Tag Archives: Government Waste

Congress Learns Pentagon Wasted $1 Trillion, Promptly Gives It Bigger Budget

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Image: “Veterans for Peace” https://www.veteransforpeace.org/take-action/people-over-pentagon
Intelligencer

The Washington Postpublished “The Afghanistan Papers,” thousands of pages of war documents that our government did not want us to see, and which the paper only secured after a protracted legal battle.

Those documents include nearly 2,000 pages of notes from interviews with generals, diplomats, and other officials who played a central role in waging America’s longest war.

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“Here’s a fun little thought experiment: Imagine a “big government” bureaucracy embarked on a wildly ambitious project of social engineering — only to discover, almost immediately, that it had little hope of meeting its stated objectives. Reluctant to admit defeat, or jeopardize funding for its endeavors, this federal agency proceeded to deliberately mislead the public about how badly its project was going, and the likelihood of its ultimate success. Over an 18-year-period, these pointy-headed bureaucrats and their allied elected officials conspired to shovel roughly $1 trillion of taxpayer money into an initiative that exacerbated the very problems it purported to solve — and got 2,300 Americans killed in the process!

Now imagine that a major newspaper published a bombshell report meticulously documenting this bureaucracy’s conscious efforts to mislead the American people whom it claimed to serve, so as to ensure that it could carry on squandering our blood and treasure with impunity.

Would Congress reward that bureaucracy with a $22 billion budget increase hours later, with self-identified “small government” conservatives leading the call?

This week, we learned that the answer is “of course.”

Here is some of what the Post uncovered:

Several of those interviewed described explicit and sustained efforts by the U.S. government to deliberately mislead the public. They said it was common at military headquarters in Kabul — and at the White House — to distort statistics to make it appear the United States was winning the war when that was not the case.

Bob Crowley, an Army colonel who served as a senior counterinsurgency adviser to U.S. military commanders in 2013 and 2014, told government interviewers. “Surveys, for instance, were totally unreliable but reinforced thateverything we were doing was right and we became a self-licking ice cream cone.”

John Sopko, the head of the federal agency that conducted the interviews, acknowledged to The Post that the documents show “the American people have constantly been lied to.”

This campaign of deceit facilitated mindless misuses of public funds. The Defense Department was not directly responsible for all of this waste. And America’s civilian leadership bears primary responsibility for the war itself. But in routinely misrepresenting the state of the conflict, and lobbying for higher levels of funding for both military and aid operations in Afghanistan, the Pentagon is complicit in boondoggles like these:

During the peak of the fighting, from 2009 to 2012, U.S. lawmakers and military commanders believed the more they spent on schools, bridges, canals and other civil-works projects, the faster security would improve. Aid workers told government interviewers it was a colossal misjudgment, akin to pumping kerosene on a dying campfire just to keep the flame alive.

One unnamed executive with the U.S. Agency for International Development (USAID) guessed that 90 percent of what they spent was overkill: “We lost objectivity. We were given money, told to spend it and we did, without reason.”

… One unidentified contractor told government interviewers he was expected to dole out $3 million daily for projects in a single Afghan district roughly the size of a U.S. county. He once asked a visiting congressman whether the lawmaker could responsibly spend that kind of money back home: “He said hell no. ‘Well, sir, that’s what you just obligated us to spend and I’m doing it for communities that live in mud huts with no windows.’ ”

But no detail from our misadventure in Afghanistan may do more to validate the conservative critique of “big government” excess than this one: Before the U.S. invasion, the Taliban had almost completely eradicated the opium trade in Afghanistan. After 18 years of war — and $9 billion in U.S. funding for anti-opium programs in the country — the Taliban remains in power, only now, it presides over a country that supplies 80 percent of the world’s illicit opium.

The Washington Post and New York Times aired all this dirty laundry on Monday morning. Hours later, Congress’s Armed Services Committee released a bipartisan draft of the 2020 National Defense Authorization Act (NDAA) that would give the Pentagon an additional $22 billion to play with next year, bringing its annual budget to $738 billion. Before Donald Trump took office, the U.S. was already spending more on our military than China, Russia, Saudi Arabia, India, France, the United Kingdom, and Japan spend on theirs, combined. The Defense Department’s budget is now $130 billion larger than it was the day Trump was sworn in. Meanwhile, nearly 2 million Americans are still living in places that do not have running water.

Shortly after the Trump administration released its first budget in 2017, OMB director Mick Mulvaney defended the White House’s proposed cuts to Meals on Wheels by saying, “I think it’s fairly compassionate to … say, ‘Look, we’re not gonna ask you for your hard-earned money, anymore, single mother of two in Detroit … unless we can guarantee to you that that money is actually being used in a proper function.’” In a subsequent statement, the administration said that it had an obligation to cut spending on programs and agencies that had “failed to meet their objectives.”

https://www.msn.com/en-us/news/opinion/congress-learns-pentagon-wasted-1-trillion-promptly-gives-it-bigger-budget/ar-AAK3w7Q?ocid=msn360

Government Contract “Bad Actor” Awarded $400 Million Border Wall Contract

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UPDATE: The Number 2 – Historical “Bad Actor” in terms of government contract fines and violations cited in this “Project on Government Oversight” article earlier this year has now been awarded a $400 Million Contract for border wall construction.

Time for the competition protests; but none of them have a clean slate either.

Image: Matassii.com

“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“The past conduct of three contractors—Caddell Construction, W.G. Yates & Sons, and Fisher Sand & Gravel—should concern contracting officers and prompt stronger oversight in future contracts to ensure that these companies play by the rules.”

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“Caddell Construction and W.G. Yates & Sons

“While Customs and Border Protection (Border Patrol) invited four companies to design one border wall prototype, Caddell Construction and W.G. Yates each designed two—one made of concrete and the second of other materials—giving them half of the prototypes that Border Patrol assessed. Both Caddell and Yates are currently the subjects of an unreported years-long whistleblower lawsuit alleging that they, through a joint venture, fraudulently misrepresented their use of small business subcontracts for a 2009 Camp Lejeune project. The government partially intervened in the case, securing a guilty plea from the owner of the subcontractor involved—Pompano Masonry. She pleaded guilty in 2015 to lying to investigators and received a 30-month prison sentence.

