23 May 2017

Our Corrupt Pentagon

In an effort to simplify procurement and save costs, the Pentagon buys fuel for all the services, and then distributes it to each of them on an as needed basis.

In theory, this should save money by reducing procurement and inventory costs.

In practice, the Pentagon has overcharged the services and diverted the profits to a secret slush fund:
The Pentagon has generated almost $6 billion over the past seven years by charging the armed forces excessive prices for fuel and has used the money — called the “bishop’s fund” by some critics — to bolster mismanaged or underfunded military programs, documents show.

Since 2015, the Defense Department has tapped surpluses from its fuel accounts for $80 million to train Syrian rebels, $450 million to shore up a prescription-drug program riddled with fraud and $1.4 billion to cover unanticipated expenses from the war in Afghanistan, according to military accounting records.

The Pentagon has amassed the extra cash by billing the armed forces for fuel at rates often much higher — sometimes $1 per gallon or more — than what commercial airlines paid for jet fuel on the open market.

Under a bureaucracy that dates to World War II, the Defense Department purchases all of its fuel centrally and then resells it at a fixed price to the Air Force, Navy, Army, Marine Corps and other customers, who pay for it out of their own budgets. The system is intended to reduce duplication and promote efficiency.

The Defense Department is the largest single consumer of fuel in the world. Each year, it buys about 100 million barrels, or 4.2 billion gallons, of refined petroleum for its aircraft, warships, tanks and other machines.

The practice of exploiting fuel revenue to plug unrelated gaps in the defense budget has escalated in recent years, prompting allegations — and official denials — that the accounts are being used as a slush fund.
I am not sure of the etymology of the term "Bishop's Fund", maybe it goes back to the Borgia Popes or some such.

In any case,  this is no surprise coming from an agency that has kept its books unauditable for decades, despite laws requiring it to clean up its act.


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