Tag Archives: Government Spending

Homeland Security Falling Short in Managing Risky Contractors

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Contracted workers install a blue tarp on a roof damaged by Hurricane Irma as a part of FEMA / The Corps of Engineers “Operation Blue Roof” program in Monroe County (Cudjoe Key), Florida on Tuesday, Oct. 3, 2017. (Photo: J.T. Blatty / FEMA)

“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“The Department of Homeland Security awarded over $23 billion in contracts, grants, and other federal assistance in fiscal year 2017.

The Department’s suspension and debarment policies and practices are falling short, making it more difficult for the agency to ensure taxpayers’ money isn’t lost to fraud, waste, and abuse.”


“The watchdog concluded the Department’s suspension and debarment policies and practices are falling short, making it more difficult for the agency to ensure taxpayers’ money isn’t lost to fraud, waste, and abuse.

Federal agencies use suspension and debarment to prevent individuals and companies suspected or found guilty of misconduct from receiving contracts, grants, loans, and other federal money. Suspensions and debarments aren’t used as a punishment; instead, they are used to protect taxpayers by making sure the government only does business with responsible entities.

Among the deficiencies highlighted in the report, the Department’s guidelines regarding suspensions, debarments, and administrative agreements—a remedy used in lieu of suspension and debarment—are outdated and missing needed information. In particular, the Inspector General found inadequate documentation for five of seven administrative agreements approved between 2012 and 2017.

The watchdog also determined the Department lacks an effective centralized system to track suspension and debarment activities, which may have caused the agency to publicly report inaccurate data for one year. In addition, for an eight-month period in 2016 and 2017, the Federal Emergency Management Agency (FEMA) failed to update the System for Award Management (SAM) and the Federal Awardee Performance and Integrity Information System (FAPIIS)—databases that track which individuals and companies have been barred from doing business with Uncle Sam. Fortunately, the Inspector General reported that none of the individuals and companies FEMA excluded during that reporting lapse had received funds from FEMA or any other federal agency.

The Inspector General made several recommendations for improvement, including updating suspension and debarment guidelines, devising a centralized information tracking system, enhancing information sharing within the agency, and incentivizing employees to timely report suspensions, debarments, and administrative agreements in the SAM and FAPIIS databases. The good news is that the Department agreed with all of the recommendations and is taking steps to address them. According to the report, the agency expects to fully implement all recommended fixes by the end of September this year.

The Project On Government Oversight has called for strengthening the federal suspension and debarment system and providing government contracting officials with more and better awardee accountability data. We are encouraged that the Department is increasing its usage of suspension and debarment, and that it is making improvements where necessary.”

http://www.pogo.org/blog/2018/02/homeland-security-falling-short-in-managing-risky-contractors.html

 

 

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McCain Wants to Fire Those Responsible for Weapons Cost Overruns

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McCain said he asked Chief of Naval Operations Adm. John Richardson who was responsible for cost overruns and was told Richardson didn’t know.

“MILITARY.COM”

“The Army‘s Future Combat Systems and the USS Gerald S. Ford, the first of the Navy‘s new class of supercarriers. He took to task Ellen Lord, the new under secretary of defense for acquisition, technology and logistics. 

FCS was canceled in 2009 after six years of work and more than $6 billion in taxpayer investment; the Ford was delivered earlier this year, more than $2 billion over budget and 15 months later than expected.”


“The chairman of the Senate Armed Services Committee is playing hardball with the Pentagon when it comes to acquisition programs that end up billions of dollars over budget or deliver years late.

“I mean, there’s such a thing as accountability, and all of the things that were just covered by the witnesses here … there’s no penalty for failure,” the Arizona Republican said. ” … When I go to a town hall meeting and tell my constituents that we blew $6 billion and there has not been anyone fired or replaced or — or — or new way of doing things, they’re not really very happy.”

Lord declined to talk about specific personnel actions in an open hearing, telling McCain she preferred to discuss the matter privately in his office.

“We, as a team, are working very closely together to look at functions and individuals in OSD and in the services, the duties they’re required to perform,” she said, “and are determining whether or not we have the right people in the right slots, and I don’t want to talk about individuals here in a broad forum.”

Army Secretary Mark Esper, who also testified, was more direct.

“Senator, I’m not aware of anyone being fired for FCS, to your point,” he said.

McCain has been a longtime critic of a number of major defense acquisition programs that saw large cost overruns or failed to live up to their initial promise.

On Thursday, he said the F-35 Joint Strike Fighter program, now with a $1 trillion lifetime cost, still “operated in dysfunction,” and other programs, such as the Army’s Warfighter Information Network-Tactical, still didn’t work as planned.

“That’s why this committee enacted the most sweeping acquisition reforms in a generation through the last two National Defense Authorization Acts,” he said. “And yet, despite that legislation, and in the face of our eroding military advantage, the department has been unable or unwilling to change.”

Lord, who previously served as CEO of Textron Systems and assumed her current position in August, told reporters following the hearing that she expects to address personnel issues going forward, though she may not reveal all actions to the public.

She added that she is prohibited by law from making any personnel changes or reassignments in the first 120 days of her tenure. That milestone, she added, has only recently passed.

