Inheriting a Shambles at Defense

For Gates, Fixing Iraq is Just a Start

Robert Gates, illustration by Mike Krone

Bonus: Web-only sidebar

Few in Washington thought it would actually happen, but on November 8, there it was: a vaguely humbled-looking Secretary of Defense Donald Rumsfeld, finally being shown the door. As his increasingly McNamara-esque visage withdraws from the scene, all eyes turn to his nominated successor, Robert M. Gates, Texas A&M president and former George H.W. Bush CIA chief. Everyone seems acutely focused on one matter: how Gates will handle Iraq. But as critical and obvious as that issue is, it obscures an even more important reality: Iraq is really only a reflection of a larger institutional problem. On Rumsfeld’s watch the Pentagon’s perennial management and budget woes have gone from a mess to an utter shambles.

“Rumsfeld will have two legacies. One is the war—it’ll go down in history as much as Rumsfeld’s war as Bush’s war,” says Winslow Wheeler, a veteran former Senate staffer and investigator who now runs the Straus Military Reform Project at the Washington, D.C.-based think tank, the Center for Defense Information. “But initially, people will probably miss the other legacy, which is the total mismanagement of the Pentagon. He inherited gigantic problems—ones that had nothing to do with Iraq—and made them worse. Iraq is only one part of Gates’ job. He’s going to have to undo a disastrous legacy on budget, program, and management issues.”

Despite all the at-odds-with-reality praise once lavished on Rumsfeld for his supposedly brilliant management style (2002’s The Rumsfeld Way: The Leadership Wisdom of a Battle-Hardened Maverick probably won’t be meeting the test of time), nonpartisan studies and government audits have long shown Rumsfeld to be a less-than-able Pentagon steward. In 2002, for example, Bush’s own White House Office of Management and Budget initiated the President’s Management Scorecard, a sort of quarterly report card assessing the top management of 25 major federal agencies and departments.

It uses a “Stoplight Scoring System,” with green for success, yellow for mixed results, and red for unsatisfactory. Wheeler notes that the DOD’s columns are more often defined by red and yellow than green. “The last time I checked, DOD ranked 24 out of 25—hardly a ringing endorsement,” Wheeler says.

Another solid indicator of the true nature of Rumsfeld’s legacy can be found in the files of the Government Accountability Office, the congressional investigative arm. Of the hundreds of GAO investigative reports devoted to the Defense Department on Rumsfeld’s watch, 25 deal in some way with Iraq. The other 861 have titles that, in many cases, indicate that Iraq wasn’t the only crisis crying out for Rumsfeld’s attention. Some pull no punches (“DOD Wastes Billions of Dollars through Poorly Structured Incentives”); others are, intentionally or not, drolly understated (“Hurricane Katrina: Better Plans and Exercises Need to Guide the Military’s Response to Catastrophic Natural Disasters”). It’s also hard not to be struck by the frequency with which subtle-yet-pointed phrases like “actions needed,” “issues require attention,” and “room for improvement” appear. (“Oversight,” for example, often appears in contexts that indicate a marked lack of the practice.)

Though the GAO organizes its reports by subject matter and agency, it also pinpoints “High Risk” areas, which it defines as activities with “greater vulnerabilities to fraud, waste, abuse, and mismanagement.” In this area, Wheeler notes, “Rumsfeld’s DOD has earned itself more GAO High Risk reports on failed management than any other federal agency.”

This is particularly true for the Pentagon’s business operations. Though hardly as attention catching or viscerally provocative as Iraq, how the Pentagon spends and accounts for its money may be the most critical component of national defense. Such is GAO’s view, anyway. Alas, it’s not one Rumsfeld has cared much about. The result, according to GAO, has been ruinous, with “billions of dollars provided to DOD wasted each year because of ineffective performance and inadequate accountability.” Indeed, not one “military service or major defense component [can] pass the test of an independent financial audit because of pervasive weaknesses in financial management systems, operations, and controls.” As David Walker, GAO’s chief, noted in recent congressional testimony, his organization has repeatedly suggested that Rumsfeld create a new Pentagon post—that of chief management officer—to begin straightening all this out. Rumsfeld never obliged.

