The Pentagon Literally Tossed Millions of Dollars Into the Trash
Logistics agency would rather throw out faulty spare parts than go to the trouble of returning them
by MATTHEW GAULT
Over the past four years, the Defense Department’s logistics agency threw away a significant portion of the spare parts it purchased via a $21-million contract with the manufacturer of a lifesaving armored vehicle.
The parts were for the Mine-Resistant Ambush-Protected trucks, which are specially shaped and reinforced to deflect the blasts from buried and roadside bombs. Starting in 2007, the Pentagon purchased tens of thousands of the high-tech vehicles at a cost of $49 billion.
The Defense Logistics Agency handles spare parts worth billions of dollars for the thousands of MRAPs in Afghanistan and elsewhere. In 2010, the DLA placed a parts order with Navistar Defense, the weapons arm of an Illinois truck-maker that produced thousands of MRAPs.
The long-term contract, which is ongoing, has cost taxpayers $21 million. But according to one DLA worker, many of the parts never arrived, showed up in the wrong packaging or were surplus to requirements.
And rather than fix the contract or process the paperwork necessary for a refund, the DLA ate the cost—and even tipped some spare parts into the garbage in order to make the problem disappear.
“The Navistar long-term contract for MRAP spare parts … needs to be looked at,” a DLA source told War is Boring on condition of anonymity.
“DLA is paying them for parts never received,” the source added. “Due to time restraints, lack of training and just plain laziness the [agency’s quality-assurance specialists] have been disposing of millions and millions of dollars worth of new material every year.”
The Pentagon has long had a waste problem. Its weapon systems routinely go over-budget. It can’t account for all the equipment it has nor all the money it spends. But the DLA’s disposal of brand-new vehicle parts is egregious even by military standards.
Worse, no one seems to be interested in stopping the wastage—and making sure it doesn’t happen again. “How unsurprising,” quipped Winslow Wheeler, director of the Straus Military Reform Project of the Project On Government Oversight in the Washington, D.C. area. “In today’s unaccountable, unauditable DOD system, the press finds yet another horror story based on working-level sources—and their agency managers explain how they will do nothing about it.”
The Defense Logistics Agency handles supplies for all the armed services. The agency orders, processes, stores and ships everything from nuts and bolts to food, clothing, truck tires, aircraft avionics and ammunition.
But the DLA has lots of problems. They’re sitting on a huge stockpile of obsolete and dangerous ammunition. It can’t quite decide which computer systems it should use to track shipments.
On any given day, the DLA’s warehouses are brimming with $14 billion worth of parts and supplies. “Probably half of that is excess we don’t need,” Navy Vice Adm. Mark Harnitchek, the officer in charge of the DLA, told a group of aviation executives.
And now the DLA is buying some supplies then promptly destroying them—because that’s easier than telling companies to fix problems with their products.
The DLA doesn’t make anything. It’s a middleman. The armed services tell the DLA what they need. The logistics agency then orders the materials from the manufacturer and oversees shipping to the specific military branch that placed the order.
For its trouble, the DLA tacks on a “cost-recovery rate” fee—in essence, its own surcharge for managing the supply chain. The Army, Navy, Air Force and Marines ultimately pay the bills and the fees—and the branches rarely audit their DLA orders, according to government sources with knowledge of the subject.
That leaves lots of room for wastage. As long as the DLA handles a problem in-house, outsiders are rarely aware anything has gone wrong. Sure, somebody’s cost-recovery fee might inch upward in order to cover the cost of the waste. But as long as no one is auditing their DLA accounts, the increases appear to be routine—if they get noticed at all.
“One of my biggest concerns was the disposal of new material delivered to the depots and found non-conforming,” the DLA source said. In other words, Navistar sent parts in the wrong boxes or with the wrong labels, virtually ensuring they would disappear into some warehouse somewhere and never actually get used.
What a DLA employee should do when a non-conforming shipment shows up is fill out the right forms to send the shipment back to the manufacturer for repacking. That is to say, compel the vendor to fix the problem.
But paperwork is a real headache. And why bother when the DLA can do the work itself or even throw away the non-conforming parts and order replacements—and, in either case, pass the expense on to the frontline military in the form of a slightly higher cost-recovery fee?