“I think you should expect to see some movements,” she said.”

https://www.military.com/dodbuzz/2017/12/07/mccain-wants-fire-those-responsible-weapons-cost-overruns.html

 

 

Overspending On The Pentagon Won’t Make Us Safer

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“THE HILL” By William D. Hartung

“$716 billion on the Pentagon and related programs for fiscal 2019 will be a case of throwing good money after bad.

Pentagon spending is already approaching a post-World War II record, well above the Cold War average and higher than peak spending during the Korean and Vietnam wars. “


“At a time when military force has been either irrelevant or ineffective in addressing the most urgent threats we face, doubling down on Pentagon spending at the expense of diplomacy and other elements of national strength is misguided at best, and potentially disastrous at worst.

Rather than overspending on unnecessary nuclear weapons and bulking up on traditional weapons systems, the administration should be crafting a strategy for making Americans safer that uses the full range of available tools. The Pentagon doesn’t need more spending, it needs more spending discipline, and a clearer strategy. Trying to do everything is not a strategy, it is a recipe for perpetual conflict.

Advocates of higher spending claim that there is a “readiness” crisis driven by shoddy equipment and inadequate training, factors that — they claim — are the cause of deaths of sailors and Marines on patrol or in stateside military exercises. In fact, as a number of officers who lead personnel on the front lines have noted, there is no readiness crisis. To the extent that additional funds are needed for training and maintenance there is more than enough money available if the Pentagon would eliminate wasteful and misguided expenditures.

Examples of waste in the Pentagon budget abound. For example, a Pentagon advisory council has identified excessive bureaucratic overhead that, if eliminated, would save $25 billion per year.

Rather than get down to the task of streamlining its operations, Pentagon leaders tried to hide the report’s findings from Congress, fearing that the revelations would undercut their pleas for additional funding. Or take the case of the more than 600,000 private contractors that the Pentagon employs, many of whom do jobs that duplicate work being done by government employees. Cutting this work force by 15 percent would save another $20 billion per year.

Then there are the Pentagon’s sloppy purchasing practices, which result in overpaying for basic items like $500 worth of helicopter gears that the Army purchased for $8,000.

Part of the problem is that the Pentagon’s books are in such a state of chaos that the department is the only major U.S. agency that has never passed an audit. If they can’t keep track of where the money goes, it’s much harder to root out waste or avoid overpaying for basic goods and services.

Another factor that keeps Pentagon spending higher than it should be is the myth that most of the funds it receives support our troops. This is not the case. About 40 to 50 percent of the Pentagon’s yearly outlays go to corporations, with large contractors like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and General Dynamics getting the lion’s share. And too often the big-ticket items that fuel the revenues of these firms are of little value in actually defending us from the most urgent threats we face.

Take, for example, the F-35 combat aircraft, the largest weapons program ever undertaken by the Pentagon, at a projected $1.5 trillion to build and operate over the lifetime of the aircraft. The Project on Government Oversight, a respected nonpartisan watchdog group, has determined that the plane may never be fully ready for combat, even as it experiences huge cost overruns and ongoing performance problems.

For another example, look at the Pentagon’s plan to spend $1.7 trillion over the next three decades on a new generation of nuclear-armed submarines, bombers, and land-based missiles. We already possess massive nuclear overkill, with a stockpile of 4,000 nuclear weapons when a few hundred would be enough to dissuade any nation from attacking the United States. Cutting the arsenal down to size could save hundreds of billions of dollars in the years to come. And needless to say, building more nuclear weapons will do nothing to protect us from terrorism, even as it starves necessary domestic programs of funds.

Before they throw more money at the Pentagon, the administration and Congress need to force the department to do a better job of spending the money it already has. Spending more without a smarter strategy won’t make us any safer, and it could even make matters worse.”

http://thehill.com/opinion/national-security/371414-overspending-on-the-pentagon-wont-make-us-safer

ABOUT THE AUTHOR:

William D. Hartung is the director of the Arms and Security Project at Center for International Policy and a senior adviser to the center’s Security Assistance Monitor. He is the author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex (Nation Books, 2011) and the co-editor, with Miriam Pemberton, of Lessons from Iraq: Avoiding the Next War (Paradigm Press, 2008). His previous books include And Weapons for All (HarperCollins, 1995), a critique of U.S. arms sales policies from the Nixon through Clinton administrations.

 

 

Revolving Door Between Pentagon And Contractors Spins Faster

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“BLOOMBERG GOVEERNMENT”

“The former principal undersecretary of the Air Force for acquisition left her job in 2003 to work for Boeing, after the Air Force announced it had awarded Boeing a 10-year tanker lease.

Soon after, she pleaded guilty to inflating the price of the contract – while she was in negotiations for her $250,000-per year Boeing job. For his role in hiring Druyun, Boeing’s then-chief financial officer Michael Sears was fired and in 2005 was sentenced to four months in prison.”


“Ties between the Pentagon and the defense industry have deepened under President Donald Trump, prompting renewed concern about conflicts of interest that could result in favoritism toward top military contractors.

More than 80 percent of top Defense Department officials under Trump have defense contractor work experience – in many cases extensive – compared with roughly half of those President Barack Obama appointed to the same jobs, a Bloomberg Government analysis found.

Defense industry supporters say contractor work experience is a highly valuable asset for Pentagon officials, especially those who are part of the acquisition process.

But key senators of both parties worry about the ethics problems that could arise by putting these former corporate executives in the highest Defense Department posts where they oversee the awarding of billions of dollars of contracts.

