Wasteful Defense Spending Is a Clear and Present Danger

[Schmedlap]

Inflation has risen by 700% since then. So Mr. McCain's A4 cost $6.1 million in 2008 dollars. Applying a generous factor of three for technological improvements, the price for a 2008 Navy F18 fighter should be about $18 million. Instead, we are paying about $90 million for each new fighter.

I wonder how good of a comparison that is. Was an A4 designed for the same mission as an F18? Is a "factor of three for technological improvements" really generous?

I love the concluding sentence.

At least they are safe from cyberattack since no one in China knows how to program the '83 vintage IBM software that runs them.

It reminds me of an anecdote that I shared with an Information Systems class in Business School, as I explained that - in the 21st century - we were using dot-matrix printers, floppy disks, and giant, low-resolution monitors to run the Army supply system. People thought that I was exaggerating. When the professor asked me for some plausible benefit of this, I pointed out, "well, I suppose you can't hack into an old 386 if it doesn't even have an ethernet port."

[Cliff]

I wonder how good of a comparison that is. Was an A4 designed for the same mission as an F18? Is a "factor of three for technological improvements" really generous?

First off, the F-22 doesn't cost $350 million... that's essentially including the development cost, most of which is sunk. Somewhere around $115-$130 million is probably more accurate. If the F-22 was built at the same rate (approx 2900?) the A-4 was, it would certainly be a lot cheaper. Or even the rate it was supposed to be built. Or even half the rate it was supposed to have been.

The A-4 is not really comparable to the F-22 either... roles and missions wise, we don't really have an equivalent... the ROKAF T-50, Hawk, or M-346 would probably be a more apt comparison. From the A-4's timeframe, the F-102 or F-4 are probably better comparisons.

If you compare the effectiveness increase of the F-22 (perhaps kill ratios?) over other fighters to the cost increase they are probably pretty close to proportional.

I've said it before, and I'll say it again... the US military needs to be able to fight at all levels of the spectrum of conflict. Without the high end forces (armor, artillery, carriers, fighters) needed to fight at the high end, wars may not stay small.

Personally I think we should be able to afford a force that allows a moderate level of risk across the spectrum.

[pjmunson]

Cliff, Lehman isn't saying that we shouldn't have the F-22. From the title, and the article itself, he's saying that the bloating of costs due to the screwed-up nature of our acquisitions bureaucracy, plus the fact that we've essentially let the contractors take over the job of telling us what we need, is killing us on defense spending. I'd argue that, while the F-22 makes an attractive example because of the sheer dollar amounts involved, you can see this contracting bloat everywhere. The answer to everything seems to be to hire contractors, who will then work into their study, their procedures, whatever, the trojan horse of how you are going to need them forever and how you need to increase the scope of their contract so you can pay them more money.

[J Wolfsberger]

Cliff, Lehman isn't saying that we shouldn't have the F-22. From the title, and the article itself, he's saying that the bloating of costs due to the screwed-up nature of our acquisitions bureaucracy, plus the fact that we've essentially let the contractors take over the job of telling us what we need, is killing us on defense spending. I'd argue that, while the F-22 makes an attractive example because of the sheer dollar amounts involved, you can see this contracting bloat everywhere. The answer to everything seems to be to hire contractors, who will then work into their study, their procedures, whatever, the trojan horse of how you are going to need them forever and how you need to increase the scope of their contract so you can pay them more money.

You should probably learn at least a little bit about how the defense industry operates before writing such slanderous nonsense.

[Ken White]

...that the bloating of costs due to the screwed-up nature of our acquisitions bureaucracy, plus the fact that we've essentially let the contractors take over the job of telling us what we need...

Seems to me the former leads to the latter. Both failures ably and forcibly supported by our superb Congress.

The emasculated the former to to stop backbiting and evading of Congressional preferences They assisted DoD in shutting down the P&C folks by passing some really dumb laws and requiring a 'compliance' bureaucracy that would be hilarious in its lack of value if it weren't sad.

They really like contractors -- contractors are BIG campaign contributors and many of them hire Union workers, a twofer for the Congroids.

There's plenty of blame in this for many -- including a number of folks in uniform and DoD civilians, appointed and career. The industry is reacting to the people it sells to. Contractors are subject to uniformed scrutiny...