The lawsuit, filed by former Pompano Masonry employee Rickey Howard, alleges that Caddell and Yates, while engaged in a $190 million construction project for the Navy at Camp Lejeune, encouraged Pompano to create a sham small business that they would then use to route Pompano’s payments through. Doing so would allow Caddell and Yates to count the work done by Pompano (a large business) as if it were being done by a small business, helping them fulfill their small business subcontracting plan. For this service, the lawsuit claims, they offered and paid Pompano an additional 2 percent of the subcontract’s almost $15 million value—over $250,000.

Aside from the creation of a fake small business that existed only on paper, Caddell and Yates appear to have regularly used “pass-through” small businesses on that project. The lawsuit alleges a dozen different instances where Caddell and Yates chose large, trusted contractors to perform the work, and then paid small businesses one to two percent of the subcontract value to act as middlemen so Caddell and Yates could meet their small business subcontracting goal of 77 percent. This resulted in some rather unusual arrangements, such as Caddell and Yates routing a $1.4 million subcontract for food service equipment through a small landscaping company called Power Mulch—for a 1 percent fee.

Don’t write Howard off as just a disgruntled employee. After leaving his job at Pompano Masonry and filing the lawsuit, Howard went to work at Harper Construction. Within a few short months, he discovered that Harper was using sham small businesses as well. A much shorter lawsuit ensued, and in June 2016, Harper Construction paid the government $5.4 million to settle those allegations. “This type of fraud siphons taxpayer dollars and takes away opportunities for legitimate small businesses for which this money was set aside,” said then-U.S. Attorney Laura Duffy in a press release.

A spokesperson for Yates responded to our questions about the case with the following statement:

“Yates Construction believes that the plaintiff’s qui tam case against it is baseless. Plaintiff’s allegations are just that—allegations—untested and prove nothing. The government declined to join the case after conducting its own inquiry into this matter. Moreover, the Navy gave Caddell-Yates an outstanding rating for the construction project at issue. Yates Construction is vigorously defending the case, and is seeking summary judgement. Yates Construction fully expects to prevail in the matter.”

On a different contract in 2011, Caddell was caught abusing two different small business programs to defraud the government. Ironically for a border wall contractor, the fraud was discovered during a joint General Services Administration and Department of Laborinvestigation of a Caddell subcontractor that was hiring immigrants who were working in the country illegally. Caddell ended up paying $2 million in criminal penalties and $1.15 million in civil penalties.

As the investigation progressed, investigators found that Caddell was billing the government for time spent “mentoring” a Native American small business it subcontracted with, when in reality there was no mentoring going on. In fact, this small business, Mountain Chief Management Services, wasn’t even doing any work. Caddell was using the small business as a pass-through entity to claim incentive payments and boost their small business contracting goal statistics.

The investigation found that this wasn’t the only project in which Caddell had been found to have defrauded the government. According to a report obtained by POGO, Caddell claimed over $1.2 million from the two programs by “citing Mountain Chief as a subcontractor on various U.S. Army Corps of Engineers projects from 2003-2005.”

In 2014, after the investigation was complete and the settlement agreed to, the U.S. Army Corps of Engineers still sent the Army’s Procurement Fraud Division a recommendation to debar Caddell, according to documents obtained by POGO through FOIA. The referral asserts that “it is in the Government’s interest to debar Caddell Construction Co. … based upon the submission of numerous false statements and/or false claims to obtain payment.” Debarment—which prevents a company from extending, renewing, or bidding on government contracts—usually lasts at least three years. It would have been a major problem for Caddell, which has received over $5 billion from the federal government in the last decade. In the end, Caddell escaped debarment, receiving only a warning.

The Caddell employee deemed most responsible for the fraud, Mark Hill, pleaded guilty to lying to investigators and was debarred in 2015. His debarment will end July 1, 2018, but debarring individuals only prevents them (or a company they run) from bidding on and receiving a federal contract or grant. It does not prevent them from working on federal contracts as an employee. Despite the wrongdoing, a company news article appears to indicate that Hill remains employed with Caddell as the Director of Operations for Caddell Power, a subsidiary of Caddell Construction.

Caddell has had a previous run-in with the debarment process. In 1999, the U.S. Air Force officially proposed to debar Caddell, making them immediately ineligible for any government contracts and giving them a chance to argue against it before it became final. The details of the proposed debarment are unclear, but in the end Caddell was ineligible for just eight days.

Caddell told POGO that it does not comment on its government contracting work. Caddell also did not respond to POGO’s request to verify Mark Hill’s continued employment. However, the 2017 article showing a picture of Mark Hill accepting an award on behalf of Caddell was removed the day after the request for comment was sent.

Fisher Sand & Gravel

Fisher Sand & Gravel has a rap sheet that is too long to list here, racking up around two thousand violation notices from city, county, state, and federal regulatory bodies, many relating to the company’s disregard for air pollution standards. Completely aside from the then-owner of the company being sent to prison for tax fraud in 2009, the city of Phoenix reportedly filed 467 criminal charges against the company in 2010, stemming primarily from violations at one facility’s asphalt plant. The company ended up shutting down the offending plant a month later and paying the city at least $243,000 in fines. Early the next year it settled a lawsuit with Maricopa County for $1 million, stating that it was “relieved to finalize this settlement and to move forward with a clean slate.”

Three months later, in April 2011, the company paid $312,000 to settle a civil case brought by the State of Arizona for air and water quality violations that spanned six counties. That settlement covered issues such as illegally dumping waste into a river, operating for up to 16 hours a day instead of the permitted 3.3 hours, and having exhaust stacks that were half as high as they were required to be. Instead of requiring Fisher Sand & Gravel to pay the full amount to the state, the settlement allowed them to put two-thirds of the fine towards an Environmental Management System that would prevent future problems. In 2013, however, the state found more violations and the company was forced to pay $500,000.

Also in 2013, the Environmental Protection Agency (EPA) fined Fisher Sand & Gravel $150,000 for “failing to comply with dust mitigation regulations” at three sand and gravel producing facilities in 2010. “Some nights there was so much [dust] in the air, it looked like fog outside,” a nearby homeowner told azfamily.com. “If you took a deep breath, it would make you cough.” That fine also included a requirement to install water spray bars in and around the machinery at one Phoenix area plant to help control the dust. While the dust problems at that location appear to have been addressed, the county air-quality department issued a $2,160 citation related to dust control as recently as January 2017 over a different Phoenix facility.

