The Pentagon's wasted BILLIONS

...Costs included in the prices proposed by the contractor . . . did not reflect cost reductions which might be expected to result from purchases in larger quantities . . . Additional quantities were ordered under the contract at prices which did not give effect to lower, more current costs of materials...

...But the GAO discovered that Thompson Ramo had bought these screws for from one to five and one-half cents each...

...The agency noted that "272,701 new type fillister head screws" were included in the repair kits "at a standard cost of $1 each...

...By words and indeed even some actions, Secretary of Defense McNamara has indicated that he is determined to get a dollar's worth of defense for every dollar spent in the name of defense...

...When an organization is as scattered, as diffuse, and as large as the Defense Department, it is not easy to track down deficiencies...

...Although he was past fifty at the beginning of World War II, he enlisted in the Marine Corps as a private and still carries a withered arm as his memento of service under fire in the Pacific...

...The watchdog agency calculated that the Army overpaid $6,675,000 for work done by subcontractors on the project and that one subcontractor— the prime contractor was the vast Western Electric Company—was allowed to accumulate $5 million in government funds over two years "because the Army did not require the prime contractor to limit provisional payments to subcontractors to incurred costs plus contemplated profit...

...The Senate and the House votes were unanimous...

...If, for example, another government department or agency discovers that it has use for an item in the stock fund not now needed by the services, the department or agency must first pay for the item, which of course has already been purchased once by the government...

...all that is required is a modicum of common sense and a genuine concern that the government get a full return on every dollar it spends...

...Upon investigation the GAO found that the Air Force was paying more than twenty-five per cent more than it should have paid for what would appear to be a relatively simple item...

...Kowalski has estimated that 50,000 members of the armed services perform valet and even maid services lor officers at a total cost to the taxpayers of $300 million a year...

...But reasonableness of both profits and wages surely ought to be the guiding principle in defense industries, which are financed with tax funds...

...On a huge Navy contract with General Motors' Cleveland Diesel Engine Division, "the contractor," according to the GAO, "was allowed the same rate of profit on subcontracted major components as on items to be manufactured in his own plant...

...In recent years more than eightysix per cent of the defense contracts have been negotiated instead of being let to the lowest competent bidder...

...In a case involving the San Antonio Air Material Area, the Navy was buying spare parts while the Air Force was disposing of the same parts as surplus...

...testing and evaluating of initial pilot models to determine performance capabilities...

...The reasons for this gun-shy attitude are understandable from a political point of view...

...Only about a fourth of such general supplies as paper, furniture, office machinery, musical instruments, and containers are standardized in at least two of the services...

...Under the negotiated contract it had with the Air Force, Lockheed stood to gain $1,251,000 from these overstatements—not because of efficiency, as envisaged by the contract terms, but rather because of excessive estimates...

...In fact, if these practices continue, we shall not make ourselves stronger, but in fact we could become weak, our people could lose faith, and instead of planes, tanks, guns, and combat troops, we could have a surplus of items we do not need purchased at prices which should not have been paid...

...negotiated because the Air Force awarded the contract on a fixed price basis without requiring the contractor to furnish detailed support for the estimate," said the GAO...

...Some large corporations like General Motors have attempted to solve this problem by making each of its divisions semi-independent and highly competitive units...

...So for important economic as well as political reasons the ranks of the military's opposition are thin on Capitol Hill...

...Also uncovered was the case of a specialist fourth grade at Fort Hood, Texas, who, according to Kowalski, spent eight months working for a colonel, "washing and waxing the car...

...Firestone's profit of $3 million amounted to thirty-five per cent of its costs because, as the GAO pointed out, neither the prime contractors nor the Air Force required evidence of the reasonableness of Firestone's proposed costs...

...mowing the lawn...

...As for the Army, its firepower may still be deficient, but this has not diminished its ability to scatter dollars as if they were infantry fanning out over a field...

...And the title of orderly can encompass anything from upstairs maid for a major's wife to walking a pet Pekingese...

...There is a feeling of helplessness in Congress toward the spendthrift policies of the Pentagon...

...The Pentagon knows and rewards handsomely its friends and seldom forgets an enemy...

...cleaning the bathroom...

...The Navy permitted Librascope Inc...

...This approach surely cuts cost in private industry, but it hardly works that way among the intensely competitive armed services where ever bigger budgets, not larger sales and profits, are the dominating drive...

...But when the question of efficiency in the Pentagon is raised, most members of Congress shrug their shoulders and throw up their hands in despair...

...Not long ago an Air Force base in West Germany needed 300 footlockers...

...The government eventually got the money back, but in the meantime General Electric had in effect an interest-free loan...

...General Motors' A-C Spark Plug division, also of Milwaukee, refunded $750,000 to the Air Force as a result of "unreasonably high prices...

