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June 08, 2005

Revenge of the $500 toilet
Posted by Suzanne Nossel

Devastating piece today in the NYT on the state of Pentagon procurement.  Some highlights:

The Pentagon has more than 80 major new weapons systems under development, which is "a lot more programs than we can afford," a senior Air Force official, Blaise J. Durante, said. Their combined cost, already $300 billion over budget, is $1.47 trillion and climbing.

The Pentagon has more than 80 major new weapons systems under development, which is "a lot more programs than we can afford," a senior Air Force official, Blaise J. Durante, said. Their combined cost, already $300 billion over budget, is $1.47 trillion and climbing.

Military officials routinely understate the anticipated costs of weapons, said Winslow T. Wheeler, who analyzed armaments spending as a Senate staff member advising both Republicans and Democrats for 31 years.

When costs rise far beyond the promised ceilings, he said, almost no one takes responsibility.

Oversight is dwindling, Pentagon officials acknowledge. While the dollar value of weapons contracts doubled over the last decade, the Pentagon halved the size of the work force that polices their costs.

Finally, the costs of new weapons are sometimes concealed by secrecy and creative bookkeeping.

They now total nearly $148 billion a year, and almost one in five of those dollars is hidden from public view, in the classified "black budget."

The Pentagon dismissed its own auditors in the name of "acquisition reform," Mr. Wheeler said. "They thought they were copying private-enterprise practices by removing this monitoring bureaucracy."

When weapons finally move from the drawing board to the assembly line, the military services employ a practice Mr. Walker calls "plug and pray." "They plug how many they can buy with the amount of money they have," he said. "Then they pray that they'll get more money in order to be able to buy more."

But by then, he warned, many weapons of the future may prove too costly to bear.

"There's no way we're going to be able to afford them," Mr. Walker said. "We're going to have to rationalize what people want and reconcile it against what we really need, and what we can afford, and what we can sustain."

And this is in an era that we are being told that: 1) soldiers on the ground are being asked to make do without body armour; 2) military pay and perks aren't adequate to support the level of recruitment we need; 3) the disproportionate size of our military budget gets used to explain why we don't have the money to thoroughly secure our ports and nuclear facilities, never mind beef up funding for diplomacy, aid programs, etc.

As the Times describe them, the problems sound hard but not impossible to fix:  it appears that they need steps on the order of a new and robust auditing function (ironic that as private sector auditing has met its maker and been augmented substantially through Sarbox etc. Pentagon auditing has quietly gone out the window); some sort of objective civilian review of the requirements specification process; advance auditing of whether costs, timeframes and delivery promises from contractors are realistic (proof, not just promises); strict penalties for overruns that put the cost on the contractor, not the Defense Department' and - this is the toughest but probably key - some new contractors added to restore competition to the bidding mix.

I am curious what the progressive military outlook is on all this (Lorelei?).  My guess is they are outraged, and that there ought to be a chance of building a coalition to get spending rationalized and, at least potentially, have budget available for a whole lot of key things including supporting our men and women on the ground with ample equipment, and building (and adequately supporting) new capabilities tailored for post-conflict reconstruction.


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The biggest example of this wartime profiteering comes from the Pentagon, and in particular the missile defense system that still doesn't work. [Read More]


The Pentagon is the biggest contracting agency in the Federal Govt, yet is totally incapable of designing and then governing its contracts appropriately. Contracts don't enforce themselves, and contracts don't amount to a damn thing unless they are enforced.

The Pentagon needs an independent, joint-force contracting capacity that either takes on the task itself, or trains and oversees Services' own monitoring and implementation of contracts. Agency heads often have a whole host of issues to deal with, and don't necessarily have the expertise to deal with contracting issues. Yet the Pentagon does nothing to mitigate this problem. If the DOD is going to rely on the private sector, that means contracting. If it doesn't know how to contract-out, it is tantamount to mission failure. Resources are being wasted that could be going to the battlefield.

Phillip Carter's *Governing By Contract* should be read more widely as well.

Pardon me, brainwires got crossed. It's not Phil Carter, as in Intel Dump.

It is Phillip J. Cooper's *Governing By Contract* (Congressional Quarterly Press, 2002)[ISBN: 156802620X].

For political points in 2006 Dems should compare these wasted dollars to the equipment shortages in Iraq.

The Republicans are more concerned with pork wrapped in flags than the safety of our volunteer military.

Y'know, there is such a thing as too much oversight and auditing.

Here's one example:

Does anyone really think this is news? Ike warned about the military-industrial complex half a century ago. Rumsfeld warned about the unsustainable bow wave of military procurement four years ago, and started doing something about it (cancelling the Crusader and later the Comanche Army programs) but has had other things to focus on.
Military procurement is a bipartisan pork barrel, not one limited to the republicans--and probably a non-starter as a political issue in 06. After all, the procurement means jobs in the districts and states which translates to votes. Look at the defense of the (in my opinion ultimate Cold War weapon) F-22. L/M advertises it provides jobs in 43 states--think the Administration is going to be able to overide Congress on that?
And the concept of newe contractors is ludicrous as the entry costs are so high. Of course, remember it was the Clinton Administration at the "last supper" that told the various contractors to consolidate or die. Consequently, the only new contractors that could be added would be open up more procurement to foreign contractors--and we have seen how well that plays in Congress.

What weapons systems? They seem to keep getting cancelled as "unaffordable" only to be replaced by programs that end up costing more. Seawolf got cancelled and replaced by Virginia which costs more than Seawolf. DX got cancelled and DDX is so expensive it's scary. The Army lost Commanche and Crusader and whatever the merits of those systems they still need to replace systems (M109 and Kiowa) that are 40 years old.

One can argue whether the Air Force needs the F-22 but if they are to buy it then it's just irrational to cut the program to the point where the individual costs skyrocket.

The main problem with most of these contracts is there is little or no competition due to a much smaller defense industry base causing costs to rise, less being ordered, costs rising more but the base getting smaller because less are ordered.

It was criminally negligent to allow the commercial shipbuilding industry in the US to die and now we witness how much naval ships cost now. Throughout the Clinton years there was a well known and constant drawdown in the procurement budget- especially in shipbuilding. While the dollars have increased the actual number of ships procured is still falling.

The Army really doesn't have a major weapon system that it currently uses that was not designed in the 1970's. There is currently no replacement on the drawing board for the M1, M2, M109, Apache, Kiowa, team. FCS is inherently illogical.

Procurement desperately needs fixing but pointing to the costs being out of control is not a solution. The whole process needs to be done on a multi-year basis based on a well known and accepted force structure. What is really needed is more equipment needs to be purchased on a regular basis that industry can plan for.

In fact there is a new procurement system that the regular forces are stealing from SOCOM. Identify commercial and/or current systems that work well and just buy them. Amazing how well "commercial" tech $20,000 RPV's cost in relation to mult-million dollar DOD RPV systems.

How to translate this to ships, planes, and tanks should be the real goal of procurement reform. Perhaps where possible subsystems could be "open source"? All I know is the current Military Industrial Complex has shrunk so far competition is dead. As Libertarian Soldier stated this is old news...


Here is a few good examples of stupid expenditure. The Army hand-held GPS device is much more expensive than the commericial one. The commercial one is half the size, and perform much better (it is also a radio). DoD contracted out software for the Army that cost billion of dollars. The software totally suck, so we use Microsoft Office which is better and cheaper.

And the Pentagon also has the "made in the USA" requirement. It is stupid. We can import many weapons and systems much cheaper instead of building one from scratch.

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