Corporate Conflicts

“The Defense Department’s job is to protect our national interests, not the financial interests of defense contractors,” Sen. Elizabeth Warren (D-Mass.), a member of the Armed Services Committee, told Bloomberg Government in a written statement.

Armed Services Chairman John McCain (R-Ariz.) echoed those concerns during the confirmation hearings of a number of Pentagon nominees, including Deputy Defense Secretary Patrick Shanahan, a former Boeing Co. senior vice president for supply chain and operations, who left after 31 years with the company.

Over the course of his Boeing career, Shanahan oversaw several noteworthy military projects, including Army helicopters, a ground-based missile defense program, and the V-22 Osprey aircraft.

During Shanahan’s June 20 confirmation hearing before the Senate Armed Services Committee, McCain said that 90 percent of defense spending “is in the hands of five corporations, of which you represent one. I have to have confidence that the fox is not going to be put back into the henhouse.”

Shanahan promised to divest “all ties” with Boeing, with the exception of his executive retirement savings. “For the duration, if I’m confirmed, I will not deal with any matters regarding Boeing unless cleared by the office of ethics,” he said. Shanahan also committed to make public any recusal waivers he may seek.

Of the 17 top, Senate-confirmed Pentagon posts, including those overseeing defense acquisition, 14 are filled with Trump picks who have worked for defense contractors. By contrast, Obama’s first confirmed picks for the same posts included nine with industry backgrounds, or 56 percent, and seven without. There were 16 comparable positions under Obama at the time, as the acquisition, technology and logistics undersecretary position had yet to be split into two jobs.

By the end of Obama’s second term, a total of only 16 of 35 of Obama’s confirmed appointees for the same jobs, or 46 percent, had direct experience working for contractors before moving to the Pentagon.

The revolving door is working both ways as 19 of 35 of Obama’s top DOD officials have joined or rejoined the defense industry, including taking seats on contractor boards of directors.

During three contentious confirmation hearings last year, McCain and Warren took issue with the nominees’ “rotating back and forth between government” and several of the “big five” largest-grossing defense contractors – Lockheed Martin Corp., Boeing, General Dynamics Corp., Raytheon Co., and Northrop Grumman Corp.

“I will not vote to confirm nominees from industry who do not recuse themselves from matters involving their former employers for the duration required by their ethics agreements,” Warren said, “without waiver and without exception.”

Eisenhower Warning

Worries about too-cozy ties between the military and defense contracting giants aren’t new.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex,” President Dwight Eisenhower, himself a retired general, warned just before leaving office in 1961. “The potential for the disastrous rise of misplaced power exists and will persist.”

There remain few ironclad protections against conflict-related abuses, government watchdogs say. The Trump White House prohibits senior officials hired into the Pentagon and other agencies from working on matters involving their former employers for two years – but officials can ask for recusal waivers, and such discussions, including whether the waivers have been granted, are kept secret.

“It’s clear that this administration values the experience of business executives over that of career civil servants,” Mandy Smithberger, director of the Straus Military Reform Project for the Project on Government Oversight, a Washington nonprofit group, told Bloomberg Government.

The shift has spurred an increased risk of abuse, Smithberger said. “The lack of transparency is a real concern,” she said. Without proper management of conflicts of interest, unfair competition can result, she said.

Worst-case scenarios could include everything from awarding contracts worth billions of dollars to a former employer, to not properly overseeing a program, to failing to account for cost overruns, she said. When contractors fail to deliver a promised system, or deliver an ineffective plane or ship that doesn’t meet national security needs, significant sums would be wasted.

Defense Secretary James Mattis – who was elected to a board seat with General Dynamics in 2013, and received at least $276,000 in fees from the company since then – has taken several steps to avoid actual and perceived conflicts.

Mattis stepped down from his board seat as a condition of confirmation. In his government ethics agreement made public a year ago, he also agreed to recuse himself, for a year, from participating “personally and substantially in any particular matter involving specific parties in which I know General Dynamics is a party or represents a party,” unless otherwise authorized to participate.

Shanahan set up a unique system to try to avoid conflicts, Bloomberg News reported last August. He signed a so-called “screening arrangement” to notify Mattis of issues involving Boeing.

The conflict alert system was set up to instruct both Mattis and Shanahan’s staff to refer “certain matters to another official” for decisions, the Bloomberg story said.

McCain pressed the conflict issue during November 2017 hearings for John Rood, the nominee for defense undersecretary for policy who previously worked as senior vice president with Lockheed Martin International, and Mark Esper, the Army secretary nominee who was Raytheon’s top lobbyist in Washington from 2010-17, earning more than $1.5 million from the company in his last year there, according to news reports.

Warren asked Rood if he would commit to forgo seeking a waiver from his two-year White House recusal pledge regarding Lockheed projects. McCain followed up, telling Rood, “You should not be making decisions that are related to your previous employment, or would affect the fortunes of one of them. So, I don’t like your answers. Most of us don’t like your answers.”

On Jan. 3, the Senate confirmed Rood by an 81-7 margin. McCain, who has been battling brain cancer, missed the vote. Warren voted no.

Valuable Expertise

Many Pentagon and contractor officials say the main benefit of drawing talent from industry is clear: contractor officials have direct experience designing and building weapons systems and related services.