Other federal bodies have fined Fisher Sand & Gravel for additional issues. The Equal Employment Opportunity Commission fined them $150,000 in 2011 for discrimination and retaliation, the EPA fined them again in 2016 for $18,654, and there are several fines from the Mine Safety and Health Administration ranging from $5,000 to $10,000 between 2008 and 2016. Azcentral.com also reports that the company has faced environmental complaints and violations in other states including Michigan and Montana.

“Fisher Sand & Gravel Fisher is a good environmental steward and we take environmental responsibility very seriously,” the company wrote in a 2018 statement to Fox News. “We complied with all orders and everything has been resolved.” Given the company’s history of recurring violations and the recent county-level citations, however, it would be wise to take these words with a grain of salt.

Fisher did not respond to POGO’s request for comment.

Contractor Misconduct Rarely Leads the Government to Meaningfully Debar Companies

Unfortunately, contractor misconduct is not rare, and the government does little to punish frequent abusers—especially when they are large companies. POGO’s Federal Contractor Misconduct Database is full of contractors that have together paid out over $100 billion for various kinds of misconduct but continue to receive hundreds of billions each year in taxpayer funds. If the government ends up awarding one of these three contractors a future contract, it would be wise to build in additional safeguards and oversight.

What future contracts they might be involved in remains unclear. The Trump Administration appears dedicated to fulfilling the campaign promise of a “big beautiful wall,” but both Congress and Mexico have so far declined to pay for it. While the recently passed appropriations bill includes $1.6 billion in funding for border security, the vast majority of that funding is specifically dedicated to additional fencing, personnel, and border security technology. None of the fencing funds can be spent on new designs (aka “the wall”), and only $38 million is allocated towards border wall “planning and design” (Section 230, starting at p. 673). That is far below the $18 billion that Border Patrol requested from Congress in January for the first phase of the wall. President Trump, however, remains committed to the project and has requested that the states deploy the National Guard to bolster security—despite the fact that the Guard is prohibited from performing civil law enforcement duties. “The Guard will provide air support, reconnaissance support, operational support, construction of border infrastructure, and logistical support,” according to an Arizona National Guard statement. Exactly how involved they will be in “border infrastructure” is unclear, although California Governor Jerry Brown made clear that “this will not be a mission to build a new wall.” Adding to the uncertainty, California yesterday rejected the Trump Administration’s proposed duties for the troops because they were too closely related to immigration enforcement.

There has been speculation that President Trump might attempt to divert military funds to build the wall, but that would be a complicated process requiring Congressional approval. It is far more likely that the Administration will simply wait and request more funding for the wall in the next appropriations bill, which is due this October.

Despite President Trump’s early statements that he will personally select the winning border wall design, the Department of Homeland Security (DHS) “does not anticipate that a single prototype design will be selected,” according to an email from Southwest Border Branch Chief Carlos Diaz. “Rather, the eight different prototypes are each anticipated to inform future border wall design standards in some capacity.” As far as the DHS is concerned, the “contract for [prototype] construction has been completed” and agency leadership is evaluating potential next steps.

When asked about the potential for military funding for the wall, White House Press Secretary Sarah Huckabee Sanders declined to provide details, instead stating that “the continuation of building the wall is ongoing, and we’re going to continue moving forward in that process.”

https://www.pogo.org/analysis/2018/04/bad-actors-among-border-wall-contractors/

Stay Informed At The Center For Defense Information

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Pentagon Bills – Photo by POGO

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

The goal of the Center for Defense Information (CDI)  is to secure far more effective and ethical military forces at significantly lower cost by seeking to achieve the elusive goal of meaningful Pentagon reform by fostering a fundamentally better informed public.”

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“Questions such as the size and nature of the defense budget, especially its many offenses to the American taxpayer, a Congress more inclined to perform real oversight—rather than the pretense, and affordable, effective weapons that service the needs of the men and women in our armed forces—rather than the gluttony of selfish elements of corporations and a dysfunctional political system.

CDI has also sought to probe the origins and costs—human and material—of the wars in Afghanistan, Iraq, and elsewhere so that such tragedies can be avoided in the future. “

https://www.pogo.org/projects/center-for-defense-information/

It’s Time to Stop Stuffing the Defense Budget

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defense_budget_pardon

 

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO) From the Article, “Bestselling Pentagon Fiction”

For the Pentagon, happy days are here again (if they ever left). With a budget totaling more than $1.4 trillion for the next two years, the department is riding high, even as it attempts to set the stage for yet more spending increases in the years to come.”

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“With such enormous sums now locked in, Secretary of Defense (and former Raytheon lobbyist) Mark Esper is already going through a ritual that couldn’t be more familiar to Pentagon watchers. He’s pledged to “reform” the bureaucracy and the spending priorities of the Department of Defense to better address the latest proposed threats du jour, Russia and China. His main focus: paring back the Pentagon’s “Fourth Estate” — an alphabet soup of bureaucracies not under the control of any of the military services that sucks up about 20% of the $700 billion-plus annual budget.

Esper’s promises to streamline the spending machine should be taken with more than the usual grain of salt. Virtually every secretary of defense in living memory has made similar commitments, with little or nothing to show for them in terms of documented savings. Far from eliminating wasteful programs, efforts pursued by those past secretaries and by Congress under similar banners have been effective in only one obvious way: further reducing oversight and civilian control of the Pentagon rather than waste and inefficiency in it.

Examples of gutting oversight under the guise of reform abound, including attempting to eliminate offices focused on closing excess military bases and sidelining officials responsible for testing the safety and effectiveness of weapon systems before their deployment. During the administration of President Bill Clinton, for instance, the slogan of the day — “reinventing government” — ended up, in Pentagon terms, meaning the gutting of contract oversight. In fact, just to repair the damage from that so-called reform and rebuild that workforce took another $3.5 billion. Gordon Adams, former associate director for national security and international affairs at the White House Office of Management and Budget, noted accurately that such efforts often prove little more than a “phony management savings waltz.”

Secretary of Defense Esper has also pledged to eliminate older weapons programs to make way for systems more suited to great power conflict. Past efforts along these lines have meant attempts to retire proven, less expensive systems like the A-10 “Warthog” — the close-air-support aircraft that protects troops in combat — to make way for the over-priced, underperforming F-35 jet fighter and similar projects.

