Tag Archives: Government Spending

Federal Workers Earn 32% Less Than Private Sector Employees Doing The Same Jobs

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Fed Emloyee Salaries

Federal employees see nearly 32 percent less on their paychecks than their private-sector counterparts, according to a recent report by the Federal Salary Council’s Locality Pay Working Group. (Getty Images)

“FEDERAL TIMES”

“Federal employees on average see a 31.86 percent difference between their paychecks and those doing the same work in the private sector according to an April 10, 2018, report submitted to the Federal Salary Council by its Locality Pay Working Group.”

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“The working group calculates the pay gap between federal employees and their private-sector counterparts by taking sample data from the Bureau of Labor Statistics’ National Compensation Survey in areas of the country in which federal employees receive locality pay and averaging those pay rates into a format that is comparable with federal general schedule rates.

Federal employees can receive locality pay on top of what the general schedule rates allow for their position if the government has determined that the cost of living in that locality is higher than the rest of the U.S.

These 46 established and four pending locality pay areas can span wide swaths of the U.S., such as the entire states of Hawaii and Alaska, to make up for cost-of-living expenses.

The Washington-Baltimore-Arlington locality, for example, would have seen a nearly 88 percent pay disparity from 2015 to 2017 without the addition of locality pay, according to the report.

The target disparity for the whole of the federal workforce is five percent, according to the report, giving the government a long way to go to bring employee pay in line with targets.

In 2017 and 2018 reports, the Council recommended that Burlington, Vermont; Virginia Beach, Virginia; Birmingham, Alabama; and San Antonio, Texas, be established as new locality pay areas, and the President’s Pay Agent approved that recommendation, though the regulatory process to make that change has yet to be undertaken.

For 2019 pay, the working group also recommended that Corpus Christi, Texas, and Omaha, Nebraska, be established as locality pay areas, as pay disparities in those areas have exceeded the rest of the U.S. by more than 10 percent in the past three years.

Federal employee base pay has seen fairly steady increases since 2014, hovering at or just above one percent. U.S. code calls for increases in basic pay equal to the percentage increase in the Employment Cost Index minus half a percent. As the ECI increased to 2.6 percent in September 2017, the GS basic pay increase for 2019 should be 2.1 percent.

The working group’s report was submitted during an April 10, 2018, meeting of the entire Federal Salary Council, whose full report to the Pay Agent will be made available in the coming weeks.”

https://www.federaltimes.com/management/pay-benefits/2018/04/12/federal-employees-face-nearly-32-percent-pay-disparity-with-private-sector/

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Acquisition Insanity: USS Ford Block-Buy Proposal

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USS Ford. (Photo: U.S. Navy

“THE PROJECT ON GOVERNMENT OVERSIGHT”

“Less than a year after the first-in-class ship’s commissioning (before it ever launched or recovered an aircraft…a first in history), the sea service is exploring options to buy them in bulk. 

The program’s $6 billion cost increase earned the Ford-class program a spot on Senator John McCain’s (R-AZ) “America’s Most Wasted Report.”  The ship’s electric advanced arresting gear is supposed to be able to go 16,500 landings between mission failures. So far, the best it can do is 19. “


“The Navy wants to go all in on the USS Ford-class aircraft carrier program.

The Navy has already repeated several common acquisition mistakes with the Ford program, but this latest scheme would pile on more problems. The Navy committed to this program—which includes several new major ship systems like nuclear reactors, catapults, and radar systems—while their designs were still in a conceptual stage, and the inevitable complications in their development have contributed greatly to the program’s $6 billion cost increase. Committing to such a large program with so many unproven systems earned the Ford-class program a spot on Senator John McCain’s (R-AZ) “America’s Most Wasted Report.” Yet, James Geurts, the Navy’s Assistant Secretary for Research, Development, and Acquisition, said before the House Armed Services Committee on March 6 that the Navy is studying a potential two-ship block buy for the third- and fourth-in-class ships.

Geurts testified that such a plan could save $2.5 billion over the total cost of the program, although this is only a rough estimate at this point as they are asking for evidence of savings from the contractor rather than seeking an independent cost estimate. The history of this program should make everyone skeptical of such claims. The Government Accountability Office released a report in 2017 that stated cost estimates for the Fordprogram are unreliable because they do not take into account the risks associated with building the ships before the design has been completed and tested.

