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Value for the Money? The Defense Budget Blackhole

Near the end of a recent piece by Fred Kaplan, he wrote in Slate that:

The United States has the world's most powerful military. This military consumes more money (adjusting for inflation) than it did at the height of the Cold War. Not counting the costs of the two wars, it spends as much on the military as the rest of the world's countries combined. And yet, despite all this money and global reach, the U.S. Army finds itself unable to sustain more than 150,000 or so troops in Iraq and Afghanistan.

Pentagon leaders want us to spend even more, but as Kaplan makes clear, even with our current grotesquely large defense budget, we're having trouble fighting wars against relatively low-tech insurgencies in two medium-sized countries (both Iraq and Afghanistan have populations of around 30 million).  God forbid if we actually have to fight a real war against a near peer (which is being touted as China which has 1.3 billion people and high-tech).  More money is not the answer. 

Some of the problem is what we're buying (i.e. do we have the appropriate military for the conflicts we're in and likely to face?) and how we're buying (i.e. the acquisition process which includes contracting) and how efficiently the contractors we pay with taxpayer dollars develop and produce weapons.  The former two issues are well worn, the third is taken for granted, but shouldn't be.  In the commercial world, industry constantly delivers higher quality products at significantly reduced prices.  In the defense industry, the opposite is true.  It is easy to argue that we pay much more even relative to the increase in quality. 

Winslow Wheeler at the Center for Defense Information describes what may be the pre-eminent case study of this.  In Defense News, Wheeler wrote:

...if we adjust for inflation, weapons today should cost — very roughly — what they cost in 1945, at most 30 percent more. Of course, the advance in technology should bring a vast improvement in performance.
   
    Now, let’s run the price comparison for fighter aircraft. The newest thing in 1945 was the Lockheed P-80 jet, the most ex­pensive fighter Harry Truman could buy. In 1945, the P-80 cost $110,000. Using the OMB index to convert the dollars, we get $1,309,000.
   
    Today’s F-22 is a little pricier.
   
    The 184 F-22s the Air Force is now buying will cost $65.3 billion in contemporary dollars. That’s $355 million per copy. That’s not exactly in the price neighborhood of the inflation-adjusted P-80. In fact, it’s in a whole different universe. It’s a multiple of 273.
   
    We should not pretend that free market inflation and technology improvement is an excuse for to day’s huge defense budgets. While commercial prices have barely grown in inflation-adjusted terms and brought gigantic performance improvements, military prices have grown astronomically.
   
    A defense process so grossly in efficient that it can run up weapon costs 273 times faster than inflation reeks not of the commercial market but of socialism and bureaucracies that breed incestuously ad infinitum.
   
    And what about performance improvements? Does the cost of the F-22, even if astronomical, really help the Air Force win? A 273 fold improvement in capability is unreasonable to expect, but is it worth buying?
   
    On the purely technical level, the F-22 can fly more than three times the speed of the P-80 and al most twice as high. It has other special characteristics (a reduced signature against some radars at some angles and long-range sen sors and missiles, and more) that the P-80’s creators were incapable of designing.

One major reason we're paying so much more is the lack of competition in the defense industry due to mergers.  Another is the government often does not bargain well with its contractors.  Funding instability and massive billion-dollar projects which are sold on rosy, snake oil claims of cheap, easy leaps in technology play a major role too.  The political game of spreading out defense contract work to facilities and subcontractors in as many political districts as possible both politically protects defense programs and makes them more expensive (i.e. it is harder to coordinate hundreds or thousands of subcontractors dispersed over a vast geographical expanse, also each company has to take its cut in profit).

With the money the U.S. is spending we should demand better.  But it's more than about money; if we don't clean up the defense budget mess, we may not even be able to afford to fight wars anymore even if we need to.

-- Nick Schwellenbach

May 7, 2008 in Defense, Waste | Permalink | Comments (4) | TrackBack

Say 'NYET!' to Mergers

In an important Washington Post op-ed today, former senior Department of Defense officials Dov S. Zakheim and Lt. Gen. Ronald T. Kadish (Ret.) point out that the lack of competition in the Pentagon's buying has led it to become a Soviet-style system:

The Government Accountability Office reported last month on how things are going with nearly 100 major U.S. defense systems. Not well, it seems. They have exceeded their original budgets and are, on average, almost two years behind schedule.

The GAO report lays bare a festering problem in our nation's military procurement system: Competition barely exists in the defense industry and is growing weaker by the day.

It was a different story just two decades ago. In the 1980s, 20 or more prime contractors competed for most defense contracts. Today, the Pentagon relies primarily on six main contractors to build our nation's aircraft, missiles, ships and other weapons systems.

It is a system that largely forgoes competition on price, delivery and performance and replaces it with a kind of "design bureau" competition, similar to what the Soviet Union used--hardly a recipe for success.

With less competition, contractors have few incentives to keep costs down and performance high. In essence, we are left with a few super-sized contractors that are holding all of the cards. As witnessed by the Air Force tanker deal and the recent IBM suspension, the government has few places to turn--it has, in effect, handcuffed itself.

The Pentagon pushed a policy in the mid-90s to consolidate the defense industry, which has led to the situation we have today. Zakheim and Kadish describe a fateful Clinton Administration "Last Supper" meeting that precipitated the mergers.

Even worse, however, was that the federal government paid for the defense contractor mergers under a policy which its opponents, including POGO, called "payoffs for layoffs." At the behest of defense contractors, the Pentagon and its friends in Congress paid the contractors billions of dollars to merge. At the time, POGO noted:

These mergers contain an even more fundamental problem: even if there are short-term savings for the government, in the long run any lower prices are likely to be offset by the effects of reduced competition from excessive corporate merging. The Pentagon has not yet fully examined the long-term government costs of reduced competition from the tremendous concentration currently underway in the defense industry.

The health care, homeland security, and IT industries are also following a similar path toward merger-mania. In some instances, new companies are being gobbled up by the large DoD contractors. Too much power, influence, and control over the government marketplace is not good for taxpayers. POGO agrees with Zakheim and Kadish--more oversight isn’t going to fix the problem. The government has to do something to increase competition and bring in the many small and mid-sized firms that can help the government meet its needs.

-- Beth Daley and Scott Amey

April 28, 2008 in Contract Oversight, Defense, Waste | Permalink | Comments (1) | TrackBack

Senator McCaskill Digs In on Thunderbirds Sweetheart Deal Accountability

Yesterday, Senator Claire McCaskill sent a letter (pdf) to Air Force Secretary Michael Wynne with her concerns that insufficient accountability has been taken in regards to the favortism towards Strategic Message Solutions on the Thunderbirds Air Show Production Services (TAPS) contract.  She expressed "displeasure with the level of accountability that has been meted out on those associated with contracting improprieties."  In particular, she has questions about the "details undue command influence as well as command improprieties that appear to have risen all the way to the level of the senior uniformed official in your service, Air Force Chief of Staff General T. Michael 'Buzz' Moseley."