Given what Walker’s investigators have found in recent years, that shouldn’t come as a shock. The sundry Iraq-related excesses (price-gouging, abuse of no-bid contracts, botched and incomplete projects) around Halliburton and other large contractors are now well known—but just as much money in aggregate gets flushed down the DOD toilet at home in all manner of smaller, sub-rosa ways. For example, the Pentagon actually has joint responsibility with the Treasury for collecting the unpaid taxes of defense contractors. As Walker noted two years ago, “at least $100 million could be collected annually from DOD contractors through effective implementation of levy and debt collection programs.” In fairness, this wasn’t exactly a high priority for Rumsfeld’s Democratic predecessors. But it was hardly something high atop Rumsfeld’s agenda either: Between 1998 and 2004, DOD collected a mere $687,000 worth of unpaid contractor taxes. GAO has also found that tens of millions of dollars aren’t collected each year from insurance companies that do business with DOD.

On the policy front, Rumsfeld and his crony Stephen Cambone, the undersecretary of defense for intelligence, have presided over an unprecedented expansion of the Pentagon’s intelligence apparatus. For all the massive growth in programs and expenditures, the results have been dubious. Citing the need to be proactive in the name of counterterrorism and homeland security, the Rumsfeld Pentagon created the Counterintelligence Field Activity, a highly classified agency that, in the ostensible service of protecting DOD facilities, conducts intelligence collection and surveillance activities within the United States.

Donald Rumsfeld, illustration by Mike Krone

Thus far, the CIFA’s chief accomplishment seems to have been acting to sluice federal money to private contractors; 70 percent of CIFA’s budget gets outsourced. In the process, it has become enmeshed in the earmarking-contracting scandal emanating from former Congressman Randy “Duke” Cunningham. The agency has also distinguished itself by compiling secret databases on antiwar protesters—the type of activity that the CIA decades ago learned the hard way not to do. Meanwhile, the state of the actual security CIFA and other DOD elements are supposed to provide has been, charitably, underwhelming. According to a July GAO report, earlier this year its investigators strolled into two DOD warehouses unchallenged, and walked out with just over $1.1 million in “sensitive military equipment items.” Their haul included “two launcher mounts for shoulder-fired guided missiles, several types of body armor, a digital signal converter used in naval surveillance, an all-band antenna used to track aircraft, and six circuit cards used in computerized Navy systems.”

That shouldn’t necessarily be surprising, as many of the people now responsible for military facilities security aren’t actually in the military—and aren’t even adequately screened. The GAO recently discovered that when the Army outsourced security for some bases, the Pentagon knew “it was paying considerably more”—$495 million more, to be exact—by issuing sole-source contracts rather than competitively bidding them. Did the Army and the taxpayers get their money’s worth? According to an April GAO report, at two installations “a total of 89 guards were put to work even though they had records relating to criminal offenses, including cases that involved assault and other felonies.”

Rumsfeld also failed to show much interest when it came to purchasing weapons, and more importantly, eliminating unnecessary ones. Through the graces of the Freedom of Information Act, earlier this year the Washington Post received the complete transcript of an interview between Rumsfeld and two Pentagon investigators probing the corrupt Boeing tanker-lease deal. (The worst defense procurement scandal in recent history, the investigation ended with a top DOD official and a senior Boeing executive going to prison.) As the Post pointedly noted, the transcript said “a lot about how little of Rumsfeld’s attention has been focused on weapons-buying—a function that consumes nearly a fifth of the $410 billion defense budget, exclusive of expenditures in Iraq and Afghanistan.”

The Post noted that not only did the transcript reveal that Rumsfeld could not explain “how his department came to nearly squander $30 billion leasing several hundred new tanker aircraft that its own experts had decided were not needed,” but also that the secretary of defense couldn’t explain why he didn’t know. This was only one indicator of Rumsfeld’s mismanagement. The paper further cited GAO chief Walker’s statement to Congress earlier in the year that the Pentagon has “a long-standing track record of over-promising and under-delivering [weapons systems] with virtual impunity.” The Post also reported the GAO had recently discovered that five new weapons systems already costing taxpayers well into the billions had been allowed to rack up cost overruns of almost 30 percent. “Some of the blame, Walker suggested, should be laid at Rumsfeld’s office,” the paper reported, “which does not seem to be pushing’ for the dramatic overhaul of the Pentagon’s system needs.”

