Tuesday, August 14, 2018

Department of Defense, The Great American Swindle


Pentagon being cut in half

Military leaders, administration officials and fiscal hawks claim the country's debt is a threat to national security, especially since other countries own nearly half of U.S. public debt. China and Japan lead the list of creditors.

While both parties agree the debt is a national security problem, they disagree about the role defense spending can play in debt reduction.  This should come as no surprise, since the needs of the defense department are always wrapped in the flag and measured by degrees of patriotism.  And there’s the clever trick of substituting “the military” (manpower) for the DoD.

I’m a patriot.  But I believe the defense department is America’s greatest swindle.  Congress is the bagman and the Department of Defense is the bag.




The US boasts approximately 13,000 military aircraft. China and Russia, the world's next-largest aerial powers,  have fewer than 3,000 military aircraft each.  The U.S. Navy has 288 battle ships and11 aircraft carriers: China has one.  Rear Adm. Thomas Moore said, ”We're an 11-carrier Navy in a 15-carrier world.”  We boast 9 amphibious assault ships, 22 cruisers and 62 destroyers to China’s 25.  The U.S. Navy has frigates and submarines. We have helicopters, tanks, drones, missiles, nuclear weapons and our allies are also better equipped than these nations.


Defense Secretary Panetta asked Congress to slim down the bill because it contained amounts allocated for weapons and programs that are no longer viable.

Secretary Gates asked, 
“….Does the number of warships we have and are building really put America at risk when the U.S. battle fleet is larger than the next 13 navies combined… Is it a dire threat that by 2020 the United States will have only 20 times more advanced stealth fighters than China?”
Gen. Raymond T. Odierno told Congress that it would save taxpayers $3 billion if the Pentagon holds off repairing, refurbishing or making new M-1 Abrams tanks.  But Republicans and Democrats disagreed.  Or maybe, the Pentagon could just stop financing boondoggles

Yet, every year the budget is padded with enormous cost projections for new war toys.  Republicans whine that the military is underfunded, ill-equipped and depleted.  Mind you, they are not talking about manpower, so I don’t believe it.  After all, aircraft and ships unlike cars, are not timed to fall apart just before you pay the last note. More importantly, the deployment of tanks and planes and ships is rapidly becoming an outmoded form of war.  We are still producing Abrams tanks, while other countries are training armies of keyboard warriors.


Still, I found myself focused on an area with which I’m more familiar; housing.  I’m not an expert,  I just reach what I consider to be some common sense conclusions.  I looked at defense bills, concentrating on the housing sector because it is an area we are all familiar with. After all, we all have to live somewhere. 

A Little Insight

President Clinton signed the National Defense Authorization Act for Fiscal Year 1996, which contained the Military Housing Privatization Initiative (MHPI). This act allowed DoD to work with the private sector to build, renovate and sustain military housing. The stated purpose was "to help improve the quality of housing for the military".  

Under the program, the Secretary of Defense is authorized to enter into agreements with private developers to own, maintain and operate military housing.  Outsourcing was embraced by Presidents Clinton and Bush as a way to downsize the military, but in fact, it is a means of shifting huge sums of resources from government coffers to private hands.

Section XXI of the NDAA: Military Construction Authorization

The Secretary of the Army may acquire real property, carry out architectural and engineering services and construction design activities with respect to the construction or improvement of military family housing units.

The military acquires land, pays private architectural firms, engineers and contractors to build,  then turns it all over to the contractor who then leases the land for 30, 40, 50 years. A lease can cost as little as $1.00.  In fact, the Secretary has the authority to simply give the land away.

The private contractor then owns, manages the property and enjoys all the profits.  What is the benefit to taxpayers?  Nothing!  It’s a complete giveaway.  To add insult to injury, soldiers receive a housing allowance as a part of their pay.  If they reside in one of the properties built by the contractor, the housing allowance is relinquished to the contractor/manager.  

Perhaps it makes sense to pay a contractor for design and engineering, but I can’t understand relinquishing construction and management and payment to them as well.  After all, soldiers leave the military at alarming rates in order to sign on with private contractors.  And since the housing is occupied by military personnel, why can’t the millions paid in housing allowances simply be kept by the military? 

While there are certainly military installations with a shortage of housing, there are also military bases with such a surplus of vacancies, civilian federal workers and military retirees live in many of the units.  Private management companies are allowed to rent the units at market rates to tenants, giving priority to soldiers.  I stopped looking for the value or loss of such an arrangement when I read:  statistics are unavailable because they are not required to report their outcomes.  In other words, there is no oversight or accountability.

I looked at Defense Budgets from the year 2000 through 2013, concentrating just on the housing section.  I chose to look at the disbursements for Fort Wainwright, Alaska.  Fort Wainwright was transferred from the Air Force to the Army in 1961. These were amounts allocated to Fort Wainwright, year after year for housing construction and improvements.

In 2002, Congress was asked to amend the defense Act of 2000, in a letter, addressed to Cheney (timestamped Mar 25, 2002) that sought to modify various projects going back to the beginning of the privatization program (1996) through 2002, in each case modifying amounts upwards. What kind of accounting jujitsu is that?

The letter requested $17,752,000; 38 units were built or improved for the sum of $17,752,000 in 2003. That’s $467,000 per unit!   These are not housing developments with a high degree of customization.  They’re not bullet-proof or equipped with bomb shelters. They are limited to a library of floor plans in a master-planned community somewhere in the quasi-rural part of the state.

The median listing price for a house in nearby Fairbanks in 2003 was $172,000.

Fort Wainwright has more than 1600 privatized housing units located on post.


The following appropriations are repeated in each budget for each branch of the military.

Funds are hereby authorized to be appropriated for military construction, land acquisition, and military family housing functions of the Department of the Army in the total amount of $2,353,231,000.  That’s $2.3 billion!
For the costs of acquisition, architectural and engineering services, and construction of facilities for the Guard and Reserve Forces:
Army National Guard $205,448,000
Army Reserve  $107,149,000.
75 units @ $24,000,000 = $320,000 per unit
32 units @ $12,000,000 = $375,000 per unit
38 Units @ $17,752,000 = $467,157 per unit
140 units @ $64,000,000 = $457,142 per unit
246 units @ $124,000,000 = $504,065 per unit
180 units @ $91,000,000 = $505,555 per unit
234 units @ $132,000,000 = $564,102 per unit





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