Never mind that a war with either Russia or China — both nuclear-armed states — would be catastrophic. Never mind that more effort should be spent figuring out how to avoid conflict with both of them, rather than spinning out scenarios for fighting them more effectively (or at least more expensively). Prioritizing unlikely scenarios makes for a great payday for contractors, but often sacrifices the ability of the military to actually address current challenges. It takes the focus away from effectively fighting the real asymmetric wars the U.S. has been fighting since World War II. It leaves taxpayers with massive bills for systems that almost invariably turn out to be over cost and behind schedule. Just as an infamous (and nonexistent) “bomber gap” with the Soviet Union was used by the Pentagon and its boosters to increase military spending in the 1950s, the current hype around ultra-high-speed, hypersonic weapons will only lead to sky’s-the-limit expenditures and a new global arms race.

Esper’s efforts may end up failing even on their own narrow terms. Reforming the Pentagon is hard work, not only because it’s one of the world’s largest bureaucracies, but because there are far too many parochial interests that profit from the status quo. Under the circumstances, it matters little if current spending patterns aren’t aligned with any rational notion of what it would take to defend the United States and its allies.

A Revolving-Door World

The Department of Defense regularly claims that it has implemented “efficiencies” to ensure that every penny of your tax dollars is being wisely spent. Such efforts, however, are little more than marketing ploys designed to fend off future calls for cuts in the Pentagon’s still-ballooning budget. Here are just two recent examples of this sadly familiar story.

In September 2018, the Government Accountability Office (GAO) released a report stating that the Department of Defense had provided insufficient evidence that $154 billion in alleged “efficiency savings” from fiscal years 2012 to 2016 had been realized; the department claimed credit for them anyway.

Just this month, the GAO came to a similar conclusion regarding a proposed Pentagon reform plan that was to save $18.4 billion between fiscal years 2017 and 2020. Its report stated that the Pentagon had “provided limited documentation of… progress,” which meant the GAO “could not independently assess and verify” it. Consider that a charitable way of suggesting that the Department of Defense was once again projecting a false image of fiscal discipline, even as it was drowning in hundreds of billions of your tax dollars. The GAO, however, failed to mention one crucial thing: even if those alleged savings had been realized, they would simply have been plowed into other Pentagon programs, not used to reduce the department’s bloated budget.

Esper and his colleagues have argued that it will be different this time. In an August 2nd memo, his principal deputy, David Norquist, stated that “we will begin immediately and move forward aggressively… The review will consider all ideas — no reform is too small, too bold, or too controversial to be considered.”

Even if Esper and Norquist were, however, to propose real changes, they would undoubtedly run into serious interference within the Pentagon, not to mention from their commander-in-chief, President Donald Trump, a man determined to plough ever more taxpayer dollars into the military, and from members of Congress in states counting on jobs generated by the military-industrial complex. Inside the Pentagon, on the other hand, resistance to change will be spearheaded by officials who previously held jobs in the defense industry or hope to do so in the future. We’re talking, of course, about those who have made use of, or will make use of, the infamous “revolving door” between weapons companies and the government. Consider that the essence of the military-industrial complex in action.

Such ties start at the top. During the Trump administration, the post of secretary of defense has been passed from one former defense industry figure to another, as if it were literally reserved only for key officials from major weapons makers. Trump’s first secretary of defense, retired General James (“Mad Dog”) Mattis, came to the Pentagon straight from the board of General Dynamics, a position he returned to shortly after leaving the department. Interim Secretary Patrick Shanahan, who followed him, had been an executive at Boeing, while current Secretary Esper was Raytheon’s former chief in-house lobbyist. The Pentagon’s number three official, John Rood, similarly comes courtesy of Lockheed Martin. And the list only goes on from there.

This has been a systemic problem in Democratic and Republican administrations, but there has been a marked increase in such appointments under Donald Trump. A Bloomberg Government analysis found that roughly half of the Obama administration’s top Pentagon officials had defense contractor experience. In the Trump administration, that number has reached a startling 80%-plus.

That revolving door, of course, swings both ways. Defense executives come into government, where they make decisions that benefit their former colleagues and companies. Then, as retiring government officials, they go to work for defense firms where they can use their carefully developed government contacts to benefit their new (or old) employers. This practice is endemic. A study by the Project On Government Oversight found 645 cases in which the top 20 defense contractors hired former senior government officials, military officers, members of Congress, or senior legislative staff as lobbyists, board members, or senior executives in 2018 alone.

There is, of course, nothing new about any of this. The late Senator William Proxmire (D-WI) pinpointed the problem with the revolving door back in 1969:

“The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse… How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at over 2,000 fellow officers doing well on the outside after retirement?”

Such revolving-door hires and former defense executives in government remain a powerful force for the status quo in Pentagon spending. They exert influence as needed to keep big-ticket weapons programs like the F-35 combat aircraft up and running, whether they are needed or not, whether they work as promised or not.

For his part, President Trump has repeatedly bragged about his role in promoting defense-related employment in key states, both from Pentagon budget increases and the sale of arms to repressive regimes like Saudi Arabia. In March, he held a one-hour campaign-style rally for workers at a tank plant in Lima, Ohio, at which he typically suggested that his budget increases had saved their jobs.

As for Congress, when the Army, in a rare move, actually sought to save a modest amount of money by canceling an upgrade of its CH-47 transport helicopter, the Senate struck back, calling for funding that the Pentagon hadn’t even requested in order to proceed with the program. The reason? Protecting jobs at Boeing’s Philadelphia-area factory that was scheduled to carry out the upgrades. Unsurprisingly, Trump seems fine with this congressional initiative (affecting the key battleground state of Pennsylvania), which still needs to survive a House-Senate conference on the defense bill.

The bottom line: Donald Trump is likely to oppose any changes that might have even the smallest impact on employment in states where he needs support in election campaign 2020. Defense industry consultant Loren Thompson summed up the case as follows: “We’re too close to the presidential election and nobody [at the White House] wants to lose votes by killing a program.” And keep in mind that this president is far from alone in taking such a stance. Similar reelection pressures led former President Jimmy Carter to increase Pentagon spending at the end of his term and caused the George H. W. Bush administration to reverse a decision to cancel the troubled V-22 Osprey, a novel part-helicopter, part-airplane that would later be implicated in crashes killing dozens of Marines.

