Military in origin, but often used in paramilitary organizations like cadets. Used to describe a situation that has gone horrendously wrong. Almost always involves a large group of people that are disorganized: where the leader has failed.
(Can often refer to a performance by a group of people; drill performance, play, skit that fails to entertain)
J: "OMG... that unit has the worst drill I've ever seen..."
K: "It's like a huge cluster fuck!"
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