“In thousands of cases, I have seen DLA pay the depot an outrageous amount of money to repackage the material [in accordance with] the contract rather than return it,” the agency source said. “The cost for the depot to repackage the stuff was often more than the value of the contract.”
In some cases, the DLA doubles the military’s costs—all because it can’t be bothered to return bad shipments.
War is Boring contacted the DLA to ask about the Navistar contract. “I’m not going to be able to meet your deadline in terms of your inquiry,” a DLA rep told us over the phone. “MRAP comes in more than 52 variants. And there are thousands of [national stock numbers] and I don’t have the staff to do the thing that you’re asking.”
We stressed that we were only interested in one specific contract, not the many thousands of MRAP-related deals the DLA has managed. But the DLA declined to comment.
To be clear, the DLA’s main pathologies do not appear to lie with its low-level logisticians—the hands-on workers and managers in warehouses. Rather, higher-ups in the agency instruct the lower employees to bury private firms’ mistakes. “I am not permitted to process [the problem orders] in the way they should be processed,” one worker complained in an internal agency email obtained by War is Boring.
The $21-million Navistar contract, designated SPM7LX10D9007 in the DLA’s database, has been a particularly wasteful one, according to the agency source. The DLA has eaten multiple faulty shipments. Some of the shipments never even arrived at the agency’s depots, having apparently disappeared inside Navistar’s own warehouses.
But DLA employees never once required Navistar to make good on the mistakes. It’s actually possible Navistar doesn’t even know there have been problems—as no one from the government has told the company that shipments have failed to arrive … or arrived with the wrong labels or other faults.
“Navistar Defense is one of a few select companies that maintain a strategic alliance with the DLA, which is earned through demonstrated performance,” a company rep told War is Boring. “Regular communication with the DLA indicates contracts are being executed accurately with on-time, quality parts and monthly DLA performance metrics show Navistar Defense continues to uphold its above-average performance rating.”
“They are correct,” the DLA said. “The [quality-assurance specialist] can only give a [complaint] to a contractor if they have notified that contractor of their non-compliance. Since we were not allowed to do so, Navistar will always have a perfect rating.”
War is Boring obtained copies of emails between a low-level DLA employee and the employee’s supervisor. The emails perfectly illustrate DLA’s willingness, even eagerness, to eat bad shipments. “I have numerous depot complaints on MRAP items supplied by Navistar under contract SPM7LX10D9007,” one DLA worker wrote to a supervisor in February 2011.
“There are many problem with the [unit of issue] and the quantities supplied,” the worker continued, “so I have to write letters requesting money back from Navistar to pay for the remarking and repackaging of these urgently required parts.”
The supervisor wrote back, instructing the worker to spike the refund request. DLA officials “determined that the government was partially at fault for the problem, since we released the orders to Navistar,” the supervisor wrote. “Regardless of my personal feelings that Navistar should be held accountable, DLA will be underwriting the expenses to correct the deficiencies.”
“I am sorry that we cannot recover the monies,” the supervisor lamented.
The source had a cynical view of DLA officials’ motives for protecting Navistar from the consequences of the company’s own sloppiness. “Somebody at DLA … will probably be getting a great job with Navistar one day.”
One particularly sad example of the DLA’s abuses is evident in a June 2013 chain of emails. The contract in question—designated SPM5L5-09-D-0030-0111—is not the $21-million Navistar deal, but is indicative of the kinds of wastage that have occurred under the Navistar contract, the DLA source claimed.
According to the emails, the DLA ordered 4,160 hinged locks. Workers at one agency depot were able to send along 1,675 of the locks. The rest showed up in a DLA database as “blocked” articles—meaning they could not be shipped out to the military.
Worse, the vendor actually sent an extra 208 copies that no one wanted … and had the gall to bill the DLA for them.
A DLA worker asked what was going on with the blocked items. “Unfortunately, they have been disposing of this material almost every time it got to the depot,” another agency employee responded. “From what I can see, nobody has ever gone back to the contractor to let them know they provided the wrong part, if indeed they did provide the wrong part.”
More than half of the $3,400 order went to waste. And the DLA ate it … and passed the expense along to the military and, by extension, the American taxpayer.
The first employee wrote back in regard to the 2013 shipment, neatly—and inadvertently—summing up the DLA’s waste crisis. “This isn’t going to be a quick clean-up,” the worker wrote.