The Pentagon's goal was simple, empower the Defense Business Board (DBB), a federal advisory panel of corporate executives, to retain consultants to identify potential cost savings in the Department of Defense's $580 billion budget. But, when the DBB study revealed a "clear path to saving over $125 billion," a level of waste which spoke to the egregious mismanagement and incompetence of DoD leaders, it was clear something had to be done to bury the story. Now, according to the Washington Post, that is exactly what happened.
The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post.
Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.
The report, issued in January 2015, identified “a clear path” for the Defense Department to save $125 billion over five years. The plan would not have required layoffs of civil servants or reductions in military personnel. Instead, it would have streamlined the bureaucracy through attrition and early retirements, curtailed high-priced contractors and made better use of information technology.
The study was produced last year by the Defense Business Board with help from consultants with McKinsey and Company. Their report revealed for the first time that the Pentagon was spending almost a quarter of its $580 billion budget on overhead and core business operations such as accounting, human resources, logistics and property management.
The data further showed that the Defense Department was paying a staggering number of people — 1,014,000 contractors, civilians and uniformed personnel — to fill back-office jobs far from the front lines. That workforce supports 1.3 million troops on active duty, the fewest since 1940.
Pentagon officials had hoped to use the cost-cutting report to identify opportunities to eliminate "waste" that could be converted to direct spending for troops and weapons. But when the report highlighted too much waste, senior officials grew concerned that Congress might attempt to reduce their budget instead. So, they did what any bloated, corrupt government organization would do when faced with the same choice...they made everyone sign confidentiality agreements promising to never speak of the study and removed all copies of the report from public websites.
For the military, the major allure of the study was that it called for reallocating the $125 billion for troops and weapons. Among other options, the savings could have paid a large portion of the bill to rebuild the nation’s aging nuclear arsenal, or the operating expenses for 50 Army brigades.
But some Pentagon leaders said they fretted that by spotlighting so much waste, the study would undermine their repeated public assertions that years of budget austerity had left the armed forces starved of funds. Instead of providing more money, they said, they worried Congress and the White House might decide to cut deeper.
So the plan was killed. The Pentagon imposed secrecy restrictions on the data making up the study, which ensured no one could replicate the findings. A 77-page summary report that had been made public was removed from a Pentagon website.
Now that the cat's out of the bag, Pentagon officials have no choice but to discredit the study at all costs.
After the board finished its analysis, however, Work changed his position. In an interview with The Post, he did not dispute the board’s findings about the size or scope of the bureaucracy. But he dismissed the $125 billion savings proposal as “unrealistic” and said the business executives had failed to grasp basic obstacles to restructuring the public sector.
“There is this meme that we’re some bloated, giant organization,” he said. “Although there is a little bit of truth in that . . . I think it vastly overstates what’s really going on.”
"We will never be as efficient as a commercial organization,” Work said. “We’re the largest bureaucracy in the world. There’s going to be some inherent inefficiencies in that.”
Frank Kendall III, the Pentagon’s chief weapons-buyer, did the same saying the cost savings estimate was nothing more than "a ballpark, made-up number."
“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.
“If you don’t believe me, call in an auditor,” replied Klepper, the board’s restructuring expert. “They’ll tell you it’s even worse than this.”
In 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.
Of course, while every effort was made to hide this $125 billion in "made-up" cost savings, we suspect there may be some in the incoming administation that may like to dive a little deeper.