Start adding all this up, and one begins to understand why, insurgency aside, the U.S. expedition to Iraq has been such a mess: In some ways it’s just a manifestation of an entrenched Pentagon culture in desperate need of reform. Which brings us to Bob Gates.

It’s perhaps worth revisiting a moment from Rumsfeld’s confirmation hearing, way back in 2001. Toward the end, Democratic Sen. Robert Byrd of West Virginia asked a simple, if pointed, question. “How can we seriously consider a $50 billion increase in the defense budget when DOD’s own auditors say that the department cannot account for $2.3 trillion in transactions in one year alone?” he said. “My question, to you, Mr. Secretary, is what do you plan to do about this?”

“Decline the nomination,” Rumsfeld said to hearty laughter.

The question artfully dodged, the Senate confirmed Rumsfeld. While today the laughter from the hearing is but a faint echo, whether Gates will provide the answer remains to be seen. Hoping to get Gates on the record, some of the stalwarts of the military reform movement—a loose affiliation of analysts, military officers, and journalists who have tried for decades to transform the Pentagon’s culture—have been drafting detailed questions about matters other than Iraq and sending them to the Senate Armed Services Committee. While the chances of getting them asked aren’t great, reformers nonetheless hope that issues like the militarization of space, the continuation of dubious and unnecessary weapons systems, and internal financial oversight reform, among others, will come up in the hearing.

Whether Gates will be an agent of change or more of the same is hard to tell at this early stage, although his background offers a few, often contradictory, clues. To those paying attention during the Reagan-Bush and Bush-Quayle years, Gates will be remembered primarily as someone who narrowly escaped being dragged into the Iran-Contra scandal. He is also considered by some—ranging from a coterie of his own analysts at Langley to then-Secretary of State George Shultz—as having tailored CIA Soviet intelligence analysis to the likings of Reagan administration ideologues. (Though confirmed as Bush Sr.’s CIA director in 1991, his confirmation process was a bruising affair, with a number of veteran CIA analysts testifying Gates had pressured or forced them to slant their products.)

For an administration that’s been battered for engendering a culture of political corruption, playing fast and loose with intelligence on Iraq (including pressuring analysts), and crafting foreign policy based on ideology, Gates hardly seems the stuff of healing and reassurance. Yet out of 535 members of Congress, only one—Rep. Rush Holt, a New Jersey Democrat who won’t be voting on Gates’ confirmation—has expressed any concerns. Which—if one believes Congress actually has an obligation to conduct oversight—should be at least a tick troubling.

Progressives aren’t the only ones concerned. Washington’s neoconservatives regard Gates as a sign
that Bush is retreating from a mu
cular foreign policy. Yet a glance back at Gates’ relentlessly gloomy, hard-line take on the Soviet Union, and his enthusiasm for invading Panama while No. 2 on Bush Sr.’s National Security Council staff, in some respects put him closer to those with an itch for righteous intervention.

So what about the unsexy but crucial stuff of budgets, weapons procurement, management, and internal oversight? According to those who have either worked closely with Gates in the past or have been in touch with him recently, it’s hard to say, but a glimpse of the answer probably won’t be long in coming. An able administrator who ran the CIA when the post also required one to oversee the entire U.S. intelligence community, Gates has a reputation for getting people to play nice—and also for dispensing with those who stand in the way. “I would not be surprised to see some brass retiring a little earlier than expected,” says one former Gates associate.

The task ahead would be daunting enough for an incoming defense secretary with a full term. Gates has only two years. An opportunity for a showdown with the brass could come quickly. Rumsfeld has all but removed himself from the current supplemental defense budget process, effectively telling the military service chiefs they have permission to lard supplemental requests with anything they want.w Gates might escape having to deal with the supplementals right away, as they’ll likely go to the Hill before he arrives. (Defense budget critics fear the future Democratic Congress will rubber-stamp them, lest it be perceived as being “soft” on defense and unsupportive of the troops.)

“On the one hand, he’s a strategic thinker and tough as nails; on the other hand, he’s a realist and a pragmatist,” says an old CIA colleague. “I’m not sure he can do a hell of a lot about the budget stuff—he’s only got two years, and Iraq is clearly top of the agenda. He’s a pragmatist, and knows that in Congress, even among the Democrats, some programs and weapons systems have strong constituencies of their own.”

For Gates, a Few More Rumsfeld Loose Ends (sidebar)

Iraq is, understandably, front and center as Bob Gates enters the Pentagon. But it’s not the only mess that awaits him.

