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Letter to commission on defense spending

This letter via Counterpunch to the Deficit Commission makes a clear statement on broad issues of accountability for the DoD, our contracting system, and the huge drain on our resources. Reading the whole letter points to examples of problems, and how the current system has reached and will reach unsustainable levels of spending.

We are writing to you and other members of the President’s National Commission on Fiscal Responsibility and Reform as individuals who have worked in national security affairs for decades for the Department of Defense, in the Armed Forces and for Democrats and Republicans in Congress. Our concern is the defense budget.

Similar to what your “Co-Chairs’ Proposal” said last week regarding Social Security and other issues, we do not believe that defense spending should be reduced to a bargaining chip in budget negotiations at the Deficit Commission. On the other hand, we do believe that the defense budget is dangerously bloated, giving rise to serious decay in our armed forces.


Despite Secretary of Defense Robert Gates’ efforts to cancel or redo several weapon programs that were over cost and under-performing, the number of major defense acquisition programs has changed from 91 programs costing $1.6 trillion to 87 programs costing $1.6 trillion. As you know, Secretary Gates has also imposed a plan on the DOD bureaucracy to transfer internally $102 billion dollars over 5 years, but there is no net savings to help the deficit.

Instead, Secretary Gates wants the DOD budget to grow one percent per year plus inflation for the next 10 years. That would increase the base DOD budget from $554 in 2010 to $735 billion in 2020 – a 33 percent increase, not including any spending for the wars against terrorism. While the Co-Chairs’ Proposal seeks a number of terminations, reductions, and efficiencies beyond the Gates’ plan (many of them welcome and overdue, but some that we believe require major modification), both the Co-Chairs Proposal and the Gates’ plan project into the future a defense program that is essentially the same as that we have today, simply at different spending levels. Under either plan, the size and modernity of our forces will continue to shrink and age, even if all remaining programs are implemented without any cost increases or schedule delays.

Without a jolt, without radically altered incentives, the bureaucratic system that thrives on corrupted, unaudited accounts cannot and will not change. A colleague of yours on the Deficit Commission, Senator Tom Coburn, R-OK, has written to you recommending the urgently required accounting changes, together with a new and strong incentive: the DOD budget should be frozen at current (2010) spending levels until it can pass comprehensive audits of all of its programs, agencies, and contractors.

All this is inextricably interwoven with our present wars. If – after our withdrawal from Iraq, Afghanistan and similar adventures, an increasingly inevitable consequence of impending bankruptcy – we simply default to the Pentagon’s military and civilian bureaucracies, allowing them to continue business as usual by just shrinking presently planned forces, it would be an enormous tragedy for the American people and for all those in uniform. Your support of constructive, thoughtful use of reduced budget levels and audited spending figures can make possible truly fundamental reform, reform that reorients our national military strategy to more prudently balance national ends against national means.

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Obama Administration Foolishness, Part 2

I took a couple of days to let life interfere with blogging, but none of the standard politics/economics bloggers seems to have highlighted this note from the Lex column of last Wednesday’s (13 October 2010) FT (again, no link; feel free to provide in comments) under the heading “Defence M&A”:

Lockheed has two small services businesses on the block. [These] in particular appear vulnerable as Robert Gates, secretary of defence, looks for back-office savings to fund operational spending.

That’s pretty much a fair description of the reason for the existence of MERS.* If there is an area of the U.S. economy that it is more corrupt has poorer incentive-alignment than FIRE, it is Defense Spending.  Mr. Gates’s willingness to encourage that by removing processing controls does not bode well for long-term budgetary value.

 

*Well, the other reason, after tax evasion.

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Procurement and research are in the ‘gaining’ portion of the budget

Hat tip reader ilsm for this article by Tony Capaccio, Bloomberg News, Bloomberg.com
July 6, 2010

U.S. spending on weapons through 2016 likely will grow faster than the overall defense budget, which will have annual increases of only about 1 percent above inflation, according to Pentagon Comptroller Robert Hale.

“Our goal would be to get forces and modernization to grow by 2 or 3 percent,” Hale said in an interview, while saying that “it’s not a given.”

