openpolitics.com

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.

.. 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 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 cost-cutting study could find a receptive audience with President-elect Donald Trump. He has promised a major military buildup and said he would pay for it by “eliminating government waste and budget gimmicks.”

.. 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.

.. 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”

.. Work said 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.

.. Some Defense Business Board members warned that exposing the extent of the problem could have unforeseen consequences.

“You are about to turn on the light in a very dark room,” Kenneth Klepper, the former chief executive of Medco Health Solutions, told Work in the summer of 2014, according to two people familiar with the exchange. “All the crap is going to float to the surface and stink the place up.”

.. “Elements of the culture are masterful at ‘waiting out studies and sponsors,’ with a ‘this too shall pass’ mindset.”

.. he revealed that early findings had determined the average administrative job at the Pentagon was costing taxpayers more than $200,000, including salary and benefits.

..

Former defense secretaries William S. Cohen, Robert M. Gates and Chuck Hagel had launched similar efficiency drives in 1997, 2010 and 2013, respectively. But each of the leaders left the Pentagon before their revisions could take root.

.. “Because we turn over our secretaries and deputy secretaries so often, the bureaucracy just waits things out,” said Dov Zakheim, who served as Pentagon comptroller under President George W. Bush. “You can’t do it at the tail end of an administration. It’s not going to work. Either you leave the starting block with a very clear program, or you’re not going to get it done.”

.. It then broke down how the Defense Department was spending $134 billion a year on business operations — about 50 percent more than McKinsey had guessed at the outset.

.. 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.

.. Work explained he was worried Congress might see it as an invitation to strip $125 billion from the defense budget and spend it somewhere else.

.. uniformed military leaders were receptive at first. They had long groused that the Pentagon wasted money on a layer of defense bureaucracies — known as the Fourth Estate — that were outside the control of the Army, Air Force and Navy. Military officials often felt those agencies performed duplicative services and oversight.

.. McKinsey consultants had also collected data that exposed how the military services themselves were spending princely sums to hire hordes of defense contractors.

.. The average cost to the Army for each contractor that year: $189,188, including salary, benefits and other expenses

.. 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 went to Work and warned that the findings could “be used as a weapon” against the Pentagon.

.. Worse, the board was unable to secure an audience with Carter, the new defense secretary.

.. Work and other senior officials had already “concluded that the report, while well-intentioned, had limited value.”

.. called the board’s recommendations too ambitious and aggressive. “They, perhaps, underestimated the degree of difficulty we have in doing something that in the commercial sector would seem to be very easy to do.”

.. “If we had a longer timeline, yes, it would be a reasonable approach,” he said. “You might get there eventually.”

.. On June 2, 2015, Navy Secretary Ray Mabus delivered a speech at the American Enterprise Institute, a conservative think tank. He complained that 20 percent of the defense budget went to the Fourth Estate

.. He singled out the Defense Finance and Accounting Service and the Defense Logistics Agency, which together employ about 40,000 people, as egregious examples.