The Best Defense

An Afghanistan/Iraq vet says Romney should run the Pentagon like Bain Capital

By Michael Cummings

Best Defense defense budget department

Seeking to capture the national security voting demographic, presidential candidate Mitt Romney has vowed to, "reverse President Obama's massive defense cuts." His website says it will increase Navy procurement from nine ships a year to fifteen. Most monumentally, as Travis Sharp pointed out on this blog a couple of weeks back, a Romney administration would increase defense spending to 4 percent of GDP, or around a trillion dollars a year, in ten years.

While a debate over the size of the military's budget is important, I think as a voting population we are ignoring a much bigger question: When did a really smart business person, Mitt Romney, lose his business sense?

When it came to running Bain Capital, creating Staples, or rescuing the Winter Olympics in Salt Lake City, businessman Romney made tough decisions -- especially when it came to cutting costs -- to strengthen bottom lines. Yet Romney refuses to apply this same fiscal acumen to the Army, Navy or Air Force.

Amazingly, for a cost-conscious fiscally minded businessman, he wants to give the military more money. Apparently, the military is the sole exception to "government is wasteful" rule that has driven his campaign thus far.

That doesn't describe the military I knew. When I was in the Army, I saw waste and, sometimes, epic inefficiencies. If candidate Romney looked at defense as a business, not a constituency to woo, his diagnosis would be simple: cut, cut, cut. I hope a would-be President Romney looks at my experience with waste in the Army -- and countless other examples from around the services -- and says, "You know what? The Pentagon doesn't need anymore money. It just needs to do a better job with what it has."

Example 1: Ammunition

From ROTC to Special Forces, commanders track how much ammunition they use. They do this for a simple reason: They need to fire it all. Even if a unit doesn't need all its ammunition, it fires it anyways. Often units conduct something called a "Spend Ex," short for "Spending Exercise." Every soldier stands in a line at the firing range. They fire as much ammunition as possible as quickly as possible. Units don't want to lose their ammo in the next fiscal year. (Ammo they didn't need the year before.)

I'll put this in "Staples" terms, in honor of Mitt Romney's most successful investment. Let's say Staples portioned out bundles of paper to each store at the beginning of the year. Each store desperately wants the same amount of paper to sell next year, so, at the end of the fiscal year, they would sell as much paper as cheaply as possible simply to make room to get paper for next year. That doesn't sound like a very smart business model.

Example 2: Deployed Contractors

When I arrived in Afghanistan, I didn't have enough equipment. Sure, my packing list filled two duffel bags, a ruck sack, and another two backpacks, but I didn't have the latest issue of body armor or cold weather clothing. So my supply sergeant and I headed to the local warehouse to get the gear. Inside, four contractors sat behind computers, working on who knows what. The whole time (which took about 45 minutes), I was the only person in line. One civilian contractor helped me while the others played computer games or fantasy football.

Maybe the Army needed four contractors because at peak hours at this warehouse on Bagram Air Field soldiers swamped the office. More likely, the Army probably bought about three workers too many. (Like the contractors employed throughout the Department of Defense.) To put this in consulting terms which Mitt Romney would understand, this is like hiring twenty consultants to do a job which only requires five. Bain Capital wouldn't stay in business very long if its customers thought it was hiring four times too many people for every job.

Example 3: Budgets

Every Army unit from top to bottom is given a bag of money at the start of the fiscal year. Then they try to spend it. Everyone in the Army believes that if they don't spend all their money, they won't get the same-sized bag the next year. (Though, for each of the last ten years, the bag has grown by about ten percent.)

At the end of the fiscal year, the Pentagon and every unit under it goes on spending sprees, buying knives, printers, and scanners to spend, spend, spend. I saw units replacing new printers with newer printers, simply to spend the money.

I will put this in Brookstone terms, another Romney success story. Let's say he gave each store a budget at the beginning of the year. What if he heard that at the end of each fiscal year, each store went on spending sprees, buying as much as they could to ensure they got the same budget the next year. Would a businessman Romney support that plan? Probably not, so why does he want to give more money to the Pentagon?

Example 4: Failed Weapons Systems

Imagine that Steel Dynamics -- a steel producer who Romney touts as the pinnacle of innovation -- needed new steel furnaces. If they were the Pentagon, they would hire a contractor and order 250 of the best prototypes they can find. This contractor would tell them the experimental furnaces cost 50 million per unit and won't be ready for ten years.

Ten years later, the furnaces still haven't been delivered. The cost is now 120 million dollars per furnace. And Steel Dynamics still pays the contractor a 600 million dollar bonus. Even better, the ovens won't be ready for six more years. If that sounds ridiculous, well, that is exactly what happened, and is still happening, with the Joint Strike Fighter. (Meanwhile, the Joint Strike Fighter's predecessor, the F-22 Raptor, still hasn't flown a single mission supporting the wars in Iraq, Afghanistan or Libya. It also poisons its pilots.)

The list of failed, over-budget or late weapons systems -- the Comanche, the Littoral Combat Ship, the Future Combat System just to start -- boggles the mind. Meanwhile, the Air Force has tried for years to kill the A-10 Warthog, a plane that literally kept me alive in Afghanistan. The Marine Corps only adopted the MRAP because of a Secretary of Defense fiat.

What Romney Actually Believes

Instead of calling for higher budgets, the Romney/Ryan team should demand the Department of Defense focus on productivity growth, efficiency, and a new culture of fiscal-minded reform -- not just by the Deputy Secretary of Defense, but by every leader from buck sergeant to Chairman of the Joint Chiefs. They should demand "audit-ready" budgets. Can you imagine Bain Capital telling shareholders they don't have a budget? The problem with the Pentagon isn't the size of its budgets, it is the people making massively inefficient and wasteful decisions with taxpayer money.

Mitt Romney just needs to listen to himself. Describing the naval procurement system Romney said, "A business like that would be out of business." I agree. But the solution isn't giving the Pentagon more money, it's giving it less. Mitt Romney should make the Pentagon establish strict new efficiency goals, then use his business acumen to ensure the Pentagon does more with less, like he did as a private equity investor. To do otherwise is simply pandering to win votes.

In other words, Romney has become a politician and forgotten how to be businessmen.

Michael Cummings is veteran and a writer, who deployed to Afghanistan in 2008 with the 173rd Airborne Brigade as a platoon leader, and Iraq in 2010 with 5th Special Forces Group as an intelligence officer. He run a milblog at On Violence and currently attends the UCLA Anderson School of Management.

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