“Just as it’s good to have former military personnel in Congress providing oversight over the military, it’s good to have former industry people in government providing oversight over industry,” John Luddy, the Aerospace Industries Association’s vice president for national security policy, told Bloomberg Government in a written statement. “They have the experience to know what is and is not reasonable in industry offerings. They know which questions to ask.”

The AIA includes as members the big five defense contractors, each of which declined to comment for this story.

Such experience allows officials to better calculate and manage risk, and realistically assess weapons project schedules, Andrew Hunter, director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies, said in an interview.

Industry expertise is difficult to replicate in the other fields presidents often draw from when looking for defense leadership, such as think tanks, Capitol Hill staff and military officers and civilian staff, Hunter said.

Exit to Industry

Since Trump took office, several Obama-appointed defense officials have taken a time-honored path. They’re now working for the contractors whose weapons programs the Pentagon oversaw under their watch.

Former deputy secretary of defense Robert Work was elected to Raytheon’s board of directors about a month after leaving the Pentagon. Work praised Raytheon in December 2016 as a company that boasts “the best missileers in the world,” Defense News reported.

Frank Kendall, former undersecretary for acquisition, technology and logistics, was appointed to defense contractor Leidos’s board.

Former undersecretary for intelligence Marcel Lettre II is now vice president, national security, for Lockheed Martin.

Deborah Lee James, the former Air Force Secretary, joined Textron Systems’ board of directors.

Most recently, former assistant secretary of the Navy for research, development and acquisition Sean Stackley became a corporate vice president for L3 Technologies.

Former senior defense officials are subject to a range of restrictions involving working or lobbying on programs that they, or others within their company, handled while in the government.

The 2018 National Defense Authorization Act (Public Law 115-91) further tightened the rules for high-ranking former military officers and counterpart civilian Pentagon officials. Under the new defense authorization, former Executive Schedule III officials and higher – who include Work, Kendall, Lettre, and James – are subject to a two-year “cooling off” period, during which they can’t lobby Pentagon officials regarding any department projects.

In the wake of the Druyun case, the Pentagon made several regulatory and policy changes, Defense Department spokesman Patrick Evans told Bloomberg Government in a written statement. Among the changes: a requirement that all public financial disclosure filers certify annually to confirm their review and understanding of the federal post-government employment laws, and a mandate that post-government employment be included annual ethics training.

Senate-confirmed appointees must sign a White House ethics pledge, enter into an Office of Government Ethics-approved agreement that outlines steps taken to avoid conflicts, and divest of any Pentagon contractor stock, Evans said.

Mattis has instructed Pentagon leaders “to engage and work collaboratively with private industry – in a fair and open manner – to find ways to maintain the competitive advantage needed to fight and win the next war, as well as be good stewards of the money entrusted to us by U.S. taxpayers,” Evans said.”

https://about.bgov.com/blog/revolving-door-trump-pentagon-contractors-spins-faster/

 

 

Budget Uncertainty Is the Worst Enemy of the Pentagon

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Photo: iStock

“NATIONAL DEFENSE MAGAZINE”

“More than 1,100 days — over three years ­— with significant uncertainty about the resources available to provide for the common defense.

These delays and uncertainties have also led to inefficient spending, wasting billions that could have gone to modernization, recapitalization and warfighter readiness.

The last defense appropriations bill passed and signed by the president on time was for 2009, leaving the services to endure nine consecutive years of kicking off the fiscal year with ambiguity, uncertainty and an inability to create momentum for new programs or enhance force readiness for contingencies.”


“As we go to print, the federal government is still without a budget for 2018, spending a third of the fiscal year under multiple continuing resolutions.

Like the previous eight, we’ve entered this fiscal year with a stopgap, putting the federal government and the Defense Department on autopilot executing funding as if it were fiscal year 2017 with little regard for changes and priorities in the recently signed National Defense Authorization Act for 2018.

Worryingly, an increasing number of pundits and defense insiders speak seriously about the resolutions extending through all of fiscal year 2018 — an outcome placing strains on the warfighter, hindering recapitalization and modernization of the force and damaging the health of the defense industrial base.

The Navy alone figures it has lost $4 billion in such inefficiencies since 2011. Now, with no firm budget for 2018, the department’s detailed budget submission for 2019 may be delayed. Hopes are dimming for an on-time submission of the president’s budget, further compressing the timeline Congress has to complete critical legislation.

Both the Obama and Trump administrations have highlighted the harm budget instability has caused to force readiness. The service chiefs and secretaries have continually pressed for stable budgets, even at lower levels, to allow the services to effectively conduct long-term planning and stem readiness declines. The defense committees in Congress have held hearings to spotlight readiness challenges and used recent aircraft and ship accidents to emphasize the dire life-and-death nature of the problem.

Lack of stability and certainty have rightly been characterized as a military readiness crisis akin to the “hollow force” years of the 1970s. The Reagan administration and Congress solved that crisis with the 1980s defense buildup. They relied on a robust defense industry. What’s less noticed and less obvious outside defense circles this time around has been the effect instability and uncertainty have had on the readiness of the U.S. defense industrial base, and the support the base can provide the warfighter today and in the future.

With continuing resolutions placing new starts and initiatives on hold, and given uncertain budget toplines and market pressures to deliver on investor expectations, firms — especially small and medium-sized — face stark choices on whether to continue to accept financial risk and uncertainty in support of the warfighter or leave the defense marketplace.