“We Won’t Get Fooled Again”

What would a genuine Pentagon reform plan look like? There are areas that could easily yield major savings with sufficient political will and persistence. The most obvious of these might be the Pentagon’s employment of more than 600,000 private contractors, many of whom do jobs that could be done by government civilians for less. Cutting that work force to “only” about half a million, for example, could save more than a quarter of a trillion dollars over the next decade, as noted in a recent report by the Center for International Policy’s Sustainable Defense Task Force (of which both authors of this article were members).

Billions more could be saved by eliminating unnecessary military bases. Even the Pentagon claims that it has 20% more facilities than it needs. A more reasonable, restrained defense strategy, including ending America’s twenty-first-century forever wars, would make far more bases redundant, both at home and among the 800 or so now scattered around the planet in an historically unprecedented fashion. Similarly, the president’s obsession with creating an expensive Space Force should be blocked, given that it’s likely only to increase bureaucracy and duplication, while ensuring an arms race above the planet as well as on it.

Real reform would also mean changing how the Pentagon does business (not to speak of the way it makes war). Such savings would naturally start by simply curbing the corruption that comes from personnel in high positions who are guaranteed to put the interests of defense contractors ahead of those of taxpayers and the real needs of American security. (There are also few restrictions on former officials working for foreign governments and almost no public disclosure on the subject.) The Project On Government Oversight found hundreds of Pentagon officials leaving for defense industry jobs, raising obvious questions about whether decisions they made were in the public interest or meant to advance their own future paydays.

Real reform would close the many loopholes in current ethics laws, extend cooling-off periods between when an official leaves government and when he or she can work for an arms contractor, and make far more prominent information about when retired national security officials switch teams from government to industry (or vice versa). Unfortunately, since Esper himself has refused to pledge not to return to the world of the corporate weapons makers after his stint as secretary of defense, this sort of reform will undoubtedly never be part of his “reform” agenda.

One outcome of his initiative, however, will definitely not be money-saving in any way. It will be to boost spending on high-tech systems like missile defense and artificial intelligence on the almost laughable grounds (given the past history of weapons development) that they can provide more military capability for less money. Whether you look at the Navy’s Ford aircraft carriers — the first two costing $13.1 billion and $11.3 billion — or the Air Force’s aerial refueling tanker (which has taken nearly two decades to procure), it’s not hard to see how often vaunted technological revolutions prove staggeringly costly — far, far beyond initial estimates — yet result in smaller, less effective forces. As longtime Pentagon reformer Tom Christie has pointed out, to really change the acquisition system would require building in significantly more discipline. That would mean demonstrating the effective and reliable use of new technology through rigorous field-testing before advancing fragile weapons systems to the production stage, ensuring future maintenance and other headaches for troops in combat.

There is, in addition, a larger issue underlying all this talk of spending reform at the Pentagon. After all, Esper’s “reforms” are visibly designed to align Pentagon spending with the department’s new priority: combatting the security challenges posed by Russia and China. Start with one crucial thing: these challenges have been greatly exaggerated, both in the Trump administration’s national defense strategy and in the report of the industry-led National Defense Strategy Commission. That document, when you analyze its future math, even had the nerve to claim that the Pentagon budget would need to be boosted to nearly $1 trillion annually within the next five years, reports Taxpayers for Common Sense.

Russia has much to answer for — from its assistance to the Syrian army’s ongoing slaughter of civilians to its military meddling in the affairs of Ukraine — but the response to such challenges should not be to spend more on ships, planes, and advanced nuclear weapons, as current Pentagon plans would do. In reality, the economy and military of Russia, a shaky petro-state only passing for a great power, are already overshadowed by those of the U.S. and its NATO allies. Throwing more money at the Pentagon will do nothing to change Russian behavior in a positive fashion. Taking measures that are in the interests of both countries like renewing the New START nuclear reduction treaty and beginning new talks on curbing their massive nuclear arsenals would be extremely valuable in their own right and might also open the door to negotiations on other issues of mutual concern.

China’s challenge to the U.S is significantly more economic than military and, if those two nations wanted to make the planet a safer place, they would cooperate in addressing the threat of climate change, not launch a new arms race. Genuine reform of the Pentagon’s massive budget is urgently needed, but rest assured that Secretary of Defense Esper’s claims about implementing real changes to save taxpayer dollars while making the U.S. military more effective are the equivalent of bestseller-list Pentagon fiction. The motto of Congress, not to speak of the White House and the public, with respect to the Pentagon’s latest claims of fiscal probity should be “we won’t get fooled again.”

https://www.pogo.org/analysis/2019/09/bestselling-pentagon-fiction/


Why The Pentagon Wants To Be More Like McDonald’s

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Image: Deafness News

“DEFENSE NEWS”

“The department would be lovin’ it if they could mirror some of McDonald’s supply chain strategies. “taking a page from McDonald’s, who is very good at managing and acquiring goods and services by category.”

The example of the humble two-by-four, [lumber] for which the Pentagon had 22 different acquisition contracts. “We necked it down to two contracts — $18 million in savings, which seems small, but when you have 40,000 contracting officers, those small items start to add up very quickly.”

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“If the U.S. Department of Defense wants to find efficiencies and bring down waste, it should look to McDonald’s, the nominee for the department’s No. 3 job said Tuesday.

No, the department isn’t ready to drop its rifles for Big Macs, nor is it taking a side in the perpetual Great Fast Food Competition between Ronald and Col. Sanders. But according to Lisa Hershman, the acting chief management officer who on Tuesday had a confirmation hearing to permanently fill the role, the department would be lovin’ it if they could mirror some of McDonald’s supply chain strategies.

Asked how the Pentagon can trim waste during her hearing, Hershman told senators that there are best practices that can be learned from big corporations in the private sector, including “taking a page from McDonald’s, who is very good at managing and acquiring goods and services by category.”

“We have a large DoD-wide category management reform initiative underway. We are looking at everything from what type, how many contracts we have for certain goods and services,” Hershman said. She held up the example of the humble two-by-four, for which the Pentagon had 22 different acquisition contracts.

“Here’s the problem: We found that amongst those 22, several of the contracts were from the same vendor at different price points,” Hershman said. “We necked it down to two contracts — $18 million in savings, which seems small, but when you have 40,000 contracting officers, those small items start to add up very quickly.”

Several times during her hearing, Hershman drew back upon her private sector experience and expressed her belief that common-sense contracting reforms such as the two-by-four case could net the Pentagon savings. Members of the Senate Armed Services Committee asked few probing questions and largely gave the impression that Hershman should face limited, if any, opposition for the job.