-- Nick Schwellenbach

April 18, 2008 in Contract Oversight, Defense, Ethics | Permalink | Comments (3) | TrackBack

Email to Gen. Moseley on Thunderbirds Contract: "I cannot support burning that kind of money to fix something that isn’t broken, when I am not buying fixes to things that are broken"

Below are email exchanges between General Ronald Keys, Air Combat Command (ACC) Commander, to General T. Michael "Buzz" Moseley, Air Force Chief of Staff.  Gen. Keys expressed concern that the Thunderbirds Air Show Production Services (TAPS) contract will cost far more than Keys initially was led to believe.  He stated that he finds it tough to swallow spending "big money" on public relations--i.e. the TAPS contract--at the expense of expenditures on current aircraft needs (an especially bad problem given that many aircraft are wearing out because of the conflicts abroad and aging).  Gen. Moseley waved him off and is more concerned about messaging and branding the Air Force for PR purposes through the use of the TAPS contract.  This looks bad, real bad for Gen. Moseley. 

These emails are from pages 211-212 of the Department of Defense Inspector General's (DoD IG) investigation report (pdf) of the "improper influence" of Major General Stephen M. Goldfein on the $50 million contract with Strategic Message Solutions for Thunderbirds Air Show Production Services:

1027. November 9, 2005,
General Ronald Keys, ACC Commander, e-mailed General Moseley, Chief of Staff. Keys wrote, “Boss, we asked for bids on this capability and they have come back. I know you said ‘press’ and ‘found’ some fy ’05 right-colored money to be able to acquire this capability. However, this is turning out to be an $8M per year project… something over $40M for the FYDP, and I cannot support burning that kind of money to fix something that isn’t broken, when I am not buying fixes to things that are broken… and may not be able to even fly mail to Chicago. I plan to pass on pursuing this and it will probably cost some small termination/bid prep costs, … but I can’t see spending big money here when we are talking about stopping aircraft mods and going to 75% BOS funding. I know this was somehow wrapped up in the Strategic Comm package so wanted to know your thoughts before I proceed. RK”

1028. November 10, 2005,
General Moseley responded to General Keys,
“Thanks for the SA Ron. Let me think about this one for a bit. It does fit into my strategic communication plan in a big way. I’d ask you not to terminate anything until I can get wrapped around this one a bit more. Thanks again”

1029. November 10, 2005,
General Keys responded to Moseley,
“Right, Boss…. That’s why I gave you the head’s up. I asked my folks to hold off until after the 21st, since that bloodletting would provide rationale and also to wait until I had talked to you. No one can give me a metric on people recruited (which we may or may not need), or opinion makers touched and changed at events like these. It would enhance getting out a message, but to whom? …. And the contract as written is really more focused at putting cockpit video etc to the ground during lulls in the performance. I would rather put it against the bills coming in to stand up the Adversary Threat Group and UAV COE. Additionally, I would like to re-open the bidding on block 52s to the T’Birds… block 40s would make more sense to me as I would then have the block 50 data-link and targeting pod surrogate IRST in my aggressor fleet to replicate the threat… I don’t see thrust as a driving addition to what the T’birds do and believe we should flipflop the transfer. Having said all of that, will await your direction on the Jumbotron… know you are consumed in the QDR and believe there is not a big rush on this for a couple of weeks. I’m out at Nellis for the Aviation Nation Celebration and then on to Whiteman but am up on e-mail.
Cheers, V/R Ron”

1030. November 14, 2005,
Moseley responded to Keys, “Ron…as we discussed at CORONA…I’m working my way through a bigger set of strategic comm options. And, this has been one I’ve liked – not just for TBird reasons – but for the “messaging opportunities” if we get the right people working this for me. Hold off in killing or deciding anything until I can get some non-QDR time to reflect on this a bit more. I’m prone to support it and pay the money and drive the message we want across the spectrum of options – from Mar through Nov every year at a variety of locations (and use the TBird shows as a vehicle to get at the public).
I’m prone to support it because it offers that spring board to other venues and other outreach opportunities. This will work even better as we get more sophisticated with our “market research” and “branding/marketing.” So, my notion has been this is more than a project to support a demo team & big screens. But, give me some time and I’ll come to closure soonest. Thanks again”

-- Nick Schwellenbach

April 18, 2008 in Contract Oversight, Defense, Ethics | Permalink | Comments (0) | TrackBack

Thunderbirds Investigation -- Air Force Response

Here is the Air Force's response (pdf) to the Department of Defense Inspector General's (DoD IG) investigation report (pdf) of the "improper influence" of Major General Stephen M. Goldfein on the $50 million contract with Strategic Message Solutions for Thunderbirds Air Show Production Services.

Of note, on pages seven and eight, is a memo to senior Air Force leaders from Secretary of the Air Force Michael Wynne and Chief of Staff "Buzz" Moseley and a statement from Moseley.  Both stress ethics.

However, the word on the street is that Moseley missed getting caught in a buzzsaw in this investigation, possibly due to the standards of evidence used to determine responsibility for wrongdoing.  More specifically, we hear that the "clear and convincing" evidence standard was used as opposed to the lower "preponderance of evidence" standard (UPDATE, note: "clear and convincing" would make sense in a criminal investigation, however, because it was declined for criminal prosecution by the Nevada Assistant U.S. Attorney, it was an administrative investigation).  Moseley comes up numerous times in the DoD IG report of investigations (pdf).

-- Nick Schwellenbach

April 18, 2008 in Contract Oversight, Defense, Ethics | Permalink | Comments (2) | TrackBack

Flawed Thunderbirds Contract Tainted with Improper Influence

Back in May 2006, POGO posted a blog entry about the Air Force improperly steering a $50 million contract to produce large-scale video shows during Thunderbirds Air Demonstration Squadron performances to a company connected to senior Air Force officers. POGO noted that the Department of Defense Inspector General and FBI were investigating the contract, which the Air Force voluntarily terminated after a competing bidder filed a protest.

Goldfein_sm3_3 Almost two years later, the DoD IG has finally released its findings in a redacted 251-page report. The report concludes that Air Force Maj. Gen. Stephen M. Goldfein and others went to improper lengths to steer the contract to Strategic Message Solutions (SMS), an inexperienced and ill-equipped company that tendered a bid twice as expensive as a competing vendor's. SMS also had close contacts with senior Air Force officers and members of the Thunderbirds. The report highlights an Air Force contracting process fraught with improper influence, irregular procedures, glaring conflicts of interest, and an award decision that "did not represent the best value for the Air Force." As it happened, the Thunderbirds fiasco occurred shortly after another major procurement scandal that sent Air Force acquisition chief Darleen Druyun to prison.