Navy leaders have made at least one step in the right direction with the program recently. Following pressure from several key lawmakers, Navy Secretary Richard Spencer announced that the USS Ford will undergo crucial full-ship shock trials in 2019 or 2020. Shock trials occur when explosives are detonated underwater in close proximity to a fully kitted-out and crewed ship. This is done to test the integrity of all the ship’s systems to determine if they are sufficiently hardened to withstand the rigors of combat. Shock trials are supposed to be done as early as possible in a shipbuilding program so design problems can be identified and fixes incorporated into the design before more ships are constructed. This helps avoid costly retrofits on already constructed ships. In 2017, the Project On Government Oversight called on Congress to demand the Navy carry out these tests.

This latest announcement reverses an earlier Navy decision to postpone shock trials to the second-in-class ship of the Ford program, which would have delayed these tests for up to six years, by which time construction on three of the ships would have been substantially completed. The Navy and the Pentagon’s testing director both agreed in 2007 to performthis important test to the first-in-class ship. But on February 2, 2015, the Navy abruptly informed DOT&E that they would not conduct shock trials on the Ford, citing concerns the tests would delay the ship’s first operational deployment.

Senators John McCain (R-AZ) and Jack Reed (D-RI), the Chair and Ranking Member, respectively, of the Senate Armed Services Committee, have been rather vocal about their wishes to see the shock trials performed on the USS Ford. Other Members of Congress, however, have been working to do the Navy’s bidding by inserting language in the 2018 National Defense Authorization Act that would have allowed them to postpone the tests.

The Navy, in seeking a block buy, is following what is becoming a well-trodden path created by the Military-Industrial-Congressional Complex in two significant ways. In a big-picture sense, they want to gain commitments to purchase as many units as possible before a design has been fully tested. We are seeing this now with the F-35 program where, at the current pace, taxpayers will be on the hook for more than 600 aircraft before testing can conclusively prove the design can actually perform in combat.

As with the F-35 program, block-buy plans for the Ford program skirt the margins of legality. The Pentagon can commit to multiple-year acquisition contracts, but only after certain criteria have been met. Title 10 U.S.C., Section 2306b stipulates that for a program to be eligible for multiyear procurement, the contract must promote national security, result in substantial savings, have little chance of being reduced, and have a stable design. Until any program completes the IOT&E process, it does not meet the criteria for a multiyear contract.

Pentagon leaders know this, which is why they are careful to request block buys instead of multiyear contracts. Calling such a plan a block buy means the scheme is not subject to the same legal requirements. This is little more than verbal jiu-jitsu because the net effect is the same: the American people are stuck with the tab for an unproven weapon that may never live up to the lavish promises used to sell it, leaving the troops with a system that could fail them at the very moment they need it the most. It should also be noted that that there are plenty of people in Congress who are complicit in this plan. More than 100 lawmakersrecently sent a letter to the Secretary of Defense pushing for the two-carrier deal.

While the announcement that the Navy will conduct shock trials on the USS Ford is a positive step, this program has a lot more to prove before lawmakers should commit more taxpayer dollars. No decision for any kind of a multiyear purchase should be made until after all operational tests are performed and the results are properly evaluated and reported. Any potential savings from a multiyear deal now could easily be erased paying for expensive retrofits should significant design flaws be found during the remaining tests.”

http://www.pogo.org/straus/issues/defense-budget/2018/acquisition-insanity-uss-ford-block-buy-proposal.html

Feast or Famine? How Will The New Budget Impact Federal Contract Spending?

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Feast or Famine

Image: “FCW – The Business of Federal Technology”

“WASHINGTON TECHNOLOGY” By David Berteau

“We are halfway through the fiscal year, and we now have a full appropriations act for the entire federal government for fiscal 2018, the “Continuing Appropriations Act of 2018.”

What will be the impact of this on government services contractors?”


“First, the act means the end of the constraints imposed on both funding and programs by the series of continuing resolutions under which the government has been operating since Oct. 1.

It also eliminates any risk of another government shutdown due to a lapse in appropriations, something that has occurred twice this year already.

Second, it provides substantial increases in funding for numerous agencies and programs. Under the Bipartisan Budget Agreement of 2018, enacted on Feb. 9, the Budget Control Act caps for fiscal years 2018 and 2019 were raised significantly, and the fiscal 2018 final appropriations provides funds for most of those increases.

The Department of Defense has the largest appropriations increase, $80 billion above the previous budget cap for 2018 and $26 billion above the president’s requested budget level. For non-defense agencies, the cap was raised by $63 billion, but the omnibus appropriations bill distributed that increase unevenly and incompletely across those agencies. We are still sorting through the bill’s 2,100 pages, but it’s apparent that some departments and agencies will see an increase well above both their fiscal 2017 funding levels and above the president’s budget request for 2018, while other agencies will see lower funding levels.

