Pentagon officials ran from their own internal report on wasteful spending after the depth and breadth of the problem was revealed to be much worse than anyone imagined.
A 2015 study produced by the Defense Business Board, in conjunction with consultants from McKinsey and Company, produced data showing $125 billion in inefficient spending. The results, which were supposed to give officials a map for redirecting resources to combat-related causes, were soon viewed as a potential “weapon” for cash-hungry lawmakers.
A 77-page summary report disappeared from the Pentagon’s website and the report’s advocates were soon denied meetings with high-level officials starting in February.
Multiple sources involved in the report spoke with The Washington Post on Monday. The newspaper also received confidential memos on the size or scope of the Pentagon’s bureaucracy, which were not disputed by Deputy Defense Secretary Robert O. Work.
“You are about to turn on the light in a very dark room,” Kenneth Klepper, the former chief executive of Medco Health Solutions, told Mr. Work in the summer of 2014, sources told the newspaper. “All the crap is going to float to the surface and stink the place up.”
“Do it,” replied Mr. Work, a retired Marine officer.
Some of the findings by the Defense Business Board include:
- The Pentagon spends almost 25 percent of its $580 billion budget on operations such as accounting, human resources, logistics and property management.
- The Defense Department pays roughly 1,014,000 contractors, civilians and uniformed personnel to fill office jobs away from the front lines.
- Researchers said there was a “clear path” for saving $125 billion over a five-year period.
- Property management currently requires 192,000 jobs with annual expenses of $22.6 billion.
Mr. Work’s “do it” attitude was muted when contacted by the newspaper.
“There is this meme that we’re some bloated, giant organization,” Mr. Work 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. We’re the largest bureaucracy in the world. There’s going to be some inherent inefficiencies in that.”
The secretary said a more realistic goal in light of the report’s findings would be $30 billion in savings by 2020.
Robert “Bobby” L. Stein, a private-equity investor from Jacksonville, Florida, who served as chairman of the Defense Business Board, said the new posture by Pentagon officials is ludicrous.
“They’re all complaining that they don’t have any money. We proposed a way to save a ton of money,” Mr. Stein said. “We’re going to be in peril because we’re spending dollars like it doesn’t matter.”
The newspaper added that only a small group of individuals were given access to the data after a $2.9 million consulting contract was signed, and that “none of the data or analysis could be released to the news media or the public.”
Frank Kendall III, the Pentagon’s chief weapons-buyer, told The Post that he was “very disappointed” by the board’s findings. He said the $125 billion number was an invalid and arbitrary number.
“It was essentially a ballpark, made-up number,” Mr. Kendall said.
• Douglas Ernst can be reached at dernst@washingtontimes.com.
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