Oct 07, 2015

Decades of Overspending on Defense Acquisition Prove Futility of Central Planning

Post by Mary Kate Hopkins

The newest addition to the U.S. Navy’s fleet of nuclear-powered aircraft carriers, named for President Gerald Ford, is progressing just as the Government Accountability Office (GAO) predicted back in 2007: over budget and behind schedule.

During a recent U.S. Senate hearing, Sen. John McCain (R-AZ), chairman of the Armed Services Committee, called the Ford-class carrier program “one of the most spectacular acquisition debacles in recent memory.” The mismanagement is certainly spectacular—the program is currently $6 billion over budget according to a Senate staff review and the first of the new carriers has not even been completed.

This budgetary fiasco, however, should come as a surprise to no one.

The history of the Pentagon’s defense acquisition programs has been one of overspending, under-delivering, and scrapping projects after billions of taxpayer dollars had already been funneled into them. And, despite clear evidence that there are significant problems in the defense acquisition process, history seems to keep repeating itself. In the 1980s, lawmakers were outraged to find that the Pentagon had spent $640 for toilet seats on military planes and $7,600 for a coffeepot.

During the early 1990s, the Department of Defense implemented sweeping acquisition reform—but that reform focused on rewriting policies rather than implementing procedures to make the acquisition process more efficient or effective.

As we entered the 21st century, acquisition spending again spiraled out of control. Between 2001 and 2011, the Pentagon spent $46 billion on more than a dozen acquisition programs that were eventually scrapped—including $3.7 billion for a new fleet of presidential helicopters that were cancelled for being too expensive and sold to Canada to be used for spare parts.

The Ford-class aircraft carrier program debacle is just the cherry on top of a very expensive bowl of ice cream, with American taxpayers picking up the tab.

In 2002, the federal government sponsored a comprehensive study of the effectiveness and implementation of the reforms made to the acquisitions programs in the 1990s. The results help explain why acquisition programs continue to under-deliver.

The study found that, in the opinion of Pentagon employees, while the reform policies had encouraged more innovation and risk-taking in acquisitions, program managers had not been given increased authority with regard to funding allocation or schedule flexibility. Basically, program managers in charge of developing acquisition programs still lack the responsibility for the success or failure of a program. Without sufficient authority and responsibility, program managers are not incentivized to keep projects under budget or on schedule, which has led to the culture of waste we see today in the realm of defense acquisition.

Many have attempted acquisition reform, but clearly none have been successful to date. Perhaps that is because reform proposals over the years have all overlooked the structure and culture of the Pentagon, thus allowing this pattern of overspending and underperformance to continue.

To be sure, defense acquisition is vital to the government’s role in protecting the lives of American citizens and the safety of our homeland. The fact that this amount of waste and abuse has taken place for so long in such an inherently important function is alarming, not only with regard wasting taxpayer dollars, but also from the standpoint of national security.

The federal government owes it to the men and women in uniform, as well as American Taxpayers, to ensure defense acquisition programs are efficiently and effectively keeping the U.S. military on the cutting edge of defense technologies. To that end, lawmakers and Department of Defense officials must actively seek ways to root out waste and abuse in defense acquisition. They could start by giving more effective decision-making authority to program managers, rather than continuing to rely on a centralized, top-down structure which has demonstrably proven it is incapable of eliminating overruns.