Wednesday, December 18, 2013

Waste Not, Want Not

In 2011, former Secretary of Defense Robert Gates publicly spoke out against the decentralized accounting mechanisms within the Pentagon, stating:  “My staff and I learned that it was nearly impossible to get accurate information and answers to questions such as ‘How much money did you spend’ and ‘How many people do you have?’”  A recent report from Reuters targets this exact issue:  the lack of accountability within defense spending and the overlapping accounting mechanisms within the security community.  In a particularly disturbing anecdote, the report details how the office of Defense Finance and Accounting Service (DFAS, the Pentagon’s main accounting agency) regularly “fixes” their spending numbers so that they are in accordance with the budget provided by the U.S. Treasury.  DFAS employees are usually able to correct inaccurate or missing numbers through hurried emails and phone calls before submitting their monthly reports; but any remaining inaccuracies are ameliorated through “plugs,” false numbers entered to make monthly expenditure numbers match those in the Treasury budget.

It is commonly understood that no one knows how much the defense community is truly spending.  In fact, as Defense Secretary Hagel recently stated, “The Department of Defense is the only federal agency that has not produced audit-ready financial statements, which are required by law.  That’s unacceptable.”


While the report focuses on the need for greater oversight of defense spending, which I wholeheartedly support, I wish to briefly focus on the fractured nature of the current defense budgetary system.  Former Secretary Gates likened the current business operations of the Pentagon as an “amalgam of fiefdoms without centralized mechanisms to allocated resources, track expenditures, and measure results.”  His choice of the word “fiefdom” invokes images of territorial and competitive organizations and bureaucracies - and certainly this is what the defense community has become:  A series of organizations and groups within organizations vying for resources and opportunities to promote their desired projects.  Much like how the unwieldy growth of the defense community following the September 11th attacks has created incredible bureaucratic overlap, the same overlap of organizational purpose and goals is reflected in its unaudited expenditures.

The expansive organization of the Defense Department (which does not include the money spent on contracted employees)
Indeed, the theory of organizational or bureaucratic competition explains how policy decisions result from infighting between organizations, particularly as organizations seek more resources, autonomy, and influence within the greater national security infrastructure.  As each agency or organization within the security community has pursued its own goals in order to achieve greater influence in policy decisions, excessive funds have been spent on amassing "stuff" -- ultimately resulting in wasted resources.  As a Navy vice admiral told Reuters, about have of their $14 billion inventory is in excess of what they need.  Multiple this excess across all branches and facets of the defense community and a true picture of organizational waste begins to emerge.

It is truly alarming to find so many wasted resources within the defense community.  Until greater oversight and accurate auditing procedures are achieved, inefficiencies will remain in the defense apparatus -- inefficiencies that ultimately threaten the functioning of our security system.

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