Waste, Greed, and Fraud: The Business that Makes the World’s Greatest Army

The article below is a product of the Harvard Political Review. Review articles and viewpoints expressed are written and edited exclusively by Review undergraduate students, not the staff of Harvard's Institute of Politics.
Derek Paulhus


Lockheed Martin’s C-130 Hercules aircraft has been used by the U.S. Military for four decades. The spacious transport plane can accommodate utility helicopters and six-wheeled armored vehicles and can airdrop up to 42,000 pounds. The company boasts that “there is no aircraft in aviation history … that can match the flexibility, versatility and relevance of the C-130J Super Hercules.” Four of these $30 million planes have been gifted to the Afghan Air Force (AAF) with Pentagon dollars to aid the Americans in protecting the region. There’s only one problem: according to the Special Inspector for Afghan Reconstruction, General John Sopko, the planes are underutilized and ridden with support problems due to lack of training, spare parts, and maintenance.

The narrative of mass waste and a misallocation of American taxpayer dollars runs deep throughout post-9/11 military spending. Of the billions that have been poured into bolstering the United States and allied militaries, much has gone towards a broken military contracting system that is riddled with fraud and authoritative negligence. Now that the United States is once again becoming more involved in the Middle East in order to combat the threat of ISIS, it is unclear when or if the leaky contracting system will be plugged in the near future.

The Middle Eastern Money Pit

Although Department of Defense officials provided some documents to show that the Department consulted experts and performed analyses to identify the aircraft best suited for medium airlift operations, they provided no documentation to Sopko to explain why they chose the C-130. In fact, one of the U.S. Air Force’s analytical teams that assists in choosing equipment for the AAF highlighted the C-130’s cost and complexity as reasons why the aircraft would not be appropriate for the AAF, calling it an “empty asset” for the Afghans.

Further investigations into military spending in the Middle East shed light on similar stories that underscore the depth of the waste that permeates the system. In an interview with the HPR, William Hartung, the Center for International Policy’s Arms and Security Project Director, stated that there is an “excess of usable military equipment relative to any possible need.” In addition to unused aircrafts and helicopters rusting on tarmacs in Afghanistan, parts ripped from working equipment and sold at junkyards, and about 410 tons of functional equipment incinerated in burn pits daily, Hartung said that authorities and contractors have been reckless with their own products. “They’re doing things like destroying perfectly useful items,” he explained. “They also lose track of things. They destroy ammunition that is still functional, and they retire things early.”

How did we get to this point? In the years following the 9/11 attacks, the United States and its allies have fought a continuous war on terror. The taxpayer tab for the war totals about $5 trillion, or $16,000 per person, according to Brown University’s Watson Institute for International Studies. This was, according to Hartung, the “biggest Pentagon spending buildup in history since World War II.” This spending has not only gone into strengthening the U.S. military itself, but also to improving the allied Afghan, Iraqi, and neighboring Middle Eastern security forces. The idea has been to arm Middle Eastern countries to enable them to secure their own territories.

Billions of dollars’ worth of aid has come principally in the form of military contracts. BAE Systems Vice President for External Communications Brian Roehrkasse said in an interview with the HPR that the government determines what products it needs from contractors like BAE. The Pentagon asks primarily for “a lot of combat vehicles,” including armored trucks, airplanes, and helicopters. According to Roehrkasse, contractors have done well in protecting the troops and in maintaining equipment for the army, pointing to instances in which protection and mine-resistant equipment saved soldiers’ lives, and in which the company “had a number of our field service reps stationed to help provide ongoing maintenance and support for the vehicles themselves.”

However, critics like Fareed Zakaria, H.A. Goodman, and Bill Maher point to the rise of ISIS, the retreat of Iraqi security forces, and the incompetence of Middle Eastern forces in general—namely that a combined Middle Eastern military force of four million has been ineffective against an ISIS force of 30,000—as evidence that American military intervention has done little to curb terrorist forces or guarantee allies capable of ensuring peace in the Middle East. In fact, an Institute for Economics and Peace report noted that terrorist attacks were not declining at the hand of American military and contracting intervention, but rather rising sharply.

The Broken Contracting System

Reports from the Inspector Generals’ offices of Iraq and Afghanistan estimate that the U.S. military has lost $60 billion to waste and fraud in Iraq, $100 billion to Afghan reconstruction efforts, and billions more in wasted equipment either burned or left behind after the withdrawal of forces. Part of the problem may be that the Pentagon has 1.7 million contracts open, which makes oversight difficult, if not impossible. “In Iraq and Afghanistan there was huge waste fraud and abuse on the part of companies like Halliburton and others that [these companies] were able to get away with in the fog of war because there wasn’t enough scrutiny into what they were doing,” said Hartung. “In some cases billions of dollars went missing; [contractors] were overcharging for everything from simple tasks like doing the laundry for the troops and [providing] meals to building shoddy facilities for schools and things for water and electricity.”

Another impetus for fraud stems from the blank checks that the Pentagon writes to contractors. The most common method of winning contracts is through the “cost-plus” contracting system, in which the government reimburses contractor expenses and tacks on a commission as profit. According to Hartung, the system works in such a way that “the more work [contractors] do, the more profit they get, even if their work is inefficient. … It basically says, ‘If you spend a billion dollars building a weapons system, you’ll get a 10 percent profit or $100 million.’” Essentially, for contractors, “you do better if you are wasteful.”

