Military ethics, where have we gone wrong?

A friend/classmate at Georgia Tech (civilian with no military background) recently sent me the below article from CNN about a report that states military officers (and in the article it says civilians too) up and down the entire chain lie routinely. My friend asked me "I was curious on your take on ethical problems being caused / amplified by bureaucratic hoops in the armed forces."
Talking to an outsider I very well could have denied it as blown out of proportion and defended us tooth and nail. I took a different approach. As I said with him, if you can't take a look at yourself and your organization and take some constructive criticism and identified problems, come to understand them and most importantly learn from them and develop some solutions, then you're not cut out for the military. I then followed with an unexpectedly long reply about it all. My thoughts aside, what's everyone else's take on the subject?
http://www.cnn.com/2015/02/19/politics/army-ethics-lying-report/index.html