The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, the Pentagon is one of the most “open” of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it’s issued, to whom, and for how much — all right out in the open on its website.
So what has the Pentagon been up to this week?
As I mentioned last week, DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). Yet this week in particular, the Pentagon spent way, way more than you might have expected it to spend.
Indeed, Pentagon contracts awarded Monday to Friday totaled $9.8 billion in value. Put another way, four months into the sequester, the Pentagon just spent about 58% more than it’s budgeted to in an ordinary week. Where did the money go?
Napoleon was wrong
According to General Bonaparte, “an army marches on its stomach.” Well, that might have been true 200 years ago, but today, the modern military drives to work, and for this, it needs fuel. Last week, the Pentagon placed orders for more than $2.3 billion worth of oil supplies — with jet fuel orders making up the bulk of the purchases.
Pretty much everyone who’s anyone in the oil industry got a contract. The biggest winner was Netherlands’ Royal Dutch Shell plc (ADR) (NYSE:RDS.A) at $474 million, but America’s Valero Energy Corporation (NYSE:VLO) came a close second with $456 million in Pentagon fuel contracts.
Over the course of two very lucrative days, Hewlett-Packard Company (NYSE:HPQ) inked two separate contracts with the Pentagon. In separate contract extensions, the Navy and Marines hired Hewlett-Packard Company (NYSE:HPQ) to first build them a new Intranet called the Next Generation Enterprise Network for $322 million — and then agreed to pay the company a further $680 million to keep their old Navy Marine Corps Intranet running while they transition to the new system.