Privatization (Corporatization) of the Military

On September 10, 2001, Donald Rumsfeld gave a speech to kick off DOD Acquisition and Logistics Excellence Week Kickoff—Bureaucracy to Battlefield.  It was in this speech that Rumsfeld said that by some estimates "we cannot track $2.3 trillion in transactions".   The assumption made by most people in the 9-11 Truth community that what he meant was that $2.3 trillion dollars came up missing from the DOD accounts.    And they pointed at Dov Zakheim as the suspect because he was Undersecretary of Defense and Comptroller of the Pentagon.  That's a reasonable suspicion minus a few critical insights into the process of selling information technology and computer systems.   It's standard procedure in the IT Consulting business when justifying costs for new systems to pump up the negatives as reasons why the new system(s) are needed.  The bigger the new system(s), the higher the dollar value of the negatives for not doing it.  The fact that Rumsfeld used $2.3 trillion as the negative indicates how big the contract values are for the privatization of the military that he was selling.

Key points from Rumsfeld's remarks.


Rep. John Mica (R-FL)

Mica was with Donald Rumsfeld for a breakfast meeting at the Pentagon on September 11, 2001.  Purpose of the meeting: "to make certain we were prepared for something we might not expect".  Audio clip from the August 1, 2007 House Oversight Committee on Pat Tillman's Death.

  • The adversary's closer to home. It's the Pentagon bureaucracy. Not the people, but the processes. Not the civilians, but the systems. Not the men and women in uniform, but the uniformity of thought and action that we too often impose on them.
  • Our challenge is to transform not just the way we deter and defend, but the way we conduct our daily business. Let's make no mistake: The modernization of the Department of Defense is a matter of some urgency. In fact, it could be said that it's a matter of life and death, ultimately, every American's.
  • We must develop and build weapons to deter those new threats. We must rebuild our infrastructure, which is in a very serious state of disrepair. And we must assure that the noble cause of military service remains the high calling that will attract the very best.

    All this costs money. It costs more than we have. It demands agility -- more than today's bureaucracy allows. And that means we must recognize another transformation: the revolution in management, technology and business practices. Successful modern businesses are leaner and less hierarchical than ever before. They reward innovation and they share information. They have to be nimble in the face of rapid change or they die. Business enterprises die if they fail to adapt, and the fact that they can fail and die is what provides the incentive to survive. But governments can't die, so we need to find other incentives for bureaucracy to adapt and improve.

    The technology revolution has transformed organizations across the private sector, but not ours, not fully, not yet. We are, as they say, tangled in our anchor chain. Our financial systems are decades old. According to some estimates, we cannot track $2.3 trillion in transactions. We cannot share information from floor to floor in this building because it's stored on dozens of technological systems that are inaccessible or incompatible.

    To that end, we're announcing today a series of steps the Department of Defense will take to shift our focus and our resources from bureaucracy to battlefield, from tail to tooth.

  • But we have the ability—and, therefore, the responsibility—to reduce waste and improve operational efficiency on our own. Already we have made some progress. We've eliminated some 31 of the 72 acquisition-related advisory boards. We now budget based on realistic estimates. We're improving the acquisition process. We're investing $400 million in public-private partnerships for military housing. Many utility services to military installations will be privatized.

[Note: when the Iraq war started, the DOD sold the military housing on Long Island.  As I recall, the families were going to get a housing allowance.  Here is 2007 budget for construction of military housing.  Question:  Where is all the money going?  This is not DOD mis-allocation.  This is the Congress - closing bases, selling off military housing and then paying to rebuild - with public-private partnerships?] 

  • We're tightening the requirements for other government agencies to reimburse us for detailees, and we're reviewing to see whether we should suspend assignments where detailees are not fully reimbursed.
  • We have committed $100 million for financial modernization, and we're establishing a Defense Business Board to tap outside expertise as we move to improve the department's business practices.
  • In order to make decisions more quickly, we must slash duplication and encourage cooperation. Currently the Departments of the Army, the Air Force and the Navy operate separate but parallel staffs for their civilian and uniformed chiefs. These staffs largely work the same issues and perform the same functions. Secretaries White and Roach will soon announce plans for realigning the Departments to support information sharing, speed decision-making, integrate Reserve and Guard headquarters into Department headquarters. Secretary England is engaging a broad agenda of change in the Department of Navy as well.  [Consolidation of power.  This is why we have an Admiral in charge of ground troops in Iraq]. 
  • To transform the Department, we must look outside this building as well. Consequently, the Senior Executive Council will scour the Department for functions that could be performed better and more cheaply through commercial outsourcing. Here, too, we must ask tough questions. Here are a few:

    Why is DOD one of the last organizations around that still cuts its own checks? When an entire industry exists to run warehouses efficiently, why do we own and operate so many of our own? At bases around the world, why do we pick up our own garbage and mop our own floors, rather than contracting services out, as many businesses do? And surely we can outsource more computer systems support.

    Maybe we need agencies for some of those functions. Indeed, I know we do. Perhaps a public-private partnership would make sense for others, and I don't doubt at least a few could be outsized -- outsourced altogether.