[pjmunson]

instead of insulting me and calling what I say nonsense, or at least in addition to insulting me, then why don't you explain how ill-informed I am. Sensitive because contracting dollars are lining your pockets? I have seen it in action, and I also know contractors who admit as much. Contractors (the companies) are businesses and if they do not justify their continued utility to the DoD, and also the expansion of their scope of work, then they are not going to survive. It makes business sense for them to be selling themselves. It also leads to bloat when no one in the DoD bureaucracy cuts the fat, or at least weeds out what we need from what we don't.

Furthermore, some of the mechanisms through which the military is contracting out programs that are "urgent" leads to excesses, poorly written statements of work, and generally a lot of money wasted for not a lot of results.

I am not a defense industry or defense acquisitions expert, but don't hide behind your huffy insults. Explain how I am off base.

[Surferbeetle]

Privatization is a government strategy that can be attributed to Margaret Thatcher, Ronald Reagan, and Brian Mulroney. The objective is to allow the competitive powers and associated efficiencies of the free market to deliver government services at low cost. The theory is sound and simple to understand, however effective real world implementation depends upon a government's (and as we know they are not monolithic entities) ability to mobilize sufficient capability and capacity to properly oversee the process. The IMF & World Bank are famous/infamous for attempting to implement Privatization Strategies in 2nd and 3rd World countries.

The government side of the sausage making process as I understand it:

Hazy understanding:

• Agency develops a budget request which takes into account operations & maintenance, new projects, and force structure-somehow this is tied to a budgetary line item

• Line items get appropriations (money) from Congress

Better understanding:

• Five year plan projects or emergency projects are funded.

• Contracting Officer's Representative (COR) develops a Statement of Work (SOW) which incorporates project background, defines required work, references industry standards to measure the work against, defines a submittal schedule, incorporates a proposed project schedule, and defines the deliverables to be provided by the contractor.

• COR develops an independent government estimate of the projects anticipated cost.

• Contracting Officer (CO or KO) sends out a Request for Proposal and considers bids from qualified parties.

• COR reviews bids for technical considerations if requested and provides advice to CO

• CO applies Federal Acquisitions Regulation, determines winning bid, and negotiates price

• CO, COR, and Contracting Officer's Technical Representative (COTR) then oversee project to completion

Just like in military operations, weak links in government contracting operations often come down to capacity and capability.

[J Wolfsberger]

instead of insulting me and calling what I say nonsense, or at least in addition to insulting me, then why don't you explain how ill-informed I am. Sensitive because contracting dollars are lining your pockets? I have seen it in action, and I also know contractors who admit as much. Contractors (the companies) are businesses and if they do not justify their continued utility to the DoD, and also the expansion of their scope of work, then they are not going to survive. It makes business sense for them to be selling themselves. It also leads to bloat when no one in the DoD bureaucracy cuts the fat, or at least weeds out what we need from what we don't.

Furthermore, some of the mechanisms through which the military is contracting out programs that are "urgent" leads to excesses, poorly written statements of work, and generally a lot of money wasted for not a lot of results.

I am not a defense industry or defense acquisitions expert, but don't hide behind your huffy insults. Explain how I am off base.

1. “… the bloating of costs due to the screwed-up nature of our acquisitions bureaucracy…” Agreed. And one of the few accurate observations.

2. “… plus the fact that we've essentially let the contractors take over the job of telling us what we need…” Completely false. This is not how the acquisition process works. For the Army, TRADOC (Training and Doctrine Command) determines doctrine and needs. These are given over to the AMC (Army Material Command) activity, which interfaces with the contractors. It is generally in this area that the requirements process breaks down, for the service, the civil service and contractors.

3. “ … contracting bloat everywhere.” Yes. Due to the fact that for the last 10 or so years the entire engineering process has been FUBARed. Specifically, our systems analysis and engineering sucks, across the board. My observation, the GAO’s judgment, and the principal thrust of the latest acquisition reform bill.

4. “The answer to everything seems to be to hire contractors…” Yes. Because of:

a. Congressionally determined authorized end strength.
b. Retention problems for highly skilled technical fields.
c. Inflexible Civil Service rules regarding hiring and firing.

5. “… who will then work into their study, their procedures, whatever, the trojan horse of how you are going to need them forever and how you need to increase the scope of their contract so you can pay them more money.” No. And in addition to being false, it is also extremely insulting.

There are amateurish, unethical officers, civil servants and contractors. There are far more ethical, professional, competent officers, civil servants and contractors. If you’ve had a run in with some unethical types, that’s unfortunate. It doesn’t justify your remarks, in either post.

