The Washington Post published a lengthy investigation Monday evening into how a Pentagon-commissioned study that found the Department of Defense could save $125 billion in administrative waste was effectively buried by the DoD because it feared the findings would spur Congress to cut its funding. The study produced by the Defense Business Board and McKinsey and Company was issued in January 2015 and, according to the Post, outlined a 5-year plan to save money that “would not have required layoffs of civil servants or reductions in military personnel [and] [i]nstead [-] would have streamlined the bureaucracy through attrition and early retirements, curtailed high-priced contractors and made better use of information technology.”
The report did exactly what it was commissioned to do—find wastage and inefficiency in the non-combat, administrative and support roles within the Defense Department. The report was ordered by the second-highest ranking official at the Pentagon, Deputy Defense Secretary Robert Work. The investigation discovered a tangled bureaucratic web and "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,” according to the Post. In sum, more than one million contractors were employed doing back-office support tasks for 1.3 million active duty troops.
Here’s more of what was found (via the Post):
In a confidential August 2014 memo, McKinsey noted that while the Defense Department was “the world’s largest corporate enterprise,” it had never “rigorously measured” the “cost-effectiveness, speed, agility or quality” of its business operations. Nor did the Pentagon have even a remotely accurate idea of what it was paying for those operations, which McKinsey divided into five categories: human resources; health-care management; supply chain and logistics; acquisition and procurement; and financial-flow management… The board added a sixth category of business operations — real property management. That alone covered 192,000 jobs and annual expenses of $22.6 billion…
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. The Pentagon’s purchasing bureaucracy counted 207,000 full-time workers. By itself, that would rank among the top 30 private employers in the United States. More than 192,000 people worked in property management. About 84,000 people held human-resources jobs…
But the McKinsey consultants had also collected data that exposed how the military services themselves were spending princely sums to hire hordes of defense contractors. For example, the Army employed 199,661 full-time contractors, according to a confidential McKinsey report obtained by The Post. That alone exceeded the combined civil workforce for the Departments of State, Agriculture, Commerce, Education, Energy, and Housing and Urban Development. The average cost to the Army for each contractor that year: $189,188, including salary, benefits and other expenses. The Navy was not much better. It had 197,093 contractors on its payroll. On average, each cost $170,865. In comparison, the Air Force had 122,470 contractors. Each cost, on average, $186,142.
Support for bureaucratic reform began to crumble when the final tally of potential wastage came in and the agency went about discrediting and discarding its findings. The Pentagon yanked the then-public report from its website and slapped secrecy restrictions on the data.