ILSM: Whittle a Break

This one is by ILSM…

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I’d like to comment on this front page story in the Washington Post, published on April 1, 2008 by Dana Hedgpeth, a Washington Post Staff Writer.

GAO Blasts Weapons Budget
Cost Overruns Hit $295 Billion

Government auditors issued a scathing review yesterday of dozens of the Pentagon’s biggest weapons systems, saying ships, aircraft and satellites are billions of dollars over budget and years behind schedule.

Auditors said the Defense Department showed few signs of improvement since the GAO began issuing its annual assessments of selected weapons systems six years ago. “It’s not getting any better by any means,” said Michael Sullivan, director of GAO’s acquisition and sourcing team. “It’s taking longer and costing more.”

“In most cases, programs also failed to deliver capabilities when promised — often forcing war fighters to spend additional funds on maintaining” existing weapons systems, the report says.

This is somewhat misleading. In almost every case the reliability of new systems is poor, requires more people to repair it, resulting in lost utility, more maintenance equipment, parts and costing more than keeping the old system running. This will be the case with the Airbus tanker. The KC-135 even with more depot stays will be more useful and cheaper to operate than the Airbus.

The GAO chose 72 systems to examine, based on high-dollar value and congressional interest. The various systems were at different stages of the acquisition process over the last year.

The GAO’s Sullivan said the reasons for the cost overruns and delays are threefold: There are too many programs chasing too few dollars; technologies are often not mature enough to go into production; and it takes too long to design, develop and produce a system.

“They’re asking for something that they’re not sure can be built, given existing technologies, and that’s risky,” Sullivan said in an interview.

That engineering is faulty is cultural. When a program goes into Full Development (the government manager knows what can be developed, built and sustained at given set of costs) the underlying technology is supposed to be proven. NASA has a series of technology readiness levels which DoD has adopted. The rush is to get into production to help the industry make money. Money is the reason we see all these “do-overs”. The profit is the same the third time around.

Steven L. Schooner, co-director of the government procurement law program at George Washington University, said the GAO’s report reveals the recurring problems the Pentagon faces with its costly procurements.

“The nature of major weapon systems development is that you have to expect that the initial estimates, and typically the initial contracts, are overly optimistic and unrealistic,” he said. “Unfortunately the purchaser — the government — typically lacks the discipline to freeze the configuration such that the contractor has any reasonable chance of developing what it promised on time and for the price promised.”

This is a straw man, most of the specification changes are relieving the designer of requirements for things like quality manufacturing, technical data, eliminating testing and on occasion a new requirement is added to give the appearance that the added funding is not a bail out. An example, when the government requires a certain outcome which will cause the developer to lose money the developer asks the government to change the contract to pay again for the work already required. This seems to be a requirement change but it is not rooted in any technical aspect but in paying twice for the work to be done in a different manner a hidden ‘do over’ to compensate for an overrun.

Defense Department officials have tried to improve the procurement process, the GAO said, by doing more planning and review in the early stages of a contract. But “these significant policy changes have not yet translated into best practices on individual programs,” Gene L. Dodaro, acting comptroller general of the GAO, wrote in the report.

“Flagship acquisitions, as well as many other top priorities in each of the services, continue to cost significantly more, take longer to produce, and deliver less than was promised,” Dodaro said. “This is likely to continue until the overall environment for weapon system acquisitions changes.

The DoD must, but won’t, require the contractors perform as promised in the development contracts or put them out of business not give a company overrunning and not delivering a 99% rating on “past performance” in the next competition. Also, DoD managers must consider the value to the taxpayer, not their career or some recondite agenda to ‘take care’ of the soldier.

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This one is by ILSM.