Relevant and even prescient commentary on news, politics and the economy.

Blast from the past…old funding dies hard

This article caught my attention mainly because I hadn’t heard much about the court battles on terminating funding for the A-12 because I thought it was done. But the inability of DOD to submit documentation that might justify that the A-12 was not viable due to classified and secret information and specs made an impression on me as a catch-22 of funding for non-viable projects…making it horribly difficult to ‘learn from mistakes’ so to speak.

Here is a response from ilsm to my sending him the link:


The A-12 a blast from the past!

I believe the Supreme Court last year decided the Navy/US Government would not be paid back “progress payments” paid prior to the termination of the A-12 sometime in the early 1990’s. Here is an article form Feb 1999 about the case as it stood then, it kept going until 2010!

I had read the linked article years ago and am surprised to find it. In the past 8 or so years I have only kept up with the A-12 headlines, when I saw them. The A-12 was a stealthy fighter concept, a carrier based version much different [of course] to the already retired F-117. Purportedly, the free world depends on things like the A-12.

The interesting issue to me is why then Sec Def Cheney terminated the contract for “convenience”, a termination used when the service decides it does not need the equipment. The Navy’s acquisition approach was to have Mc Donald Douglas (now owned by Boeing) build 12 of the A-12’s for test and evaluation. The technology was risky and the specifications challenging, for example they had to keep the weight under 80,000 pounds which was the limits of the elevators on aircraft carriers and likely a big deal to beef them up (maybe the decks cannot handle the load of the landings either).

I am neither an expert in stealth nor an expert in aircraft carriers, mostly Air Force. The contract type for this risky development was “fixed price”, which means Mc Donald Douglas signed up to deliver the 12 airplanes at a specification at a set time and contract price. In order words the contractors assumed al the risk.

As it happens today, and then Mc Donald Douglas promised to “name the song in 5 notes”, but needed about 20 special notes not on contract, they kept the Navy at bay, who would have done some insider contracting “magic” to raise the price until a contract auditor discovered the A-12 would not get any airplanes in the time and money Mc Donald Douglas had entered into the contract to deliver.

  George HW Bush was president and his advisors had some interest in cutting DoD spending [FY 91 spending had declined to 475B from 553B in 1989 a decline which was disrupted by the first Gulf war, but hit $400B in 2011 dollars in 1999] and finding new ways to do acquisition which was as much a mess as today.

So, through a fair amount of trading and evading it was decided to terminate for convenience. The better termination was for default, and I do not know why Cheney directed the type of termination, nor why a Navy contracting authority would not set him straight.

Cheney could have done three things, one being convenience. He could have terminated for “default”, which they were doing, or he could have called Mc Donald Douglas in and said: “a contract is a bond, do the job [which is impossible given the traditional ineptitude of defense contractors]. The point in Fensler’s article, which is valid today, is that the Navy needed Mc Donald Douglas and would have (without the publicity) kept shoveling good money after bad for  the A-12, (like the AF did F-22 and now F-35). The good thing is despite the fact the government does not get its progress payments back, the Navy has not been saddled for twenty years and likely $200B in costs to try and make the A-12 fly, a burden the USAF has successfully held up so their generals could have good jobs…

… Bottom line from the Supremes: the military industrial complex does not get real contracts, as in common law, they get paid whether they meet their promises or not.

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Post-traumatic stress disorder (PTSD) responses

Past Angry Bear posts started in 2007, but here are four later posts 2008 and 2009:

Brain injury awareness
Pattern of misconduct
PTSD and our military response
What are we going to do now is your choice

GAO report 12-154 addresses the notion that this sort of thing is being taken care of. There are about 80 projects now ongoing to determine best practice within the military culture and organization, which is of course very different than civilian demands placed on personnel. :

Post-traumatic stress disorder (PTSD), which falls into the broader field of psychological health (PH), and traumatic brain injury (TBI) are recognized as the signature wounds of the wars in Afghanistan and Iraq. In two reports issued in 2011 (GAO-11-219 and GAO-11-611), GAO cited numerous management weaknesses at the Defense Center of Excellence for PH and TBI (DCOE). For the present report, GAO reviewed (1) funding for DOD’s PH and TBI activities in fiscal years 2007 through 2010 and the accuracy of its reporting on these activities to Congress and (2) DOD’s ability to coordinate its PH and TBI activities to help ensure that funds are used to support programs of the most benefit to service- members. GAO interviewed DOD officials, reviewed legislation and DOD’s annual reports, and obtained relevant documentation.

