Government Waste

Pentagon Buried Report Finding $125 Billion in Bureaucratic Waste

Rather than face reality, Defense Department wants to continue to peddle the fiction that it is underfunded.

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What's $125 billion in public money?
Glenn Fawcett/ZUMA Press/Newscom

The Department of Defense (DoD) learned the hard way to not ask for the truth if you don't want to hear it.

Senior Pentagon officials commissioned a study from the Defense Business Board, titled "Transforming DoD's Core Business Processes for Revolutionary Change," which delivered its assessment of the department's spending in January 2015. The very first words summarizing the report are "We are spending a lot more than we thought."

But the report never saw the light of day, because its staggering finding of $125 billion in bureaucratic waste contradicted the Pentagon's repeated complaints that the U.S. military was being deprived of necessary financing, according to the Washington Post.

The report found that the DoD was employing almost the same amount of people as active duty troops (1.3 million) as those working desk jobs (over one million), which include both civilians and uniformed military personnel.

The report stressed "every billion saved in 2016 is worth five billion" for the following five fiscal years because of "the compounding effect," and recommended cutting back on the use of expensive and redundant contractors and career employees by offering up enticements for early retirements. But the report wasn't exclusively about cutting spending, it also recommended "retention bonuses" for truly vital employees as a means of "retaining institutional knowledge" and also increasing spending to streamline and modernize the department's technology.

Deputy Defense Secretary Robert O. Work ordered the study, but displeased with the recommendations which he called "unrealistic," sought to discredit and conceal it from both the public and other government agencies after the fact.

According to the Post, Work believes "the board fundamentally misunderstood how difficult it is to eliminate federal civil service jobs — members of Congress, he added, love having them in their districts — or to renegotiate defense contracts." As a result, the Pentagon ordered the data itself to be made secret so that no other agency could come to the same conclusions as the Defense Business Board had.

Some of the report's highlights of Defense Department waste include:

  • The average administrative position received over $200,000 in compensation, including benefits.
  • Over 192,000 positions in "real property management" cost taxpayers a total of $22.6 billion.
  • Approximately 84,000 people worked in "human resources" positions.
  • Over half a million military contractors were earning compensation averaging between $170,000 and $189,000.

When it's all said and done, about one-fourth of the Pentagon's $580 billion budget was spent on "overhead…accounting, human resources, logistics, and property management," according to the Post.

President-elect Donald Trump has promised a marked increase in military spending to substantially add troops and combat equipment, but he also promised to cut wasteful military spending. To do that, he'd need his chosen Pentagon leadership to be willing to do what their predecessors didn't, which is to accept real data and act accordingly, even if it makes it harder to beg for an increase in taxpayer spending.

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  1. Gee – – I wonder what John McCain thinks of all this?

    1. Right now some cloud is really pissng him off.

      1. ‘Cloud’ here meaning analog TV tuned to UHF snow.

        1. Some small percentage of which are the echos of creation.

          1. +1 pigeon shit.

        2. *bangs fist on giant console*

          “WORK, damn you! The Waltons is about to come on!”

          1. + Mary Ellen

          2. *bangs fist on giant console*

            Fist didn’t even post here.

  2. Any analysis of DoD spending that doesn’t take into account the Congress-Pentagon feedback loop is doomed to fail. The “data” is meaningless if it doesn’t account for why the money is spent.

    1. Anything that gets people thinking about the problem is a net plus. Once you deal with the more tangible and egregious issues you then start educating the public about the deeper issues and hope you keep their interest.

      1. Anything that gets people thinking about the problem is a net plus

        I’ll believe it when I see it. The people who care about this matter either think every penny spent on defense is wasted, or every penny not spent on defense is a terrorist attack/Chinese provocation not thwarted.

  3. Rather than face reality, Defense Department wants to continue to peddle the fiction that it is underfunded.

    You just described every single government agency.

    1. How this process usually goes:

      1. Congressperson says “you’re wasting all this money”
      2. Agency says “yes, but we can waste it in your district”
      3. Congressperson finds some new hobbyhorse

      1. True. Voters need to be convinced to let bases in their own states be closed. That’s going to be unlikely.

    2. Exactly. I’m already seeing the usual left outlets professing their outrage over all this wasteful spending, but try arguing to them about infrastructure and education waste and they think you’re a conservative nutjob wanting to kill poor people and drive on dirt roads.