The executive summary of an upcoming study from the Center for Strategic and International Studies states that between 2011 to 2015, the number of first-tier prime contractors shrunk by about 17,000 companies — a decline of approximately 20 percent. Since fiscal support of the military plays a key role in determining resources available to drive innovation and increase productivity in critical U.S. manufacturing sectors, budget instability has both hollowed the military’s readiness levels as well as the defense industrial base’s capability and capacity to rapidly respond to future warfighter requirements.

Just as concerning, resourcing uncertainty limits companies’ willingness to take financial risks associated with research-and-development investments that could advance capabilities. Experts increasingly worry this erosion of the base will hamper the nation’s ability to respond quickly and effectively with the capacity to deliver defense articles and services to the warfighter in times of national crisis.

At the same time, the disincentives driving traditional suppliers out of the market are weighing on next-generation technology companies that can offer future — sometimes unforeseen — capabilities.

These capabilities could be key to maintaining the overmatch the United States has come to expect when it contemplates global military operations. The department has instituted initiatives such as the Defense Innovation Unit-Experimental, also known as DIUx, to help attract these companies, but the challenges it and similar efforts face are compounded by now endemic budget instability.

Recognition of these challenges is growing. In addition to the soon-to-be-released CSIS study, the Trump administration issued Executive Order 13806 last summer on “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.” With a 270-day timetable, the executive branch plans to produce its initial assessment by mid-April.

This assessment — coupled with efforts to encourage and streamline sales of U.S. equipment overseas — is heartening but insufficient to stabilize the base, or create an environment where new entrants see opportunities to innovate and provide potentially game-changing capabilities to next-generation warfighters. Innovation that drives over-match demands budget stability.

Though many in Congress are aware and pressing their leadership, it’s time for all members of Congress, especially those not on defense committees, to recognize and take actions to reverse the disastrous effects budget instability is having on the warfighter and the companies that support them. To catalyze action, the National Defense Industrial Association made this issue a strategic priority. It will inform all its engagements with the administration, the services, industry members, fellow associations and think tanks, as well as Congress.

Budget stability and certainty will remain front and center at NDIA so we can help break the almost decade-long practice of beginning the fiscal year without a budget, putting the focus on readiness recovery for the warfighter and U.S. industry.”

http://www.nationaldefensemagazine.org/articles/2018/1/29/a-renewed-plea-for-budget-stability

 

IT Contracts Worth Billions Lack Proper Oversight, GAO Reports

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(Photo: Shutterstock; Illustration by POGO)

“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

After 16 years of development and a cost of $5 billion the White House stopped a tri-agency environmental satellite system project because of ineffective management, cost hikes, and scheduling delays.

 In FY 2017 alone the IT budget for federal agencies was $89 billion; such large-scale spending means that mismanagement of this spending will have serious repercussions for taxpayers.”


“This is particularly concerning considering the problematic trend of federal agency IT projects notoriously exceeding cost expectations and failing to meet productivity goals.

The Federal Information Technology Acquisition Reform Act (FITARA), passed by Congress in 2014, was meant to remedy this large-scale waste. The law requires the federal agencies identified in the Chief Financial Officers (CFO) Act of 1990 to properly classify IT contracts and to have qualifying contracts reviewed and approved of by the agency’s Chief Information Officer (CIO). Additionally, IT developments now have to happen in an incremental way instead of over long time frames and with broad scopes. These measures ensure someone is accountable for these IT contracts and increase the likelihood that potential problems will not go unnoticed or unaddressed.

For its report, GAO evaluated CIO involvement in IT acquisitions at 22 of the 24 CFO Act agencies, excluding the Department of Defense (DoD) because it is exempt from the relevant provision and the Department of Homeland Security (DHS) because GAO had just recently reviewed it.

$4.5 Billion in Federal IT Contracts Escaped Mandated Oversight

The 22 agencies being evaluated were asked to identify all of their IT contracts while GAO created an independent list of the agencies’ IT contracts. The agency-provided total was 76,599 contracts worth $14 billion for FY 2016, while GAO found 108,092 worth $18.5 billion. That means 31,493 IT contracts worth $4.5 billion were not being flagged for the FITARA oversight process.

Eight of the reviewed agencies—the Departments of Health and Human Services (HHS), the Interior, Transportation, and the Treasury, as well as the National Science Foundation (NSF), the U.S. Agency for International Development (USAID), the General Services Administration (GSA), and the Office of Personnel Management (OPM)—were the worst offenders, failing to identify over 40 percent of their IT contracts.

Part of this discrepancy can be explained by disagreements over what contracts qualified as IT and what was required to be reported. For example, GSA did not think that products and services coded as maintenance-related and rebuilding-related should be categorized as IT. Additional discrepancies came from disparities in which types of contracts had to be identified. For example NSF, which was in compliance with OMB guidelines and CIO certification requirements, did not identify IT contracts worth less than $150,000, and at OPM a spokesperson explained “OPM only submitted information related to new IT contract and not contract modifications,” adding, “OPM overall percentage of identified contract obligations will be greater with the inclusion of information related to contract modifications.”  It is not clear, however, what other factors contributed the high number of unreported IT contracts. Four of the agencies—the Departments of the Interior, Transportation, and the Treasury, and USAID—did not respond to the Project On Government Oversight’s request for comment.