One way defense companies are able to push for contracts and sell their products is by lobbying the government. In an interview with the HPR, Harvard Kennedy School lecturer Mark Fagan explained that companies lobby in order to build and articulate strategy on policy issues. He states that defense companies pay large sums of money, sometimes in the form of campaign contributions, to gain the ear of a congressperson or a Pentagon official. Corporations can then influence their member of government to fight against sequester cuts to defense spending, push for their contracts, and more. Such spending has swelled the military industry to become the eighth-largest lobbying sector in the nation, spending well over $100 million annually on lobbying the government. Boeing, Lockheed Martin, Honeywell International, and Northrop Grumman are among the top spenders.

However, while defense companies spend tens of millions of dollars trying to win the ears of politicians, they reap billions in return. U.S. government defense spending currently totals slightly less than one-fifth of the $3.8 trillion federal budget. While corporate lobbying seems to be at least partially responsible for the bloated defense budget, Fagan argues that defense companies are simply trying to sell their wares to consumers: the government. As he states, “Marketing buys you an ear … to have your perspective on the table.” Defense companies are working against “a lot of competing pressures for those Pentagon dollars,” he added, referring to competition between defense companies like Boeing, Lockheed Martin, BAE Systems, and others to sell their products to the government.


Lockheed Martin C-130 Hercules aircraft

American Foreign Policy and its Implications

Since the 9/11 attacks, America’s foreign policy has followed a trend of asserting hasty force, instead of deliberative diplomacy. Hartung states that the nation has looked to solve conflicts through force and military means—a policy that has largely backfired. While defense industry marketing to the Pentagon has been partially responsible for the glut and availability of defense equipment, and therefore the inflated military budget, Fagan pointed out that it is nevertheless “the responsibility of the buyer to make sure that what they are choosing to buy is actually what they need … [and] it is up to our elected officials … to determine what is the right course of action for the country’s security and for the taxpayers.”

Although the Obama administration has proposed defense spending cuts and a general withdrawal from the Middle East, the new confrontations with ISIS have thrown much of that into question. In fact, the latest defense spending bill from Congress only cuts a fractional $5 billion, with the majority of savings coming from lower fuel costs, bringing the total defense budget slightly down to $607 billion. Hartung added that “the contractors will be [continuing] to look for all kinds of possibilities” in order to continue to profit. With the current political trends in the Middle East, it appears that there is still plenty of opportunity for armed confrontation.

Whether these new possibilities come to fruition or not, the Pentagon is trying to ingrain defense spending as a crucial and permanent investment even in times of peace. Although much waste and glut exists within the system, the Pentagon continues to press for even more funds while fighting against calls to decrease the defense budget. In a recent release, the Pentagon stated that “the geopolitical events of the past year only reinforce the need to resource DoD at the president’s requested funding level as opposed to current law,” alluding to the disaster that defense cuts from a sequester would have on the department.

Nevertheless, even if the Pentagon fails to stop defense cuts, contractors are still looking at hundreds of billions in purchases for the Middle East and Africa through 2019 through the DoD’s Foreign Military Sales (FMS) program, a government-to-government sales agreement. A sliver of those billions come from Iraq, where the United States is preparing to ship 175 tanks, 15 Hercules tank recovery vehicles, 55,000 rounds of ammunition for the tanks, and hundreds of millions worth of Humvees, howitzers, and trucks. During a conference call with analysts, Theodore Karasik, director of research and consultancy at the Institute for Near East and Gulf Military Analysis, stated that “every country in the Middle East is shopping for some type of military equipment.”

The new conflict in the Middle East is yet another example of the perpetual war that the United States seems to find itself in. As the late Gore Vidal pointed out in his book, Perpetual War for Perpetual Peace: How We Got to Be So Hated, the United States always appears to find a new enemy to attack to perpetuate controlled wars, or small conflicts that keep dollars flowing to sustain the defense industry. As Hartung put it, the overriding sentiment in the government has been that “we need [the money] to defend the country, so we can’t ask too many questions.” When there are calls to cut the defense budget, to withdraw and stop intervening in world conflicts, or to use older equipment available, contractors and lobbyists respond by arguing that the country “needs a new generation of equipment,” or that the Pentagon needs to continue a steady stream of purchasing in order “sustain the defense industrial base” to prepare for the next war.

Hartung’s and Vidal’s words seem to capture a unique setback to being a world-superpower. The United States, which has assumed the duty of exporting peace, democracy, and stability throughout the world, can only do so with a sizeable and dominant military force that is prepared to act on a moment’s notice. Such mobilization can only be accomplished with an innovative and successful defense sector. Therefore, whether it be through the reinforcement of allies or through direct intervention, the United States must always be involved in a conflict in order to maintain the vitality of its defense partners. With its blank checks, lack of oversight, and belief that no one should question those contractors and companies that protect the nation, the government has allowed the defense system and contractors to act wastefully and fraudulent, has permitted companies and contractors to take advantage of government spending, and has cleared the way for the industry to exercise its influence over the nation’s politics in the pursuit of greater profit.

Image Credits: MSgt Benjamin Bloker/Wikimedia, Adrian Pingstone/Wikimedia