It’s a few years after the fact, but the Defense Department’s Office of the Inspector General has finally released its findings about the Pentagon process that led to the decision to locate a Joint Intelligence Analysis Complex in Great Britain rather than at Lajes Field, in the Azores archipelago. That might sound boring, but the episode encapsulated in one decision the Pentagon’s tunnel vision, waste, and strategic incompetence.

Here’s the background:

Lajes Field, on Terceira Island, in the Azores, a strategic Atlantic archipelago about 1,000 miles west of Lisbon, has been a crucial military facility dating back to its role as a transit hub and anti-submarine warfare prior to World War II. While the U.S. military has subsequently maintained a modest presence at Lajes Field at times of crisis — World War II, the 1973 Arab-Israeli War, Operation Desert Storm in 1991 — U.S. officials have quickly ramped up activities on the island. Over the course of decades, the Pentagon spent hundreds of millions of dollars building facilities, schools, and housing.

None of that mattered to the Obama administration, however, which sought to slash the Pentagon budget. Defense Secretary Chuck Hagel bragged about reducing the size of the army to pre-World War II levels just days before Russia invaded the Ukraine. When I visited Lajes Field two years ago, it was a ghost town. A base which could accommodate hundreds of servicemen had just a couple dozen Americans present. State-of-the-art elementary and high schools were closed, and subdivisions which looked like they could have been plucked from southern California were largely ghost towns.

Sure, austerity hurts. But what was going on at Lajes wasn’t really about saving money. After all, the Pentagon had also decided to build a new JIAC. Rather than consider Lajes — an ideal location strategically, economically, geographically, and in terms of existing infrastructure — it decided without any real, accurate comparative process to locate it outside of London. The key factor seems to be the desire for intelligence contractors and those who might serve at JIAC to collect a higher per diem allowance and to be able to take advantage of London nightlife on weekends. That’s not a good basis, however, to make strategic and financial decisions. Many naval officers, for example, might prefer to cruise the Caribbean or have port calls in Tahiti, but that’s not a reason to ignore the Middle East or the South China Sea.

The Pentagon, up to and including former Deputy Secretary of Defense Robert Work, insisted to Congress they had considered Lajes and found it lacking. Whistleblowers and internal contradictions in Pentagon work products, however, belied that. Now the Inspector General’s report shows that the Pentagon process was sloppy and inaccurate and, frankly, conjured up numbers to support a pre-ordained conclusion.

Curiously, however, while the Inspector General found that while the process was flawed and the numbers faulty, it refused to attribute the fraud to malfeasance and instead embraced the notion, ‘what’s done is done; just accept the fraudulent conclusions and move forward.’ Not only does the Office of the Inspector General conclusion fly in the face of an earlier Government Accountability Office report with regard to the motives of the Pentagon bureaucrats, but the Pentagon’s Inspector General seems to encourage the idea that so long as employees circle the wagon and refuse to admit their motivations for fraud, they will get away with it. It’s been the same story at the IRS, US Agency for International Development, and every large government bureaucracy where employees have run amok and pursued agendas at odds with those of the government.

If that were the only problem with the Pentagon report, it would be bad enough. But it’s really only the tip of the iceberg.

Overshadowing the decision to shutter Lajes is the fact that the Chinese are measuring the drapes as they push to move into real estate the United States abandons. When I visited Terceira, talk of the island was how the Chinese premier stopped on the island to inspect facilities that would give it a crucial outpost in the middle of the Atlantic. That may have been the first visit of a Chinese leader, but it hasn’t been the last. Defense officials might wring their hands about China’s posture in the Pacific and diplomats and journalists might report on Chinese activities in Africa, but the blind spot toward Chinese activities in the Atlantic — from increasing mining operations in Greenland toward building military-standard port facilities in the island nations of Cape Verde and São Tomé and Príncipe — should be raising alarm bells. That the Pentagon would issue a 164-page report about the process surrounding the decision effectively to abandon the Azores in favor of a facility near London and not even mention China once is astounding.

If the United States is to retain its strategic position, every single decision from the Pentagon at every level of the bureaucracy should consider: Will this decision undercut America’s strategic position or bolster the strategic advantage of China, Russia, or Iran? A combination reading of both the GAO and Office of the Inspector General reports suggests that, under Secretaries of Defense Leon Panetta, Chuck Hagel, and Ashton Carter, the Pentagon had not only failed in its fiduciary responsibility to taxpayers but had let its guard down in terms of broader strategic vision.

So what should be done?

First, heads should roll inside the Pentagon. If employees take home high five-figure and six-figure salaries, there is no excuse for not doing the basic legwork in a decision costing taxpayers hundreds of millions of dollars. There is no excuse for relying on Wikipedia to formulate reports to Congress. There is no excuse for lying to Congress or causing superiors to lie to Congress. Second, the response to fraud should not be a collective shoulder shrug. It’s time to stop all construction of the JIAC at RAF Croughton and to double down on Lajes Field.

After all, it’s not simply about the JIAC or doing the right thing financially. And it’s not simply about refusing to affirm a culture of the ends justifying the means in the Pentagon. Rather, it’s also about America’s broader strategic posture. A decade of navel-gazing, willful blindness, and incompetence at the Pentagon should not change that.

Michael Rubin (@Mrubin1971) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a resident scholar at the American Enterprise Institute and a former Pentagon official.

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