GAO Recommends "Fundamental Changes" for Weapon System Programs
Last Thursday the Government Accountability Office (GAO) testified before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security urging the need for fundamental changes to improve weapons program acquisitions.
Major weapons systems have been on GAO's high risk list since 1990 (incidentally, the same year GAO started identifying government programs and operations at high risk)--and POGO's too. A couple of highlights from the GAO's testimony:
- The acquisition cost of DoD's 2007 weapons program portfolio is $300 billion over initial estimates.
- Programs are experiencing, on average, a 21-month delay in delivering initial capabilities to the warfighter, a 5-month increase over fiscal year 2000 programs.
- There are significant problems at the program level: "Weapon system programs are initiated without sufficient knowledge about system requirements, technology, and design maturity. Lacking such knowledge, managers rely on assumptions that are consistently too optimistic, exposing programs to significant and unnecessary risks and ultimately cost growth and schedule delays."
- DoD is too indecisive, especially when it comes to cancelling programs.
- Like many agencies, DoD's definition of success is skewed. Success is getting continued funding for the project, rather than a successful, on-budget realization of the system.
As this blog has mentioned before, DoD certainly bears the brunt of the responsibility for its spending problems, but it's important to remember the significant role of some members of Congress in impeding reforms. The GAO's report does urge the military services, DoD, and Congress to work together to solve these problems, but the report buries the lede when it comes to Congress's role in exacerbating the problems in weapons acquisitions. This becomes particularly clear when looking at the problem of decentralizing requests on a service-by-service basis that fail to prioritize acquisitions:
Ultimately, the process produces more demand for new programs than available resources can support. This imbalance promotes an unhealthy competition for funds that encourages programs to pursue overly ambitious capabilities, develop unrealistically low cost estimates and optimistic schedules, and to suppress bad news. Similarly, DOD’s funding process does not produce an accurate picture of the department’s future resource needs for individual programs--in large part because it allows programs to go forward with unreliable cost estimates and lengthy development cycles--not a sound basis for allocating resources and ensuring program stability. Invariably, DOD and the Congress end up continually shifting funds to and from programs--undermining well-performing programs to pay for poorly performing ones. (Emphasis POGO's)
Major weapons systems create jobs, which then go on to create Congressional (and constituent) stakes in sustaining a program--whether it's successful or not. The challenges with defense acquisitions facing the next administration are multi-faceted and complex. With so many incentives for continuing with status quo operations, it will require bold leadership to institute the kind of tough reforms necessary to ensure that our national defense is focused on purchasing weapons that will meet our comprehensive strategic needs on-time, on-target, and on-budget.
-- Mandy Smithberger
Defense contracts in the '70s and '80s reimbursed contractors for their development (RDT&E), but did not pay them a profit on development. Companies in those days did not try to drag development of weapons to 2 and 3 decades. There was no financial incentive to do that. In the early '90s Congress changed the rules so that contractors now make the same 10% profit on development they make on production. What a genuinely stupid move that was. How much risk is there in development? None. You're building a paper weapon. Nothing has to work. You need no expensive facilities. All you need is a leased building full of leased computers in leased cubicles. How much risk is there in production? Lots. A real weapon has to work. There are any number of things that can and do go wrong. It requires expensive machinery to build the parts and assemble the product. Then we wonder why the 4th generation fighters took 3-5 years to develop and the 5th generation take 25. You don't have to be a genius to figure this stuff out. Just open your eyes.
Has POGO ever taken a position on the issue of contractors making the same profit on development and production? NO! They are more than happy to lead Americans to believe everyone in the defense industry is crooked and incompetent, but mysteriously they've never figured out why development costs and schedules have spiraled out of control. When is POGO going to take a real stand against waste, instead of tacitly furthering the interests of the very defense contractors they claim to be "watching"?
Posted on: Oct 02, 2008 at 10:29 PM