Tag Archives: Defense Procurement

Americans And Our Government Expect And Accept Trillions In Pentagon Waste

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(Illustration: CJ Ostrosky / POGO)

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO) By Mandy Smithberger

Congress only recently passed and the president approved one of the largest Pentagon budgets ever. It will surpass spending at the peaks of both the Korean and Vietnam wars. 

 This after $2 trillion on war in Afghanistan alone. between $10 million and $43 million spent constructing a single gas station , $150 million for  luxury private villas for Americans. The Pentagon has, by the way, never actually passed an audit.

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“Call it a colossal victory for a Pentagon that hasn’t won a war in this century, but not for the rest of us. Congress only recently passed and the president approved one of the largest Pentagon budgets ever. It will surpass spending at the peaks of both the Korean and Vietnam wars. As last year ended, as if to highlight the strangeness of all this, the Washington Post broke a story about a “confidential trove of government documents” — interviews with key figures involved in the Afghan War by the Office of the Special Inspector General for Afghanistan Reconstruction — revealing the degree to which senior Pentagon leaders and military commanders understood that the war was failing. Yet, year after year, they provided “rosy pronouncements they knew to be false,” while “hiding unmistakable evidence that the war had become unwinnable.”

Given the way the Pentagon has sunk taxpayer dollars into endless wars, in a more reasonable world that institution would be overdue for a comprehensive audit.

However, as the latest Pentagon budget shows, no matter the revelations, there will be no reckoning when it comes to this country’s endless wars or its military establishment — not at a moment when President Donald Trump is sending yet more U.S. military personnel into the Middle East and has picked a new fight with Iran. No less troubling: how few in either party in Congress are willing to hold the president and the Pentagon accountable for runaway defense spending or the poor performance that has gone with it.

Given the way the Pentagon has sunk taxpayer dollars into those endless wars, in a more reasonable world that institution would be overdue for a comprehensive audit of all its programs and a reevaluation of its expenditures. (It has, by the way, never actually passed an audit.) According to Brown University’s Costs of War Project, Washington has already spent at least $2 trillion on its war in Afghanistan alone and, as the Post made clear, the corruption, waste, and failure associated with those expenditures was (or at least should have been) mindboggling.

Of course, little of this was news to people who had read the damning reports released by the Special Inspector General for Afghanistan Reconstruction in previous years. They included evidence, for instance, that somewhere between $10 million and $43 million had been spent constructing a single gas station in the middle of nowhere, that $150 million had gone into luxury private villas for Americans who were supposed to be helping strengthen Afghanistan’s economy, and that tens of millions more were wasted on failed programs to improve Afghan industries focused on extracting more of the country’s minerals, oil, and natural gas reserves.

In the face of all this, rather than curtailing Pentagon spending, Congress continued to increase its budget, while also supporting a Department of Defense slush fund for war spending to keep the efforts going. Still, the special inspector general’s reports did manage to rankle American military commanders (unable to find successful combat strategies in Afghanistan) enough to launch what, in effect, would be a public-relations war to try to undermine that watchdog’s findings.Pentagon in the center of a vortex of hundred dollar bills.

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Our final annual tally for war, preparations for war, and the impact of war comes to more than $1.25 trillion—more than double the Pentagon’s base budget.Read More

All of this, in turn, reflected the “unwarranted influence” of the military-industrial complex that President (and former five-star General) Dwight Eisenhower warned Americans about in his memorable 1961 farewell address. That complex only continues to thrive and grow almost six decades later, as contractor profits are endlessly prioritized over what might be considered the national security interests of the citizenry.

The infamous “revolving door” that regularly ushers senior Pentagon officials into defense-industry posts and senior defense-industry figures into key positions at the Pentagon (and in the rest of the national security state) just adds to the endless public-relations offensives that accompany this country’s forever wars. After all, the retired generals and other officials the media regularly looks to for expertise are often essentially paid shills for the defense industry. The lack of public disclosure and media discussion about such obvious conflicts of interest only further corrupts public debate on both the wars and the funding of the military, while giving the arms industry the biggest seat at the table when decisions are made on how much to spend on war and preparations for the same.