The U.S. Attorney's Office in Nevada, home of Nellis Air Force Base and the Thunderbirds, declined to prosecute the case. Goldfein, who is now Vice Director of the Pentagon's Joint Staff, and four other officers not named in the report received administrative punishments.

There has been talk around Washington that IGs, Congress, the GAO, and watchdogs have demoralized government employees and are causing them to leave government service. It's funny that POGO hears from many government employees who support our efforts, who state that their frustration results from government scandals rather than the reporting of them, and who have tried to fix the system from within only to be labeled as troublemakers and the enemy (where is Bunny Greenhouse now?). Taxpayers are also demoralized and many see the federal government transforming into nothing more than a corporate machine that protects special interests rather than the public's interest. The award of the Thunderbirds contract highlights many problems--actual and apparent conflicts of interest, concerns with the revolving door, improper influence in contracting, flawed deals, and wasted money. I would love to see how anyone can blame the DoD IG for conducting its investigation and exposing a deal that wasn't benefiting taxpayers.

-- Neil Gordon and Scott Amey

April 18, 2008 in Contract Oversight, Cronyism, Defense, Ethics, Revolving Door, Waste | Permalink | Comments (2) | TrackBack

Sensitive Military Equipment Available to the Highest Bidder

Many of us turn to eBay and Craigslist when we're in the mood for a spaceship or a grilled cheese sandwich that looks like the Virgin Mary.  But did you know that your favorite online classifieds and auction sites also offer sensitive military-grade equipment??

A hearing was held today before the House Oversight and Government Reform Committee to discuss a recently released Government Accountability Office study that found numerous military items for sale on eBay and Craigslist.  From January 2007 through March 2008, undercover GAO investigators were able to successfully purchase around a dozen items, some of which were stolen, and some of which appear on the U.S. Munitions List, meaning there should be restrictions on their overseas sales.

As the study notes, "many of the sensitive items we purchased could have been used directly against our troops and allies, or reverse-engineered to develop countermeasures or equivalent technology."  The following table includes just a few examples:

Although the GAO acknowledges that the Department of Defense has taken measures to prevent the sale of sensitive military equipment on the Government Liquidation web site, this latest study confirms that sensitive items are still readily available to members of the public and potential adversaries.

-- Michael Smallberg

April 10, 2008 in Defense, Homeland Security | Permalink | Comments (0) | TrackBack

GAO: Bad Problems Worsen with Pentagon Programs

Today, Congress' investigative arm, the Government Accountability Office, released its annual assessment of major defense programs (pdf) -- and the findings, though dismal, are largely unsurprising.  What is surprising is that somehow many of the already bad problems are even worse than in previous years.

But first, why should the public, Congress and media pay attention?  The GAO's report very early on makes the answer clear.

DOD’s investment in weapon systems represents one of the largest discretionary items in the budget. While overall discretionary funding is declining, DOD’s budget continues to demand a larger portion of what is available, thereby leaving a smaller percentage for other activities. DOD’s investment in weapon acquisition programs is now at its highest level in two decades. The department expects to invest about $900 billion (fiscal year 2008 dollars) over the next 5 years on development and procurement with more than $335 billion, or 37 percent, going specifically for new major weapon systems. Every dollar spent inefficiently in developing and procuring weapon systems is less money available for many other internal and external budget priorities—such as the global war on terror and growing entitlement programs. These inefficiencies also often result in the delivery of less capability than initially planned, either in the form of fewer quantities or delayed delivery to the warfighter.

Unfortunately, our review this year indicates that cost and schedule outcomes for major weapon programs are not improving over the 6 years we have been issuing this report. Although well-conceived acquisition policy changes occurred in 2003 that reflect many best practices we have reported on in the past, these significant policy changes have not yet translated into best practices on individual programs. 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. [emphasis added]

Here are some of the tables and charts which show some of the worsening trends:

Gao1

The table above shows that the major defense programs the GAO has reviewed are, on average, growing in total acquisition cost and increasingly facing longer schedule delays.

Gao3

The chart above shows that defense programs still do not produce stable engineering plans at early enough stages before serious money is sunk into the programs, a milestone many would call a "point of no return," AKA the production decision (in many ways, the de facto point of no return exists from the beginning, thus the Ernie Fitzgerald quote:  "There are only two phases to these programs...Too early to tell. And too late to stop.").  Serious engineering drawing are supposed to be produced at very early stages of a program (when development starts), not when production is about to start.  According to the GAO:

Over half of the programs in our assessment did not even have mature technologies at the design review (knowledge that actually should have been achieved before system development start). Also less than one-quarter of the programs that provided data on drawings released at the design review reached the best practices standard of 90 percent, which is a smaller share than programs in our 2005 assessment (see fig. 5). Knowing that a product’s design is stable before system demonstration reduces the risk of costly design changes occurring during the manufacturing of production representative prototypes—when investments in acquisitions become more significant. Even by the beginning of production, more than a third of the programs that had entered this phase still had not released 90 percent of their engineering drawings.

GAO detailed the cost consequences of not having a stable design early on in some major defense programs' development contracts.

Gao4

In addition to finding that defense weapons programs are not run well and tens of billions of our dollars are inefficiently spent, the GAO took a look at the workforce of 52 of the Defense Department's program offices for these weapon programs.  Turns out contractors now make up about half the Pentagon's workforce at these 52 offices. 

Gao2

Unfortunately the Pentagon's multi-billion dollar programs rarely get front-page play in the major papers or on TV.  Often minor scandals involving relatively miniscule sums often get more focus in the mainstream media.  Why is this?   Partly it's due to the declining number of reporters assigned to the defense beat (or the elimination of the beat and of entire DC bureaus due to cuts at newspapers).  But other reasons I've heard are less excusable; a couple of them are: the subject matter is difficult and these problems are not newsworthy.  Frankly, the subject matter, though not simple, is not anymore difficult than public policy or business reporting.  And regarding the later excuse, thinking that the way our government spends our money badly is not newsworthy is destructive.  The problems with defense acquisition are newsworthy because they continue, it's serious public money and its misuse damages our national security. 

Tabloids aren't giving up on covering Britney Spears' antics because she has a history of them.  Though there are some good reporters covering the beat, most of the "serious" news media has given up on quality, sustained coverage of the Pentagon's spending.  I'm probably not going too far out on a limb by saying that problems at the Pentagon are getting worse because the media (and thus the Congress and the public) is not paying enough attention.

-- Nick Schwellenbach

March 31, 2008 in Defense | Permalink | Comments (0) | TrackBack

AEY & Efraim Diveroli: Subject to the Foreign Corrupt Practices Act?

