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Did the Pentagon Bury Billions in Waste? Dig a Little Deeper

Tobin Harshaw writes editorials on national security, education and food for Bloomberg View. He was an editor with the op-ed page of the New York Times and the paper's letters editor.
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We defense wonks awoke to find a bombshell Tuesday morning, in the form of a Washington Post investigation by Bob Woodward and Craig Whitlock titled "Pentagon buries evidence of $125 billion in bureaucratic waste." All the plot elements are here for a classic Woodward expose: colossal federal waste, bureaucratic cover-up, high-level dissembling, and even overstaffed chow halls.

But on closer inspection, the bombshell appears to be a dud. First, coming from somebody who has been as intimately familiar with government malfeasance for as long as Bob Woodward, shock over runaway Pentagon spending seems akin to griping over the cost of a porterhouse at the Capital Grille -- it’s an outrage, but it comes with the territory. Second, after taking time to do the math and parse the timeline, it seems like there really is a lot less here than meets the eye.

The story, in a nutshell, is that Deputy Secretary of Defense Robert O. Work commissioned a study on potential budget savings from one of the military’s outside advisory panels, the Defense Business Board, with the help of consultants from McKinsey & Co. The report was delivered last year, and among the findings was that the Pentagon spends almost a quarter of its nearly $600 billion budget, and employs more than 1 million people, on "overhead and core business operations" such as accounting, human resources, logistics and property management. The auditors came up with a proposal to save $125 billion over five years.

The real scandal, according to the Post, is that the original plan of making the report public -- and available to the generals’ paymasters in Congress -- was ditched. A 77-page summary that had been posted on the Pentagon website disappeared. (A Pentagon spokesman notified me after this post was published that the summary is still available here.) 

It doesn’t look good. But how outraged should taxpayers, and anybody who wants the U.S. military to maintain the global order, really be? It helps to parse the story’s major aspersions, insinuations and conclusions one at a time.

“Officials moved swiftly to kill it by discrediting and suppressing the results.” Maybe, but it’s also conceivable that having second thoughts about making the report public was wise. It seems clear that Work and other top officials were initially hoping the study would help them make the case for re-allocating money to more pressing and efficient needs. If they later became concerned some budget officials or lawmakers would jump on the study to take billions away from the Defense Department entirely, well, no wonder they wanted to keep the report discreet; they sought to improve the military and feared the outcome would be the opposite.

“Hordes of contractors.” The Army has nearly 200,000 contractors pulling down $190,000 a year on average, including benefits. That fact comes courtesy of … the consultants from McKinsey, who probably make well into six figures themselves. What McKinsey and its competitors tend to do is bring in a group of very smart men and women, who often make a virtue of having relatively little experience in the field, to make efficiency suggestions based on their outsiders’ perspective. This often works quite well (although not always). But the key word here is “suggestions.”

Work, Pentagon acquisitions chief Frank Kendall and others looked at the report’s conclusions and, according to Woodward and Whitlock’s own reporting, decided on something less aggressive, cuts of $30 billion by 2020. The Post authors call this “suppression” and “discrediting the results,” but it can just as easily be viewed as disagreement followed by compromise. (As for the Defense Business Board’s credentials, it was then headed by Bobby Stein, a private-equity honcho from Florida whose battlefield experience includes bundling millions into President Barack Obama’s campaign war chest.)

“Almost half of the Pentagon’s back-office personnel -- 457,000 full-time employees -- were assigned to logistics or supply-chain jobs. That alone exceeded the size of United Parcel Service’s global workforce.” Yep, and I’m willing to bet that the State Department has more ambassadors than Wal-Mart. The comparison is senseless on the face of it. More to the point, the implication that somehow supply chains and logistics are peripheral to the tasks of war-fighting and force projection is disingenuous coming from such experienced journalists. The huge importance of these functions is exactly what is meant by the old truism that "an army marches on its stomach.”

“The board added a sixth category of business operations -- real property management. That alone covered 192,000 jobs and annual expenses of $22.6 billion.” Here, I will defer to Steven Saideman, a professor at Canada’s Carleton University specializing in civil-military relations. “So much for property management?” asks Saideman on his blog. “Yes, because the US military owns a heap of property, and it has to deal with the complexities of its activities on said properties. Could/should the US military own less property? Sure, whose fault is it that it does not drop many bases? Congress.”

“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.” Well, yes, and also 600 billion pens with the Defense Department logo on them. This is an exercise in math, not reasoning. Besides, 50 army brigades is roughly 150,000 troops -- if the idea is that we could use the saved money to add them, it would mean hiring back tens of thousands of those logistics and supply-chain and property-management personnel you just got rid of. As for the nuclear arsenal, I’d rather spend the money training killer dolphins than renovating all those relic ICBMs from the Cold War.

“An internal study that exposed $125 billion in administrative waste.” The facts of the article don’t seem to back up this claim, repeated in the hyperbolic headline. What the outside analysts actually provided was a “clear path” for the Pentagon to save that much over half a decade. I could save a lot of money not buying any more shoes until 2022, but does that fact “expose” $1,200 in footwear waste?  In any case, the military is already modernizing to bring Army manpower to historic lows and focus on high-tech and autonomous weapons systems. This modernization will eliminate some personnel costs, but in the meantime it’s nonsense to label the not-yet-eliminated costs as “waste.” According to the Post article, the plan involved no firings of civilians or uniformed personnel, but hoped to cut staff costs through attrition. Top officials, including Work, say that some of these approaches “have been on the drawing board for years” and were already a part of long-term efficiency plans.  

None of this is to say that there isn’t a great deal of fat to be trimmed in the military-industrial complex. I’ve written about it here and here and here and here. And some aspects of the Post piece are genuinely worrisome, such as the claim that members of the Defense Business Board were denied meetings with top generals and Secretary of Defense Ashton Carter.

But all the outrage here seems a bit ginned up. Honestly, not a week goes by that my inbox doesn’t have yet another doorstop-weight reform proposal from the plethora of smart people who know their way through the weeds of the Pentagon budget. Let’s judge the U.S. military not on its reaction to a report it commissioned itself, but on the decisions it actually makes. Those will determine American strategy and readiness for the threats of the next century.

(Corrects spelling of Steven Saideman in ninth paragraph.)
  1. That this quote has been variously attributed to Napoleon, one of his marshals and Frederick the Great takes nothing away from its veracity. For confirmation, consider this from Erwin Rommel: “The battle is fought and decided by the quartermasters, long before the shooting begins.”

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To contact the author of this story:
Tobin Harshaw at tharshaw@bloomberg.net

To contact the editor responsible for this story:
Philip Gray at philipgray@bloomberg.net