In the aggregate, though, these increases, spanning many agencies and programs, may well turn the second half of fiscal 2018 into a very different market for contractors than it was in the first half. To understand how it will change, let’s look back at government contract spending in the first half of 2018.

Public data for DOD contract obligations have not yet been released, even for last October. However, monthly defense spending (as reflected in Treasury Department outlay data) for the first five months of fiscal 2018 show that defense spending was up by more than $10 billion (nearly 5 percent) compared to the same period under the fiscal 2017 CR, even though fiscal 2018 CR funding was slightly less than fiscal 2017. It appears that DOD has been spending at a rate that anticipated an appropriations increase.

The total defense increase is 15 percent above the previous caps, but only 4 percent above the programmed budget that DOD had prepared. For contractors, this likely means increased opportunities, but perhaps not as much as the numbers might indicate at first glance.

For non-defense agencies, the first half spending story is quite different, and here we do have official data to analyze. Comparing fiscal 2018 CR first quarter contract obligations to the same period under the fiscal 2017 CR shows a drop of 27 percent year-over-year. This is the largest single quarterly decline in a long time.

Obligations for services contracts declined only slightly less, 23 percent year-over-year. In some agencies, the decline has been even greater. For example, contract obligations for the U.S. Agency for International Development saw a year-over-year decline of nearly two thirds.

This pattern raises two important questions for services contractors; Why did that decline happen? Is it about to change?

First, why the decline in contract spending? Maybe it’s because the president’s proposed budget for fiscal 2018 included significant funding reductions for many non-defense agencies. With CR spending levels unchanged from 2017 throughout the first half of fiscal 2018, and the prospect (or risk) of final funding even lower under the president’s budget, some agencies appear to have planned for and spent at rates equal to the lower numbers.

Second, will that decline in contract spending reverse itself under the significantly higher full-year appropriations levels? Since the president’s proposed budget for fiscal 2019 for many of these non-defense agencies does not include that increased spending, this can put agencies in a bind. Do they spend the money Congress appropriated for fiscal 2018 and anticipate similar levels of appropriations for fiscal 2019, or do they spend only to the president’s budget level while anticipating reductions for 2019?

Comments from Mick Mulvaney, director of the Office of Management and Budget, at the Feb. 12 release of the president’s 2019 budget may offer some insight. With regard to the $63 billion increase in the non-defense appropriations cap that the president had just signed on Feb. 9, Mulvaney stated that “we don’t need to spend all the money.”

Another indicator is the omnibus appropriations bill itself. Congress expanded only DoD’s flexibility to permit more spending in the final two months of the fiscal year, for the DoD operation and maintenance accounts. Year-end spending is typically limited, but despite the late enactment of 2018 appropriations, other agencies will have no greater flexibility to spend the additional funds than in the past.

Finally, will OMB constrain non-defense agency spending? If so, will it do so indirectly, or will it issue direct written guidance? How rapidly and fully will OMB and agency comptrollers apportion and allocate funds to program offices? Independent of OMB guidance, will agencies be able to spend the additional 2018 funds in the remaining half of the fiscal year? It’s too soon to know the answers to these questions, but they will directly determine contract spending over the next few months.

PSC will be tracking and reporting on this regularly in the coming months, so stay tuned!”

https://washingtontechnology.com/articles/2018/04/02/insights-berteau-budget-analysis.aspx

About the Author

Mr. Berteau became the President and Chief Executive Officer of the Professional Services Council (PSC) on March 28, 2016. With nearly 400 members, PSC is the premier advocate of and resource for the federal technology and professional services industry. As CEO, Mr. Berteau focuses on legislative and regulatory issues related to government acquisition, budgets, and requirements, helping to shape public policy, lead strategic coalitions, and work to improve communications between government and industry. PSC’s member companies represent small, medium, and large businesses that provide federal agencies with services of all kinds, including engineering, logistics, operations and maintenance, information technology, facilities management, international development, scientific, and environmental services. 

Prior to PSC, Mr. Berteau was confirmed in December 2014 as the Assistant Secretary of Defense for Logistics and Materiel Readiness. He managed logistics policy and processes to provide superior, cost effective, joint logistics support to the entire Department of Defense. He oversaw the management of the $170 billion in Department of Defense logistics operations. 

