Media: Pentagon buries report of wasting $125b
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.