Based on my quick Google search of the web for AEY, Efraim Diveroli and "Foreign Corrupt Practices Act," I haven't seen anyone ask the question (though someone may have): Is Efraim Diveroli's alleged bribery of Albanian government officials, if true, a violation of the Foreign Corrupt Practices Act?  It seems that it would be the case.  According to the New York Times:

As Mr. Diveroli began to fill the Army’s huge orders, he was entering a shadowy world, and in his brief interview he suggested that he was aware that corruption could intrude on his dealings in Albania. “What goes on in the Albanian Ministry of Defense?” he said. “Who’s clean? Who’s dirty? Don’t want to know about it.”

The way AEY’s business was structured, Mr. Diveroli, at least officially, did not deal directly with Albanian officials. Instead, a middleman company registered in Cyprus, Evdin Ltd., bought the ammunition and sold it to his company.

The local packager involved in the deal, Mr. Trebicka, said that he suspected that Evdin’s purpose was to divert money to Albanian officials.

The purchases, Mr. Trebicka said, were a flip: Albania sold ammunition to Evdin for $22 per 1,000 rounds, he said, and Evdin sold it to AEY for much more. The difference, he said he suspected, was shared with Albanian officials, including Mr. Pinari, then the head of the arms export agency, and the defense minister at the time, Fatmir Mediu.

...

The conversation, he said, showed that the American company was aware of corruption in its dealings in Albania and that Heinrich Thomet, a Swiss arms dealer, was behind Evdin.

...

Mr. Diveroli recommended that Mr. Trebicka try to reclaim his contract by sending “one of his girls” to have sex with Mr. Pinari. He suggested that money might help, too.

“Let’s get him happy; maybe he gives you one more chance,” he said. “If he gets $20,000 from you ... ”

At the end, Mr. Diveroli appeared to lament his business with Albania. “It went up higher to the prime minister and his son,” he said. “I can’t fight this mafia. It got too big. The animals just got too out of control.”

 

Perhaps Chairman Waxman should push the issue at his upcoming hearing.  Seems the Justice Department's Fraud section could have a field day if it looks into this, if hasn't already started to.

-- Nick Schwellenbach

March 28, 2008 in Contract Oversight, Defense, Ethics, Government Fraud | Permalink | Comments (1) | TrackBack

22-Year-Old Arms Dealer Scandal Exposes Flaws in Federal Contracting

The news has recently been abuzz with the story of Efraim Diveroli, the 22-year-old self-described "super nice guy" from Miami Beach who was caught supplying the Afghan government with unreliable and obsolete munitions under a $300 million U.S. Army contract. Diveroli and his company, AEY Inc., are also believed to have dealt with illegal arms traffickers and covered up the fact that tens of millions of the rifle and machine gun cartridges he supplied were illegally obtained from China.

The Army awarded the contract to AEY early last year. According to an investigation published Thursday in the New York Times, problems with the munitions began cropping up last fall. In January, American officers in Afghanistan became concerned enough to suggest terminating the contract. A month later, Army contracting officials met with AEY and imposed more rigorous packaging standards. Yet the company again supplied another shipment of substandard cartridges.

This week, the Army suspended AEY from all future federal contracts. Neither Diveroli nor his company will be allowed to bid on any future government work until the allegations are resolved, but will still be allowed to provide ammunition already on order under the contract. AEY is also facing investigations by the Department of Defense’s inspector general and Immigration and Customs Enforcement.

How did a relatively new company run by a twenty-something land such a lucrative contract in such a vital national security area? The Times found a host of systemic problems. In 2006, Army contracting officials were under intense pressure to supply munitions to Afghan forces. They did not carefully vet the bidding companies. By 2006, AEY had landed a few security and defense-related contracts, but, according to contracting officials quoted anonymously in the Times story, AEY had already earned a reputation for unreliability. Diveroli also had a series of run-ins with the Dade County authorities in 2005 and 2006. Nevertheless, the Army was satisfied with AEY’s bid proposal and awarded it the contract in January 2007.

That contract, however, was vaguely worded and had few quality assurance restrictions. It lacked rigorous standards regulating the quality, packaging, transportation and storage of munitions. Without such restrictions, AEY was free to conduct its business in a way that maximized its profits, which meant dealing with shadowy "middlemen" and vast, unregulated stockpiles of unsafe munitions in former Soviet Bloc countries and elsewhere.

Unfortunately, debacles like this are becoming all too common. In fighting the global war on terror, the Pentagon is handing out billions of dollars in hastily drafted contracts to poorly vetted companies like AEY. The contractor takes advantage of the loophole-ridden contract, the government drops the ball on oversight, and the pursuers of Al Qaeda are left with defective bullets. This time, a team of tenacious reporters at the New York Times pushed the government into action. Whether or not this will lead to meaningful reforms in the federal contracting system remains to be seen.

-- Neil Gordon

March 28, 2008 in Contract Oversight, Defense, Waste | Permalink | Comments (0) | TrackBack

Air Force Wants Contractors to Write Its Strategy

The Air Force wants to outsource the synthesization, analysis and writing of its own overarching strategic direction.  Inside the Air Force reports: "The Air Force is seeking a private contractor to help prepare its portion of the Defense Department’s Quadrennial Defense Review."

According to Title 10, Section 118 of the United States Code, the QDR is: “a comprehensive examination of the national defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other elements of the defense program and policies of the United States with a view toward determining and expressing the defense strategy of the United States and establishing a defense program for the next 20 years."  This is clearly the kind of function that should be kept in the hands of government employees.  Outsourcing this function will distance the Air Force from the people who are developing its own strategic direction.  Frankly, the Air Force should not need to hire a contractor to do this, nor should it want to.  Plus when you consider the weak conflict of interest regulations that contractors are subjected to relative to those faced by government employees, and the obvious temptations the opportunity provides (e.g. setting acquisition priorities, among other things), it all boils down to being a bad idea.

According to the March 20, 2008, solicitation notice on FedBizOpps, the contractor is supposed to provide the following:

1.1 Mission.     To provide the focal point for the Air Force Quadrennial Defense Review (QDR) and Quadrennial Roles and Missions Review (QRMR) through an integrated process that reaches across the Department of Defense (DoD), supporting the Chief of Staff's global strategic vision while preparing our nation to fight and win in air, space, and cyberspace.

1.2     Scope.     Non-personal advisory and assistance services (A&AS) contract to support mission and requirements as well as all supported staff organizations and agencies.     Primarily responsible for integrating positions from all Air Staff, MAJCOM, Doctrine Development Center (AFDDEC), and DoD inputs with all relevant existing research.     Conducts requisite novel research and analysis for developing recommended advocacy positions on relevant issues that have effects on the Air Force and DoD as a whole.     A&AS contract support should include, but is not limited to, analysis and position development on DoD roles and missions, air mobility, global strike, command and control (C2), intelligence, surveillance, and reconnaissance (ISR), unmanned aircraft systems (UAS), cyberspace, ballistic missile defense (BMD), irregular warfare (IW), joint recapitalization, strategic communications, QDR strategy and other timely and acute strategic issues.

