Wasteful Pentagon Spending

February 6, 2018

Just as Congress is preparing to hike defense spending, a new report suggests the inefficiency that has plagued the Pentagon for decades continues unabated. Politico discusses a new audit of one of the Pentagon’s purchasing agencies:

Ernst & Young found that the Defense Logistics Agency [DLA] failed to properly document more than $800 million in construction projects, just one of a series of examples where it lacks a paper trail for millions of dollars in property and equipment. Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.

“Ernst & Young could not obtain sufficient, competent evidential matter to support the reported amounts within the DLA financial statements,” the Pentagon’s inspector general, the internal watchdog that ordered the outside review, concluded in issuing the report to DLA. The accounting firm itself went further, asserting that the gaping holes uncovered in bookkeeping procedures and oversight strongly suggest there are more.

Politico says that the Department of Defense “has never undergone a full audit despite a congressional mandate,” and that the “$40 billion-a-year logistics agency is a test case in how unachievable that task may be. The DLA serves as the Walmart of the military, with 25,000 employees who process roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a host of other federal agencies — for everything from poultry to pharmaceuticals, precious metals and aircraft parts.”

Does the “Walmart of the military” deserve a break because $40 billion is a lot of purchases?

I don’t think so. Walmart itself has sales of almost $500 billion a year and manages to keep track of products from 10,000 suppliers. And then there is Amazon, which has annual sales of almost $180 billion. The online goliath sells 600 million different items and it ships five billion items through its Prime service a year.

So the Pentagon’s large size is not the root cause of its inefficiency and waste. Instead, it suffers from the same sorts of structural failures as other federal bureaucracies, and the same lack of congressional oversight.

More on Pentagon mismanagement here and here.


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