Media Analysis Brought to You by the Arms Industry

That lack of disclosure regarding potential conflicts of interest recently came into fresh relief as industry boosters beat the media drums for war with Iran. Unfortunately, it’s a story we’ve seen many times before. Back in 2008, for instance, in a Pulitzer Prize-winning series, the New York Times revealed that the Pentagon had launched a program to cultivate a coterie of retired-military-officers-turned-pundits in support of its already disastrous war in Iraq. Seeing such figures on TV or reading their comments in the press, the public may have assumed that they were just speaking their minds. However, the Times investigation showed that, while widely cited in the media and regularly featured on the TV news, they never disclosed that they received special Pentagon access and that, collectively, they had financial ties to more than 150 Pentagon contractors.

Given such financial interests, it was nearly impossible for them to be “objective” when it came to this country’s failing war in Iraq. After all, they needed to secure more contracts for their defense-industry employers. A subsequent analysis by the Government Accountability Office found that the Pentagon’s program raised “legitimate questions” about how its public propaganda efforts were tied to the weaponry it bought, highlighting “the possibility of compromised procurements resulting from potential competitive advantages” for those who helped them.

While the program was discontinued that same year, a similar effort was revealed in 2013 during a debate over whether the U.S. should attack Bashar al-Assad’s Syrian regime. You probably won’t be surprised to discover that most of the former military figures and officials used as analysts at the time supported action against Syria. A review of their commentary by the Public Accountability Initiative found a number of them also had undisclosed ties to the arms industry. In fact, of 111 appearances in major media outlets by 22 commentators, only 13 of them disclosed any aspect of their potential conflicts of interest that might lead them to promote war.

The same pattern is now being repeated in the debate over the Trump administration’s decision to assassinate by drone Iranian Major General Qassem Soleimani and other Iran-related issues. While Soleimani clearly opposed the United States and many of its national security interests, his killing risked pushing Washington into another endless war in the Middle East. And in a distinctly recognizable pattern, the Intercept has already found that the air waves were subsequently flooded by defense-industry pundits praising the strike. Unsurprisingly, news of a potential war also promptly boosted defense industry stocks. Northrop Grumman’s, Raytheon’s, and Lockheed Martin’s all started 2020 with an uptick.

Senator Elizabeth Warren (D-MA) and Representative Jackie Speier (D-CA) have offered legislation that could shut down that revolving door between the major weapons makers and Washington for good, but it has met concerted resistance from Pentagon officials and others still in Congress who stand to benefit from preserving the system as is. Even if that revolving door wasn’t shut down, transparency about just who was going through it would help the public better understand what former officials and military commanders are really advocating for when they speak positively of the necessity for yet another war in the Middle East.

Costly Weapons (and Well-Paid Lobbyists)

Here’s what we already know about how it all now works: weapon systems produced by the big defense firms with all those retired generals, former administration officials, and one-time congressional representatives on their boards (or lobbying for or consulting for them behind the scenes) regularly come in overpriced, are often delivered behind schedule, and repeatedly fail to have the capabilities advertised. Take, for instance, the new Ford class aircraft carriers, produced by Huntington Ingalls Industries, the sort of ships that have traditionally been used to show strength globally. In this case, however, the program’s development has been stifled by problems with its weapons elevators and the systems used to launch and recover its aircraft. Those problems have been costly enough to send the price for the first of those carriers soaring to $13.1 billion. Meanwhile, Lockheed Martin’s F-35 jet fighter, the most expensive weapons system in Pentagon history, has an abysmal rate of combat readiness and currently comes in at more than $100 million per aircraft.

Officers Advocating for More F-35s Often Had Financial Stakes

It’s clear that many of those advocating for more F-35s are far from independent and impartial experts.Read More

And yet, somehow, no one ever seems to be responsible for such programmatic failures and prices — certainly not the companies that make them (or all those retired military commanders sitting on their boards or working for them). One crucial reason for this lack of accountability is that key members of Congress serving on committees that should be overseeing such spending are often the top recipients of campaign contributions from the big weapons makers and their allies. And just as at the Pentagon, members of those committees or their staff often later become lobbyists for those very federal contractors.

With this in mind, the big defense firms carefully spread their contracts for weapons production across as many congressional districts as possible. This practice of “political engineering,” a term promoted by former Department of Defense analyst and military reformer Chuck Spinney, helps those contractors and the Pentagon buy off members of Congress from both parties. Take, for example, the Littoral Combat Ship, a vessel meant to operate close to shore. Costs for the program tripled over initial estimates and, according to Defense News, the Navy is already considering decommissioning four of the new ships next year as a cost-saving measure. It’s not the first time that program has been threatened with the budget axe. In the past, however, pork-barrel politics spearheaded by Senators Tammy Baldwin (D-WI) and Richard Shelby (R-AL), in whose states those boats were being built, kept the program afloat.