Space Policy. Though the Bush administration’s attempts to realize a Pax Americana in the Middle East is the subject of sustained international debate, there’s been less attention to the White House’s dream of American hegemony in space. (This isn’t an accident: The current National Space Policy was released to the public at a moment when few reporters were around—5 p.m. on October 6, the beginning of Columbus Day weekend.) The Defense Department now has orders to “deny, if necessary, adversaries the use of space capabilities hostile to U.S. national interests.”

Exactly what this means in practical terms remains to be seen. But as Aviation Week and Space Technology recently reported, the new directive now has “military space commanders… discussing ‘space control’ and ‘space superiority’ issues with unusual candor” after years of those “politically sensitive terms [being] off limits.” Among the few Democrats who appear to have taken notice is Al Gore, who, according to the magazine, told the audience at a recent private conference that this “may be the most serious strategic error in the entire history of the United States of America.” Will Bob Gates be sympathetic, opposed, or indifferent to letting generals with stars in their eyes push the new policy to the limits? Stay tuned.

Intelligence Reform. The view of most intelligence-community watchers is that Undersecretary of Defense for Intelligence Stephen Cambone’s days are numbered.

Sources close to Gates say nothing to discourage this notion, and the likelihood is that much of what Cambone has set up—particularly in the realm of human intelligence—is likely to be dismantled by the new defense secretary. “He will push Cambone’s efforts back—he’s a believer that most of the stuff Cambone has been getting into has no place in Defense,” says a veteran senior CIA official.

Whether the office of the new undersecretary will continue in a downsized, reoriented form, or will be disbanded, is unclear. But according to some of Gates’ former CIA colleagues, they wouldn’t be entirely surprised if Gates tries to do something no secretary of defense has ever wanted to do: Willingly oversee the transfer of the three biggest-budget intelligence agencies currently under DOD control—the National Security Agency, National Reconnaissance Office and National Geospatial Intelligence Agency—from the Pentagon to civilian control.

Despite their status as DOD agencies, NSA, NRO, and NGA serve more than just the Pentagon, and have long been considered by many in the intelligence community to be entities that should more properly be under civilian control. For those who have publicly articulated this view, the result hasn’t always been pretty. In a 2004 congressional hearing, then-NGA head Lt Gen James Clapper said such an arrangement would be fine by him. By January 2006, Rumsfeld had succeeded in forcing Clapper out.

But echoing Clapper in that 2004 hearing was then-NSA Director General Michael Hayden—who, after a dressing-down from Rumsfeld, moved over to become deputy director of national intelligence, and has since become CIA director. At his CIA confirmation hearings earlier this year, some observers noted with interest Hayden’s casting of NSA as a “national” rather than a “defense” agency, further noting that “when I was the director of NSA, Defense was our biggest customer, but it wasn’t our only customer, and it wasn’t our most important customer. I feel like I was running a national agency.” With Hayden at CIA, Gates at Defense, and Director of National Intelligence John Negroponte in need of a real center of gravity, formidable forces are about to align in favor of key intelligence reform many have sought for years. How far will Gates push—and if he does, will the president and Congress back him up?

Weapons Systems. While the Rumsfeld Pentagon did manage to kill the Crusader—an unwieldy and unnecessary artillery system whose prime utility was to contractors—a slew of programs-than-will-not-die continues. Among the worst offenders are the V-22 Osprey (nicknamed by critics “the widowmaker” for it’s alacrity in killing Marines) and the F-22, the most expensive airplane in history and one designed to fight an enemy that no longer exists. The latter continues to be defined by cost overruns; and though the former continues to get a less-than-clean bill of health from Pentagon evaluators, DOD keeps ordering up copies and is preparing to field them in combat. Responsibility for both of these rests as much on congressional Republicans and Democrats as it does the Pentagon. Lockheed Martin Corp., Bell Helicopter Textron Inc., and Boeing Co. have done an excellent job of politically engineering the programs in a way that assures a constant flow of federal dollars to districts (and contributions to legislators). Will Gates, with just two years in office, throw down the gauntlet and strike a blow for the cause of reform? —JV

Jason Vest is a Washington, D.C.-based national security journalist and Mintz-Burnham Fellow at the Project on Government Oversight. Any views expressed in this article are his own.

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