Tag: 9 11 attacks

How Much Defense Acquisition Waste Is Enough?

Stories in DoD Buzz and the Christian Science Monitor this week cover a new Center for Strategic and Budgetary Assessment report on the Pentagon’s 2012 budget request. Both articles focus on the insightful section of the report explaining how the post 9-11 defense spending explosion has barely increased our war-fighting capacity. Unfortunately, both echo the report’s claim that all money spent on cancelled programs is money wasted and an indictment of the Pentagon acquisition system (page 36 and 37).

Here’s how the Monitor put it:

The new spending involves considerable waste, the report says. The Pentagon has spent nearly $50 billion since the 9/11 attacks on weapons systems that it never used due to technological failures or cost overruns, according to the study.

“These are weapons systems that have been started and then canceled without using any of them – we never saw one system fielded as a result of these programs,” says Todd Harrison, defense budget studies senior fellow with CSBA. “We can’t keep starting programs that are unrealistic and unaffordable and getting them canceled without getting anything out of it.”

In some ways, that complaint is sound. At least some of these programs suffered troubles made predictable by an acquisition process that often allows overly ambitious projects to break the bank. The Marines’ Expeditionary Fighting Vehicle is an example.

The main problem with this analysis is the implication that the correct acquisition failure rate is zero. Reward rarely comes without risk. Successful enterprises often fail. Apple failed with the Newton. Great base stealers often get thrown out.

Militaries are particularly prone to missteps because of their uncertain environment. Their business is competitive as can be, but the competitions (wars) are rare and thus hard to predict. Platforms last longer than enemies and cutting edge technology. This uncertainty means that programs should often be found wanting and cancelled. The question is not how to build an acquisition system that never fails but the right ratio of success to failure.

CSBA counts $46.4 billion in spending over the past decade on programs that got cancelled before procurement. That’s a big number. But it is a modest failure rate. It’s just 6.3 percent of total RDT&E (Research, Development, Testing and Evaluation) spending in the period, 2.4 percent of total acquisition spending (RDT&E plus procurement) and 2.7 percent of the Pentagon’s ongoing major acquisition programs. You could add percentage point or two in each category by including programs that got cancelled after we bought only a handful, like the DDG-1000 destroyer.

I don’t know what the perfect rate of failure is. But I see no reason why this one is unsustainable, as Harrison says. I actually suspect, for a couple reasons, that the numbers are too low; that the Pentagon should fail more.

First, bad programs often survive thanks to the iron triangle—services bureaucracies that want a new platform, contractors that make it, and Congressmen representing districts where they build. Cancellation shows that the political system can make choices serving the national interest at the expense of parochial ones. Parochialism usually wins.

Second, we foolishly limit competition that would increase cancellations. Our four services largely manage their own procurement, with oversight from feuding officials in two branches. This dispersal of power produces diverse solutions to military challenges. We also launch more acquisition programs than we can afford, encouraging low bids to hide costs that everyone knows are coming. Wealth encourages us to replace manpower with technology, increasing the need for innovation. The natural result of these forces is competition for survival among programs. Contrary to conventional wisdom, that competition is useful. It encourages program managers to outshine rivals on cost and capability.

Rather than harvest this creative destruction, we suppress it. The Pentagon’s culture of jointness quiets public fights where program managers attack rival programs. Fixed budget shares encourage them to cover procurement shortfalls by growing the entire pie, rather than competing. Ever-increasing defense budgets delay reckoning. Embracing competition would produce more innovation and more cancelled programs, which CSBA would call waste.

* Cross-posted on National Defense Magazine’s blog.

Manhattan Says No to Terror Trials

Today, Politico Arena asks:

Terror trials: Is it time for the administration to retreat and rethink? Is it generally mishandling the terrorism issue?

My response:

On no issue is President Obama getting acquainted with reality more clearly than terrorism, or so it seems.  He blazed into office, guns holstered, as the anti-Bush, putting Eric Holder’s Justice Department in charge, not of the War on Terror, a phrase he banished from his administration’s lexicon, but of “bringing those who planned and plotted the [9/11] attacks to justice,” as Holder put it in November when he announced that Khalid Sheikh Mohammed and four others would be given civilian trials in downtown Manhattan.  But as the manifold costs of such a trial became increasingly apparent, and as even New York Democrats have grown increasingly restive, the White House, it seems, has backed down.  We await the line of congressmen saying “Bring the trial to my district.”

How could it be otherwise?  The administration’s law-enforcement approach to terrorism has been unserious and folly from the start.  In an understated yet devastating piece in yesterday’s Washington Post, former CIA director Michael V. Hayden cataloged that folly, nowhere more evident than in the FBI’s handling of the would-be Christmas Day bomber, who was Mirandized and lawyered up long before he could be seriously interrogated by agents with the background to elicit the intelligence we need – not to prosecute terrorists, but to prevent future terrorist attacks.  The most telling revelation in Hayden’s piece came at the end, however.  In August, the government unveiled its High Value Detainee Interrogation Group (HIG) designed to interrogate people like the Christmas Day bomber, and it announced also that the FBI would begin questioning CIA officers about alleged abuses in the 2004 inspector general’s report.  Was the HIG called in to interrogate the Christmas Day bomber?  No – it has yet to be formed.  But the interrogations of CIA officers are proceeding apace.  So much for the administration’s priorities.  Is it any wonder that Scott Brown’s pollsters report that terrorism, and the administration’s mishandling of the issue, polled better even than Brown’s opposition to ObamaCare?