Does the Pentagon Really Waste $125 Billion on Pencil Pushers? Probably not
Keven Drum casts a skeptical eye on the $125 billion “waste” at the Pentagon. It looks a lot like a consulting company trying to drum up business with phony figures and bogus estimates. Read his post here. His post begins:
The Washington Post has a big article up tonight about military waste:
Pentagon hid study exposing $125 billion in wasteful spending
The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post….The report, issued in January 2015, identified “a clear path” for the Defense Department to save $125 billion over five years. The plan would not have required layoffs of civil servants or reductions in military personnel.
Hmmm. I have some doubts about this. For starters, that $125 billion over five years. That comes to $25 billon per year, or about 4 percent of the defense budget. That’s not peanuts, but it hardly seems big enough to represent “far more wasteful spending than expected,” as the article says.
But that’s not the main thing that makes me skeptical about this. My big problem is that this is a McKinsey report, and I have a fairly cynical view of McKinsey-driven “process improvement” blather. For example, the report suggests that the Pentagon can save loads of money by increasing its back-office productivity by 4-8 percent per year. “Private sector industries commonly show similar gains,” they say merrily, so why not the Pentagon?
This is exactly the kind of thing that gives business consultants a bad name. Do private sector businesses really show routine annual productivity gains like this in their back-office operations? I doubt it very much. And even if they do, can the federal government do the same things that private industry does? Hard to say. In any case, it turns out that McKinsey’s biggest finding is that the Pentagon is spending more on its contracts than it should. Here’s how they propose to fix this: . . .