The Air Force’s new bomber, the B-21, being built by Northrup Grumman, has been on a similar trajectory. Despite significant pressure from then-Senator John McCain (R-AZ), the Air Force refused in 2017 to make public or agree upon a contract price for the program. (It was a “cost-plus,” not a “fixed price” contract, after all.) It did, however, release the names of the companies providing components to the program, ensuring that relevant congressional representatives would support it, no matter the predictably spiraling costs to come.

Recent polling indicates that such pork-barrel politics isn’t backed by the public, even when they might benefit from it. Asked whether congressional representatives should use the Pentagon’s budget to generate jobs in their districts, 77% of respondents rejected the notion. Two-thirds favored shifting such funds to sectors like healthcare, infrastructure, and clean energy that would, in fact, create significantly more jobs.

And keep in mind that, in this big-time system of profiteering, hardware costs, however staggering, are just a modest part of the equation. The Pentagon spends about as much on what it calls “services” as it does on the weaponry itself and those service contracts are another major source of profits. For example, it’s estimated that the F-35 program will cost $1.5 trillion over the lifetime of the plane, but a trillion dollars of those costs will be for support and maintenance of the aircraft.

Increasingly, this means contractors are able to hold the Pentagon hostage over a weapon’s lifetime, which means overcharges of just about every imaginable sort, including for labor. The Project On Government Oversight (where I work) has, for instance, been uncovering overcharges in spare parts since our founding, including an infamous $435 hammer back in 1983. I’m sad to report that what, in the 1980s, was a seemingly outrageous $640 plastic toilet-seat cover for military airplanes now costs an eye-popping $10,000. A number of factors help explain such otherwise unimaginable prices, including the way contractors often retain intellectual property rights to many of the systems taxpayers funded to develop, legal loopholes that make it difficult for the government to challenge wild charges, and a system largely beholden to the interests of defense companies.

In for a TransDigm, Out for Billions

While it is easy to blame TransDigm, Congress created the problem, and agencies are placed in the undesirable position of relying on outdated, and often outrageous, prices.Read More

The most recent and notorious case may be TransDigm, a company that has purchased other companies with a monopoly on providing spare parts for a number of weapon systems. That, in turn, gave it power to increase the prices of parts with little fear of losing business — once, receiving 9,400% in excess profits for a single half-inch metal pin. An investigation by the House Oversight and Reform Committee found that TransDigm’s employees had been coached to resist providing cost or pricing information to the government, lest such overcharges be challenged.

In one case, for instance, a subsidiary of TransDigm resisted providing such information until the government, desperate for parts for weapons to be used in Iraq and Afghanistan, was forced to capitulate or risk putting troops’ lives on the line. TransDigm did later repay the government $16 million for certain overcharges, but only after the House Oversight and Reform Committee held a hearing on the subject that shamed the company. As it happens, TransDigm’s behavior isn’t an outlier. It’s typical of many defense-related companies doing business with the government — about 20 major industry players, according to a former Pentagon pricing czar.

A Recipe for Disaster

For too long Congress has largely abdicated its responsibilities when it comes to holding the Pentagon accountable. You won’t be surprised to learn that most of the “acquisition reforms” it’s passed in recent years, which affect how the Department of Defense buys goods and services, have placed just about all real negotiating power in the hands of the big defense contractors. To add insult to injury, both parties of Congress continue to vote in near unanimity for increases in the Pentagon budget, despite 18-plus years of losing wars, the never-ending gross mismanagement of weapons programs, and a continued failure to pass a basic audit. If any other federal agency (or the contractors it dealt with) had a similar track record, you can only begin to imagine the hubbub that would ensue. But not the Pentagon. Never the Pentagon.