Earlier, Mr. Berteau served as Senior Vice President and Director of the National Security Program on Industry and Resources at the Center for Strategic and International Studies (CSIS) in Washington, D.C. His research and analysis covered national security, management, contracting, logistics, acquisition, and industrial base issues. Mr. Berteau is a Fellow of the National Academy of Public Administration and has previously served as an adjunct professor at Georgetown University and at the Lyndon B. Johnson School of Public Affairs, a Director of the Procurement Round Table, and an Associate at the Robert S. Strauss Center at the University of Texas. 

Before he joined CSIS full time in 2008, he served as a CSIS non-resident Senior Associate for seven years. In addition, he was director of national defense and homeland security for Clark & Weinstock, director of Syracuse University’s National Security Studies Program and a professor of practice at the Maxwell School of Citizenship and Public Affairs, and senior vice president at Science Applications International Corporation (SAIC). He served a total of 14 years at senior levels in the U.S. Defense Department under six defense secretaries. 

Mr. Berteau graduated with a B.A. from Tulane University in 1971 and received his master’s degree in 1981 from the LBJ School of Public Affairs at the University of Texas. 

 

 

 

 

 

 

 

 

The Scam Artist Who Sold Fake Armored Trucks to U.S. Army

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Fake Trucks

PHOTO ILLUSTRATION BY THE DAILY BEAST

“THE DAILY BEAST”

“Whyte’s fraud is symptomatic of rushed, desperate weapons-purchases that were common during the Pentagon’s invasion and occupation of Iraq. 

Years after the Iraq occupation morphed into a wider U.S. intervention targeting Islamic State militants, the Pentagon still doesn’t know exactly what it’s spending its money on.”


“Sometime in the summer of 2006, John Ventimiglia, a plant foreman for Canada-based Armet Armored Vehicles, visited the company’s Ontario factory to inspect several Kestrel armored trucks that Armet was assembling for the U.S. military in Iraq.

Ventimiglia was horrified by what he saw, according to court documents. The vehicles lacked the floor armor that the military had specified. Instead of special, blast-resistant mineplate, workers had installed fragile plywood planks. It was also apparent that workers were using sandbox-style play sand in the vehicles’ construction—although Ventimiglia wasn’t sure why.

Ventimiglia emailed his coworker Frank Skinner, who then approached the FBI. Nearly 12 years later, this past week, a U.S. district court sentencedArmet CEO William Whyte to five years in prison for supplying fake armored vehicles to the U.S. military during the height of the American-led occupation of Iraq. Seventy-two-year-old Whyte, of Ontario, must also pay back the U.S. government for the trucks.

“Evidence at trial demonstrated that Whyte executed a scheme to defraud the United States by providing armored gun trucks that were deliberately under-armored,” the Justice Department stated.

But the military’s contracting problems aren’t unique to Iraq.

In 2011, the congressionally mandated Commission on Wartime Contracting in Iraq and Afghanistan reported that contractors had cheated the Pentagon out of $31 billion since 2001 (PDF). In one 2007 case, two South Carolina sisters—co-owners of a small parts-supplier—were found guilty of billing the Pentagon $20 million for hardware that was worth a fraction of that.

“Unfortunately, there are unscrupulous individuals out there who will take advantage of a wartime emergency, even one involving the lives and safety of our troops, to pad their own pockets,” Dan Grazier, a former Marine who is currently an analyst with the Project on Government Oversight in Washington, D.C., told The Daily Beast.

In Iraq, an escalating insurgency motivated many of the most flawed purchases. From mid-2005 to mid-2006, roadside bombs and other improvised explosive devices killed around 40 Americans per month in Iraq. Starting in 2006, the Defense Department spent $50 billion buying no fewer than 24,000 up-armored vehicles.

So-called Mine-Resistant Ambush-Protected trucks, or MRAPs—built by major defense contractors—accounted for most of the new vehicles. But the crash effort drew in small companies too, some of which assembled less-complex armored trucks for hauling Iraqi and coalition officials around Baghdad and other Iraqi cities.

Armet Armored Vehicles was one of those smaller companies. The Ontario-based company, which also operated a factory in Danville, Virginia, specialized in adding armor to SUVs and building ambulances and police vehicles. The company provided vehicles for Fast Five, the 2011 installment in the Fast and Furious film franchise.

In March 2006 the Defense Department hired Armet to build Kestrel armored trucks based on the chassis of a Ford F550 pickup. The price: around $200,000 per truck, including shipping. All told, Armet stood to earn $4 million.

