Me­dia: Pen­tagon buries re­port of wast­ing $125b

China Daily (Hong Kong) - - WORLD - By XIN­HUA in Wash­ing­ton

An in­ter­nal study found that the US Depart­ment of De­fense wasted as much as $125 bil­lion on bu­reau­cracy, which is in­ten­tion­ally hid­den away by top Pen­tagon of­fi­cials, US me­dia re­ported on Tues­day.

The Wash­ing­ton Post said in an ex­clu­sive re­port that the study found a way to cut back-of­fice busi­ness op­er­a­tion cost by $125 bil­lion over five years.

The study, named Trans­form­ing DoD’s Core Busi­ness Process for Rev­o­lu­tion­ary Change, was con­ducted by the De­fense Busi­ness Board, a fed­eral ad­vi­sory panel, and con­sul­tants from McKin­sey. It was re­leased in early 2015.

Deputy De­fense Sec­re­tary Robert Work, who ini­ti­ated the project and ini­tially was en­thu­si­as­tic about a shakeup, said he was “scared” at the re­sult and agreed to adopt only part of the study and save $30 bil­lion by 2020.

No one re­ally knows

It was no se­cret that the Pen­tagon has a bu­reau­cracy is­sue, but the prob­lem is that even depart­ment of­fi­cials don’t know ex­actly how much money was paid for those op­er­a­tions.

In 2014, Work com­mis­sioned the DBB and McKin­sey with a $2.9 mil­lion con­tract to gather in­for­ma­tion. The tar­get was to find out how much money was spent on back-of­fice bu­reau­cracy and ways to cut the cost.

Ini­tially spec­u­la­tion made by McKin­sey was about $75 bil­lion to $100 bil­lion, but it said in a memo that “no one re­ally knows”.

Af­ter three months’ of anal­y­sis, the re­sult came back and shocked every­one.

For its back-of­fice op­er­a­tions, the Pen­tagon spends $134 bil­lion an­nu­ally on more than 1 mil­lion per­son­nel, com­pared to the 1.3 mil­lion troops it has on ac­tive duty.

The study found that 457,000 peo­ple were hired in po­si­tions re­lated to sup­ply chain and lo­gis­tics, con­sti­tut­ing a larger em­ployee count than in­ter­na­tional ship­ping com­pany UPS.

For pur­chas­ing, 207,000 peo­ple were hired, which by it­self would rank among the top 30 US pri­vate em­ploy­ers.

In re­sponse to the over­staffing prob­lem, the study pro­posed three ways to cut spend­ing, with the most con­ser­va­tive sav­ing $75 bil­lion over five years and the most am­bi­tious sav­ing twice as much.

In the end, the mid­dle way was cho­sen, rec­om­mend­ing sav­ing $125 bil­lion, which if spent on boost­ing com­bat power, can cover the op­er­a­tion cost of 50 army bri­gades, 3,000 F-35 fighter jets, or 10 air­craft-car­rier strike groups.

In face of the un­ex­pected re­sult, even Work be­came un­com­fort­able.

“There is this meme that we’re some bloated, gi­ant or­ga­ni­za­tion, although there is some truth in that ... I think it vastly over­states what’s re­ally go­ing on,” he said.

“We are the largest bu­reau­cracy in the world. There’s go­ing to be some in­her­ent in­ef­fi­cien­cies in that,” he said.

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