...But the colossal naval blunder of recent years was the expenditure of $600 million for aircraft and equipment, which, in the words of a GAO report, "were incapable of performing the designated mission...

...Douglas is one of the few members of Congress who has had the patience and political courage to document the charges of waste that are all too often made in scatter-gun fashion against the military...

...And then there was the Air Force contract with Cessna Aircraft of Wichita, Kansas, for B-52 stabilizer assemblies and related tooling...

...Another area which needs overhauling is the continued failure of the services to depend upon a common source for the supplies they all need...

...As a subcontractor for North American Aviation, Rheem Manufacturing Company of Downey, California, overcharged the Air Force $178,000 for vertical stabilizer tips...

...there were no questions about where we were going to get the money, as there are when education, medical care, and other social welfare programs are proposed...

...Excess costs of $5,022,465 were recovered, for example, from Boeing Airplane Company of Seattle on a contract for spare parts for B-52 bombers...

...The excess cost was computed by the GAO as $565,600...

...cleaning teenage son's quarters...

...One important reason is the vastness of the military operation...

...At least $8.4 million was wasted in this transaction...

...Thus, President Kennedy could have financed nearly all of the additional defense expenditures he deemed necessary to increase the combat strength and readiness of the armed services out of savings that can readily be made in current military spending...

...But once the words have been spoken nothing much ever seems to get done...

...The documented stories of waste in the Pentagon add up to damning indictment of what would appear to be an unbelievably mismanaged bureaucracy...

...We in Congress," Douglas has also said, "have an obligation to provide for the national defense...

...The A. O. Smith Corporation of Milwaukee was obliged to refund $126,775 to the Army because "officials negotiated prices without verifying cost data which the contractor furnished in support of the proposed prices," again according to the GAO...

...McNamara's attitude has greatly impressed Senator Douglas and other crusaders for the elimination of waste...

...Yet, another $20 million in parts were on order at the time of the GAO investigation...

...it sent an order for them to a Quartermaster Depot in Philadelphia...

...is now Comptroller General, deserves special mention...

...Tens of thousands of servicemen— including many highly trained and high-ranking non-coms," Kowalski has said, "are regularly assigned as bartenders, waiters, chefs, bedmakers, valets, chauffeurs, babysitters, yardmen and so-called 'orderlies' for officers...

...GAO reports and independent investigations by Congressional committees have led Douglas to conclude: "If the Defense Department needs more money for ships, planes, tanks, and combat troops, there is at least another $2 to $3 billion which they could use for these purposes which they could get by tightening up on existing procurement, supply, and surplus disposal practices within the Department itself...

...In those same two years (fiscal 1957 and 1958) the Navy was contracting with private companies in Japan for the repair of ships while the Navy's facilities in Japan were being only partly utilized...

...Finally, there is the stock fund system under which the services, primarily the Army and the Navy, require the transfer of funds for the removal of any item from certain supply stocks...

...Such is the warfare in Washington that an officer or a civilian in a position of importance in the Pentagon will not hesitate to carry out a reprisal action against a Senator or a Representative who does not put all of his faith in the way the military is being run...

...A $2,103,685 contract was negotiated by the Air Force with Thompson Ramo for fuel booster pump repair kits...

...A review of thirteen expensive shipments of household goods by commercial air at a total cost of $125,470," the GAO has reported, "disclosed that shipment by surface transportation was feasible and would have cost only about $23,000, or about $102,000 less than the shipment by commercial air...

...Senator Douglas and other thoughtful critics of waste in the military believe, however, that the preference of the armed services for negotiated contracts lies at the heart of the problem...

...But what is perhaps most important of all is the hunger of each member of Congress for as much as possible of the now $46.5 billion a year military largesse for his own state or district...

...The two basic reasons for it are the rivalries among the services and the lethargic way in which the Pentagon moves...

...There were repeated indications at successive stages of production that serious deficiencies existed...

...The services are now seeking to dispose of much of this surplus as rapidly as possible...

...Successive orders for the production of aircraft and equipment in volume were placed despite known serious deficiencies which indicated their inadequacy to accomplish the mission intended, or before...

...Douglas, too, is an old soldier...

...Somewhere along the line the request got garbled, and 30,017 footlockers were shipped from the United States to the base in Germany...

...A steady stream of reports minutely detailing waste in the military comes out of the General Accounting Office, the Congressional watchdog agency which Campbell heads...

...Among the serviceman-servants turned up by Kowalski were sixtytwo airmen at Andrews Air Force Base near Washington who were cutting meat and sacking groceries for the wives of Air Force personnel shopping at the Base commissary, fifteen who drove school buses for officers' children in Washington, twelve who were told to clear crabgrass from the officers' golf course at Offutt Air Force Base, scores of combat-trained GIs who were forced to serve as babysitters at an Army base, and an honor graduate of an Army leadership school who put in half of his time shining officers' shoes...