The first four Kestrels were due in Baghdad 45 days after Whyte signed the contract in mid-March 2006. The rest, by the end of July. “Here we go, the first 20 Kestrels for Baghdad,” Whyte emailed his staff, according to court documents. “The only problems that I see is the chassis and FINANCE!”

Whyte was correct that it would be problematic to finance what was, for Armet, a substantial boost in production. The company fell behind. Unable to build the trucks on time and to spec, Whyte essentially faked them—replacing some government-mandated floor armor with plywood and leaving gaps in the protection on other parts of the vehicles.

“He knew he couldn’t meet the deadline,” Frank Skinner, who in 2006 oversaw Armet’s Danville factory said of Whyte during the latter’s two-month trial in in the U.S. District Court for the western district of Virginia beginning in June 2015. The first two Kestrels arrived in Baghdad at least two months late. Around the same time, Skinner secretly contacted the FBI about Whyte’s fraud.

While building faulty trucks and delivering them late, Whyte hounded military officials to pay Armet in advance for future vehicles. The military refused most of the requests. “You need to stop using progress payments for an excuse for your inability to deliver these vehicles against any type of credible timeline,” Cmdr. Tommy Neville, a contracting officer in Baghdad, wrote to Whyte.

“We miscalculated and were deluded when we believed that money was forthcoming,” Whyte wrote to another military official in October 2006. Years later, federal prosecutors would allege that Whyte repainted some of the Kestrels he had built for, but not yet shipped to, the U.S. military and instead sold them to the Nigerian government—because the Nigerians offered a higher price. A judge threw out that complaint for a lack of evidence.

In March 2008, the Pentagon rejected the seventh gun truck that Armet had shipped to Iraq and canceled the contract. By then the military had paid Armet around $2 million for six trucks it could not use. The Justice Department indicted Whyte in July 2012 and issued a warrant for his arrest the same day.

“None of the armored gun trucks delivered by Armet and Whyte met the ballistic and blast protection requirements of the contracts, despite the defendant’s claims that the vehicles met the standards,” the FBI stated. “Armet and Whyte knew that each of the six armored gun trucks failed to meet the required standards, that they were defective, and that they would not protect the officials they were intended to protect.”

Whyte fled to Canada to avoid prosecution. Armet shut its doors. Canadian authorities extradited the former CEO after a three-year legal battle. On Oct. 9, a jury unanimously found Whyte guilty on three counts of major fraud against the United States, three counts of wire fraud and three counts of criminal false claims.

Five months later on Feb. 20, Judge Jackson Kiser sentenced Whyte to spend 70 months in prison—and to pay back the $2 million his company received for the fake armored vehicles.

For the Pentagon, the underlying problem likely persists. In January 2017, the Government Accountability Office estimated that, as recently as 2016, as much as 5 percent of all federal payments to individuals and contractors were “improper” and resulted in $144 billion in waste in that year alone (PDF).

But that calculation didn’t take into account military contracts, owing to “serious financial management problems at the Department of Defense that have prevented its financial statements from being auditable,” the GAOexplained. In late 2017 Congress finally passed a law requiring the Defense Department to conduct a full audit starting in 2018.

In the meantime, it’s unclear how many other William Whytes are out there, cheating American servicemembers and taxpayers. “This is just one of the many reasons why we need to have effective oversight of the DoD acquisition process,” Grazier said.”

https://www.thedailybeast.com/the-scam-artist-who-sold-fake-armored-trucks-to-us-army

 

Things Veterans Could Get For The Price Of A Parade

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Homeless Vet Marketwatch dot com

Image: Marketwatch.com

“TASK AND PURPOSE”

“Instead of sending service members out into the streets…………… consider helping homeless veterans off of them.

Even the parade’s uber-thrifty low-end price projection, $10 million, is enough to give thousands of struggling veterans a “thank you” that really means something.”


“A Department of Defense memo sent to Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford of March 9 laid out the plans for a sprawling military parade in Washington, D.C. for Veterans Day on November 11th, 2018. In addition to requiring active-duty service-members to cram into their dress uniforms and stand by to stand by to stand by for hours on end, the parade would have a whopping price tag of somewhere between $10 and $30 million, according to the White House.

This is a puzzling proposition — and not just because the last time the U.S. enjoyed a military parade was after our last actual victory, following the conclusion of the Gulf War in 1991. Indeed, planning the big, fanfare-swaddled spend for Veterans Day seems like something of an insult to the estimated 40,056 veterans who are homeless on any given night, according to U.S. Department of Housing and Urban Development (HUD) estimates.

