Imagine you’re standing in front of a Redbox kiosk. In hand is Kate Hudson’s latest romantic comedy, appropriately titled “This Crap is No Different from the Last One.”
Her costar is obviously Matthew McConaughey, who plays the role of the vain advertising executive who secretly lives with his grandmother and cares for abandoned puppies. Hudson is the fierce corporate lawyer whose career is second to none. The two meet in Central Park, his dog playfully attacks her and the seeds are planted. Spruce in some ridiculous scene involving his ex, played by Anne Hathaway and through the course of 120 minutes the two unintentionally fall in love.
Your current quandary is the fact that the DVD has been wedged under your driver’s seat for two weeks. Do you ride it out, keep the DVD and pay the full rent-to-ownership fee in order to take complete possession of this cinematic masterpiece, or do you return it and face the prospect of a late fee in the neighborhood of $15?
Well, this is the exact complicated dilemma facing the Department of Defense, which since 2001 has paid $720 million in late fees for storage containers. Does the DOD ride it out, waste more money from its bloated budget and buy the intermodal containers? Or does it simply continue renting and pay 3/4 of a billion dollars in late fees?
The intermodal containers are generally 20 feet in length, made of steel and are heavily used in rail and sea shipping. The Pentagon uses them for a variety of purposes, including shelter, transport and storage. Each of these containers is worth roughly $3,200. According to USA Today, which broke the report, the late fees for each container can total more than $2,200, in addition to rental fees. If the Pentagon decides to keep the containers, a rent-to-own price of approximately $7,400 is charged.
It doesn’t take a major in accounting to realize the ineptitude occurring: Paying nearly three times the economic value of a product is bad business.
The late fees are a result of miscalculations on the length of the wars in Iraq and Afghanistan. Yet this is not a valid excuse for the complete waste of $720 million in taxpayers’ money. One of the main profiteers on the late fees is Maersk Line, Limited, a Danish shipping conglomerate. What this means is the business and late fees our country is giving this company are directly exiting the American economy as the DOD has willingly outsourced the business. So much for patriotism.
As it stands, $720 million is only a small fraction of the swollen $553 billion defense budget. However, wasting such substantial money is an abhorrent act in such a critical economic time. To quantify $720 million further, let’s compare the recent budget cuts to the California State University system. Roughly $650 million was cut this summer, which was heralded as one of the most significant cuts in the history of higher education in California. For the Pentagon, this figure is merely a late fee. The waste of taxpayer money is disgusting. Furthermore, it is considerably difficult to believe that within our military industrial complex the DOD has to go to all the way to Europe to find these containers.
The truly sad fact concerning the $720 million late fees is that they are all part of a larger pattern occurring. The Commission on Wartime Contracting, “an independent, bipartisan legislative commission established to study wartime contracting in Iraq and Afghanistan,” released a report on Aug. 31 detailing the atrocious spending patterns of the DOD. The Commission concluded that $30 billion has been lost in the past decade caused by, “… poor planning, vague and shifting requirements, inadequate competition … and subpar performance or outright misconduct by some contractors and federal employees.”
This is a crippling economic pattern, which could bring about the death of nearly every business in this country. For the DOD, which annually receives hundreds of billions in taxpayer money, there is no such deterrent. The taxpayer money will keep coming in, and the horrendously wasteful spending will continue. The DOD needs to be held accountable for such egregious errors and those who are in charge should be prosecuted to the fullest extent.
According to the DOD’s website, it “constantly build(s) and reinforce(s) core values that everyone wearing a uniform must live by: duty, integrity, ethics, honor, courage and loyalty.” Duty, honor, integrity and loyalty are notably absent in these economic actions. The damage may actually be counterproductive to the core mission of the DOD, which is to protect the country.
The final conclusions of the Commission on Wartime Contracting latest report show, “…that the costs of contracting waste and fraud extend beyond the disservice to taxpayers. The costs include diminishing for U.S. military, diplomatic and development efforts; fostering corruption in host countries; and undermining U.S. standing and influence overseas.” In the end it looks like the DOD is merely guaranteeing itself future business.
—Brody Burns is seeking a master’s in business administration.
