History quiz: Name the greatest robbery committed in the last 100 years.
A: Bernard Madoff¹s Ponzi scheme B: Nazi theft of art treasures from conquered nations C. Diamonds stolen from Africa by Belgians D. The Pentagon budget.
This is not a tricky multiple choice question where all the answers could be correct. Only one stands out as the criminal conspiracy of the century, an ongoing fraud perpetrated by tens of thousands of beneficiaries.
Did you get it? Yes, the most fraudulent corrupt scheme ever foisted on humankind is the Pentagon budget. Since 2001, under the guise of defending the country which the Defense Department has never done the Department of Defense (DOD) has scammed from U.S. taxpayers $5.1 trillion. Since its inception, it has never passed an audit and thus not accounted for the money that pours into its coffers.
Assume an auditor confronts the following entry item under ‘CONTRACTS DEFENSE LOGISTICS AGENCY.’
“Rolls-Royce Engine Services, Oakland, Calif. (N00019-09-D-0013); Standard Aero (San Antonio), Inc., San Antonio, Texas (N00019-09-D-0014); and Wood Group Turbopower, LLC, Miami Lakes, Fla. (N00019-09-D-0012) are each being awarded modifications to previously awarded firm-fixed-price, indefinite-delivery/indefinite-quantity contracts to exercise options for depot-level repair for the T56 Series III engine. The award for Rolls-Royce Engine Services is $34,465,472; for StandardAero, Inc., $41,193,248; and for Wood Group Turbopower, LLC, $44,600,663. Depot-level repair of the T56 Series III engine modules is required to support fielded P-3 and derivative aircraft, as well as T56 powered C-130 and C-2 aircraft. The three major modules of the engine to be maintained and repaired under these options will be a maximum annual quantity of 160 power sections, 180 reduction gear assemblies, and 140 torquemeters. Depot-level repair of T56 Series III engine modules is required to support fielded P-3 and derivative aircraft, as well as T56-powered C-130 and C-2 aircraft Efforts under these options are expected to be completed in February 2011. Contract funds will not expire at the end of the current fiscal year.”
You still awake? Shocked at $120 million for engine repair, maintenance and modification?
The February 11 New York Times said former Blackwater employees were suing the company for routinely billing for non-existent expenses, using bogus receipts. And Halliburton over-billed by billions!
Now you can imagine why it costs $1 million a year to keep one soldier in Iraq or Afghanistan? (Estimate from Center for Strategic and Budgetary Assessments).
A private¹s salary is only $35,000. But allocate gourmet food budgets (about $100 a day) and first class air fare both ways, lodging at the Baghdad Ritz, outfitting and supplying with weapons bought at a military supply store on Rodeo Drive, and Britney Spears acting as the DOD purchasing agent.
Pentagon contracts are mostly “cost overruns,” meaning no control over spending. And it’s public.
On January 6, 2010, Gene L. Dodaro, acting comptroller general of the United States, explained: “For more than a decade, DOD has dominated GAO’s (Government Accounting Office) list of federal programs and operations at high-risk and vulnerable to fraud, waste, abuse, and mismanagement. In fact, all the DOD programs on GAO’s High-Risk List relate to business operations, including systems and processes related to management of contracts, finances, the supply chain, and support infrastructure, in addition to weapon systems acquisition. Inefficiencies and other long-standing weaknesses in these areas lead to challenges in supporting the warfighter, billions of dollars being wasted annually, and missed opportunities to free up resources for higher priority needs.” Talk at National Defense University, Washington, DC
Dodaro said “DOD needed more reliable financial information” to reform its practices. “While DOD represents a big share of the federal budget, it cannot accurately account for its spending or assets [and] cannot pass the test of an independent audit. Without accurate financial information, DOD is severely hampered in its ability to make sound budgetary and programmatic decisions, monitor trends, make adjustments to improve performance, and reduce operating costs or maximize the use of resources.”
The Pentagon also paid hundreds of dollars for a toilet seat and screwdriver. Dorado attributes this flaw to the Pentagon’s overspending habit, not from “mistakes, lack of expertise, or unforeseeable events.” Rather, it is the outgrowth of a system in which key processes and incentives are better at saying “yes” than “no” to programs that fail to measure up. The challenge, Dorado insists, is to change the dynamics of this “culture.”
Should the Pentagon apply Nancy Reagan’s “Just say no” approach to drug use to their expensive and unneeded weapons systems and save several hundred billion dollars a year? Would anyone campaign on this platform? Not if they know the military system means that almost every congressional district contains a base or a jobs-heavy project linked to the “Defense Budget.” No one in authority cites the Office of Government Ethics rule: “Employees shall disclose waste, fraud, abuse, and corruption to appropriate authorities.” (57 FR 35042, Aug. 7, 1992)
President Obama’s Defense (with other military allocations) is almost $1.5 trillion budget, the highest in world history. Try to think of how to spend $4,100 per second!
Saul Landau is an Institute for Policy Studies fellow. Nelson Valdes is Professor Emeritus at the University of New Mexico.