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:

Dan,

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!

http://www.usni.org/magazines/proceedings/1999-02/12-legacy-it-wasnt-airplane-it-was-train-wreck

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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Procurement

Mother Jones points us to a Stimson Center study, titled What We Bought: Defense Procurement From FY01 to FY10 (PDF), (via Reader Supported News).

From the report

Procurement funding grew from $62.6B in FY01 to as much as $135.8B throughout the decade.3 In constant dollars, base procurement funding in FY10 increased by 41 percent from FY01.4 Increases also were augmented by the use of supplemental war funding. In FY02, only $1.4B was appropriated for procurement in supplemental war funding. That increased every year until $65.9B was appropriated in FY08. FY08 ended up as the high water mark, but the following three years have all seen procurement funding of about $30B included in war funding.5 In all, $232.8B or 22 percent of total procurement funding in the last decade came from supplemental war funding. Although procurement funding increased in the base budget, supplemental war funding significantly enhanced the resources available.

The Mother Jones article

says the military is hardly in dire straits when it comes to funding its big-ticket items. “The services capitalized on funding to modernize their forces, especially the major weapons programs that constitute the heart of the services’ capabilities,” writes the report’s author, Russell Rumbaugh—a retired Army officer and ex-CIA military analyst.

The study shows there’s one big reason the brass are concerned about budget-cutting discussions in Congress: They’ve been double dipping into the taxpayer’s pocket to finance weapons purchases. Of the roughly $1 trillion spent on gadgetry since 9/11, 22 percent of it came from “supplemental” war funding—annual outlays that are voted on separately from the regular defense budget. Those bills are primarily intended to keep day-to-day operations running in Iraq and Afghanistan—meaning that if a member of Congress votes against a supplemental spending bill, she exposes herself to charges that she doesn’t “support the troops” in harm’s way.

And there’s plenty to cut, thanks to McKeon and his congressional cohort. This spring, they preserved defense earmarks after vowing that they wouldn’t; voted to make more Humvees the Army doesn’t want (and reject Afghanistan base defense systems that it did); to keep an unnecessary $3 billion GE contract to build an “alternative engine” for the single-engine Joint Strike Fighter, whose costs are approaching $1 trillion; and to repatriate US victims of the 1804 Barbary War in Libya.

In their defense, they did vote to trim defense dollars by banning color copies at the Pentagon.

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DoD Major Weapons Acquisition

guest post by Ilsm

According to GAO 11-394T 17 Feb 2011 , DoD Major Weapons Acquisition continues to be a high risk item watched by GAO. In the testimony the GAO is concerned about waste and mismanagement in the 102 largest DoD acquisition programs. The testimony states that in the five years starting in 2011 that $300B are spent by the programs GAO reviews annually, while the rest of the Trillion plus dollars in the budget for those years is to develop and acquire things in DoD and are smaller programs which are far less well managed, whose decisions are made less formally and whose engineering has much less experience and authority to do the job well.

From 2011 through 2015 the DoD will spend appropriations totaling $1.1 Trillion dollars for R&D and Buying new war making stuff. If recent reviews hold, none of it will be spent well.

I have followed the GAO annual reports over the past several years. Refer to GAO 10-388sp, 30 Mar 2010: Assessment of Selected Weapon System Programs.

Some of the findings: few of the 102 major programs, about $300B in funds the next 5 years, met statutory requirements to have their Selected Acquisition Reports (SAR) to Congress by May 2009, most had not delivered their SAR by Nov 2009 when GAO needed the data to do the report.

Specific observations: cost over growth is hard to measure this year as the management is too late with data, decisions on spending money for systems are consistently made without sufficient “product knowledge” or without managing the technical work using Congress’ required configuration steering boards (CSB), nor managing the programs’ system engineering and finally with too many requirements change (which ironically is not much of an issue since the programs were not managed by knowledge or understanding of the performance of the configurations).

Pretty revealing and no one makes any changes even though congress adds to its direction the programs are not managed.

No one will kill a bad program.

No wonder DoD cannot pass an audit.

I have a note on my calendar to look for the March 2011 release to see if anything is better

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Eisenhower as a lefty politico

An opinion piece in the NYT points us to new docs on former President Eisenhower:

LAST week the National Archives released a trove of drafts and notes that shed new light on President Dwight D. Eisenhower’s farewell address, in which he warned America about the “military-industrial complex.”

More can be found here.

On Oct. 31, 1960, another speechwriter, Ralph E. Williams, warned of a “permanent war-based industry” run by former military officials.