Hershman formally became acting chief management officer on Dec. 1, 2018, after her predecessor was forced out of the position. But she was not nominated for the full job until August 2019.

The CMO position is not as high-profile a gig as other top Pentagon jobs, but the holder is the third-ranking official in the department, thanks to a series of congressional reforms in recent years. Capitol Hill’s intention was to empower the CMO to find efficiencies inside the Pentagon. Through February 2019, Hershman said her team found $4.4 billion in efficiencies and savings — a number she expects to grow in the future both through CMO-directed efforts and savings discovered through the Pentagon’s ongoing annual audit.”

https://www.defensenews.com/pentagon/2019/10/29/why-the-pentagon-wants-to-be-more-like-mcdonalds/

Millions In Federal Small Biz Cash For Banned Entities

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(Illustration: CJ Ostrosky / POGO)

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“The inspector general found that federal agencies awarded more than $80 million in contracts to entities found to have engaged in conduct indicating a lack of responsibility, including fraudulently obtaining contracts though the use of pass-throughs, and submitting false certifications of business size, while an entity excluded because of a Clean Water Act violation received a loan valued at $2.9 million.

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Suspension and debarment are remedies that are meant to protect the federal agencies and taxpayers from individuals and companies who lack the integrity and business ethics required for receiving government contracts, grants, and loans. The Project On Government Oversight (POGO) has long pushed for strengthening and improving these remedies as a means of safeguarding taxpayer money and ensuring the success of federal programs and missions.

If the Small Business Administration does not improve its suspension and debarment process, how much money will be lost to fraud, waste, or abuse is anyone’s guess.

Those who are suspended, debarred, or proposed for debarment are supposed to be banned—or “excluded”—from doing business with the government. These individuals or companies are supposed to be excluded for a set period of time: while they are under investigation or are involved in a pending legal proceeding (suspension), or after the investigation or proceeding results in a finding that they did something that shows they can’t be trusted with federal funds (debarment). But, as we have known for many years, excluded individuals and companies sometimes slip through the cracks and improperly receive federal funds.

This was most recently highlighted in an audit report released last month by the Small Business Administration’s inspector general. According to the report, suspended and debarred entities were awarded millions of dollars in federal contracts and loans between 2012 and 2018 because of deficiencies in the agency’s oversight.

The inspector general found that federal agencies awarded more than $80 million in contracts to entities found to have engaged in conduct indicating a lack of responsibility, including fraudulently obtaining contracts though the use of pass-throughs, and submitting false certifications of business size, while an entity excluded because of a Clean Water Act violation received a loan valued at $2.9 million.

The inspector general found two key problem areas. First, officials are not always checking the list of excluded recipients—maintained in the System for Award Management database—prior to making awards, nor are they consistently documenting that they have checked the database. Out of 14 loans, the watchdog found that files for 11, worth a total of $3.8 million, lacked documentation confirming that officials had checked the database prior to approving the loan.

Second, the Small Business Administration is taking too long to process suspension and debarment referrals. Referrals are commonly made in connection with a legal proceeding, such as a criminal or civil judgment. The watchdog found 15 referrals that had been awaiting review for an average of 620 days—almost two years. Furthermore, the Small Business Administration often fails to document the reasons for declining suspension and debarment referrals; or, when an exclusion is imposed, the agency fails to promptly update the award management database so that all other federal agencies will know not to do business with these individuals and companies.

The inspector general made several recommendations to improve the oversight and management of the agency’s suspension and debarment program. Failing to adopt the recommended corrective actions could be a costly mistake. The watchdog warned that inadequately documented referral decisions could expose the government to adverse legal action by those claiming they were unfairly suspended or debarred.

Increasing workers

Explore the Federal Contractor Misconduct Database

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. POGO maintains this database to improve contracting decisions and increase public knowledge of how the government spends billions of taxpayer dollars each year.Explore the Database

But much more is at stake—potentially billions more. According to the report, in just one year federal agencies awarded over $105 billion in small businesses contracts, while the Small Business Administration managed a loan portfolio worth $132 billion. If the agency does not improve its suspension and debarment process, how much of that money will end up in the hands of risky individuals and companies and lost to fraud, waste, or abuse is anyone’s guess.

That’s why POGO has kept on top of this issue for so many years. Whether through working with policymakers to improve the suspension and debarment system, maintaining a Federal Contractor Misconduct Database tracking the integrity and ethics of the government’s largest contractors, or pressing the government to create its own data resources to better track fund recipients, this area is a worthwhile focus for achieving a more effective, ethical, and accountable government.”

https://www.pogo.org/analysis/2019/10/millions-in-federal-small-biz-cash-for-banned-entities/

Bestselling Pentagon Fiction

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Image: Matt Wuerker -“Politico dot Com Gallery

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)

Revolving-door hires and former defense executives in government remain a powerful force for the status quo in Pentagon spending.

They exert influence as needed to keep big-ticket weapons programs like the F-35 combat aircraft up and running, whether they are needed or not, whether they work as promised or not.

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“This piece originally appeared on TomDispatch.com.

For the Pentagon, happy days are here again (if they ever left). With a budget totaling more than $1.4 trillion for the next two years, the department is riding high, even as it attempts to set the stage for yet more spending increases in the years to come.

With such enormous sums now locked in, Secretary of Defense (and former Raytheon lobbyist) Mark Esper is already going through a ritual that couldn’t be more familiar to Pentagon watchers. He’s pledged to “reform” the bureaucracy and the spending priorities of the Department of Defense to better address the latest proposed threats du jour, Russia and China. His main focus: paring back the Pentagon’s “Fourth Estate” — an alphabet soup of bureaucracies not under the control of any of the military services that sucks up about 20% of the $700 billion-plus annual budget.

Esper’s promises to streamline the spending machine should be taken with more than the usual grain of salt. Virtually every secretary of defense in living memory has made similar commitments, with little or nothing to show for them in terms of documented savings. Far from eliminating wasteful programs, efforts pursued by those past secretaries and by Congress under similar banners have been effective in only one obvious way: further reducing oversight and civilian control of the Pentagon rather than waste and inefficiency in it.

