Why the Pentagon ‘buried and killed’ a study on potential cost savings

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US Deputy Secretary of Defence Robert Work attends a press conference in Helsinki, Finland October 7, 2016. Lehtikuva/Jussi Nukari/via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. FOR EDITORIAL USE ONLY. NO THIRD PARTY SALES. NOT FOR USE BY REUTERS THIRD PARTY DISTRIBUTORS. FINLAND OUT. NO COMMERCIAL OR EDITORIAL SALES IN FINLAND. - RTSR955

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JUDY WOODRUFF: Every few years, Pentagon leaders conduct efficiency reviews, looking for ways to save money.

Two years ago, Deputy Defense Secretary Robert Work commissioned a study that looked at how much the Defense Department spent on things like its supply chain, property management and health care. But according to The Washington Post, when the results came back that said an estimated $125 billion could be saved over five years, the report was buried by top Pentagon officials.

Reporter Craig Whitlock broke the story for The Post, and he is here now to tell us more.

Craig Whitlock, tell us how all this started. Why did — why was the study ordered in the first place?

CRAIG WHITLOCK, The Washington Post: Well, a couple years ago, the Pentagon’s budget, the defense budget, was under a lot of pressure. It had been flat for a few years, and military leaders were worried that, under sequestration and the Budget Control Act, that they could actually be forced to stomach some pretty substantial cuts in the coming years.

So, Deputy Defense Secretary Bob Work ordered a federal advisory panel of private sector executives to start collecting a lot of data about how much the Pentagon spends on its back office functions as a way to find ways to save money.

JUDY WOODRUFF: And the work — the study got under way. They asked them to do it in a relatively short period of time, just a few months. It wasn’t easy to do. I gather there wasn’t a great deal of cooperation across the board.

But they did come back with a report. And what did it find?

CRAIG WHITLOCK: Well, what they found was pretty striking.

This is kind of hard, I think, for most folks to understand. But the Pentagon actually up until then had no idea how many contractors actually worked for it. So they were trying to figure out how many people worked in its business operations. And they found that more than one million people worked in these core business operations, like you said, health care management, human resources, property management, things that any organization needs.

But, you know, even for the Pentagon, one million is a lot of people. These are essentially desk jobs. And that compares to only 1.3 million active-duty troops. So the backing of the Pentagon was almost as big as, you know, the tip of the spear, so to speak.

JUDY WOODRUFF: So, Secretary Work, number two man at the Pentagon, when he and others saw this report, what did they do?

CRAIG WHITLOCK: Well, they had touted this in advance, saying this was going to be really important, and that they had asked these private sector executives to help them make sure that the report didn’t gather dust and that they would, you know, pass all these — or adopt these recommendations.

But when the numbers came back much bigger than they thought, and the recommendation that they could save $125 billion over five years, effectively, they buried and killed the study. The data that had been collected internally for the first time to pinpoint how many people worked in these jobs was kept secret.

It is still classified and confidential. We worked hard for months to get our hands on it. We were unable to. And I was working with Bob Woodward, my colleague here at The Post, who is pretty good at that stuff. To this day, they have kept that data confidential.

JUDY WOODRUFF: But the — and you write the reason it seemed that they wanted this buried was that they were afraid that, if this information came out, that Congress wouldn’t appropriate what he and others thought the Pentagon needed to get in terms of future appropriations.

CRAIG WHITLOCK: That’s right.

There’s a political calculation. They were worried that members of Congress would say, look, you have been asking us for more money. You have been saying the troops need more money, you need more funds for ships and tanks and airplane, but, look, your own report, your own data show that you could save $125 billion. Why are you asking us for more?

So they were worried Congress would cut the budget, instead of them giving them more. So that’s when they decided this wasn’t something they wanted to act on and that they wanted to keep it quiet.

JUDY WOODRUFF: So, Craig Whitlock, what’s the fallout from this today? How is the Pentagon dealing with this disclosure?

CRAIG WHITLOCK: Well, I think the Pentagon is — it’s very uncomfortable for them. They don’t dispute the numbers here. They don’t dispute that there’s a million people working in their back office jobs. They don’t dispute that the study found they could save that much money.

They do say it would take more time, that maybe it wasn’t practical to do this so quickly. But what they’re feeling today is some pressure from Congress, members of Congress, members of the Armed Services Committees. They’re saying at a minimum the Pentagon owes it to the American public to release this data showing how all this money could be saved.

And I think the Pentagon’s concerned. They want to see how President-elect Trump reacts. Here’s a guy who campaigned on a platform for a major military buildup, and he said he would pay for it by cutting waste and abuse in the military budget. He wasn’t very specific about how he would do that, but, you know, here’s a blueprint for how they could save a substantial amount of money.

JUDY WOODRUFF: Well, speaking of the president-elect and speaking of Pentagon spending, separately from all this, the president-elect today tweeted and then talked to the press — and we showed this just a moment ago — that he’s upset about how much he says it’s going to — the Boeing company is going to be charging to build two new Air Force Ones.

We know there are two of these airplanes that carry the president around. Do we know for a fact from Boeing that that’s how much these planes are now supposed to cost?

CRAIG WHITLOCK: Well, you know, he’s actually pretty close on that, Donald Trump, when he says $4 billion.

Now, that’s over the whole program. That’s the cost of developing and designing these airplanes and to build and to buy them. Boeing doesn’t have all those contracts yet, but it really is the inside track. It’s the only company the Pentagon has been dealing with to work on this.

But over the next several years, the Pentagon has projected or set aside $3.9 billion for these two airplanes. Now, one reason it costs so much is that these aren’t just Boeing 747 passenger planes. They have to be equipped as essentially an airborne command center for the commander in chief.

He has to be able to issue orders in case of nuclear war. It has to have anti-missile defenses, electromagnetic defenses. So, these are pretty fancy essentially warplanes and command centers. That said, President-elect Trump is saying, do we need to be spending that much on them?

JUDY WOODRUFF: And very quickly, Craig Whitlock, is it believed that Boeing will now hold the costs down as a result of the president-elect’s comments?

CRAIG WHITLOCK: Well, I think it’s fair to say it’s making a lot of people at Boeing and the Air Force squirm a bit.

Now they’re going — they have already had some scrutiny from Congress on this program. But they know now there is going to be a new commander in chief who, symbolically, one of the first things he’s done to point out alleged Pentagon waste is point at this program.

So, you know, I think they’re going to go back to the drawing board and they’re going to have to justify the projections.

JUDY WOODRUFF: Craig Whitlock, great reporting by you and Bob Woodward at The Washington Post. We thank you.

CRAIG WHITLOCK: Thank you.

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