Federal Agencies Failed to Properly Review $23.8 Billion in IT Contracts

GAO also reviewed 96 randomly selected IT contracts, checking for CIO review and approval. The contracts came from the ten agencies that obligated the most funding to IT in FY 2016: the Departments of Agriculture, Commerce, HHS, Justice, State, Transportation, the Treasury, and Veterans Affairs, as well as the National Aeronautics and Space Administration and the Social Security Administration. Of the 96 contracts, only 11 had been CIO-reviewed and approved; the remaining 85 un-reviewed contracts were worth an estimated $23.8 billion in the long run.

The Office of Management and Budget (OMB) has issued guidelines that agencies should follow to properly comply with FITARA, including a requirement that agencies develop their own guidelines for assisting officials in identifying IT investments that require CIO review. According to the GAO report, however, 7 agencies have not established any guidelines and 14 haven’t established guidelines that fully satisfy OMB requirements. If there is no established methodology in place, the likelihood is high that the oversight of IT contracts will keep falling through the cracks.

FITARA was passed to codify better oversight and prevent massive government waste on expensive IT projects. A CIO is accountable for agency IT investments and is responsible for tracking IT performance, but how can a CIO oversee an IT investment without knowing it exists? Compliance with OMB guidelines could help remedy this break in communication and ensure better use of taxpayer dollars.”

http://www.pogo.org/blog/2018/01/it-contracts-worth-billions-lack-proper-oversight-gao-reports.html

Continuing Resolutions – The Short Term Budget Fix That Is Bad For Government

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CR and the Can

Dark clouds pass over the Capitol in Washington.(AP Photo/Susan Walsh, File)

“FEDERAL TIMES” By Chris Cummiskey

“The latest continuing resolution was passed just before Christmas and is set to expire Jan. 19. What does it say about our country that the Congress can’t execute the most basic responsibility of providing funds for a full fiscal year?

Threatening a federal government shutdown is considered the nuclear option by both parties in Congress. However, the reality is that government by continuing resolution is bad for just about everyone.”


“Once again, the airwaves and media outlets are filled with the threat of another federal government shutdown in just 10 days.

Congress and the president have been at odds over the annual spending bill to fund the government for months, with agencies function under a series of short-term spending measures to keep the lights on. The latest continuing resolution was passed just before Christmas and is set to expire Jan. 19.

Unfortunately, this has been a common approach to government funding in recent years that I know all too well. In 2013, as the deputy under secretary for management at the Department of Homeland Security, I was tasked with overseeing DHS’s shutdown efforts.

Now, it is no secret there are legitimate policy issues to resolve this year including a host of immigration related items. The problem is that government by continuing resolution is bad for our citizens, bad for the government and bad for Federal workers that are trying to deliver much needed services.

Bad for citizens

Regardless of where you fall on the political spectrum, it is likely that you or someone close to you relies on some sort of government service. This can take many forms – ranging from receiving a monthly social security check to taking your family to a national park. What does it say about our country that the Congress can’t execute the most basic responsibility of providing funds for a full fiscal year? Confidence is already low in the federal government’s ability to perform. This doesn’t help. Say what you will about state governments, but as a state senator, we had no choice but to get the budget done at the start of each fiscal year. Most states have a balanced budget requirement that forces lawmakers to get in a room and not come out until a funding bill is sent to the governor. Congress should try that approach.

Bad for government operations

Under the rules of a CR period, the funding level is an apportioned amount based on prior year funding. Think of it as a mini fiscal year. Under a CR, no new starts of programs are permitted and changes to existing programs are severely limited. It essentially freezes all the current activity for departments and agencies so that most strategic planning is placed on hold. This means that even needed changes to improve service delivery and performance are shelved until a full year spending bill is approved by Congress.

Bad for federal workers

The constant threat of a shutdown is also bad for government workers who are left to do the best they can with a cloud of constant uncertainty. CRs also make it very difficult to fill mission essential positions. Federal managers and supervisors who are often shorthanded due to attrition, retirement and lack of retention incentives, struggle to meet critical staffing needs. When coupled with the slow rate of political appointments in many agencies, it makes it almost impossible to get the job done. These artificial mini fiscal years are particularly hard on the CFO and budget offices in agencies. At any given time, they are already working issues in several fiscal years. As an example, amid the current meltdown, CFOs and their staff must continue planning for the public release of the president’s fiscal 2019 budget set for next month. This kicks off congressional attention for the next round of budgeting even though they have not finished the 2018 spending bill.

As a recovering politician, I get it. You must play the cards you are dealt to leverage your best position in a budget negotiation. There are always a lot of moving parts and competing spending interests. Threatening a federal government shutdown is considered the nuclear option by both parties in Congress. However, the reality is that government by continuing resolution is bad for just about everyone.”

ABOUT THE AUTHOR:

Chris Cummiskey is a former acting under secretary/deputy under secretary for management and chief acquisition officer at the U.S. Department Homeland Security. He also serves as a senior fellow with the Center for Cyber and Homeland Security at George Washington University.

https://www.federaltimes.com/opinions/2018/01/09/short-term-budget-fixes-are-bad-government/

 

 

The Unaffordable Pentagon Audit

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Unaffordable Pentagon Audit

“THE NATIONAL INTEREST”

“To perform this audit is both expensive and time-consuming, and in many cases duplicates already-existing proven DOD oversight mechanisms.