Examples of gutting oversight under the guise of reform abound, including attempting to eliminate offices focused on closing excess military bases and sidelining officials responsible for testing the safety and effectiveness of weapon systems before their deployment. During the administration of President Bill Clinton, for instance, the slogan of the day — “reinventing government” — ended up, in Pentagon terms, meaning the gutting of contract oversight. In fact, just to repair the damage from that so-called reform and rebuild that workforce took another $3.5 billion. Gordon Adams, former associate director for national security and international affairs at the White House Office of Management and Budget, noted accurately that such efforts often prove little more than a “phony management savings waltz.”

Secretary of Defense Esper has also pledged to eliminate older weapons programs to make way for systems more suited to great power conflict. Past efforts along these lines have meant attempts to retire proven, less expensive systems like the A-10 “Warthog” — the close-air-support aircraft that protects troops in combat — to make way for the over-priced, underperforming F-35 jet fighter and similar projects.

Never mind that a war with either Russia or China — both nuclear-armed states — would be catastrophic. Never mind that more effort should be spent figuring out how to avoid conflict with both of them, rather than spinning out scenarios for fighting them more effectively (or at least more expensively). Prioritizing unlikely scenarios makes for a great payday for contractors, but often sacrifices the ability of the military to actually address current challenges. It takes the focus away from effectively fighting the real asymmetric wars the U.S. has been fighting since World War II. It leaves taxpayers with massive bills for systems that almost invariably turn out to be over cost and behind schedule. Just as an infamous (and nonexistent) “bomber gap” with the Soviet Union was used by the Pentagon and its boosters to increase military spending in the 1950s, the current hype around ultra-high-speed, hypersonic weapons will only lead to sky’s-the-limit expenditures and a new global arms race.

Esper’s efforts may end up failing even on their own narrow terms. Reforming the Pentagon is hard work, not only because it’s one of the world’s largest bureaucracies, but because there are far too many parochial interests that profit from the status quo. Under the circumstances, it matters little if current spending patterns aren’t aligned with any rational notion of what it would take to defend the United States and its allies.

A Revolving-Door World

The Department of Defense regularly claims that it has implemented “efficiencies” to ensure that every penny of your tax dollars is being wisely spent. Such efforts, however, are little more than marketing ploys designed to fend off future calls for cuts in the Pentagon’s still-ballooning budget. Here are just two recent examples of this sadly familiar story.

In September 2018, the Government Accountability Office (GAO) released a report stating that the Department of Defense had provided insufficient evidence that $154 billion in alleged “efficiency savings” from fiscal years 2012 to 2016 had been realized; the department claimed credit for them anyway.

Just this month, the GAO came to a similar conclusion regarding a proposed Pentagon reform plan that was to save $18.4 billion between fiscal years 2017 and 2020. Its report stated that the Pentagon had “provided limited documentation of… progress,” which meant the GAO “could not independently assess and verify” it. Consider that a charitable way of suggesting that the Department of Defense was once again projecting a false image of fiscal discipline, even as it was drowning in hundreds of billions of your tax dollars. The GAO, however, failed to mention one crucial thing: even if those alleged savings had been realized, they would simply have been plowed into other Pentagon programs, not used to reduce the department’s bloated budget.

Esper and his colleagues have argued that it will be different this time. In an August 2nd memo, his principal deputy, David Norquist, stated that “we will begin immediately and move forward aggressively… The review will consider all ideas — no reform is too small, too bold, or too controversial to be considered.”

Even if Esper and Norquist were, however, to propose real changes, they would undoubtedly run into serious interference within the Pentagon, not to mention from their commander-in-chief, President Donald Trump, a man determined to plough ever more taxpayer dollars into the military, and from members of Congress in states counting on jobs generated by the military-industrial complex. Inside the Pentagon, on the other hand, resistance to change will be spearheaded by officials who previously held jobs in the defense industry or hope to do so in the future. We’re talking, of course, about those who have made use of, or will make use of, the infamous “revolving door” between weapons companies and the government. Consider that the essence of the military-industrial complex in action.

Such ties start at the top. During the Trump administration, the post of secretary of defense has been passed from one former defense industry figure to another, as if it were literally reserved only for key officials from major weapons makers. Trump’s first secretary of defense, retired General James (“Mad Dog”) Mattis, came to the Pentagon straight from the board of General Dynamics, a position he returned to shortly after leaving the department. Interim Secretary Patrick Shanahan, who followed him, had been an executive at Boeing, while current Secretary Esper was Raytheon’s former chief in-house lobbyist. The Pentagon’s number three official, John Rood, similarly comes courtesy of Lockheed Martin. And the list only goes on from there.

This has been a systemic problem in Democratic and Republican administrations, but there has been a marked increase in such appointments under Donald Trump. A Bloomberg Government analysis found that roughly half of the Obama administration’s top Pentagon officials had defense contractor experience. In the Trump administration, that number has reached a startling 80%-plus.

That revolving door, of course, swings both ways. Defense executives come into government, where they make decisions that benefit their former colleagues and companies. Then, as retiring government officials, they go to work for defense firms where they can use their carefully developed government contacts to benefit their new (or old) employers. This practice is endemic. A study by the Project On Government Oversight found 645 cases in which the top 20 defense contractors hired former senior government officials, military officers, members of Congress, or senior legislative staff as lobbyists, board members, or senior executives in 2018 alone.

There is, of course, nothing new about any of this. The late Senator William Proxmire (D-WI) pinpointed the problem with the revolving door back in 1969:

“The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse… How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at over 2,000 fellow officers doing well on the outside after retirement?”

For his part, President Trump has repeatedly bragged about his role in promoting defense-related employment in key states, both from Pentagon budget increases and the sale of arms to repressive regimes like Saudi Arabia. In March, he held a one-hour campaign-style rally for workers at a tank plant in Lima, Ohio, at which he typically suggested that his budget increases had saved their jobs.

As for Congress, when the Army, in a rare move, actually sought to save a modest amount of money by canceling an upgrade of its CH-47 transport helicopter, the Senate struck back, calling for funding that the Pentagon hadn’t even requested in order to proceed with the program. The reason? Protecting jobs at Boeing’s Philadelphia-area factory that was scheduled to carry out the upgrades. Unsurprisingly, Trump seems fine with this congressional initiative (affecting the key battleground state of Pennsylvania), which still needs to survive a House-Senate conference on the defense bill.

