As the Department of Government Efficiency (DOGE) sets its sights on the Department of Defense (DOD), it will encounter a target-rich environment.  The Pentagon has long been treated with kid gloves by members of Congress, which has resulted in a financial disaster.

The budget for the DOD, the government’s largest discretionary expenditure, accounts for approximately one-sixth of federal spending.  It remains the sole federal agency that has yet to pass a clean audit under the Chief Financial Officers Act of 1990.  Of the five DOD branches, only the Marine Corps has passed an audit, which it accomplished in both 2023 and 2024.

Financial irregularities at the Pentagon have been on the Government Accountability Office’s (GAO) list of programs at high risk for waste, fraud, abuse, and mismanagement since 1990.  The February 25, 2025, GAO High-Risk report again contained five areas within the DOD, including weapon systems acquisition, which has been on the list since 1990, and business systems modernization, first added in 1995.

DOD officials have stressed patience with the audits, but this problem does not exist at any other federal agency.  While the Internal Revenue Service is unlikely to allow private citizens to get away unpenalized with more than 30 years of financial ineptitude, legislators have been far more charitable to the Pentagon.

Beyond addressing the Pentagon’s shaky financial infrastructure, there are numerous procurement disasters that should be scaled back and avoided in future.  The DOGE should start with the F-35 Joint Strike Fighter (JSF), the Pentagon’s posterchild for inept acquisition.  Total acquisition costs for the program now exceed $428 billion, 84 percent greater than the initial estimate of $233 billion, and lifetime costs of the program will surpass $2 trillion.

The latest bad news was delivered on January 31, 2025, when the DOD Operation Test and Evaluation report highlighted the JSF’s persistent struggles, including “no improvement in meeting schedule and performance timelines for developing and testing software designed to address deficiencies and add new capabilities.”

With the Next Generation Air Dominance platform on the horizon, which former Air Force Secretary Frank Kendall claimed could cost “multiple” hundreds of millions per aircraft, a course correction is vital to ensure that the inflated costs and underperformance of the fifth-generation JSF are not repeated in the forthcoming sixth-generation of aircraft.  One effective tool for preventing ballooning prices would be to switch from cost-plus contracting, where the government is on the hook for any cost increases, to fixed-price contracts, where the contractor assumes most of the risk for delays and price inflation.  Instituting correct incentives in contracting will help to prevent $2 trillion in lifetime cost from being spent on another underperforming aircraft.  

Finally, DOGE should recommend that the DOD revitalize the base realignment and closure (BRAC) process.  The last round of BRAC occurred during the George W. Bush administration in 2005 and resulted in estimated annual savings of between $3.8 billion to $7 billion.  An October 2017 DOD infrastructure report estimated that 22 percent of the Pentagon’s  basing capacity is excess to needs, including 33 percent for the Army, 32 percent for the Air Force, 12 percent for the Defense Logistics Agency, and 7 percent for the Navy.  After 20 years, another round of BRAC is long overdue.

The last comprehensive government-wide report on federal agency effectiveness and efficiency was released by the Grace Commission in 1984 under President Ronald Reagan.  The commission’s 2,478 recommendations would have saved $424.4 billion over three years, 22 percent of which came from defense spending, including establishment of the base closing commissions.  President Reagan said that $240 billion, or 59 percent had been saved in the first 10 years, and Citizens Against Government Waste, which was established at President Reagan’s suggestion to help implement the Grace Commission’s proposals, has documented $2.4 trillion in savings from those recommendations and other cost-cutting proposals. 

The DOGE will have its hands full with analyzing labyrinthine Pentagon spending.  By focusing on fixing the DOD’s woeful financial plumbing, addressing the underlying issues of a broken acquisition system, and streamlining the Pentagon’s footprint, the DOGE could help ensure a better return on taxpayers’ investment in national security.