The audit is larger in scope and size than any other attempted of its kind, dissecting a vast global enterprise of more than two million people.

The total cost of the 2018 audit will be an eye-popping $847 million. That’s a lot for an already cash-strapped Pentagon—the equivalent of eight Air Force F-35 fighter jets.”


 “Who can forget the Pentagon hammer that cost $600? It may be apocryphal, but it has symbolized inefficient spending for more than two decades. And last year a newspaper headline breathlessly shouted, “Pentagon buries evidence of $125 billion in bureaucratic waste.”

So seemingly only a heretic would question the need to audit the Department of Defense. But what if a Pentagon audit represents a pyrrhic victory—a quest where the results won’t justify the cost?

The Pentagon is cooperating, having recently announced that it’s ready to undergo a financial audit after years of preparation, with DOD budget secretary David Norquist noting, “It is important that the Congress and the American people have confidence in DOD’s management of every taxpayer dollar.” Norquist went on to describe how annual audits will now become part of everyday life at DOD.

To be sure, DOD is to be commended for the hard work to get to this point. But before going too far down this road, we should assure ourselves that a costly and laborious annual financial audit of DOD, performed using commercially derived strict Generally Accepted Accounting Principles (GAAP), will result in a better-functioning DOD. It’s not at all clear it will.

Congress was the driving force behind the Pentagon audit, and has long bemoaned the fact that it has never been audited. Starting in 1990, and then again in 2010, Congress passed laws that required the Pentagon to undergo a full financial audit starting in fiscal year 2018.

Since then, elected officials rarely miss an opportunity to emphasize the importance of the audit. Sen. Chuck Grassley, for example, said in a recent speech on the Senate floor that “26 years of hard-core foot-dragging shows that internal resistance to auditing the books runs deep,” while in April, eight U.S. senators told Defense Secretary Mattis that they were concerned, statingthat “clean audits inherently provide controls that guard against fraud, waste, and abuse.”

Reasonable, right? But at what cost? Norquist also noted that to conduct the annual examination will require a small army of auditors—some 1,200—to examine every nook, cranny and ledger of the Pentagon’s sprawling bureaucracy. Norquist also estimated that the total cost of the 2018 audit will be an eye-popping $847 million. That’s a lot for an already cash-strapped Pentagon—the equivalent of eight Air Force F-35 fighter jets.

Why so expensive? Because, like corporate audits following similar standards, the Pentagon audit looks at much more than financial “books.” It also spot-checks property records and estimated values of millions of pieces of equipment and facilities, such as vintage armored personnel carriers and World War II–era armories, verifies data in personnel records for accuracy, such as marriage certificates and birthdays, and examines thousands of other records and systems.

The audit is larger in scope and size than any other attempted of its kind, dissecting a vast global enterprise of more than two million people. To perform this audit is both expensive and time-consuming, and in many cases duplicates already-existing proven DOD oversight mechanisms.

So why do it? Good question. U.S. corporations by law undergo annual strict financial audits to assure potential investors in capital markets of the soundness of their offerings as described in their financial statements. But DOD is not a corporation, and has no corresponding need.

And, perhaps most significantly, financial audits are not the best tools for discovering inefficiencies, waste or fraud. For those purposes, there are far better methods such as zero-based budgeting, contract or waste audits, strong management and continuous process-improvement techniques. Indeed, the few U.S. companies that don’t have to undergo a financial audit usually avoidit, since it usually does not result in significant reductions in waste or fraud compared to the costs involved.

U.S. taxpayers deserve confidence that the Defense Department operates in an honest and efficient manner. But at a time when our military is deteriorating for want of adequate resources, highlighted daily by ship accidents, crushing maintenance backlogs and munitions shortages, an $847 million annual audit—accompanied by, at best, modest expectations for improvement—is a mistake the Pentagon can ill afford.”

http://nationalinterest.org/feature/the-unaffordable-pentagon-audit-23784

 

 

 

 

 

The Pentagon Is Not a Sacred Cow

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Pentagon Sacred Cow

“THE NEW YORK TIMES”

“The Pentagon already wastes about one in five of the taxpayer dollars it receives, according to a Pentagon-commissioned study.

And the United States, which has plenty of other urgent needs, already spends more on its military than the next seven countries combined.”


“Health care, Social Security, Medicare and other social programs are all on the chopping block as the Republican-led Congress scrambles to make up for the revenue lost to its planned tax cuts. The Pentagon, however, remains a sacred cow, destined to receive yet more money.

The military budget is now $643 billion. The actual and potential threats from Russia, China, North Korea and Islamic extremists are all serious, but giving the Pentagon another huge increase defies common sense.

The opening bid for the 2018 defense budget came from President Trump, who in May proposed $677 billion. That was $54 billion above a budget cap set by Congress in 2011, after the 2008 financial crisis led to demands for fiscal restraint. Then last month, Congress upped his ante by passing a 2018 military authorization bill that would increase spending to around $700 billion, some $85 billion above the legal cap. Mr. Trump signed that bill into law on Tuesday.

