The Bunker: Auditing Pentagon Innovation

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This week in The Bunker: The Pentagon serves thin gruel when it comes to defense innovation, perpetually preoccupied with spending over thinking; for the fifth year in a row, the military can’t tell us where all that money’s going; and more.

THINNOVATION

The Defense Department’s leaden combat boots

“Is the Pentagon changing fast enough?” read a recent headline over a story in Defense One.

What a thigh-slapper! That’s the funniest line The Bunker has read since all those about how the Pentagon is making progress in auditing its books (see next item). How can an enterprise costing close to $1 trillion a year — yet unable to win a 20-year war against a tribal foe — be changing fast enough? The piece begins: “The Pentagon is saying all the right things when it comes to defense innovation but real, lasting change isn’t evident just yet.”

BREAKING NEWS: The Defense Department has always been able to say the right things but doing the right things has been far tougher because it requires real change.

And that requires breaking rice bowls, as they say in the military. You know — upsetting the status quo, overturning the apple cart, rocking the boat — pick your cliché from the Pentagon’s humongous quiver. Big bureaucracies prefer to fly on automatic pilot. Mergers in the defense industry are leading to “higher costs, less innovation and more risk,” the Heritage Foundation said in October (emphasis added). Generally, it takes outsiders like the Wright Brothers or Steve Jobs to drive fundamental change. Pentagon versions of such innovators — can you name one? — are pale imitations. The system is rigged to promote those who embrace the now.

“You see every service creating entities to spur innovation, whether it’s AFWIC (Air Force Warfighting Integration Capability) in the Air Force, the Marine Corps Warfighting Lab, Army Futures Command, etc., etc.,” David Ochmanek, a senior defense analyst for the Rand Corporation, said at the November 14 confab that sparked the Defense One headline. The problem, he added, is that they’re not doing anything: “I have not seen any service actually take the plunge into altering its investment priorities in a dramatic way to get after what looked like the most promising ways to actually execute these new concepts.”

Things have gotten so bad that the Pentagon set up a website earlier this year to entice innovators to don a uniform. “Looking for business opportunities with the Department of Defense?” it asks. “Find them here.”

Innovation is one of those military buzzwords, like stealth, agility, and lethality, that sound good but don’t necessarily translate all that well. Too often, Pentagon innovation centers on new weapons, not new ways of thinking about old problems. The military industrial complex’s definition is simple: Innovation = more spending. “Innovation funding” only accounts for 4% of this year’s $857 billion defense budget, McKinsey & Co. warns in a new report. “With such relatively low funding for defense technology innovation,” it adds, “it is unclear whether there will be enough capital to support the high-tech priorities embedded in the DOD’s future architecture designs.”

Don’t say it aloud, but there are cheaper ways to defend the nation. “The Pentagon was the inventor from the 1940s through the 80s but now must be the innovator — using existing platforms to put things together that already exist to create a different and better outcome,” Mackenzie Eaglen wrote November 17. She cited the Eisenhower-era B-52 as an example (although, as a senior fellow at the American Enterprise Institute, she wants more money, too).

In the final analysis, innovation is as much about mindset as money, even as the current spend-more mantra yields diminishing returns. “The legacy approach we took to the ‘junior varsity’ adversaries — the Iraqs, the Serbias, the Libyas — consistently fails when it’s tested in our wargaming against a China or Russia,” Ochmanek said. “At least, pre-2022 Russia.”

Not to mention pre-2022 Afghanistan.

PENTAGON BOOKSLEEPING

Yet another year of fiscal fiascoes

In what has become an annual rite akin to the Pentagon releasing its budget request each spring, fall brings the announcement that, once again, the U.S. military can’t tell us where all that money’s going. The Pentagon failed its 2021 audit, the Defense Department said (PDF) November 15. That gives it an 0-for-5 record since bombing in its first-ever accounting in 2018.

“I would say that we failed to get an A,” Pentagon Comptroller Mike McCord said. “I would not say that we’ve flunked.” The green eyeshade crowd issued a “disclaimer of opinion,” a bookkeeping term that boils down to “don’t blame us if you can’t tell where the money went.” McCord said the outcome was “basically the same picture as last year,” and that future progress will be slow. Optimism that the U.S. military might earn a “clean audit” by 2027 is waning.

Admittedly, tracking the flow of Pentagon dollars is a challenge. This latest $3.5 trillion audit actually consists of 27 mini-audits conducted by outside accounting firms like KPMG and Ernst & Young. They scrubbed the books of the military services and agencies. Then they handed their findings (or lack thereof) to the acting Pentagon inspector general, who stitched them together into the uber-audit. In audit-speak, the IG said it found “28 material weaknesses, 3 significant deficiencies, and 7 instances of noncompliance with laws, regulations, contracts, and grant agreements.” The audit, which cost $218 million, failed to account for 61% of the Pentagon’s assets.

Like kids bringing home a lousy report card, the military services did their best to spin the bottom line. Air Force Secretary Frank Kendall boasted (PDF) that his service “continues to be among the Department of Defense leaders in audit remediation and material weakness reduction.”

Audits, of course, need to be kept in perspective. “Passing an audit doesn’t tell you that you spent the money wisely,” McCord, the Pentagon’s money major-domo, said. “It shows that you can match the records of the obligations in a financial system to the contracts, but that might be for a plane that didn’t work right, or for a plane that was not effective in combat” (see prior item).

WHAT WE’RE READING

Here’s what has caught The Bunker’s eye recently

Putin on the Ritz

It’s like the Powerball jackpot — it just keeps rising. The Biden administration wants $38 billion in additional aid for Ukraine, which will put the total U.S. contribution in its war against Russia to more than $100 billion in less than a year, Bryant Harris reported November 15 in Defense News.

Word salad…

While the Pentagon isn’t on a diet, it loves salad — “word salad” — as its logorrhea about innovating and auditing makes clear. Kelley Beaucar Vlahos visited the Army’s all-you-can-eat salad bar November 17 at Responsible Statecraft.

Semper Silent

Capt. Kelsey M. Hastings, a field artillery officer, became the first woman to command the Marines’ storied Silent Drill Platoon (see what they do here) on November 21, the Corps announced.

The Bunker, which is thankful for you, hopes your Thanksgiving is neither salad nor silent. If you like what you’re reading, consider spreading the word. Forward this to a friend so they can sign up here.