Here’s what else that marching-around money could do:

Feed America’s Homeless Veterans For a Month

As Newsweek points out, the average cost of a single hot meal in the U.S. clocks in at $2.94 (although it can jump as high as $5.61, depending on where you live). That comes out to more than 3.4 million hot meals, or 84 square feasts for each homeless veteran in the U.S. — enough to feed each hungry ex-warfighter three times a day for 28.3 days. I’m not sure about you, but I’d take eating for a month over a dumb parade any day.

Give Vets Some  Rent Money

Rental assistance currently helps more than 340,000 veterans to afford decent housing — and, according to a 2014 report, has reduced veteran homelessness by 33% since 2010. But that housing assistance has been imperiled in recent months: In December, Politico reported that the VA planned to divert $460 million specifically set aside for the HUD-Veterans Affairs Supportive Housing (HUD-VASH) program, which provides vets with housing vouchers. (The VA officially did an about-face on that plan in February after a public outcry, but the department’s initial thinking suggests those funds are negotiable.)

Forking over $10 million in erstwhile parade money could help. A landlord of a single HUD-VASH voucher recipient in, say, New York City, could expect to see $1,256 a month, with up to $1,500 in one-time incentives for choosing a vet over another Section 8 applicant. Heck, that’s enough to put roughly 3,600 vets up in the Big Apple for a month — long enough to get sweet jobs blogging with us!

Give major homeless Vet Centers a Big Fat Endowment

There are a 30 VA-funded Community Resource and Referral Centers (CRRCs) across the country that offer services related to health and mental health care, housing support, career assistance, and access to benefits for homeless veterans. And they’re essential: 29,000 vets received assistance through CRRCs in 2015, according to VA data.

A nice fat $330,000 check for each facility could do a lot of long-term good — especially if the money, say, funds endowments to allow each center to further expand, regardless of future budget woes in Washington. Why the VA doesn’t have its own endowment boggles the mind, unless it’s because the next war will be fought by pointy-headed Harvard intellectuals. (Just kidding; they plan the wars; they don’t fight em.)”

https://taskandpurpose.com/trump-parade-cost-veterans-services/

 

 

 

 

 

How the Pentagon Devours The Budget And Normalizes Budgetary Bloat

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“THE UNZ REVIEW – Perspectives Largely Excluded from the American Mainstream Media” By William D. Hartung,

All too often, astonishingly lavish military budgets are treated as if they were part of the natural order, like death or taxes.

There is a danger that the Pentagon will just get “fatter not stronger” as its worst spending habits are reinforced by a new gusher of dollars that relieves its planners of making any reasonably hard choices at all.”


“Imagine for a moment a scheme in which American taxpayers were taken to the cleaners to the tune of hundreds of billions of dollars and there was barely a hint of criticism or outrage. Imagine as well that the White House and a majority of the politicians in Washington, no matter the party, acquiesced in the arrangement. In fact, the annual quest to boost Pentagon spending into the stratosphere regularly follows that very scenario, assisted by predictions of imminent doom from industry-funded hawks with a vested interest in increased military outlays.

The figures contained in the recent budget deal that kept Congress open, as well as in President Trump’s budget proposal for 2019, are a case in point: $700 billion for the Pentagon and related programs in 2018 and $716 billion the following year. Remarkably, such numbers far exceeded even the Pentagon’s own expansive expectations. According to Donald Trump, admittedly not the most reliable source in all cases, Secretary of Defense Jim Mattis reportedly said, “Wow, I can’t believe we got everything we wanted” — a rare admission from the head of an organization whose only response to virtually any budget proposal is to ask for more.

The public reaction to such staggering Pentagon budget hikes was muted, to put it mildly. Unlike last year’s tax giveaway to the rich, throwing near-record amounts of tax dollars at the Department of Defense generated no visible public outrage. Yet those tax cuts and Pentagon increases are closely related. The Trump administration’s pairing of the two mimics the failed approach of President Ronald Reagan in the 1980s — only more so. It’s a phenomenon I’ve termed “Reaganomics on steroids.” Reagan’s approach yielded oceans of red ink and a severe weakening of the social safety net. It also provoked such a strong pushback that he later backtracked by raising taxes and set the stage for sharp reductions in nuclear weapons.

Donald Trump’s retrograde policies on immigration, women’s rights, racial justice, LGBT rights, and economic inequality have spawned an impressive and growing resistance. It remains to be seen whether his generous treatment of the Pentagon at the expense of basic human needs will spur a similar backlash.