-- Nick Schwellenbach

March 28, 2008 in Contract Oversight, Defense | Permalink | Comments (6) | TrackBack

Troubled Waters

Yesterday, in the Washington Times, David Axe reported that deployment of the Coast Guard's National Security Cutters will be delayed by six months because the ship's radios are not waterproof. That article sent the Coast Guard into a frenzy yesterday to challenge what they said were inaccuracies, according to CGBlog.org. Navy Times reports that the Coast Guard has demanded a retraction of the front page article. We'll be watching do see how the details work themselves out.

The Cutters are part of the troubled $24 billion Deepwater program which has been plagued by delivery delays, failures and scandal. Former Lockheed Martin engineer Mike DeKort blew the whistle early on the fact that the Coast Guard failed to ensure weather durability of external equipment in the program such as the radios.

Last week, the Navy Times reported that an internal Coast Guard report recommended ditching production of two National Security Cutters in favor of other alternatives. The article noted "the risk of 'connectivity problems' among Coast Guard assets and between it and other agencies."

That news followed a statement from the Coast Guard that suggested problems were brewing with the Cutters' classified communications system which involved "some risk" to the delivery schedule. That statement reaffirmed concerns raised by the disclosures of a second whistleblower, Coast Guard engineer Anthony D'Armiento. The statement outlined what has been called by some an unknown process for testing and deployment (Interim Authority to Operate) of the Cutters. The statement raised the specter that the Coast Guard would prematurely accept the Cutters from contractors Lockheed Martin and Northrop Grumman before major problems were resolved with the ships' communications system. The Coast Guard made this same mistake when it accepted eight 123-foot Deepwater boats despite numerous flaws in those boats, which were later taken out of service with plans to be scrapped. According to some reports, the Coast Guard has denied that it will sign the contract Form DD 250s acceptance forms until the Cutters until the problems are resolved. The Coast Guard will lose important leverage to compel Lockheed Martin and Northrop Grumman to fix serious communications problems if it accepts the National Security Cutters before they are ready.

D'Armiento has been on administrative leave for more than 5 months after he leaked pages from a document which exposed that the Cutters were at high risk for not meeting contract requirements for TEMPEST and Information Assurance. While the Department of Homeland Security Inspector General ostensibly investigates him for leaking this document, the Coast Guard released a full unredacted version of the document to POGO. In 2005, POGO criticized the Department of Homeland Security for issuing a management directive which prohibits the disclosure of information that may be obtainable under the Freedom of Information Act (FOIA), raising the specter that whistleblowers like D'Armiento would be retaliated against for releasing information which Congress intended to make available to the public.

-- Beth Daley

UPDATE: David Axe provides a point by point response to the Coast Guard's full out attack on his blog. He also helpfully wrote in to our blog to clarify some points regarding the Troubled Waters blog entry (see comments below).

March 12, 2008 in Defense, Homeland Security, Waste, Whistleblower Protection | Permalink | Comments (4) | TrackBack

Contractors are more than a shadow government

On March 10, the Government Accountability Office (GAO) publicly released Defense Contracting: Additional Personal Conflict of Interest Safeguards Needed for Certain DOD Contractor Employees. That report found that contractors have flooded the Defense Department, accounting for more than 50% of the combined DoD workforce in 15 offices.

Contractor employees are providing custodial and landscaping services as well as services related to preparing budgets, developing and interpreting regulations, creating contract requirements, advising or assisting on award decisions, and determining award fees—all permitted under FAR Subpart 7.503(d).

One problem that arises involves the lack of conflict of interest laws that apply to contractor employees. Although civil servants are governed by many laws and regulations preventing personal conflicts, very few of those restrictions apply to contractor employees.

Gao_laws

I realize that some contractors have their own internal policies that might prevent and detect any possible conflicts, but is that enough? Some agencies are including contract clauses that prevent personal conflicts, but is that enough? Federal employees can do jail time for certain violations, while a contractor employee might be suspended or fired. Does the wide gap in both restrictions and penalties jeopardize the integrity of the contracting system—especially when contractor employees support and influence DoD decisions?

-- Scott Amey

March 11, 2008 in Contract Oversight, Defense, Ethics, Revolving Door | Permalink | Comments (0) | TrackBack

Will Congress Violate GAO Independence on the Tanker Deal?

With all the over-heated rhetoric surrounding the Air Force decision to go with Northrop and the European Aeronautic Defence and Space Company (EADS) refueling tanker proposal rather than Boeing's, few have asked: Will Congress put pressure on its own investigations arm, the Government Accountability Office (GAO), to deliver an outcome favorable for Boeing at the expense of the GAO's independence?  This question is important -- today Boeing announced that it will protest the Air Force's decision at the GAO.

Frankly, according to everything we've heard so far, and there may be things we don't know, it seems that the Northrop-EADS won in a blow out over Boeing and that the Air Force ran the competition fairly and transparently.  Boeing claims that the Air Force led it astray by dissuading it from proposing a larger refueling tanker in its bid, but details so far are sparse on this point.  We're curious about them and will keep an open mind. Presumably, this and other possible objections to how the Boeing bid was evaluated by the Air Force will be part of its protest to the GAO -- these may have merit, but these issues are ones for the GAO's legal professionals to decide without outside pressure. 

The bid protest function was deliberately placed by Congress in the GAO's hands to minimize the potential of interference by executive branch agencies; indeed, it would be a tragic irony if Congress were to undermine the integrity and objectivity of its own creation in the case of the tanker contract.

UPDATE: The still-vague outlines of Boeing's protest, via the Wall Street Journal (paid subcription req'd):

Boeing declined last night to provide specific details about its planned protest. However, it hinted at some of its concerns yesterday afternoon in an update it released prior to the decision to pursue an appeal.

Citing its Friday briefing with the Air Force, Boeing said it believes it fared well under the Air Force's five main criteria to evaluate bids. For example, Boeing said it received a top rating for its aircraft's "mission capability," the No. 1 factor, and said it scored very similarly in other areas to the Northrop offering. The company said subjective assessments and changes to an important analytical model contributed to the loss.

"We have serious concerns over inconsistency in requirements, cost factors and treatment of our commercial data," said Mark McGraw, the head of Boeing's tanker effort, in the statement.

In particular, Boeing said the Air Force had sought in-depth cost information on the company's modified 767 tanker offering, which is the product of work by the company's commercial and military divisions. This posed a challenge as the level of detail needed for the government's cost analysis was more than what the commercial side could offer. Boeing said the Air Force was satisfied with the data, though they were less extensive than the government expects under military contracting.