A significantly reduced budget would undoubtedly increase that institution’s effectiveness by curbing its urge to throw ever more money at problems. Instead, an often bought-and-paid-for Congress continues to enable bad decision-making about what to buy and how to buy it. And let’s face it, a Congress that allows endless wars, terrible spending practices, and multiplying conflicts of interest is, as the history of the twenty-first century has shown us, a recipe for disaster.”

https://www.pogo.org/analysis/2020/01/never-the-pentagon/

ABOUT THE AUTHOR:

Mandy Smithberger

Mandy Smithberger rejoined POGO as the director of the Straus Military Reform Project at the Center for Defense Information in December 2014. Previously she was a national security policy adviser to U.S. Rep. Jackie Speier (D-Calif.) worked on passing key provisions of the Military Whistleblower Protection Enhancement Act into law, which expands protections by increasing the level of Inspector General review for complaints, requiring timely action on findings of reprisal, and increasing the time whistleblowers have to report reprisals. Previously an investigator with POGO, she was part of a team that received the Society of Professional Journalists’ Sunshine Award for contributions in the area of open government.
Ms. Smithberger received her B.A. in government from Smith College and her Masters in Strategic Studies and International Economics from Johns Hopkins University’s School of Advanced International Studies. She also served as an analyst at the Defense Intelligence Agency and U.S. Central Command.

Pentagon Silicon Valley Experiment Thrust Into Spotlight

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Screen Shot 2015-11-06 at 3.54.04 PM“NATIONAL DEFENSE MAGAZINE”

“Since its opening in August, the Defense Innovation Unit Experimental, or DIUX, has become the focus of much industry and media chatter.

DIUX plans to host events like “pitch nights” and “hackathons” to drum up excitement among small businesses and startups that develop products for cyber security, big data analysis, surveillance, cloud computing, virtual gaming and other disciplines where the Pentagon has fallen behind the technology curve.

Defense officials acknowledge that they face a steep climb in trying to convert skeptics who see the DIUX and other initiatives as passing fads that will do little to change the minds of tech entrepreneurs who want nothing to do with the government.

“The Snowden hangover of fear and mistrust has reached a pinnacle in Silicon Valley,” said Raj Shah, an Air Force reservist and senior director of strategy at Palo Alto Networks who is now on assignment at DIUX.

Speaking to an audience of Washington insiders last week at the Heritage Foundation, Shah outlined DIUX’s ambitious agenda: Strengthen existing relationships with the tech sector, build new ties with entrepreneurs, scout for hot technologies and serve as a “point of presence” for the Pentagon.

The cultural gap between the defense and commercial worlds is real, he said. Defense Secretary Ashton Carter has cast DIUX as the facilitator that will help to attract fresh talent to the defense market. In that vein, “it is incumbent on DoD to show value to the entrepreneur community,” Shah said. Reservists like himself who understand how the military operates and also have private-sector experience are the “connective tissue.”

DIUX plans to host events like “pitch nights” and “hackathons” to drum up excitement among small businesses and startups that develop products for cyber security, big data analysis, surveillance, cloud computing, virtual gaming and other disciplines where the Pentagon has fallen behind the technology curve.

The area is bursting with tech talent, Shah said. About $20 billion in venture capital investments was poured into Silicon Valley companies last year. In the cyber sector alone, 450 startups were funded.

The Defense Department needs to tap into this innovation, he said, but acknowledged that it will be an uphill climb. “We have to be humble. This is not going to get solved in months. We need time to understand what the roadblocks are” that keep commercial companies from wanting to sell to the government.

The roadblocks are patently obvious to private sector executives. While many entrepreneurs might regard government work as prestigious and potentially meaningful, the procurement process and red tape can be deal breakers. They also find it contradictory that while the Pentagon touts its outreach to Silicon Valley, it has shown no interest in reversing contracting rules that do not allow for timely acquisitions of commercial products. Shah said he is aware of these issues but DIUX has no power to rewrite the federal procurement rulebook. “It’s unlikely that we are going to transform the acquisition process,” he said. “That’s not our mandate. Although in certain areas, we can make a difference.”

The Pentagon’s difficulties in acquiring commercial technology are now being investigated by the Government Accountability Office. GAO analysts have spent months interviewing contractors and commercial firms to understand the difference between the way the government and a commercial company buys products. As part of this study, GAO also will visit DIUX.

Geoff Orazem, a retired Marine Corps officer and now CEO of startup incubator Eastern Foundry, said the barriers to entering the defense market are “significant, but once you get over it, the government offers great opportunities.” For the Defense Department to succeed in its innovation push, it has to better articulate its needs in language that civilians can understand, he said. “A 150-page request for proposals is a non-starter. Startups won’t read it.”