...No member of Congress wants to find a piqued Pentagon closing down a base or terminating a defense contract in his state...

...The shipment included a piano, a model ship, and a sled, items which, the GAO noted, "are obviously not essential to the health or well-being of the transferred personnel or for the prevention...

...Numerous instances of waste have been turned up resulting simply from the lack of the kind of planning that ought to be basic to any large government or business operation...

...The President made his request, of course, at the height of the Berlin crisis, and it might have been extremely awkward from the standpoint of national unity for a Senator or a Representative to raise questions about the need for more defense billions...

...Sporadic investigations are held, but no genuine reforms result...

...Kowalski has made his special purview the indefensible practice of turning enlisted men into groveling servants to the officer caste...

...Nor does anyone consider the defense work which provides jobs in his state to be wasteful...

...Of the 1,600,000 available spaces, 730,000 were unoccupied...

...A horrible example of this kind of laxity is the shipment overseas of the household goods of servicemen and their families...

...In calling the rather short roll of men who have dared to stand up to the Pentagon the name of Joseph Campbell, the former director of the Budget Bureau who...

...Almost every time the Comptroller General investigates an area of negotiated contracts," Douglas has pointed out, "he finds that the government has been overcharged...

...Furthermore, the officers responsible for the contracts frequently step, despite conflict-of-interest regulations, from the Pentagon into high-paying jobs in private industry specializing in defense contracts—not because they are superb managers but because they know their way around the Pentagon without a map...

...The Pentagon's ability to intimidate investigators and frustrate inquiries with guarded remarks about national security is a formidable obstacle in itself...

...No one of course expects businessmen to forego a profit on defense work, any more than workers on defense projects are expected to contribute their time for nothing...

...It is, for example, more than mere coincidence that the state of Georgia is honeycombed with defense establishments and is also the home of the chairmen of both the Senate and the House Armed Services Committees— Senator Richard B. Russell and Representative Carl A. Vinson...

...Governments, whether municipal, state, or national, long ago discovered that competitive bidding was by far the easiest way to prevent businessmen from overcharging and to assure taxpayers that contracts are made on the basis of their best interests rather than for reasons of favoritism or unjustified expediency...

...In two recent years fewer than half of the berths on troop ships operated by the Navy were filled during voyages...

...Yet at that time on Capitol Hill there were many privately expressed misgivings about handing over more funds to an already bloated military establishment which sometimes seems to be more of a sieve for taxpayers' dollars than a bulwark against the Soviet Union...

...it will require drastic action to prevent the prodigious waste of billions of defense dollars...

...Every time the civilian guard is changed at the Pentagon, new promises are made to ferret out the waste...

...As a former Army major, Kowalski has been particularly galling to the brass, who often live considerably better than civilians earning comparable salaries because of special privileges and services, including those of enlisted man-servants, that are available to them...

...Decisions were made," the GAO went on to say, "to proceed with the production of aircraft and equipment on a volume basis notwithstanding the unfavorable prospects for producing an acceptable product...

...sweeping, mopping and waxing the floors...

...The "gut feeling" in Washington is that billions upon billions of dollars are wasted each year by a military bureaucracy which is badly managed and is often incredibly careless with the taxpayers' dollars...

...JULIUS DUSCHA is a staff writer of the Washington Post...

...The Comptroller General is in a unique position in Washington...

...Yet paradoxically businessmen who would not put up with the sloppy work of the brass often benefit from, it through those easy-to-live-with contracts...

...It has been estimated by a House committee, for instance, that the ratio of profits to costs on Army subcontracts for Nike missiles ranged from twenty-four to forty-one per cent...

...But we do not do so if we allow the military establishment to continue with its present practices and wasteful methods...

...The $6,324,970 negotiated price was found by the GAO to be thirty-seven per cent greater than the $4,621,329 actually incurred cost of the work...

...He is appointed to a fifteen-year term by the President, but his agency is an arm of Congress...

...The GAO report noted that one shipment of household goods was sent from Texas to Pakistan at a cost of $14,830...

...The Pentagon's wasted BILLIONS disasby JULIUS DUSCHA LAST SUMMER when President Kennedy asked for a f 3.5 billion increase in defense spending, Congress provided the money—and more— without a murmur of protest...

...Any organization as huge as the defense establishment is difficult to manage...

...Although a variance factor was negotiated to provide for the adjustment of standard costs, this factor contained no provisions to reduce the unreasonable high standard cost estimated for these fillister head screws," the GAO noted...

...This lack of central control also is a contributing factor to the excessive inventories of the services...

...They know what their costs are, even if the armed...

...But it will take more than attitude...

...All the blame for the waste cannot be placed on the constantly changing technology of defense, the frequent need for speed in the development of weapons, or the inevitable failures inherent in programs where knowledge is often sparse...