Of course, it’s hard to even get a bead on what’s being lavished on the Pentagon when much of the media coverage failed to drive home just how enormous these sums actually are. A rare exception was an Associated Press story headlined “Congress, Trump Give the Pentagon a Budget the Likes of Which It Has Never Seen.” This was certainly far closer to the truth than claims like that of Mackenzie Eaglen of the conservative American Enterprise Institute, which over the years has housed such uber-hawks as Dick Cheney and John Bolton. She described the new budget as a “modest year-on-year increase.” If that’s the case, one shudders to think what an immodest increase might look like.

The Pentagon Wins Big

So let’s look at the money.

Though the Pentagon’s budget was already through the roof, it will get an extra $165 billion over the next two years, thanks to the congressional budget deal reached earlier this month. To put that figure in context, it was tens of billions of dollars more than Donald Trump had asked for last spring to “rebuild” the U.S. military (as he put it). It even exceeded the figures, already higher than Trump’s, Congress had agreed to last December. It brings total spending on the Pentagon and related programs for nuclear weapons to levels higher than those reached during the Korean and Vietnam wars in the 1950s and 1960s, or even at the height of Ronald Reagan’s vaunted military buildup of the 1980s. Only in two years of Barack Obama’s presidency, when there were roughly 150,000 U.S. troops in Iraq and Afghanistan, or about seven times current levels of personnel deployed there, was spending higher.

Ben Freeman of the Center for International Policy put the new Pentagon budget numbers in perspective when he pointed out that just the approximately $80 billion annual increase in the department’s top line between 2017 and 2019 will be double the current budget of the State Department; higher than the gross domestic products of more than 100 countries; and larger than the entire military budget of any country in the world, except China’s.

Democrats signed on to that congressional budget as part of a deal to blunt some of the most egregious Trump administration cuts proposed last spring. The administration, for example, kept the State Department’s budget from being radically slashed and it reauthorized the imperiled Children’s Health Insurance Program (CHIP) for another 10 years. In the process, however, the Democrats also threw millions of young immigrants under the bus by dropping an insistence that any new budget protect the Deferred Action for Childhood Arrivals, or “Dreamers,” program. Meanwhile, the majority of Republican fiscal conservatives were thrilled to sign off on a Pentagon increase that, combined with the Trump tax cut for the rich, funds ballooning deficits as far as the eye can see — a total of $7.7 trillion worth of them over the next decade.

While domestic spending fared better in the recent congressional budget deal than it would have if Trump’s draconian plan for 2018 had been enacted, it still lags far behind what Congress is investing in the Pentagon. And calculations by the National Priorities Project indicate that the Department of Defense is slated to be an even bigger winner in Trump’s 2019 budget blueprint. Its share of the discretionary budget, which includes virtually everything the government does other than programs like Medicare and Social Security, will mushroom to a once-unimaginable 61 cents on the dollar, a hefty boost from the already startling 54 cents on the dollar in the final year of the Obama administration.

The skewed priorities in Trump’s latest budget proposal are fueled in part by the administration’s decision to embrace the Pentagon increases Congress agreed to last month, while tossing that body’s latest decisions on non-military spending out the window. Although Congress is likely to rein in the administration’s most extreme proposals, the figures are stark indeed — a proposed cutof $120 billion in the domestic spending levels both parties agreed to. The biggest reductions include a 41% cut in funding for diplomacy and foreign aid; a 36% cut in funding for energy and the environment; and a 35% cut in housing and community development. And that’s just the beginning. The Trump administration is also preparing to launch full-scale assaults on food stampsMedicaid, and Medicare. It’s war on everything except the U.S. military.

Corporate Welfare

The recent budget plans have brought joy to the hearts of one group of needy Americans: the top executives of major weapons contractors like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and General Dynamics. They expect a bonanza from the skyrocketing Pentagon expenditures. Don’t be surprised if the CEOs of these five firms give themselves nice salary boosts, something to truly justify their work, rather than the paltry $96 million they drew as a group in 2016 (the most recent year for which full statistics are available).

And keep in mind that, like all other U.S.-based corporations, those military-industrial behemoths will benefit richly from the Trump administration’s slashing of the corporate tax rate. According to one respected industry analyst, a good portion of this windfall will go towards bonuses and increased dividends for company shareholders rather than investments in new and better ways to defend the United States. In short, in the Trump era, Lockheed Martin and its cohorts are guaranteed to make money coming and going.