The Pentagon’s outreach will not work if it’s limited to top officials making speeches and touring the Valley, many experts said. The contracting officers in the field who actually negotiate deals need to be part of the effort, Orazem said. “The current generation of contracting officers was brought up with a risk averse mindset,” he added. “That puts a lot of sand into the gears of procurements.”

“DIUX will fall flat on its face if it doesn’t get the working level people involved,” said Yanev Suissa, founder of Sinewave Ventures, a tech venture financing firm. Many executives have traveled to Washington, met with Pentagon and White House officials and thought that would immediately lead to government contracts. That’s a huge misconception, he said. “There is a pretty big disconnect between startups and government,” Suissa said. Aside from rare exceptions, most venture capitalists are focused on commercial companies. “They want nothing to do with companies that sell to the government,” he said. “The public sector has to figure out how to be a better customer.”

Adam Tarsi, chief of staff of the Pentagon’s office that oversees the procurement of counterterrorism technology, said one of the obstacles for startups is the lack of vehicles to market their products to the government. “The main acquisition challenge for the U.S. government is that we make it difficult for people that have developed a product to introduce it to the government market,” he said at an industry conference last week in Arlington, Virginia. “We are planting flags all over the place” but the roadblocks remain.

The government also ought to ease startups’ fears that it will seize their intellectual property, noted Jonathan Aberman, managing director and founder of TandemNSI, a company that connects entrepreneurs with government agencies. “Sadly, government contracting communities are feared by innovators because they are concerned about losing their IP.” Those concerns can be overblown, he added. “The problem is a lack of information, no more than that.”

The CIA’s venture capital arm, In-Q-Tel, often is hailed as a success story in working with startups. “Over 70 percent of the companies we invest in have never done business with the government,” said Chief Operating Officer Matthew Strottman. There is growing interest in parts of the tech industry in working with the intelligence community, he said. Silicon Valley firms, particularly, churn out products for which intelligence agencies have a large appetite, such as big data tools. The key is for the government to show that it will play fair, “so it doesn’t look like the system is rigged for an inside community.” The outreach has to be seen as legitimate, he added. “It needs to be more of an institutionalized, long lasting presence.”

It has been just over a year since the Pentagon kicked off its innovation campaign. Acquisitions chief Frank Kendall signed a memo in October 2014 directing the launch of a “long range research-and-development plan” with specific instructions to reach out to “nontraditional players.” Kendall said the Defense Department should “identify high-payoff enabling technology investments” and focus on technology that can be adopted into military programs within the next five years. “This effort is of the highest priority and requires full and immediate support from across the department,” Kendall wrote.

A follow-up action in January was the release of a “request for information” that sought ideas from the outside world and was specifically aimed at innovative small businesses and Silicon Valley startups.

Pentagon officials said the RFI generated hundreds of responses. But it is unlikely that many of those came from the Silicon Valley firms that Carter and Kendall would like to see at the table.

The companies that have cutting-edge technology, especially small businesses, insist they could not survive as government contractors because the sales cycles are so long. The process of setting requirements, securing funding and seeking industry bids takes years, and businesses have to generate revenue constantly to stay alive. The Pentagon’s business model is acceptable for established defense contractors but not for privately funded startups, said Sean Varah, CEO of MotionDSP, a Silicon Valley-based company that develops advanced image processing, computer vision and video analytics software. “Commercial buyers have discretionary budgets to do things. They go out and find the best solution and buy it,” he told National Defense. Varah said he has tried to contact DIUX to pitch ideas but has not heard back from anyone. “I’m cynical that it will have any impact.”

Varah frequently experiences the frustrations of doing business with the government, and he knows other peers in the industry are in the same boat. One of his special operations customers, for instance, wanted to buy MotionDSP video-enhancement software a year ago, but the purchase was held up in red tape because there was no written requirement for that particular product.

“They were working with a requirements document written five years ago and advanced video processing was not specified. Now they’re having to rewrite the document. It has taken more than nine months, and it’s still not done,” Varah said. By the time they receive the product, the operators will have waited for nearly two years. “That’s going to happen to the government again and again. Disruptive technology will come out that the government didn’t know existed. They are going to want it and need it, but will have no way to buy it.”

http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2010