For the moment, that increase is a fiction. Before it can occur, Congress must remove the 2011 caps and appropriate the money. That is the focus of the present budget battle on Capitol Hill. Republican leaders reportedly want to increase military spending by at least Mr. Trump’s original figure of $54 billion and nonmilitary spending by $37 billion. Democratic leaders are insisting on equal increases for both categories.

What’s not clear is that the Pentagon needs any increase until it can get a handle on waste, which a 2015 study estimated at $125 billion, about one-fifth of its budget.

The Pentagon had a virtual blank check after the Sept. 11 attacks, as it went after Al Qaeda and the Taliban in Afghanistan and then turned its attention to overthrowing Saddam Hussein in Iraq. Military spending in 2017 is already as high as during the armed forces buildup of the 1980s. The proposed increase, coming after the United States has withdrawn thousands of troops from Iraq and Afghanistan, would take it even higher. Mr. Trump, bedazzled by men in uniform and enthralled by displays of weaponry, says more money is needed to build bigger and better forces. And senior commanders have lobbied hard for a big increase to upgrade a military they say lacks readiness, meaning the training and equipment needed to fight.

It’s certainly true that the military, cut back after the Cold War, was strained during the 16 years of near constant war after Sept. 11. Yet the ground troopswho are doing the actual fighting say there is no crisis, according to the analyst Mark Thompson of the Center for Defense Information at the Project on Government Oversight. Other experts say claims of a deteriorating military are exaggerated.

Some increases are understandable, even inevitable. For instance, from 2001 to 2012, the average cost per active service member grew by 61 percent, when adjusted for inflation, because of new and expanded benefits, increasing health care costs and pay raises. Those costs prompted the Pentagon to reduce personnel, says Todd Harrison, an expert with the Center for Strategic and International Studies.

But other increases arise from a dysfunctional congressional budget process complicated by lobbyists who woo lawmakers to back unneeded or extravagant weapons. That’s how lawmakers wind up investing in programs that don’t deliver, like the overbudget F-35 jet fighter, and modernizing the nuclear arsenal at an estimated cost of $1 trillion over the next 30 years, when smarter choices would cost less and still keep the country safe.

One encouraging sign is that the Pentagon’s acquisition chief, Ellen Lord, is talking to Congress about moving away from high-tech toys that may no longer be relevant or affordable. Another is that the Pentagon has decided to launch its first (believe it or not) audit.

Like other federal agencies, the Pentagon can’t have it all. The military is critical to national security. That does not give it license to be a poor steward of resources and gobble up tax dollars at the expense of other programs.”

Pentagon Assigns 1,200 Auditors for Unprecedented Financial Review

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Pentagon Audit U.S. News dot com

“DEFENSE ONE”

“After decades of false starts, the Defense Department aims to issue its first audit report in November 2018.

The Defense Department is finally beginning an audit of its finances, following years of calls for greater transparency and failed attempts to make its accounts fully reviewable.”

_________________________________________________________________________________________

“Defense Comptroller David Norquist made the announcement Thursday, saying the department’s inspector general would begin the audit in December. Starting in 2018, Norquist said, the IG will issue reports on the Pentagon’s finances annually. The first audit will be released in November of next year.

Congress has pushed for Defense to make itself audit-ready for decades, but the Pentagon has repeatedly missed deadlines for investigators to fully dive into the minutiae of its $600 billion in annual spending. For the last several years, department officials and lawmakers of all ideological backgrounds have targeted 2017 as the year to finally get Defense ready for its financial review. The Pentagon was statutorily required to be audit-ready by September, and Norquist pledged in his May confirmation hearing to release a full financial review in 2018 whether the department was ready or not.

The department will deploy 1,200 auditors to examine every corner of its finances. The IG has hired independent public accounting firms to help it analyze each military service and to produce an overarching, department-wide report.

It is important that the Congress and the American people have confidence in DOD’s management of every taxpayer dollar,” Norquist said. “With consistent feedback from auditors, we can focus on improving the processes of our day-to-day work.”

He added the annual audits also would ensure the military receives adequate supplies and equipment.

“It demonstrates our commitment to fiscal responsibility and maximizing the value of every taxpayer dollar that is entrusted to us,” said Dana White, a Pentagon spokeswoman, on Thursday.

The Government Accountability Office first put the Pentagon’s lack of audit-readiness on its “high-risk list” in 1995. Disparate systems among the department’s various branches and components, coupled with a dramatic increase in the use of contracts in recent years, have inhibited the efforts to boost oversight. Obama administration officials acknowledged their failure to make Defense audit-ready hindered officials’ ability to track the smallest of expenses and created a public confidence issue.

“The taxpayer will never be convinced if we can’t do what every public company does” and achieve full auditability, then-Defense Comptroller Robert Hale toldGovernment Executive in 2014.

Rep. Mike Conway, R-Texas, who chairs the House Armed Services Committee’s panel on oversight and investigations, commended department leadership.

“Today’s announcement is a major turning point for Department of Defense auditability,” Conway said. “The commitment to perform a full, annual audit of the DoD will provide the taxpayers the accountability they deserve, as well as present opportunities for increased efficiency within the department.”

http://www.defenseone.com/politics/2017/12/pentagon-defense-auditors-first-financial-review/144447/?oref=d-river&utm_source=Sailthru&utm_medium=email&utm_campaign=EBB%2012.12.2017&utm_term=Editorial%20-%20Early%20Bird%20Brief