. At the same time, the agency was buying the garments elsewhere for more than $200 apiece.

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