Arguably the biggest problem with the Pentagon is its bloated budget, much of it devoted to fighting past wars and maintaining its vast empire of overseas military bases. But even if Pentagon spending were cut in half, it would still need a supply agency doing what the Defense Logistics Agency does. The trouble is, the DLA does its job poorly. Indeed, the accounting and purchasing practices would bring a smile to the face of a modern real-life Milo Minderbinder, the blithe wheeler-dealer of novelist Joseph Heller’s Catch-22.
Bryan Bender at Politico has dug into the agency and discovered what is so often found in any serious look at the Pentagon: a history of waste, sloppy accounting, paying too much for what it buys, buying things it doesn’t need or too many of the things it does need—all of this supervised by inexperienced people.
Among the screw-ups: the DLA bought enough air frames for the V-22 Osprey to last 80 years, far longer than the plane is likely to be in service; the Government Accountability Office found in 2010 that “average annual value of inventory” for the three years it reviewed was $13.7 billion, $7.1 billion of which was not needed.
The DLA was set up under the name Defense Supply Agency in 1961 by Defense Secretary Robert McNamara with an eye toward stamping out inefficiencies as he did in his time as president of Ford Motor Company:
Instead, he created a monster. McNamara’s creation, known as the Defense Logistics Agency, has grown into a global, $44-billion operation that, were it a private enterprise, would rank in the Fortune 50. Its 25,000 employees process roughly 100,000 orders a day for everything from poultry to pharmaceuticals, precious metals to aircraft parts. In terms of Pentagon contracts, it is nearly as large as Boeing and Lockheed Martin, the Pentagon’s largest contractors, combined. [...]
In the early 70s, the supply agency went international, put in charge of "worldwide procurement, management, and distribution of coal and bulk petroleum products," as well as all food to feed the troops, according to an official DLA history.
In the 1980s, by which time it had been renamed the Defense Logistics Agency, it was given another mission: stockpiling "strategic materials" such as precious metals and industrial grade diamonds.
A quarter-century after the Chief Financial Officers Act of 1990 mandated that all government agencies achieve “audit-readiness,” the Pentagon remains unauditable. This has spurred members of Congress over the years to try to force an audit. One piece of legislation—straightforwardly called the Audit the Pentagon Act of 2015—was introduced this month by Democratic Reps. Barbara Lee of California and Jan Schakowsky of Illinois, and Republican Rep. Michael Burgess of Texas. There’s an identical bill with bipartisan support in the Senate. If passed, the act would penalize the budgets of agencies that do not receive an audit opinion annually from an independent auditor.
The Pentagon has seen the writing on the wall, and it was decided that the DLA would be the first Pentagon agency to get a full audit. DLA therefore has been preparing for three years and now says it’s ready. That remains to be seen given the plethora of reports over the years that have found serious problems at DLA.
For instance, a Pentagon report to Congress in 1999 found there were 300 initiatives designed to improve the logistics support system—"an unprecedented level of emphasis on management improvement." But those reforms didn’t go far enough.
Bender reports:
DLA has made some progress becoming more efficient over the years, but a study published earlier this fall by the Center for Strategic and International Studies shows how far it has to go to reach McNamara’s vision. For example, if DLA adopted business practices for spare parts commonly utilized by private industry—particularly the airline industry, the report’s authors suggested—it could save a billion dollars a year.
Arnold Punaro, the retired major general of the Marine Corps Reserve in charge of a special task force on logistics, says DLA has "a terrible customer" in the Pentagon. "It has no sense of value or time. No one in the Pentagon is looking for a bargain on most days. It's a cultural thing. These are people that will ship a pallet of water on a C-17” cargo plane.
Among the many other problems:
• Lack of a single database to track its inventory. The DLA has a hard time even finding "interdepartmental purchase requests," from other agencies:
"We couldn't find them," [DLA’s Deputy Director of Finance Simone Reba said]: "You could show them there was a new roof, but did you pay the right amount? And can you pull those documents very quickly? If it takes you three months to pull it [the auditors] don't think you have good control over your processes."
• In addition to the over-purchase of Osprey air frames, DLA bought way too many spare parts for the tilt-rotor aircraft, $9 million worth, according to a random assessment of only some of those parts in the inventory.
• A Pentagon inspector general’s report found DLA keeps buying cars and trucks for departments that don’t need them.
• The established rules are not always followed. For instance, some inventory is acquired without price bids, a procedure that is supposedly required.
Pentagon officials hope for a clean financial audit at DLA to restore credibility with Congress over its accounting. But plenty of skeptics on both sides of the aisle doubt a clean audit will be the outcome.
The real question, however, is not whether DLA has tallied its purchases and tracks its delivered inventory correctly, but why the agency bought certain matériel in the first place. That’s also the key question that ought to be applied overall to the Pentagon. And to the Congress that keeps the military-industrial complex humming with its annual deluge of tax dollars.