Boeing also said the Air Force made changes in its model that allowed a bigger plane to stay in the competition.

Northrop, based in Los Angeles, countered that its offering won because of its cost, past performance on other contracts, the airplane's capabilities beyond refueling and how the plane fared using a complex model assessing the plane's performance on military missions. The debriefing was "rigorous and deliberative," Northrop said. Air Force officials walked Northrop executives through their proposal yesterday to explain why it won.

-- Nick Schwellenbach

March 10, 2008 in Contract Oversight, Defense | Permalink | Comments (0) | TrackBack

McCain Didn't Go in the Tanker

I generally simmer with a level of outrage about Washington goings-on, but the last 48 hours have caused me to boil over. Partisan attacks on Senator John McCain for his yeoman work investigating the Boeing tanker lease are intellectually dishonest. Yes, McCain is running for President, but the partisan attacks shouldn't be pro-corruption. Let's make no mistake about how underhanded the Boeing Tanker Lease deal was. When POGO did its 2002 investigation, Fill 'Er Up: Back-Door Deal for Boeing Will Leave the Taxpayer on Empty, we had no idea of the outright criminal behavior behind it. We just knew the taxpayers were getting screwed. It was Senator McCain's investigation that uncovered the secret deal: a Pentagon official was negotiating jobs for herself and her family with a Boeing executive in exchange for the multi-billion dollar Air Force contract. They both went to jail for it (see here and here).

What are the people who are attacking Senator McCain for his investigation thinking? That it would have been better if he had taken the easy road, held his nose, and looked the other way, as the rest of Congress did--even though the taxpayers would have been the losers? It is a shame that, after the Air Force competition between Boeing and Northrop Grumman/Airbus, a lot of American jobs may be lost, but the alternative is infinitely worse--accepting corruption as a part of doing business.

As Steve Pearlstein of the Washington Post wrote,"the message it would send to every contracting officer in every government agency is that if they know what is good for their careers, they will put political consideration ahead of getting the best value for the American taxpayer."

I couldn't have said it better myself.

-- Danielle Brian

March 7, 2008 in Contract Oversight, Defense, Ethics, Revolving Door | Permalink | Comments (6) | TrackBack

Northrop Wins KC-X Tanker Competition

In an upset victory over odds-on-favorite Boeing.  More undoubtedly to come.

-- Nick Schwellenbach

February 29, 2008 in Defense | Permalink | Comments (2) | TrackBack

Exchange Between Senator McCaskill and Marine Commandant Conway on Franz Gayl

Read this exchange closely from yesterday between Senator Claire McCaskill and Marine Corps Commandant James Conway regarding Marine Corps science advisor Franz Gayl, who has disclosed problems with the Marine Corps' ability to rapidly procure equipment requested by marines in Iraq and Afghanistan.  Conway basically promises to Senator McCaskill that the Marines will try to find a way to screw over Gayl, hence the immediate follow-up letter from Senators McCaskill and Kennedy we posted last night defending him.  Check out the italicized text in particular:

McCaskill: I know that Senator Kennedy talked about the MRAP problems in terms of availability. I’m concerned about the whistleblower. I’m concerned about Franz Gayl. I would like some reassurance from you that Mr. Gayl is not going to face any adverse employment decisions or actions because of his whistle blowing in regard to the study that was done that has now come out as part of the public discourse.

Conway: Ma’am, he works for the Marine Corps. I’ve purposefully stayed at arms length from that discussion. I have never met Major Gayl. I can say there is an investigation underway to determine whether or not he has complied with the guidance that was given to him by his boss. We are making every overture to ensure that we don’t violate any aspect of his whistleblower status. But if it’s determined that Mr. Gayl has done something other than what his leadership and his bosses have instructed him to do, then that outcome will have to be determined as to what happens to Mr. Gayl.

McCaskill: Well I know that General Magnus recently referred him to the Office of the DoD IG, which I think is an appropriate move. I know how hard it is internally to be careful in this regard, and I know there are some whistleblowers who have not followed direct instructions and who have gotten out in ways that maybe they shouldn’t have, but the impact that dealing negatively with whistleblowers has on the entire operation is something that we really need to avoid. Whistleblowers are so important to accountability regardless of whether we’re talking about a bureaucratic agency that’s dealing with the taxpayers or whether we’re talking about the military. I just want to make sure that I didn’t leave this hearing without expressing to you how strongly I feel, and how closely I’ll be watching to make sure that any whistleblower, and this whistleblower in particular, is treated with respect and deference and under the letter of the law, in terms of any potential adverse consequences because of what he did. I think it’s tremendously important and I didn’t want to leave without expressing this.

Conway: I can assure you that he will be treated in accordance with the law.

-- Nick Schwellenbach

February 29, 2008 in Defense, Whistleblower Protection | Permalink | Comments (1) | TrackBack

Say It Ain't So Conway...

Do what's right for our uniformed men and women...

Nmccaskill_and_kennedy_franz_gayl_w

-- Nick Schwellenbach

February 28, 2008 in Defense | Permalink | Comments (1) | TrackBack

Senators: Review of Pentagon-Wide Rapid Acquisition Failures Needed

Here's the pdf of the letter from today. These Senators should be commended for exercising their constitutional obligation to oversee the executive branch during this time of war, when hard questions are needed most. And the Senate Armed Services Committee needs to take the next step and ratchet up the heat by investigating these issues, so we can avoid these fatal mistakes in the future.

Senators_letter_to_gates_22708

-- Nick Schwellenbach

February 27, 2008 in Defense | Permalink | Comments (1) | TrackBack

House Letter to Air Force on CSAR-X Requirement Change

The chairman of the House Armed Service subcommittee on oversight and investigations, Vic Snyder, sent the following letter (pdf version) to Ken Miller, an Air Force official responsible for acquisition governance and transparency, as a follow-up to Miller's December 5, 2007, briefing to Congress on issues raised in POGO's CSAR-X report:

Hasc_ltr_to_miller_1708

According to Chairman Snyder, Miller told Congress that "the issues raised by POGO were in part the result of insufficient tracking and documentation of changes to Key Performance Parameters (KPPs) and other requirements prior to formal approval by the Joint Requirements Oversight Council (JROC)."

Despite this significant substantiation of POGO's findings, privately to Congress, the Air Force had tried to smear POGO's report.  However, we were leaked a copy of the Air Force's power point presentation, which is riddled with inconsistencies.

We recently noted that the Defense Department's inspector general is launching an audit into CSAR-X requirements changes beginning next month. 