And I stand by my observation: You need to learn how the acquisition process works.

[pjmunson]

Up front, I'm not pointing the finger solely at contractors. As Ken White put it, there is plenty of blame to go around and I recognize it. Contractors (speaking of the companies more than the individuals) are there to make money and, as such, they have a responsibility to their shareholders, employees, themselves, to figure out how best to turn a profit. In that, they are going to do everything they can to sell themselves. That includes justifying their continued utility, lobbying Congress, etc.

"“… plus the fact that we've essentially let the contractors take over the job of telling us what we need…” Completely false. This is not how the acquisition process works. For the Army, TRADOC (Training and Doctrine Command) determines doctrine and needs. These are given over to the AMC (Army Material Command) activity, which interfaces with the contractors. It is generally in this area that the requirements process breaks down, for the service, the civil service and contractors."
-It is not completely false. You are correct, I do need to learn more about the acquisitions process, but at the same time, I can still have a valid observation without be an acquisitions expert. I know that TRADOC, MCCDC, and others are supposed to be determining doctrine and needs and in many cases that is happening. However, the contractors can still inject themselves into the process (as they rationally should be doing to make a profit) and tell the military what it needs and how that contractor can supply it. Because the bureaucracy is short staffed, etc, it often takes these "great ideas" and presentations and runs with them, finding out way to late just how little work had been done beyond the powerpoint. This falls on the shoulders of both the contractors who are selling subpar ideas/products, as well as the civilians and officers staffing the DoD side. A quote from an officer who was part of one of these deals, discussing how we would actually employ a program that was sold to DoD essentially through his office, "It looks great on powerpoint, but you (the operating forces) will have to figure out how to make it work" because the powerpoint briefing at least in parts was completely out of touch with reality. That office was fed crap by the contractor, then put the stamp of their office on the slideshow. Again, both are culpable.

-"“The answer to everything seems to be to hire contractors…” Yes. Because of:

a. Congressionally determined authorized end strength.
b. Retention problems for highly skilled technical fields.
c. Inflexible Civil Service rules regarding hiring and firing."

-Agreed. I understand why contractors are being relied on and how the DoD has forced that situation, but the bottom line is that the contractors have their hooks in the DoD, and Congress, and the DoD is increasingly being steered by them due to its own shortcomings. Completely rational behavior on the part of the commercial contractor, but this is a very unequal relationship. You have a crippled bureaucracy, subject to Congressional and Executive directives, that is not governed by dictates of profitability or business competitiveness permeated by commercial entities, that ARE governed by the need to make a profit, that have powerful access to Congress and the Executive. This is not a healthy relationship.

-"5. “… who will then work into their study, their procedures, whatever, the trojan horse of how you are going to need them forever and how you need to increase the scope of their contract so you can pay them more money.” No. And in addition to being false, it is also extremely insulting. "
-Not false, and shouldn't be insulting unless you are feeling extremely defensive or guilty. My wording of "trojan horse" perhaps is pejorative, but I think that it is apt in that, once contractors are in the door, they are going to try to stay there and increase their profits. What company in their right mind would not attempt to demonstrate their utility and, more importantly, once given insight into the DoD's needs by working on a given contract, what company would not try to expand their "market share" by proposing other services they can offer? DoD is culpable in that it needs an appetite suppressant, as is Congress in that they can sometimes force DoD to buy what it acknowledges it does not need.

Furthermore, the nature of the contracting industry, with its networked set of companies that (a) are often huge with many different branches with very different functions (b) often own subsidiaries or have mutually beneficial relationships with other companies and (c) are frequently shifting, renaming, and reorganizing, presents problems and conflicts of interest. Example: Massive defense corporation A has an analytical branch. It is contracted to do a study of issue X for a TRADOC-like entity. It also has branches that can provide manpower and systems that will carry out the recommendations of such a study. The TRADOC-like entity is under no obligation to implement the findings of the study, but the contractor in this case is telling the TRADOC-like entity what it needs. It the TRADOC-like entity decides to implement the findings of the study, won't corporation A be likely to have a huge advantage in the bidding? Not to mention that the surveys that the high-paid PhD and his crew came up with would fail any graduate level research design class as completely flawed.

You'll probably tell me again that I am slanderous and ill-informed, but I'll leave it to others to judge. You don't have to be an acquisitions expert to have valid criticisms of all aspects of the situation, although many would like to say so, in order to ensure that only the insiders are allowed to criticize themselves.