DoD still haunted by $125 billion efficiency report

A ranking Defense Department official says a new round of base realignments and closures (BRAC) is needed to help streamline the agency, which found itself once again in the spotlight for a 2015 audit claiming $125 billion in unaddressed efficiencies.

DoD acting Deputy Chief Management Officer David Tillotson testified March 21 on Capitol Hill that another BRAC is needed, but it is “not the only action, I’m going to say that right now, it’s not the only thing we should do.”

Tillotson was referring to a report from Lawrence Korb, a senior fellow at the Center for American Progress, which includes five recommendations for how DoD can better manage its spending. The fifth recommendation is another round of closures.

Korb’s report also recommends building on the findings of a 2015 Defense Business Board (DBB) report —which also happened to be a focus of the House oversight committee hearing —that found DoD could cut $125 billion from its support and logistics functions.

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“President Trump wants to add $54 billion to the fiscal year 2018 budget. It’s also important to keep  in mind that they’re proposing to add $30 billion to the fiscal 2017 budget, and then the Congress last year added $23 billion in the National Defense Reauthorization Act. So we’re talking about adding $100 billion to the Defense budget compared to what we thought about a year ago,” Korb said during the hearing. “I can assure you that if you add the additional funds that have been proposed by President Trump, you will ensure that those reforms do not get made. The best way to ensure that it happens is don’t give them any more money.”

Federal News Radio and other outlets reported on the board’s findings at the time, and Deputy  Defense Secretary Robert Work described its findings in detail during public appearances in early 2015.

The report has been publicly available on the DBB’s website since its release. In December 2016, the Washington Post published an article claiming the Pentagon “buried” the report, prompting a letter to former Defense Secretary Ashton Carter from 31 members of the House Oversight and Government Reform Committee, demanding answers on DoD’s business spending and the alleged cover up.

Tillotson stood by the report’s transparency, saying he took issue with the claim the report had in any way been suppressed.

“It was actively discussed within the department at the time, it has formed the basis of discussion since that time,” Tillotson, “It was posted in the public record, it was actually discussed with members of the House and Senate back in 2015, shortly after it was issued.”

But members of the oversight committee had questions about the location of the report’s public posting, as well as whether it was a report at all.

Michael Bayer, DBB chairman, said the document at issue was always available on the minutes of the January 2015 DBB board meeting, and was also on the website’s banner, where the most current work is published, before newer material is uploaded.

But the report, Bayer said “was never a report, it was a collection of slides. It was erroneously listed as a report.”

“Every single page of this thing says on it the full [DBB] report will later contain detailed text, which will reflect the totality of the points discussed and modifications,” Bayer said. “Those were never put into final form, which is why it stayed on the minutes section of the meeting.”

That clarification touched off a heated debate on whether or not McKinsey & Company and Ryan Consulting, the contractors behind the efficiency report, fulfilled their $9 million contract.

Tillotson said the contract did not include delivery of a DBB report.

Kenneth Klepper, a former DBB member, testified that shortly before he chose to leave his position on the board in May 2015, he had offered to help proofread the final report.

“It was almost completed, I was waiting for it,” Klepper said. “I called back a few weeks later, the officer that was working said they were told to stand down. I can’t answer what happened after that.”

Rep. Darrell Issa (R-Calif.) wanted to know how to avoid another instance in the future where billions of savings is on the table but an “unknown person at the Department of Defense puts a kibosh on it for whatever reason and Congress doesn’t find out about it.”

Robert Stein, DBB chairman from 2014-15, said it comes down not only to having a great plan, but the people to properly implement it.

“We’re talking about very important things and nobody will get in the same room,” Stein said. “We’ve got to change culture and make things happen.”

Tillotson admitted there were things that could be improved upon at DoD, including the agency’s use of leased property and owned real property.

“It’s intriguing to me, when we opt to let a lease contract for a building lapse —not terminate it — let the contract run out, that we spend three trips to a state’s delegation explaining why we can’t close that contract,” Tillotson said.

DoD does not have an outstanding financial history. It’s the one federal agency that’s never passed an independent audit, and it regularly appears as one of the worst offenders on the Government Accountability Office’s High Risk List.