Pentagon Super-Hoarders Waste Billions Buying Stuff They Already Have

Illustration for article titled Pentagon Super-Hoarders Waste Billions Buying Stuff They Already Have

If you thought your great aunt Edna was bad, you should meet the super-hoarders at the Pentagon. A new Reuters investigation reveals that various defense agencies can't stop buying stuff they already have. Like, many, many billions of dollars' worth of stuff.


The Defense Logistics Agency is a primary culprit, and they know it. "We have about $14 billion of inventory for lots of reasons, and probably half of that is excess to what we need," Navy Vice Admiral Mark Harnitchek, the DLA's director, admitted to aviation industry executives in August. Reuters also uncovered a document showing that the Pentagon ordered $733 million worth of equipment that it already had in excess. Harnitchek adds that, while they do have a "Clean Out the Attic" program in place, it's all but impossible to execute: the DLA doesn't even know what it has in its inventory and so it can't make an informed decision about what to get rid of.

If this sort of thing irks you, you should think twice about reading the Reuters investigation in full. All things told, the Pentagon's received $8.5 trillion from Congress that's never been accounted for, because the Pentagon hasn't undergone any audits. And it looks very likely that a lot of this money was wasted. One report showed that, between 2003 and 2011 alone, the Army straight up lost $5.8 billion in supplies. That's roughly equivalent to the GDP of Monaco. [Reuters]

Image via AP



The missing part of this article is the "why". Why does the DLA purchase so much excess? From what I understand the alternative has often times been more costly. Think about it this way. You can design a system that costs $4 Billion and within 5 years a particular part, let's say $100k piece of the $4 Billion pie, becomes obsolete because the manufacturer goes out of business (this is quite common in these systems). You're options are A) design a new part and pay someone to manufacturer it (costly both in time and money) or B) you can try and forecast obsolescence and purchase up spares for the life of the product (up front cost, but potential total ownership cost savings). Now to be fair it's impossible to predict obsolescence, but you can definitely focus on high risk items (ie single source suppliers, antiquated tech, niche products where you're the only buyer). I have no idea whether the DLA is good at it or not, but I know the Pentagon "retired" a lot of system in the past because they didn't know how to buy with the total life of the system in mind. That is far more costly than keeping extra spare around.