Also see a post from Econospeak

The following is a shortened version of Rachel Maddow’s opening monologue from her show on Wednesday on MSNBC:

For the next hour, we begin with the president of the United States addressing the nation and calling for a massive investment in this country’s infrastructure, rebuffing the idea of giant tax breaks for the richest Americans, and warning anyone who would dare touch Social Security to keep their hands off.

You want to talk about red meat for the base? Listen to some of the language the president used. “Workers have a right to organize into unions and to bargain collectively with their employers. And a strong, free labor movement is an invigorating and necessary part of our industrial society.” Wow.

How about this one? “Only a fool would try to deprive working men and women of their right to join the union of their choice.”

Listen to the way he goes after the right here. “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things, but their number is negligible and”–and the president says–“their number is negligible and they are stupid.”

That is not what Barack Obama said last night. That is way to the left of any national Democrat at this point. That was all Republican President Dwight David Eisenhower. That was all the stuff he said when he was president.

Republican President Dwight Eisenhower, president when the top tax bracket for the richest people in this country was 92 percent. President Eisenhower defended that tax bracket. He said we cannot afford to reduce taxes until, quote, “the factors of income and outgo will be balanced.” Eisenhower insisting there must be a balanced budget and that taxes on the rich are the way to balance it. Dwight Eisenhower, you know, noted leftist.

The Republican Party platform of Eisenhower’s 1956 called for expansion of Social Security, broadened unemployment insurance, better health protection for all of our people. It called for voting rights–full voting civil rights for D.C. It called for expanding the minimum wage to cover more workers. It called for improved job safety for workers, equal pay for workers regardless of sex.

This is the Republican Party circa 1956. The Republican Party.

The story of modern American politics writ large is the story of your father’s and your grandfather’s Republican Party now being way to the left of today’s leftiest liberals. If Dwight Eisenhower were running for office today, he would have to run, I’m guessing as an independent, and not as some Joe Lieberman, in between the parties, independent. He’d be a Bernie Sanders independent.

In 1982, who passed the largest peacetime tax increase in U.S. history? That would be Ronald Reagan.

Who called for comprehensive health reform legislation during in a State of the Union address in 1974, a program that was well to the left of what either Bill Clinton or Barack Obama ultimately proposed? That would be Richard Nixon.

Eisenhower and Reagan and Nixon–they were not the liberals of their day. They were the conservatives of their own time.

But the whole of American politics has shifted so far to the right in the last 50 years that what used to be thought of as conservative, what used to be thought of as a conservative position, is now considered to be off-the-charts lefty.

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The Pentagon Labyrinth

by Mike Kimel

Cross posted at the Presimetrics blog.

I just came upon The Pentagon Labyrinth Its a very readable, very informative collection of essays about national defense in the United States.  The essays are written by ex-defense personnel (some of whom were very influential) and journalists who cover the military, and to top it off, its free!!!!

From the book’s blurbage:

The Pentagon Labyrinth aims to help both newcomers and seasoned observers learn how to grapple with the problems of national defense. Intended for readers who are frustrated with the superficial nature of the debate on national security, this handbook takes advantage of the insights of ten unique professionals, each with decades of experience in the armed services, the Pentagon bureaucracy, Congress, the intelligence community, military history, journalism and other disciplines. The short but provocative essays will help you to:

-identify the decay—moral, mental and physical—in America’s defenses,

-understand the various “tribes” that run bureaucratic life in the Pentagon,

-appreciate what too many defense journalists are not doing, but should,

-conduct first rate national security oversight instead of second rate theater,

-separate careerists from ethical professionals in senior military and civilian ranks,

-learn to critique strategies, distinguishing the useful from the agenda-driven,

-recognize the pervasive influence of money in defense decision-making,

-unravel the budget games the Pentagon and Congress love to play,

-understand how to sort good weapons from bad—and avoid high cost failures, and reform the failed defense procurement system without changing a single law.

The handbook ends with lists of contacts, readings and Web sites carefully selected to facilitate further understanding of the above, and more.

This new publication from the Center for Defense Information (CDI) is being made available for download through our Web site at the following links below. Included are the full e-book, and all individual sections and essays in PDF format.

Its a quick read (vital for me right now!!), and frankly, there isn’t much in here that’s controversial though its clear several of the writers relish being gadflies.  The book is chock full of facts, and it provides a lot of great food for thought about military issues.