    [Great idea huh?  Replace a $20,000 soldier with a $60,000 contractor.  Not to mention the national security implications of outsourcing military administrative jobs.  Last year, the Pentagon had a proposal to hire foreign workers for work requiring security clearances because of the "shortage of American workers".  They posted it for public comment - and they probably got more comments than they bargained for.  My comment was to the effect, "if I was on contract to a foreign government and came into contact with state secrets, I'd be happy and proud to pass the information along to my government. ]

    [Coast Guard Deep water Project                 Note:  Video says contractor was Lockheed for Deepwater - here's more on Lockheed & their partners.... the Communist Chinese - Hutchinson Whampoa]

  • Like the private sector's best-in-class companies, DOD should aim for excellence in functions that are either directly related to warfighting or must be performed by the Department. But in all other cases, we should seek suppliers who can provide these non-core activities efficiently and effectively. The Senior Executive Council will begin a review of the Defense Finance and Accounting Service, the Defense Logistics Agency and Defense Information Service Agency.

[This is TQM - Total Qrap Management.  It is the management philosophy that Rand Corporation constructed.  The objective is to get corporations to outsource as many of their "non-core" functions as possible.  Mattel is a good example of TQM in action.  They used to be a toy manufacturer.  Now they are simply a "brand manager".  They've outsourced everything except the name "Mattel".  And that's why they are importing lead coated toys for tots.  They don't control anything.  They just import cheap Chinese Qrap. 

In the military, a slick marketing person can make a case that only the lowest level soldier carrying a gun is a "core function" of the military.  We've seen how well that works in Iraq.  Soldiers were ill-equipped, poorly supplied, they got bad water and unhealthy food.  But.... the Contractors are making a fortune.  And that's really what's important right?]  

  • Second, this effort is structurally different from any that preceded it, I suspect. It begins with the personal endorsement, in fact the mandate, of the President of the United States. President Bush recently released a management agenda that says that performance, not promises, will count. He is personally engaged and aware of the effort that all of you are engaged in. The battle against a stifling bureaucracy is also a personal priority for me and for the Service Secretaries, one that will, through the Senior Executive Council, receive the sustained attention at the highest levels of this Department. We have brought people on board who have driven similar change in the private sector. We intend to do so here. We will report publicly on our progress. The old adage that you get what you inspect, not what you expect, or put differently, that what you measure improves, is true. It is powerful, and we will be measuring.


Does any of this remove Dov Zakheim of suspicion?  Certainly not.  In fact, he is in the thick of it. 

Dov Zakheim was one of the participants in the Rand Report, "2001 Transition Report" along with Paul Wolfowitz, Ashton Carter, Anthony Lake, Zalmay Khalilzad and others. 

Following his stint at the DOD, he became Vice President of Booz Allen Hamilton

Dov S. Zakheim is a Vice President of Booz Allen Hamilton, a global strategy and technology consulting firm, where he is a leader in the firm’s global defense business, working with U.S. Combatant Commanders and allied and coalition ministries of defense worldwide.

From 2001 to April 2004 he served as the Under Secretary of Defense (Comptroller) and Chief Financial Officer for the Department of Defense, acting as the Secretary of Defense’s principal advisor on financial and budgetary matters, developing and managing the world’s largest budgets, overseeing all aspects of the Department’s accounting and auditing systems, and negotiating five major defense agreements with US allies and partners. From 2002-2004 Dr. Zakheim was DOD’s coordinator of civilian programs in Afghanistan. He also helped organize both the June 2003 UN donors’ conference on Iraq reconstruction and the October 2003 Madrid Donors’ Conference.

From 1987 to 2001 he was both corporate vice president of System Planning Corporation, a technology, analysis firm based in Arlington, VA, and chief executive officer of SPC International Corp., a subsidiary specializing in political, military and economic consulting. During the 2000 presidential campaign, he served as a senior foreign policy advisor to then-Governor Bush.

From 1985 until March 1987, Dr. Zakheim was Deputy Under Secretary of Defense for Planning and Resources in the Office of the Under Secretary of Defense (Policy), playing an active role in the Department's system acquisition, strategic planning, programming and budget processes. Dr. Zakheim held several other DOD posts from 1981 to 1985. Earlier, he was a principal analyst in the National Security and International Affairs Division of the Congressional Budget Office.

Dr. Zakheim has served on a number of government, corporate, non-profit and charitable boards. His government service includes two terms on the United States Commission for the Preservation of America's Heritage Abroad (1991-93); the Task Force on Defense Reform (1997); the first Board of Visitors of the Department of Defense Overseas Regional Schools (1998); and the Defense Science Board task force on "The Impact of DOD Acquisition Policies on the Health of the Defense Industry" (2000). He is a member of the Defense Business Board, which he helped establish, the Chief of Naval Operations Executive Panel and the Council on Foreign Relations.

A 1970 graduate of Columbia University with a B.A., summa cum laude, in government, Dr. Zakheim also studied at the London School of Economics. He earned his doctorate in economics and politics at St. Antony's College, University of Oxford, where he was a National Science Foundation Graduate Fellow, a Columbia College Kellett Fellow, and a St. Antony’s College Research Fellow. He has been an adjunct Senior Fellow of the Council on Foreign Relations, an adjunct Scholar of the Heritage Foundation and a Senior Associate of the Center for Strategic and International Studies. Dr. Zakheim has been an adjunct professor at the National War College, Yeshiva University, Columbia University and Trinity College, Hartford, Conn., where he was a Presidential Scholar.


Booz Allen Hamilton
"Smart Highways" for the U.S. Police State (core function of govt)


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