From fiscal year 2007 through fiscal year 2010, DOD activities for the treatment and research of PH and TBI received more than $2.7 billion. In fiscal year 2007, funding for these activities totaled $900 million; in fiscal year 2008, it was $573.8 million; in fiscal year 2009, $395 million; and in fiscal year 2010, $838.6 million. GAO found, however, that the reports DOD provided to Congress on these activities did not include expenditures, as required by law, and that the obligations data they contained were unreliable. Governmentwide policies call for agencies to have effective internal controls to assure accurate reporting of obligations and expenditures. 

However, the Office of the Assistant Secretary of Defense for Health Affairs has not developed quality control mechanisms to help ensure that data on PH and TBI activities are complete and accurate. Further, although DOD listed patient care among reported costs, it did not specify what those costs included, making it difficult for decisionmakers and Congress to fully understand the costs.
No one organization coordinates DOD’s PH and TBI activities.

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$158 billion for services/2007 (rounding down)

GAO reviews a case study of using contractors side by side with government employees at CCE.

CCE (Contracting Center of Exellence) has relied on contractor contract specialists since it began hiring them in 2003. In August 2007, contractors—who work side by side and perform the same functions as their government counterparts—comprised 42 percent of CCE’s contract specialists. CCE officials cited difficulties hiring and retaining government personnel in light of the competition from government and the private sector for this competency. While CCE officials said that they prefer to use government employees, they have not considered the appropriate balance of contractor versus government contract specialists. Furthermore, CCE has not addressed the need for more training of its government employees to strengthen their skills in conducting CCE’s increasingly more complex procurements.
Methods to mitigate the risks of using contractors have been mixed in effect. First, the line separating contractor from government employee is blurry, and contractors did not always clearly identify themselves as such when dealing with the public. Second, the potential for the work being done under a personal services contract, which the Federal Acquisition Regulation generally prohibits because of the government-contractor relationship it creates, was clearly present. While contractor managers retained control over matters such as approving leave requests, CCE took steps to further strengthen the management distinction between government and contractor employees based on GAO’s findings. Finally, risks of organizational and personal conflicts of interest were mitigated to some extent, but in practice the government relies on individual contractor employees to identify potential conflicts. These types of risks must be mitigated to ensure that the government does not lose accountability over policy and program decisions.
CCE is paying up to almost 27 percent more for its contractor-provided contract specialists than for similarly graded government employees. This comparison took into account government salary, benefits, and overhead and the loaded hourly labor rates paid to contractors. Our review of available résumés showed that six contractor employees supporting CCE in fiscal year 2007 had on average more contracting experience than CCE’s five recent government hires.
Despite CCE’s legal counsel’s concerns, CCE has been inappropriately ordering contract specialists under a GSA contract because the services were out of scope of those contracts. GAO found additional problems, such as a contractor advertising contract specialist services on GSA’s Web site that it was not authorized to provide. Due to what it characterizes as the growing demand by federal agencies for contractor contract specialists, GSA recently posted a revised contract category, under which government agencies can procure contract specialists to provide acquisition management services, such as cost estimating and proposal evaluation support. In response to GAO’s findings, GSA contacted each of the contractors involved in our review about their out-of-scope services and plans further follow-ups with them.

(italics and bolding by rdan)

The Washington Post tried to scoop me…I readied the post yesterday. The thinking at CCE appears on the surface to mimic the OCC and John Dugan in method and intent. But there are expert readers who can figure out the details.

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DoD and the GAO

Status of Selected Aspects of the Coast Guard’s Deepwater Program. GAO-08-270R, March 11

Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks. GAO-08-388, March 11
Highlights –

Defense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight. GAO-08-572T, March 11
Highlights –

Joint Strike Fighter: Impact of Recent Decisions on Program Risks. GAO-08-569T, March 11
Highlights –

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

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