-- Nick Schwellenbach

February 27, 2008 in Defense | Permalink | Comments (0) | TrackBack

POGO/GAP Urge Senate to Investigate MRAP and Other Delays, Retaliation Against Gayl

Our friends at the Government Accountability Project and POGO have sent a letter (pdf) to the Senate Armed Services Committee today (SASC), urging the SASC to hold a hearing on the lack of responsiveness to urgent requests for equipment from troops in Iraq and Afghanistan.  We also recommend that the Marine Corps be held accountable for their disgraceful treatment of Marine Corps whistleblower and science advisor Franz Gayl, who has disclosed problems with the Marine Corps' rapid acquisition system.  Gayl is now being asked to stop his research into the failures at the Marine Corps--who are apparently sweating under the heat of public scrutiny.

Though it is a good thing the Marine Corps has announced they have requested the Pentagon inspector general investigate Gayl's allegations--which have been substantiated to some degree by a Naval Audit Service report--the IG is not equipped to ask all of the hard, bigger questions.  As noted by CNN's Jamie McIntyre:

...this is unusual because the Pentagon Inspector General normally looks at you know instances of crime or misconduct or wrongdoing, bribes, that sort of thing. What they're really asking here is for someone to render a judgment on their judgment.

Here's the letter:

Ltr_to_sasc

-- Nick Schwellenbach

February 27, 2008 in Defense | Permalink | Comments (0) | TrackBack

Hey Tipster: Send Us More Details

We received your two anonymous tips last night and today about a federal agency's award of a large contract to a small firm with questionable ties to a former Pentagon official.  You mentioned there was a Pentagon inspector general report on the matter.  Could you give us more details about the name of the company and what the ties between it and the former Pentagon official are? 

-- Nick Schwellenbach

February 26, 2008 in Contract Oversight, Defense, Intelligence, Open Government | Permalink | Comments (0) | TrackBack

Air Force Tanker Decision Imminent

UPDATE: Upon popular request, here is POGO's original May 2002 report on why the tanker leasing deal was such a massive ripoff for the taxpayer.

The contract award for the Air Force tanker replacement program is imminent.  In anticipation, Reuters' Andrea Shalal-Esa has compiled a timeline of key events from the foiled Boeing tanker lease days which resulted in the imprisonment of two Boeing officials (a longer, detailed chronology can be found in the DoD IG's management accountability review report of the scandal), through the present:

Sept. 25, 2001 - Darleen Druyun, then the Air Force's No. 2 acquisition official, meets with officials at Boeing to lay out a strategy to lease 100 Boeing 767s.
Oct. 9, 2001 - Then-Air Force Secretary James Roche says the service could lease Boeing 767s with an option to buy, if Congress passed supporting legislation.
January 2002 - Congress passes law appropriating defense funds for fiscal year 2002 that includes language saying the Air Force may lease up to 100 Boeing 767s.
February 2002 - Air Force requests information from Boeing and Airbus parent EADS about tanker capabilities.
September 2002 - Facing questions from Arizona Republican Sen. John McCain about the urgency to replace tankers, the Air Force begins to cite a significant corrosion problem. However, the comments are contradicted by formal studies that view the corrosion problem as manageable.
Oct. 17, 2002 - Druyun meets with then Boeing Chief Financial Officer Michael Sears to discuss a job offer. Sears tells her: "This meeting really didn't take place."
November 2002 - Druyun recuses herself from further negotiations with Boeing, retires mid-month and then accepts $250,000-a-year job with Boeing.
Jan. 3, 2003 - Boeing announces Druyun hire. Watchdog group Project on Government Oversight describes it as "one of the most egregious examples in recent memory of the revolving door between the federal government and defense contractors."
May 23, 2003 - Then-Pentagon chief arms buyer Edward Aldridge approves $23.5 billion Air Force plan to lease, then buy, Boeing 767 tankers, four days before he retires.
Nov. 24, 2003 - Boeing fires Druyun and Sears for unethical conduct in Druyun's hiring. Boeing Chief Executive Phil Condit resigns a week later.
March 29, 2004 - Pentagon inspector general says the Air Force used an inappropriate procurement strategy in the tanker deal and recommends a halt until the Pentagon resolves several issues.
April 21, 2004 - Druyun pleads guilty to a conflict of interest violation for discussing job with Boeing while still overseeing billions of dollars of its business with the Air Force. She is later sentenced to nine months in prison.
Oct. 28, 2004 - Congress passes defense spending bill for fiscal 2005 that terminates Air Force's authority to lease tanker aircraft.
Nov. 16, 2004  - Sears pleads guilty to violating federal conflict of interest laws. He is later sentenced to four months in federal prison.
September 2005 - Northrop Grumman says it will team with EADS to compete for an Air Force tanker contract.
April 2006 - Pentagon chief weapons buyer at the time, Kenneth Krieg, says Air Force can resume procurement of aerial refueling tankers.
December 2006 - Air Force agrees to exempt a World Trade Organization dispute between the European Union and the United States from the tanker competition, a dispute that could have knocked Northrop/EADS out of the contest. Krieg underscores the need for a fair and open competition, saying the program has "a lot of ghosts."
January 2007 - Air Force issues final request for tanker proposals after various modifications. The five key criteria are mission capability, proposal risk, past performance, price, and an integrated fleet assessment.
April 2007 - Boeing and Northrop submit bids in tanker competition. Air Force says more than 150 experts will examine the bids.
August 2007 - Pentagon rules out splitting the tanker contract between both bidders because it would be too costly.
October 2007 - Air Force's No. 2 acquisition official, Charles Riechers, found dead at his home in apparent suicide. Riechers was working on the tanker program and was under scrutiny for a temporary job arrangement by the service while he awaited Senate confirmation.
January 2008 - EADS and Northrop Grumman promise to build tankers at an Alabama plant if they win. Boeing would build its plane at plants in Kansas and Washington state if it wins.

Feb. 25 - Pentagon's Defense Acquisition Board meets to consider award of the tanker contract.

February 25, 2008 in Defense | Permalink | Comments (4) | TrackBack

Pentagon IG to Probe CSAR-X Requirement Change

Hot off the presses from Reuters:

The Pentagon's internal watchdog agency said on Friday it will audit a contested $15 billion helicopter program to see if the U.S. Air Force followed the rules when it changed military requirements for the aircraft.

The audit, due to begin next month, will examine whether changes to "key performance parameters" for the helicopter were properly disclosed and vetted through the Pentagon's Joint Requirements Oversight Council, according to a Feb. 19 letter from the Pentagon's inspector general announcing the audit.

Essentially the Defense Department's inspector general is going to examine issues we investigated in depth in our report on the CSAR-X deployability requirement changeAerospace Daily and Defense Report first reported on the change early last year.

Already the Air Force has privately admitted some of the shortfalls in the CSAR-X requirements oversight process, according to the Reuters piece:

Ken Miller, a top Air Force acquisition official, told members of the oversight subcommittee of the House of Representatives Armed Services Committee in December that there was insufficient documentation of changes in the CSAR competition, according to a letter from the subcommittee.