      1. Theyre upset thei $200 billion didn’t go to Ed Dept. HR employees.

  4. Fuck you, cut spending.

    1. With a chainsaw. A chainsaw that is on fire.

  5. I guess the first thing to cut would be the studies no one is going to pay attention to anyway.

    1. That’ll save a cool hundred grand or two. Budget balanced!

    2. Second thing: all the people pointlessly standing behind the guy speaking on the podium

      1. Third: the podium itself.

        1. Figures. You want to rip food right out of the mouths of podium children, don’t you?

      2. “Second thing: all the people pointlessly standing behind the guy speaking on the podium”

        They are “looking on”.
        They are ‘looker-oners’, required for every photo shoot which includes a poobah.

  6. “President-elect Donald Trump has promised a marked increase in military spending to substantially add troops and combat equipment, but he also promised to cut wasteful military spending.”

    This, in a nutshell, is one of the flaws with Trump’s thinking. Something that is as grotesquely gargantuan and stagnant as the defense bureaucracy can’t be easily reallocated to the military because of how well-protected government employment is relative to the private sector. Ax, rather than scalpel, is more effective as a cost-cutting tool in my opinion.

  7. It’s all fucking waste

    1. Could go with a 100% nuclear strategy.

      1. + wolverines

  8. Lightworker: “Something something line by line something cuts”

  9. There is no doubt there is waste, but:

    “?Approximately 84,000 people worked in “human resources” positions.”

    OK, WIH is that supposed to tell us? How many HR positions should there be? 50,000? 100,000? I looked at the report and couldn’t find any answer to that.

    1. DOD has about 3,000,000 staff per their website. 84,000 in hr is about 1 per 35. I think 1 per 70 is excessive but it’s government, you can’t expect too much from the poor dears.

      Cut the number in half and determine who goes by having each person fight for their job on pay per view using weapons systems that failed review.

      1. If they didn’t turn in their TPS reports with cover sheets fire them

  10. At least the LCS, Ford-class carrier, and F-35 projects have been working out well so far.

    1. A fool and their money are soon parted.

    2. Don’t forget about the Zumwalt: the destroyer we can’t even afford to keep supplied with ammunition.

      1. It never ceases to amaze me how often they forget stuff like that. I remember when the Oliver Hazard Perry class frigates first came out. They were initially undermanned because of ridiculous assumptions about how automation was going to reduce the number of men needed to control and fight the ship. None of the geniuses making that calculation thought about watchstanding needs or working parties or the million mundane chores needed to maintain a warship like chipping paint.

        1. Holy Shit, I just had a DC training flashback!

          For the squids out there.

      2. That is more the result of the decision to purchase more LCS than any fault of the Zumwalt and AGS programs.

  11. From the article:

    On Feb. 6, 2015, board members briefed Frank Kendall III, the Pentagon’s chief weapons-buyer. Kendall’s operations were a major target of the study; he oversaw an empire of purchasing agents and contractors that were constantly under attack from Congress for cost overruns and delays.

    Kendall put up a stiff fight. He challenged the board’s data and strenuously objected to the conclusion that his offices were overstaffed.

    “Are you trying to tell me we don’t know how to do our job?” he said, according to two participants in the meeting. He said he needed to hire 1,000 more people to work directly under him, not fewer.

    1. n an interview, Kendall acknowledged he was “very disappointed” by the board’s work, which he criticized as “shallow” and “very low on content.” He said the study had ignored efforts by his agencies to become more efficient, and he accused the board of plucking the $125 billion figure out of thin air.

      “It was essentially a ballpark, made-up number,” he said.

      Still, Kendall knew that lawmakers might view the study as credible. Alarmed, he said, he went to Work and warned that the findings could “be used as a weapon” against the Pentagon.

      “If the impression that’s created is that we’ve got a bunch of money lying around and we’re being lazy and we’re not doing anything to save money, then it’s harder to justify getting budgets that we need,” Kendall said.

      1. “Mr. Kendall… What is it, would you say, you do here?”

    2. “Are you trying to tell me we don’t know how to do our job?”

      Yes.

      1. I think his job is to run a bloated bureaucratic empire devoted to steering cash to cronies.

        In which case, he’s doing a bang-up job. First rate, really.

  12. Nothing new. I was told by a friend in the Reagan administration that David Stockman told Reagan in 1981 that the Pentagon could cut 25% of its spending and not reduce combat capability at all. Of course, Stockman was told that Congress would never go along with the cuts because all 535 critters had spending in their districts.