...An Air Force contract with Lockheed for airframe components included $4,110,600 in excess payments, $2,844,000 of which was known prior to the submission of the company's proposal and $1,266,600 of which became known to the contractor before negotiations had been completed...

...Like his predecessors, Secretary of Defense Robert S. McNamara is now paying lip service to the economy ritual...

...services' procurement officers do not seem to know...

...The GAO concluded that a conversion program was better and more economical, but by that time the Army was on its way installing new units...

...A word should be said here, too, about the ethics of businessmen who complain so loudly about high taxes but who apparently have no qualms about knowingly overcharging the government whenever the chance presents itself...

...waxing and polishing furniture...

...scrubbing the porches...

...What makes the situation in the Pentagon so appalling is that the worst blunders seem to be the result of just plain bad management of the kind that no business would tolerate...

...The attack against military waste is a difficult one which few Senators and Representatives care to mount...

...There is no excuse for such a situation...

...What are the reasons for this waste of taxpayers' money, besides pure mismanagement...

...Representative Kowalski's efforts to prevent the use of servicemen as servants to the brass have resulted in some reforms in the services, but not nearly enough...

...Under an Air Force contract with Boeing and Lockheed, the two aircraft manufacturers subcontracted with Firestone Tire & Rubber for aircraft fuel cells...

...Senator Douglas has said that from $2 to $3 billion worth of useful goods which could have been utilized elsewhere in the government were sold as surplus at a fraction of their cost because of the stock fund system...

...Surface transportation for that shipment would have been only $1,750...

...Other examples of the gross misuse of men and money by the Pentagon could fill many more pages...

...of Glendale, California, to include as a cost item on some periscopes the sum of $12,675 which the company actually spent for the commercial exhibition of another of its products and wrongly charged to the Navy...

...And all the time the Army had several thousand footlockers in a nearby depot in West Germany...

...Again and again the GAO has found that the services were paying far too much for equipment because of a failure to ascertain what material costs actually were...

...There is some hope for reform in sight...

...In a true sense the Comptroller General serves as a muchneeded inspector general of the United States continually questioning the expenditure of funds throughout the government, frequently reclaiming large sums of the taxpayers' money, and always scrutinizing careless bureaucrats and brass alike...

...T h e result of this strange system is that items which could be used elsewhere in the government frequently are sold at a fraction of their price as surplus goods because a department or an agency does not have the funds at hand to reimburse the Pentagon for their surplus items...

...What is more, added the GAO, the goods would have arrived a week earlier by ship than they did by air, apparently because of difficulty in finding immediately available air cargo space...

...No miracles are needed...

...And a private first class in Hawaii who had a superior rating as a chemical laboratory specialist complained that "cleaning toilet bowls for a colonel's wife is not a desirable occupation...

...It has been estimated that the value of their surplus property exceeds $26 billion and amounts to almost a fourth of all the personal property inventory of the Defense Department...

...The GAO also found that the San Antonio operation had $20 million worth of parts on hand in excess of any conceivable current needs...

...Consider, as a starter, the case of Thompson Ramo Wooldridge Inc., a giant Cleveland manufacturing concern which made a fortune in automobile parts before branching out into missile technology...

...Boeing did not disclose to the Air Force and the Air Force did not obtain and consider information on the lower subcontract price which was known to the contractor at the time the price proposals were submitted," the GAO pointed out...

...Furniture and other belongings frequently have been sent by air when they could just as easily have been put on slower but much cheaper ships...

...And contracts account for about half of the $46.5 billion budgeted for defense expenditures this year...

...Conspicuous among the distinguished exceptions on Capitol Hill are Senator Paul H. Douglas, Illinois Democrat, who since he came to the Senate in 1949 has warred against military waste, and a newer recruit, Representative Frank Kowalski, Connecticut Democrat, who was first elected to Congress in 1958 and previously had a distinguished career in the Army...

...of undue hardship...

...The shipping costs alone were $100,000...

...Then the Army embarked upon a $500 million program to convert the Nike-Ajax systems to the more advanced Nike-Hercules systems, but, commented the GAO later, the Army started its program before it knew whether a conversion program or the construction of new units "would better serve the military need in the most economical manner...

...The GAO audits of defense expenditures surely did not come as a surprise to the companies involved in the cases...

...Then there are the maddening cases where one of the supposedly unified services does not know what another is doing...

...The Air Force not only overpaid General Electric by $329,000 on a contract for radar height finders, but GE was permitted to hold excess provisional payments of $1,400,000 for two years...

...In another not untypical case the Air Force disposed of parts needed for helicopters at the same time that the Army was buying identical parts for its helicopters...

...This inexcusable waste of expensive facilities is the result of a combination of a lack of a firm policy on the use of sea and air transportation and of a simple failure on the part of the services to notify the Navy of changes in space requirements...