The Air Force reviewed its procedures after the meeting, and has tightened its rules to "address shortfalls in documentation of changes to key performance parameters,"according to an internal document obtained by Reuters.

UPDATE: Here's the DoD IG announcement:

Ig_audit_announcement

-- Nick Schwellenbach

February 22, 2008 in Defense | Permalink | Comments (1) | TrackBack

Fines for Bid Protests? No Way!

The same Air Force general who got slammed by Defense Secretary Robert Gates for his "borderline insubordination" for publicly saying the Air Force will get its desired 381 F-22s regardless of what the Pentagon leadership says, also told reporters last week that penalties should be imposed on contractors who make unwarranted protests of contract decisions.  Though protests are up a bit, sustainment rates by the GAO are generally up too--meaning the GAO thinks an increasing percentage of a larger number of protests have merit.  This may more likely reflect a failure on the part of the government side of the acquisition equation, not that of contractors.  So this may be a gauge of the continuing weakness of the Air Force's acquisition system, as well as other parts of the government.

One reader of GovExec posted the following, which we've re-posted since it addresses fraud, contracting and the revolving door--things we're interested in:

General Carlson's assertion that penalties should be levied on contractors who protest (unwarranted) is the first step towards corruption. How many Source Selection Authorities have made the correct decisions because of the fear that a protest might uncover fraud or bias if they made the decision based on their personal greed or amorist. The Generals assertion that penalties would prevent unwarranted protest is absurd. What it will do is open the door to widespread corruption and eliminate any hopes of continual oversight of the acquisition process, which by the way is so broken it has been said that to fix it would take a miracle. Protest is the only way to guarantee a fair process and any talk of penalizing the protestor because on someone's opinion that it is "unwarranted" is ridiculous. It shows the disconnect the General has between reality and his high perch of power. It makes one think of the old saying, that power corrupts and absolute power corrupts absolutely. This article depicts the depth that some will go to solidify their power and possible positions after life in the military. Do not blame the contractors for protesting when it is the source selection authorities fault for not making the criteria clear and concise up front (never has there been a source selection where all the requirements were clearly spelled out and available prior to the RFP) making it abundantly clear why the made the selection and the benefit the selection make to the government. Contractors go to great lengths to show features and benefits, but the Source Selection Authorities rarely explain the benefits of their decisions. Is it possible because the SSA's are rarely sure and their selections are made based on influence and possible future job opportunities? One wonders if the two year moratorium is enough. Would decisions be more honest if there was a lifetime ban on working for a contractor???? Mmmmm, interesting…..

Also, here's some data to chew on, showing the amount of bid protests are up, and still-rare sustainments are up too (from GAO):

Graphicfy0107

Interestingly, Alternative Dispute Resolutions (ADRs) occur at about half the rate they used to.  What are ADRs?  The GAO guide to bid protests says that:

At any time during the process of developing the record, GAO, at the request of one or more of the parties or on its own initiative, may determine that the protest is suitable for alternative dispute resolution (ADR). This may take the form of either negotiation assistance, where the GAO attorney offers to assist the parties in reaching agreement on resolution of the matter, or outcome prediction, where the GAO attorney advises the parties of the attorney’s view of the likely outcome based on the record, so that the likely unsuccessful party may take appropriate action to resolve the protest.

Fixing acquisitions problems on the government's side is the best solution to the plague of bid protests that folks are complaining about nowadays.  And maybe ADRs should be utilized as much as they have been in the past--it'd be interesting to find out why they're down.  No doubt this issue will get more attention with the likely bid protests we may see soon in the wake of the Air Force's impending tanker competition.  But that conversation should be informed by data and should be well-rounded, not driven by defenders of a broken system seeking to avoid oversight of their often flawed and sometimes corrupt decisions to spend billions of our dollars.

-- Nick Schwellenbach

February 21, 2008 in Contract Oversight, Defense | Permalink | Comments (3) | TrackBack

DoD Leadership Rebuts Air Force C-17 Requests

Today we released a Pentagon report to Congress which goes out of its way to counter moves by the Air Force to get funding for more Boeing C-17 cargo airplanes.   The Air Force's request for financing the C-17 program has been called an "ad-hoc crapshoot" by Rep. Neil Abercrombie, chairman of the House Armed Services Air and Land subcommittee.

As part of this questionable battle, the Air Force is arguably abusing the budget process. The armed services “Unfunded Requirements Lists” are relatively new devices for obtaining appropriations from Congress.  First requested from the armed services by then-chairman of the House Armed Services Committee Duncan Hunter in 1996, these Unfunded Requirements Lists have since become an annual tool for the armed services to make requests which could not fit within their official budget request due to budget constraints.  If used sparingly and as a last resort to detail needs that are truly not met, these wish lists could be justified.  However, the Air Force is using these wish lists regularly and massively to generate cover for its congressional allies to break out of the relatively more rational traditional budget request and appropriations process.

The sheer amount of requests made by the Air Force dwarf those of the Army, Navy and Marine Corps.  As stated in Wired Magazine’s online site, “At $18.75 billion, [the Air Force wish list is] more than two-and-half-times what the Army and Marines are asking for, combined.”  Furthermore, the requests by the other services tend to be more tethered to current conflicts abroad, a congressional source told POGO.

The biggest single request in the Air Force's wish list this year is for 15 C-17s, clocking in at $3.9 billion.

While some of the items in the Air Force’s list may be meritorious, we question the methods and the lengths the Air Force has persisted in going to in bypassing the budget process and oversight by the Office of the Secretary of Defense and Office of Management and Budget, particularly in regards to the C-17 and F-22.

These wish lists should not be used to keep production lines open—an action which has long-term implications that can only adequately be addressed in the baseline Defense Department budget request, authorization and appropriation process.  Yet that is exactly what the Air Force is trying to do in regards to both the C-17 and F-22 programs.

-- Nick Schwellenbach

February 21, 2008 in Defense | Permalink | Comments (0) | TrackBack

MRAPs - Rapid Acquisition Case Study Confirms Need for Congressional Hearings

This morning, POGO has made publicly available for the first time an internal study by Marine Corps science advisor Franz Gayl (pdf, large ~5MB file!) (the study only officially represents the views of Gayl).  The study concludes, based primarily on a detailed review of government documents, that requests from Marines in Iraq for Mine Resistant Ambush Protected vehicles (MRAPs), met a recalcitrant bureaucracy that was more interested in protecting existing programs, rather than responding rapidly to the needs of troops for a vehicle better able to withstand improvised explosive devices.  The results, Gayl contends: a two-year delay of the procurement of significant quantities of MRAPs and the unnecessary loss of hundreds of lives.

Though there are legitimate questions about how many MRAPs should be procured, how many different types of MRAPs should be