From strip clubs to combat ships, McCain blasts $13 billion in Pentagon waste
In the greater scheme of things, $13 billion of Pentagon waste is a drop in the bucket compared to the trillions of dollars in defense spending and contracting that has been wasted over the years.
The Defense Department's long-troubled F-35 Joint Strike Fighter program became the poster child for defense cost overruns and is now estimated to cost over $1 trillion, or $100 million or so per unit. The Washington Post reported recently that the Pentagon suppressed an internal report that identified $125 billion in wasteful spending while last summer an auditor's examination of the finances of the U.S. Army alone found misstatements and errors than ran into the trillions of dollars.
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Government watchdogs for years have issued blistering reports on cost overruns, waste, and fraudulent activities by Defense Department personnel and contractors. And tangential reports by John Sopko, the special inspector general for Afghanistan reconstruction, have documented $3 billion or more in "nation building" construction for new roads, schools, health clinics and even a luxury hotel and apartment building in Kabul that was never completed or fully accounted for.
Now comes Senate Armed Services Committee Chair John McCain (R-AZ), a long-time scold of Defense Department waste with his holiday season list of $13 billion worth of wasteful spending. The report, America's Most Wasted: Indefensible, offers more than a half-dozen examples of ill-conceived new weapon systems, faulty replacement parts, dubious travel vouchers and outright rip-offs by military service personnel using government-issued credit cards.
Congress just completed work on new defense authorization legislation calling for a total of $619 billion of spending in fiscal 2017, while President-elect Donald Trump has vowed to press for even more spending in the coming years to enhance the U.S.'s military might. But even before taking office, Trump has begun to challenge the Pentagon's spending habits, including the overall costs of the F-35 program and a Boeing contract to replace Air Force One.
"If DOD is going to continue to perform its mission and meet our high expectations, it is going to have to produce effective military forces in the most efficient manner possible," McCain wrote in the preface to his new study. "This will require the continual and careful weighing of current forces and existing programs against the necessary future capabilities, and wherever possible, the elimination of the wasteful programs that threaten to undermine current and future military readiness."
Here is McCain's list of the six most "indefensible" examples of military waste:
- $12 billion for 26 Littoral Combat Ships "with no proven combat capability." The Lockheed Martin contract for this program was originally projected to cost $220 million per ship, with delivery beginning in 2008. But the LCS program's unit cost has more than doubled to $478 million, and its combat capabilities and mine-countermeasures still aren't fully operational -- and won't be until 2020.
The littoral combat ship was designed to fight the enemy in shallow waters close to shore. But internal Navy studies concluded the ships were too fragile to go up against large opponents armed with anti-ship missiles, as The Fiscal Times reported in October.
- $458 million worth of payments for "inappropriate" travel expenses. The Defense Department spent roughly $6 billion in travel during fiscal 2014. However, $458 million of that total was improperly paid out because Pentagon officials failed to observe existing policies and procedures. They approved expense reimbursements for airfare, hotels, and rental cars without receipts, incomplete vouchers, or vouchers with amounts that did not match the receipt.
What's more, only $5.5 million of the 2014 travel overpayments were recovered. That meant that the Defense Finance and Accounting Service (DFAS) "did not take any effort to recapture around 99 percent of the overpayments from this program," the report stated.
- $375 million earmarked for Missile Defense Agency (MDA) targets were never used or didn't work. The MDA is developing a ballistic missile defense system to thwart the rising threat of sophisticated ballistic missile technology falling into the hands of hostile non-state actors.
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However, a series of Government Accountability Office (GAO) reports show that MDA "has been woefully deficient" in developing test targets. MDA's contractor, Earned Value Management System (EVMS), began a medium-range target program in 2003, but then fell behind schedule and temporarily suspended activities in 2008. The program was resumed two years later under the existing contract, without competitive bidding. The plan was to deliver five targets for $321 million. But, after spending $33 million more, MDA delivered only two complete targets.
- $58 million wasted on the Navy's "Great Green Fleet." The report argues that Navy Secretary Ray Mabus's drive to develop alternative sources of energy has been a costly flop and blames it on "cumbersome regulation, poor management and "perverse bureaucratic incentives."
Mabus announced in the fall of 2009 a goal of ensuring that at least 40 percent of the energy used to power the Navy's ships, aircraft, ground vehicles and installations were alternatives to petroleum or fossil fuels. "Not only has the Navy failed to meet its goal but the alternatives it explored have been without exception far more expensive to taxpayers than traditional petroleum products," the report asserts.
- $12 million for defective spare parts. DOD contractors had delivered more than 200 different types of defective aviation parts at an estimated cost of $12.3 million.
The Defense Logistics Agency is responsible for acquiring spare parts for things like safety equipment, propellers and engines to support the Pentagon's helicopters, bombers and fighter jets. The DLA should have sought replacements for the faulty parts or demanded a refund. Yet "To add insult to injury, DOD failed to require the contractors to replace or refund the defective parts," McCain's report complained.
- $1 million for travel claim reimbursements for unauthorized expenses at casinos and strip clubs. The Navy has been very lax in reviewing travel expenses and receipts. One of the more outrageous and annoying cases involved a Navy petty officer who charged $1,758 to his government credit card for his personal enjoyment.
The petty officer's credit card charges were more than six times his total authorized allowance for meals and expenses. And he made those charges at adult entertainment establishments including the Dreams Cabaret, Jaguars Gold Club, Tequila Sunrise and Red Parrot Gentlemen's Club.
"Only after being informed by the DOD IG did the Navy take disciplinary action, including the creative solution of having the petty officer lead a training session for his organization to illustrate his renewed understanding of DOD travel policy," according to McCain's report.
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