    1. So, like a lot of agencies at all levels of government, the DoD is as much a jobs program as it is anything else.

      1. At least I feel less angry because most of those people (nobody needs the amount of HR crap jobs out there today, which are just make-work programs for losers that couldn’t hack it in a real profession) add some value and kind of are preforming a constitutional function. Paying people to otherwise just sit on their ass, galls me.

        1. You should be happy to pay people to sit on their asses twiddling their thumbs; you have no appreciation for what an improvement that would be on the make-work they otherwise create.

  13. This is one thing that never changes. When I was in the Navy back in the ’70s and ’80s, the first ship I served on (U.S.S. Truxtun (CGN-35)) was a ship the Navy didn’t want when it was built (early ’60s) but Congress had forced down their throats. Likewise the Congress of the ’80s was forcing the Navy to buy A-7 Corsairs it didn’t want or need.

    That’s not to say that the bureaucrats in the Pentagon aren’t a problem. Their rice bowl politics are a constant too. But it will be hard to drain this particular swamp with all those Congressional alligators living in it.

    1. How about the fucking Zumwalt which cost who knows how many billions to develop but is useless because every shell for its big gun costs $800,000?

      Or the F-35…

      1. Can you name me the last defense spending project that never had a problem at the onset, usually caused by the bureaucratic morass needed to get these things done, ever? Some of the most valuable military platforms in use today where vilified during their R&D and subsequent production runs (AEGIS, Apache, F-15, the OHP FFGs or the Burke DDGs, and so on) Shit I remember when they adopted the Beretta 9MM back in the late 80s, and even that turned into a costly cluster fuck. Now they are dropping it and going elsewhere, and I expect that to cost a ton too.

        The problem usually is too many people with needs that have nothing to do with procuring a good weapon system having their hands in the till. Congress being the most egregious part of the process (closely followed by the bureaucracy at the Pentagon).

        1. I’m hardly an expert. But no, I can’t think of a single efficient military spending program that everyone was happy with.

          Many of the projects do have their issues, some of which then turn into good products.

          But the Zumwalt and F-35 are truly massive clusterfucks. The F-35 cost $1.5T and is worse than the F-16 in the air. And the Zumwalt has erectile dysfunction. At least with some of those other things the end result was actually useful.

        2. Visit the Watervliet Arsenal Museum some time. They have an exhibit showing a documentary about a bunker-busting bomb design that went from nothing to field deployed in a month because it was such a remarkable exception to the rule and did everything in a manner the bureaucracy normally didn’t permit.

          1. Taking a gun tube and filling it with explosive, adding a delayed fuse, and dropping it from near orbit was a exceptionally easy solution that had an immediate need (be prepared to kill Saddam’s palace bunkers).

            There are a number of small issue solutions that came out of OIF/OEF that worked the same way, because they were small enough to be allowed to bypass the standard acquisition process. There were also a huge amount of dollars wasted in these same operations because following this same path for total goat-screws.

            MRAP was a great system fielded in really fast time, but wasted huge sums due to amounts purchased. This why PD’s are ending up with these money-pits.

          2. You made my point for me UnCivil: the issue with all this stuff is the political angle that wrecks everything because someone is looking to use the process to make themselves and their buddies money, directly or indirectly.

            Other examples of things going well usually involve the special forces communities in time of action asking for, getting, and then using conventional equipment procured outside the onerous process that ends up working remarkably well. and they do it cheap. This of course pisses off the bureaucrats that lose out on the opportunity to make money or buy votes.

        3. I think when the Army got a new bayonet that went pretty smoothly. Of course a bayonet is small potatoes, and of questionable utility these days.

          1. Can you still peel small potatos with it?

  14. Yeah there’s a reason Virginia turned blue and DC is the richest county in the nation…

    1. Yeah there’s a reason Virginia turned blue

      The conduct of some of the commenters made her apoplectic.

      1. Wouldn’t that make her turn red?

        Maybe she went into hyperventilation instead.

      2. Fire the bitch.

        Or toss her in a wood chipper.

  15. The most surprising about this story is that they only found $125 billion of waste.

    1. I read the whole story; and that $125 billion figure was very discounted lowball – ironically to make cost plan more feasible-sounding to ‘policy stakeholders.’