An increase in weapons spending will include greater purchases of Bethesda, Maryland-based Lockheed Martin Corp.’s F-35 fighter, new ground vehicles, ship construction, satellite systems and unmanned drones, according to the Pentagon’s long- range plan. Northrop Grumman Corp., of Los Angeles, and Chicago-based Boeing Co. also stand to benefit.

Some money may be shifted into equipment and personnel accounts from an effort to cut $100 billion of overhead costs over five years, announced by Defense Secretary Robert Gates on June 28, Hale said.

“Procurement and research are in the ‘gaining’ portion of the budget,” Hale said. “The goal would be to move money from support-type activities — operations and maintenance, military construction — into acquisition.”

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Debt, Deficits, and Defense

Debt, Deficits, and Defense…The Sustainable Defense Task Force set in motion by Rep. Barney Frank has comprehensive suggestions. It is more specific than other suggestions I have read.

David Ignatius of the Washington Post sees deficits concern as a possible unifying process among right/left thinking. I don’t see it.

Bruce Bartlett comments on deficits and defense spending here and here.

Concerns about budget deficits and rising debt levels are leading to fractures in the heretofore unified conservative support for ever-higher defense spending. At least a few Republicans are now openly suggesting significant cuts in the defense budget, raising concerns among conservatives primarily concerned about national security. I believe that ultimately national security conservatives will be forced to choose between cuts in the defense budget and tax increases to reduce deficits.

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ILSM: Whittle a Break

This one is by ILSM…

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.

This one is by ILSM.

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DoD and the GAO

CORRESPONDENCE
Status of Selected Aspects of the Coast Guard’s Deepwater Program. GAO-08-270R, March 11 http://www.gao.gov/cgi-bin/getrpt?GAO-08-270R

LETTER REPORT
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks. GAO-08-388, March 11http://www.gao.gov/cgi-bin/getrpt?GAO-08-388
Highlights – http://www.gao.gov/highlights/d08388high.pdf

TESTIMONY
Defense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight. GAO-08-572T, March 11http://www.gao.gov/cgi-bin/getrpt?GAO-08-572T
Highlights – http://www.gao.gov/highlights/d08572thigh.pdf

Joint Strike Fighter: Impact of Recent Decisions on Program Risks. GAO-08-569T, March 11http://www.gao.gov/cgi-bin/getrpt?GAO-08-569T
Highlights – http://www.gao.gov/highlights/d08569thigh.pdf

These and other GAO products are available from the “Reports and Testimonies”section of GAO’s Internet site,

http://www.gao.gov.

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CBPP Documents that Defense Spending Increases Drive Federal Spending Increases

This Administration has turned large unified surpluses (real small general fund deficits) into unified deficits (real large general fund deficits) in part because of their tax “shifts” (called cuts but really deferrals) and in part because Federal spending has increased faster than GDP. John McCain and other Republicans will blame domestic spending but Richard Kogan carefully documents why any such claim is not true:

Both last year and this year, President Bush called for large funding increases for defense and related programs while demanding considerable restraint in domestic appropriations. And this year, like last year, he has threatened to veto appropriations bills if Congress does not adhere to his tight domestic levels. Some may think the President’s recent attempts to squeeze domestic appropriations are being made in response to an explosion of domestic discretionary funding during his Administration’s first six years. But this is not correct: there has been no such funding explosion for domestic discretionary programs. Between fiscal year 2001 (the last year for which appropriations levels were set under President Clinton) and fiscal year 2008, funding for domestic discretionary programs has been more constrained than any other area of the budget and has shrunk both as a share of the budget and as a share of the economy. In contrast, appropriations for defense and other security-related programs have increased more rapidly than any other area of the budget — even more rapidly than the costs of the “big three” entitlement programs: Social Security, Medicare, and Medicaid.

Table 2 is of particular interest as it shows the average annual increase of various subcategories of program costs not only in nominal terms but also in real terms as well as real spending per capita. Domestic discretionary spending – which is the favorite whipping boy of the GDP – has grown by only 0.3% per year in real per capita terms. Defense and security, which is the favorite cash cow of the GOP – has grown by 8.1% per year in real per capita terms. The former’s share of total program cost has declined from 18.4% to 14.7% while the latter’s share has increased from 21.7% to 29.2%. Anyone that is calling for more wars and more defense spending cannot be taken seriously as a fiscal conservative.