Items that snagged billions in new funding in Trump’s proposed 2019 budget included Lockheed Martin’s overpriced, underperforming F-35 aircraft, at $10.6 billion; Boeing’s F-18 “Super Hornet,” which was in the process of being phased out by the Obama administration but is now written in for $2.4 billion; Northrop Grumman’s B-21 nuclear bomber at $2.3 billion; General Dynamics’ Ohio-class ballistic missile submarine at $3.9 billion; and $12 billion for an array of missile-defense programs that will redound to the benefit of… you guessed it: Lockheed Martin, Raytheon, and Boeing, among other companies. These are just a few of the dozens of weapons programs that will be feeding the bottom lines of such companies in the next two years and beyond. For programs still in their early stages, like that new bomber and the new ballistic missile submarine, their banner budgetary years are yet to come.

In explaining the flood of funding that enables a company like Lockheed Martin to reap $35 billion per year in government dollars, defense analyst Richard Aboulafia of the Teal Group noted that “diplomacy is out; air strikes are in… In this sort of environment, it’s tough to keep a lid on costs. If demand goes up, prices don’t generally come down. And, of course, it’s virtually impossible to kill stuff. You don’t have to make any kind of tough choices when there’s such a rising tide.”

Pentagon Pork Versus Human Security

Loren Thompson is a consultant to many of those weapons contractors. His think tank, the Lexington Institute, also gets contributions from the arms industry. He caught the spirit of the moment when he praised the administration’s puffed-up Pentagon proposal for using the Defense Department budget as a jobs creator in key states, including the crucial swing state of Ohio, which helped propel Donald Trump to victory in 2016. Thompson was particularly pleased with a plan to ramp up General Dynamics’s production of M-1 tanks in Lima, Ohio, in a factory whose production line the Army had tried to put on hold just a few years ago because it was already drowning in tanks and had no conceivable use for more of them.

Thompson argues that the new tanks are needed to keep up with Russia’s production of armored vehicles, a dubious assertion with a decidedly Cold War flavor to it. His claim is backed up, of course, by the administration’s new National Security Strategy, which targets Russia and China as the most formidable threats to the United States. Never mind that the likely challenges posed by these two powers — cyberattacks in the Russian case and economic expansion in the Chinese one — have nothing to do with how many tanks the U.S. Army possesses.

Trump wants to create jobs, jobs, jobs he can point to, and pumping up the military-industrial complex must seem like the path of least resistance to that end in present-day Washington. Under the circumstances, what does it matter that virtually any other form of spending would create more jobs and not saddle Americans with weaponry we don’t need?

If past performance offers any indication, none of the new money slated to pour into the Pentagon will make anyone safer. 

The list of wasteful expenditures is already staggeringly long and early projections are that bureaucratic waste at the Pentagon will amount to $125 billion over the next five years. Among other things, the Defense Department already employs a shadow work force of more than 600,000 private contractors whose responsibilities overlap significantly with work already being done by government employees. Meanwhile, sloppy buying practices regularly result in stories like the recent ones on the Pentagon’s Defense Logistics Agency losing track of how it spent $800 million and how two American commands were unable to account for $500 million meant for the war on drugs in the Greater Middle East and Africa.

Add to this the $1.5 trillion slated to be spent on F-35s that the nonpartisan Project on Government Oversight has noted may never be ready for combat and the unnecessary “modernization” of the U.S. nuclear arsenal, including a new generation of nuclear-armed bombers, submarines, and missiles at a minimum cost of $1.2 trillion over the next three decades. In other words, a large part of the Pentagon’s new funding will do much to fuel good times in the military-industrial complex but little to help the troops or defend the country.

Most important of all, this flood of new funding, which could crush a generation of Americans under a mountain of debt, will make it easier to sustain the seemingly endless seven wars that the United States is fighting in Afghanistan, Pakistan, Syria, Iraq, Libya, Somalia, and Yemen. So call this one of the worst investments in history, ensuring as it does failed wars to the horizon.

It would be a welcome change in twenty-first-century America if the reckless decision to throw yet more unbelievable sums of money at a Pentagon already vastly overfunded sparked a serious discussion about America’s hyper-militarized foreign policy. A national debate about such matters in the run-up to the 2018 and 2020 elections could determine whether it continues to be business-as-usual at the Pentagon or whether the largest agency in the federal government is finally reined in and relegated to an appropriately defensive posture.”

William D. Hartung, a TomDispatch regular, is the director of the Arms and Security Project at the Center for International Policy and the author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.

http://www.unz.com/article/how-the-pentagon-devours-the-budget/

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

 

 

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/