    2. They deliberately narrowed the scope.

  16. Most transparent government ever!

  17. Right now the government pays contractors to do work that the government employees should do, but don’t do because they’re incapable / can’t be bothered. Govt workforce is pretty old and can retire early because they have such sweet pension deals. Hopefully those people just won’t be replaced and they’ll just have the contractors do the work so at least we won’t be paying double.

    Contractors aren’t always the greatest, but at least they have some regular market pressures – they can get fired, they have incentives to improve/advance, etc. This would be kind of a backdoor semi-privatization of a lot of govt functions. Not ideal, but better than the status quo.

    1. I have worked in that industry, BM; it’s dirty. It is very common for government workers to retire then work for a few years as a contractor, most often doing basically the same thing they were doing before. The government employees trust former fed contractors more than those who have worked in private industry. It is also very common for people to follow the contract, particularly if the government lets it be know that they really, really liked working with Sarah and it would be a terrible thing if she wasn’t on the contract; government can’t do that officially, of course, but everyone knows what the game is.

      1. particularly if the government lets it be know that they really, really liked working with Sarah and it would be a terrible thing if she wasn’t on the contract

        This happens in private contracting, too. A customer says, “we know Tonio. He was crucial for our other experience. If you NEED to subcontract any work, I’m sure you have your own people, but we really think the world of Tonio.” Naturally, the Sales lead tells the PM that the customer made it clear that Tonio needs to have a role in the project.

  18. Fixing DoD bureaucracy in electoral timelines is like sauropod paradox of head too far away from tail to really control it – even if brachiosaur sees stick of dynamite on his tail, fuse burning, signal from brain to tail won’t get there in time.

    1. So you’re saying we need more Flag officers?

      1. Getting rid of ratings sure worked wonders.

  19. You call it bureaucratic waste, some call it a federal jobs program and solid blue votes.

  20. Anyone else surprised that it was ONLY $125B being wasted?

    1. I suspect that even the people doing this report weren’t looking too hard. This report probably represents only the most egregious of the egregious.

      1. Tip of the Antarctica, as they say.

    2. A trillion dollar enterprise like the Pentagon require administration. And, like it or not, the bigger the budget, the more it takes to administer it. Waste is unnecessary, but administration is essential. Don’t confuse the two, even if the author of the piece seems to.

      1. And, like it or not, the bigger the budget, the more it takes to administer it.

        The size of the budget has little to do with the cost of administration. To the extent administration is necessary, it is so because of the organization’s objectives not the size of the budget.

        1. The examples of waste in the article are administrative costs.

  21. The DOD doesn’t waste money because it’s filled with nefarious characters, it wastes money because it’s government. There’s no mechanism like competition to remove inefficiency.

    The answer is always to have some top man come down with a master plan that results in an army of bureaucrats to get hired to ensure that printer paper gets bought at low cost even if we spend 700 man hours doing so.

    The only way to unfurl it would be to introduce some artificial level of competition and measure of efficiency which may not be possible. Currently all that’s done is make commanders really good at twisting the numbers to sound good on reports since no user actually has to see if their product actually works. I’ve just come to accept that the government is wasteful. The only question is whether any government program is worth the waste. Some may be, most are not.

    1. Also, jobs. Government jobs create an artificially large middle class at the expense of others, most particularly the working poor. Government jobs create an incentive for government employees to vote for more government. Those government jobs also incentivize the friends and relatives of government workers to vote for more government, because if Bob’s big fat government job goes away then he’s going to be on welfare and there’s going to be a house sitting empty on the block dragging everyone’s property values down. Etc.

      If you want an example of this writ large, look at the economies of the DC suburbs in Virginia and Maryland. Basically everyone works for government, a government contractor or in the service industry. Mr. Park the dry cleaner in Fairfax is totally dependent on his neighbors having government jobs, and he knows this.

  22. This Just In… US Govt. Wastes Money and Tries to Hide It.

  23. The Marines do a better job than the other three branches. It’s instructive to ask why.

    1. “The Marines do a better job than the other three branches. ”

      Nothing to brag about. Getting trounced by illiterate militias.

      1. What fictional world do you live in where any branch of the U.S. military was trounced by “illiterate militias”?

        1. Nation building in Afghan has been an abject failure.

    2. The Marines do a better job than the other three branches. It’s instructive to ask why.

      Semper Fi and all that, but USMC has basically spent past sixteen years monopolizing combat aviation for all branches between the V-22 and their F-35 dream of V/STOL Buck Rogers – which is primary design driver of that vehicle being so marginal in runway-only versions.