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ILSM on Whistleblowing MRAP Delays

This one is by ILSM…

If the value of our casualties were properly valued there would be none coming from Iraq.

The Commandant of the Marine Corps is (was) asking the Pentagon Inspector General to step in and examine the Franz Gayl allegations that a two year delay in providing MRAPs wasted Marines lives. “[H]undreds of deaths and injuries could have been prevented if incompetent minders and red tape had not sidetracked the effort to get the Mine Resistant Ambush Proof (MRAP’s) vehicles to the front lines in 2005 instead of 2007.

The Marine Corp’s excuses: they thought up-armored Hummers would work, and they (recognized that the military industry and its handlers would be non responsive) did not think that 1200 MRAP’s could be procured for Marine units in the two front-lines in Southwest Asia.

There being two diverse excuses poses more questions:

About the “minders”;

At the time the UUNS (universal urgent need statement) was submitted did anyone develop a technical solution to the UUNS that showed the Hummer would work? If one was done, as it must have to comply with certain Joint Chiefs’ directives, a thing called a capability document would have been coordinated and engineers would have compared it to the up-armored Hummer and rendered an evaluation that it met the requirements defined in the capability document. The Marine Corps if it had that could immediately answer a lot of Gayl’s arguments. That the case has not been settled since Sep 2007 indicates that step was not done, and the assertion that the up-armored Hummers could or was thought to solve the UUNS is unsubstantiated.

The above is the way the services determine requirements for use in combat and lead into delivering hardware to work the problems. The MRAP fits neither the Future Combat System mold, too heavy, nor the amphibious mode, it sinks and the whole idea of amphibious operations is to go where there are soft points.

Someone needs to tell the “minders” that Mc Cain thinks this warfare state gravy train will last for 100 years.

About the “red tape”: there are plenty of companies making these things all over the world.

There is a South African Company that has been making them for the continuous wars in Angola and other border regions since the 1970’s. This company’s specs are easily acquired by a visit, the US and NATO has cooperated with South Africa in the arms trade for many years. Further research I found that the UN peacekeepers in Somalia from 1992 to 1994 used MRAP type vehicles and experienced fewer vehicle mine impact casualties than US forces in Somalia prior to the withdrawal after the Blackhawk engagements.

The long interest in MRAP by South Africa indicates the absolute poverty of the assertion that up-armor Hummers might work.

There is no logic, to my mind, that the Marine Corps might see the MRAP as taking money away from the long troubled, no mission Expeditionary Fighting Vehicle (EFV). There is a huge amount of money floating around to pay for the wars in Iraq and Afghanistan. There is supplemental funding, there are funds coded for the Global War on Terror (GWOT, I see it as Taxpayer bilking). Lots of money out there.

The problem is the DoD system and its arcane set of priorities. Good vehicles or any equipment for that matter fast and cheap are not the priority. The end game is keeping the “industry” healthy. Meaning profit before the Marine or taxpayer.

So, what explains why the Corps did not buy South Africa vehicles and licenses to build it in quantity here in the States?

The US has vehicle manufacturers who can be hired to design new unproven MRAP type vehicles, with much more cost and good profit than buying a license to manufacture the South African design. There is an industry base to build and support despite the casualties suffered during the delayed, profitable project.

The Marine Corps could then pursue the “real” priority UUNS to stumble along on the Amphibious EFV trail, while the Army buys the MRAP, in a long blundering program at an estimated market value for the partners of $20B.

Bottom line the Marine Corps was going along with the ‘strategy and structure’ of the DoD acquisition process which is profits before any military or humane considerations. The congress helps giving their contributors more profits rather than going fast and low cost with a good existing design.

Now there are numerous MRAP designs being built by different companies to divide the profits among a number of districts. The diverse designs pose huge logistics problems with differing components and training needs to operate and maintain them.

Then there are profits to be made in wasteful logistics support, as well.

It is interesting that a couple of US MRAP budget sponsors in the congress have come to Gayl’s aid in warning the Corps about his whistleblower status.

A thorough study would reveal the delay benefited of military industrial complex market share in the MRAP business area, at the cost of Army and Marine Corps casualties.

This one was by ILSM.

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