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The wacky world_of American war

From Tom Dispatch a quiz:

With President Obama’s announced July 2011 drawdown of U.S. troops in Afghanistan in mind, the Pentagon has already:

a. Begun organizing an orderly early 2011 withdrawal of troops from combat outposts and forward operating bases to larger facilities to facilitate the president’s plan.

b. Launched a new U.S. base-building binge in Afghanistan, including contracts for three $100 million facilities not to be completed, no less completely occupied, until late 2011.

c. Announced plans to shut down Kandahar Air Base’s covered boardwalk, including a TGI Friday’s, a Kentucky Fried Chicken, and a Mamma Mia’s Pizzeria, and cancelled the opening of a Nathan’s Famous Hot Dogs as part of its preparations for an American drawdown.

Answer is b.

According to Walter Pincus of the Washington Post, construction is slated to begin on at least three $100 million air base projects — “a $100 million area at Shindand Air Base for Special Operations helicopters and unmanned intelligence and surveillance aircraft”; another $100 million to expand the airfield at Camp Dwyer, a Marine base in Helmand Province, also to support Special Operations forces; and a final $100 million for expanded air facilities at Mazar-e Sharif in northern Afghanistan. None of these projects are to be completed until well after July 2011. “[R]equests for $1.3 billion in additional fiscal 2011 funds for multiyear construction of military facilities in Afghanistan are pending before Congress.” And fear not, there are no indications that the fast-food joints at Kandahar are going anywhere.

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Misinterpreting History to Sell Eternal Mobilization.

by reader Ilsm

Misinterpreting History to Sell Eternal Mobilization
Washington Post, July 30, 2010, Pg. 19
A Defense Budget Lesson We Never Learn, Max Boot
Max Boot, Jeanne J. Kirkpatrick seat at Council on Foreign Relations, describes a litany of tragedies rooted in alleged demobilizations including post American Revolution and the War Between the States. Each example is a false conclusion designed to justify the US borrowing trillions to avoid such daunting fantasies.
I am a student of Korean conflict and the geo politics of the era. Boot ignores Douglas Mac Arthur warning that a land war on the Asian land mass is suicide, and that Mac Arthur demanded nuclear weapons to avoid such a bankrupting situation. At the time the US was not demobilized, it was planning for war in Europe against the Red Army’s WW II formations. That strategy sadly is being continued today. The father of the Task Force Smith retreat was Stalin hitting at the weakness. A few more percent of GDP to defend everywhere in the late 1940’s would have lost the Cold War to the Soviets.

The other error is Vietnam. Vietnam was lost for two reasons. The US fought in the wrong way, sending the WW II forces into a guerilla war which Mac Arthur had seen and warned against. And it was fought with allies who were as alien to the Vietnamese people as the US. A few more percent of GDP to mobilize to win in Vietnam and everywhere else would have bankrupted the US and the Soviets would have won in 1968.

Bringing in the Reconstruction “failures” after 1866 presents Mr. Boot contempt of the US constitution implying US military force should have occupied Georgia to make it better somehow. Should have been as successful as Afghanistan today.
Mr. Boot would not be happy until the war machine has bankrupted the US. He should consider the aim of national strategy, Santayana’s second famous quote: “Fanaticism consists in redoubling your effort when you have forgotten your aim.” What good is it to avoid another Task Force Smith if the country is bankrupt?“

As a balance to Boot read Andrew Bacevich: http://www.huffingtonpost.com/andrew-bacevich/the-end-of-military-histo_b_663548.html

Israel and the US are the only nations who continue to rely on the irrelevant tactic of eternal mobilization.

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Procurement of big ticket items

Follow up to the US military ‘procurement and research’ increases post:

$25 billion for the first new aircraft carrier, $9 billion for per for another one or two each.

Aircraft Builders Compete for Air Force Tanker Contract Again 24/7 Wall St.:

Maybe the third time will be the charm. Today marks the closing date for bids to build a new refueling tanker for the US Air Force. Boeing Co. (NYSE: BA) submitted its 8,000 page bid on the deadline day, following a submission yesterday from the European Aeronautic, Defence & Space Co., known as EADS and makers of the Airbus family of planes. The bid from EADS did not include participation by its former partner, Northrup Grumman Corp. (NYSE: NOC).

The Pentagon’s first try at getting a new tanker began in 2000 and the contract was awarded to Boeing in 2004. The $35 billion award would have replaced 179 Boeing 707-based tankers built from the original contract awarded during the Eisenhower administration. A bribery scandal involving Boeing executives resulted in cancellation of the contract and a new round of bidding.
The contract was re-awarded in 2008, this time to Northrup, which had partnered with EADS to build the planes at the European maker’s Alabama plant on a modified version of the Airbus 330 passenger plane. That contract too was cancelled when the Government Accountability Office found irregularities in the way the decision was made.

The bidding was opened again last year, with a decision now due in November. A third bid, from U.S. Aerospace Inc. (OTC: USAE) and Ukranian partner Antonov Co., is also expected today…

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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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