      1. This^^, in most cases, the USMC has relied on their sister services to develop the weapon systems that they use.

        How much money has been burned on the AAAV?

        1. The Marine Corps has no business being in acquisitions. We absolutely suck at it, and because we tend to be myopic our purchases reflect.

          Marine aviation could very well sink the Corps when budget shortfalls become real next decade. Hell, the V-22 is still a gaggle that isn’t properly funded and it’s a do news.

          1. Make A-10s aircraft carrier capable!

  24. The last person to effectively deal with DOD contracting and procurement abuse was John F. Lehman Jr. Project BOSS, increasing competition, ensuring the use of fixed price incentive and firm fixed price contracting instead of cost plus fee everything, going after Electric Boat and so many other contractors were some of his many accomplishments.

    Reactivating the battleships came in under budget, along with many other long lead items. Ship acceptance policy held the builder responsible for discrepancies, unlike today where a ship is accepted, and the discrepancies later fixed and paid for by the Navy. Design changes were another thing that was dealt with.

    Contractors and bureaucrats hated Lehman, which was a great thing. He even dealt with Admiral Rickover.

    If anyone was serious about cutting DOD waste, they would have begged Lehman to become SECDEF, and stood out of his way.

  25. The fix is easy.
    End Obama’s wars of choice.
    Shut down all US military bases not in the USA.
    Let those freeloaders defend their own nations.

    1. It’s a shame that it seems we have to relearn history’s lessons over and over again. We will unfortunately eventually retreat back to our own shores and once again a menacing ideology, nationalism, etc. will gain power in a country with the ability to do real damage to us. We will then be forced to fight again to secure our freedom and liberty. And I’m not talking about the minor wars we’ve fought against terrorist groups.

      There are only two reasons we never went to war directly against the Soviet Union: (1) nuclear weapons and (2) our system of foreign bases and alliances. Those two things will keep us from going to war directly against Russia and China in the years to come.

  26. “We are spending a lot more than we thought.”

    i just find it amusing that these were the first words. it says so much.

  27. The privateers are a great lesson in private production of defense efficiency vs that of gov’t. The cost overrun phenomena existed with the planning and building of the USS Constitution, President, etc. While private production at that time didn’t experience such overruns and delays. Yet privateering was banned through the Paris Declaration…..

  28. Cut all the salaries over $100,000 by 25%.

  29. Funny. On my daily morning trip on the DC Metro Blue Line from Foggy Bottom to Old Town Alexandria this past Monday, I was, as I often am, annoyed by a man with a very loud voice who talked to his more soft spoken companion for the entire trip. Usually I am irritated by a woman who has magical cell phone service even deep under the Potomac that allows her to have an inane conversation loudly on her whole ride, but today it was a hot little guy in a suit with a loud voice.

    He kept explaining to his friend why you couldn’t really save money on something, because you had to have someone check on some unused properties that cost money even just sitting behind fences and vacant.

    He got off at the Pentagon.

    I guess that was the property management bill.

  30. Let me add, as someone with real estate licenses in DC and the surrounding states, that you will know when the budget is being cut because the DC metro population will begin to shrink, and rents and real estate prices in the area will begin to drop. They have never ever dropped inside the Beltway (some just outside the Beltway neighborhoods did have significant drops and significant numbers of foreclosures) since 1996, including on 9/11, when they merely flattened for a month of two, and in the 2008 crash, when they continued to go up by 2% a year instead of the 25% a year they had been.

  31. Only $125B in waste? You are not looking hard enough.
    Navy changes uniforms again
    The DoD is changing US Navy uniforms…again. A tried and true dungaree working uniform with bellbottoms to fit over boots being worn has been changed costing millions and millions of dollars.

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  35. I tend to agree with the Defense Department’s leadership on this issue: People who make the claim that the DoD is wasting money simply don’t understand the Department’s business operations. Comparing the DoD’s operations to a for-profit organization doesn’t work because the DoD has an entirely different mission than a for-profit business. And even comparing the DoD to other federal government agencies doesn’t work because, other than the State Department, none of them have such a globe-spanning footprint (and the State Department’s mission is far less capital intensive than the DoD’s mission).

    Now, you can argue about whether or not the US should have such a mission for its military, but so long as it does, this is what kind of administrative expense you are going to require to run it.

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