The bottom line: Donald Trump is likely to oppose any changes that might have even the smallest impact on employment in states where he needs support in election campaign 2020. Defense industry consultant Loren Thompson summed up the case as follows: “We’re too close to the presidential election and nobody [at the White House] wants to lose votes by killing a program.” And keep in mind that this president is far from alone in taking such a stance. Similar reelection pressures led former President Jimmy Carter to increase Pentagon spending at the end of his term and caused the George H. W. Bush administration to reverse a decision to cancel the troubled V-22 Osprey, a novel part-helicopter, part-airplane that would later be implicated in crashes killing dozens of Marines.

“We Won’t Get Fooled Again”

What would a genuine Pentagon reform plan look like? There are areas that could easily yield major savings with sufficient political will and persistence. The most obvious of these might be the Pentagon’s employment of more than 600,000 private contractors, many of whom do jobs that could be done by government civilians for less. Cutting that work force to “only” about half a million, for example, could save more than a quarter of a trillion dollars over the next decade, as noted in a recent report by the Center for International Policy’s Sustainable Defense Task Force (of which both authors of this article were members).

Billions more could be saved by eliminating unnecessary military bases. Even the Pentagon claims that it has 20% more facilities than it needs. A more reasonable, restrained defense strategy, including ending America’s twenty-first-century forever wars, would make far more bases redundant, both at home and among the 800 or so now scattered around the planet in an historically unprecedented fashion. Similarly, the president’s obsession with creating an expensive Space Force should be blocked, given that it’s likely only to increase bureaucracy and duplication, while ensuring an arms race above the planet as well as on it.

Real reform would also mean changing how the Pentagon does business (not to speak of the way it makes war). Such savings would naturally start by simply curbing the corruption that comes from personnel in high positions who are guaranteed to put the interests of defense contractors ahead of those of taxpayers and the real needs of American security. (There are also few restrictions on former officials working for foreign governments and almost no public disclosure on the subject.) The Project On Government Oversight found hundreds of Pentagon officials leaving for defense industry jobs, raising obvious questions about whether decisions they made were in the public interest or meant to advance their own future paydays.

Real reform would close the many loopholes in current ethics laws, extend cooling-off periods between when an official leaves government and when he or she can work for an arms contractor, and make far more prominent information about when retired national security officials switch teams from government to industry (or vice versa). Unfortunately, since Esper himself has refused to pledge not to return to the world of the corporate weapons makers after his stint as secretary of defense, this sort of reform will undoubtedly never be part of his “reform” agenda.

One outcome of his initiative, however, will definitely not be money-saving in any way. It will be to boost spending on high-tech systems like missile defense and artificial intelligence on the almost laughable grounds (given the past history of weapons development) that they can provide more military capability for less money. Whether you look at the Navy’s Ford aircraft carriers — the first two costing $13.1 billion and $11.3 billion — or the Air Force’s aerial refueling tanker (which has taken nearly two decades to procure), it’s not hard to see how often vaunted technological revolutions prove staggeringly costly — far, far beyond initial estimates — yet result in smaller, less effective forces. As longtime Pentagon reformer Tom Christie has pointed out, to really change the acquisition system would require building in significantly more discipline. That would mean demonstrating the effective and reliable use of new technology through rigorous field-testing before advancing fragile weapons systems to the production stage, ensuring future maintenance and other headaches for troops in combat.

There is, in addition, a larger issue underlying all this talk of spending reform at the Pentagon. After all, Esper’s “reforms” are visibly designed to align Pentagon spending with the department’s new priority: combatting the security challenges posed by Russia and China. Start with one crucial thing: these challenges have been greatly exaggerated, both in the Trump administration’s national defense strategy and in the report of the industry-led National Defense Strategy Commission. That document, when you analyze its future math, even had the nerve to claim that the Pentagon budget would need to be boosted to nearly $1 trillion annually within the next five years, reports Taxpayers for Common Sense.

Russia has much to answer for — from its assistance to the Syrian army’s ongoing slaughter of civilians to its military meddling in the affairs of Ukraine — but the response to such challenges should not be to spend more on ships, planes, and advanced nuclear weapons, as current Pentagon plans would do. In reality, the economy and military of Russia, a shaky petro-state only passing for a great power, are already overshadowed by those of the U.S. and its NATO allies. Throwing more money at the Pentagon will do nothing to change Russian behavior in a positive fashion. Taking measures that are in the interests of both countries like renewing the New START nuclear reduction treaty and beginning new talks on curbing their massive nuclear arsenals would be extremely valuable in their own right and might also open the door to negotiations on other issues of mutual concern.

China’s challenge to the U.S is significantly more economic than military and, if those two nations wanted to make the planet a safer place, they would cooperate in addressing the threat of climate change, not launch a new arms race. Genuine reform of the Pentagon’s massive budget is urgently needed, but rest assured that Secretary of Defense Esper’s claims about implementing real changes to save taxpayer dollars while making the U.S. military more effective are the equivalent of bestseller-list Pentagon fiction. The motto of Congress, not to speak of the White House and the public, with respect to the Pentagon’s latest claims of fiscal probity should be “we won’t get fooled again.”

https://www.pogo.org/analysis/2019/09/bestselling-pentagon-fiction/


“The True Cost Of Government Shutdowns” -U.S. Senate Investigative Subcommittee Report

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The Subcommittee surveyed 26 federal agencies and found the last three government shutdowns cost taxpayers nearly $4 billion

At least $3.7 billion in back pay to furloughed federal workers, and at least $338 million in other costs associated with the shutdowns, including extra administrative work, lost revenue, and late fees on interest payments.

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“Agencies reported to the Subcommittee that the combined total of furlough days during all three shutdowns was about 14,859,144, representing an estimated 56,938 years of lost productivity for those agency employees.

These figures, however, do not include data from some of the largest government agencies, which were unable to provide complete shutdown cost estimates to the Subcommittee, including the Departments of Defense, Agriculture, Justice, and Commerce and the Environmental Protection Agency.

This report also documents the impacts that shutdowns have on important core government functions. “

Click to access 2019-09-17%20PSI%20Staff%20Report%20Government%20Shutdowns%20Final.pdf

How DOD Will Survive Its Next Audit

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DEFENSE SYSTEMS

“The Defense Department famously completed — and failed — its first financial audit in 2018. The ordeal highlighted gaps and inefficiencies in the organization’s IT infrastructure, but it also served as a bastion for tech innovation.

Here’s what some of the Defense Department’s chief financial experts had to say about how they plan to survive DOD’s second audit and how using automation and robotics is easing the process”

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Simply put, how do you all plan to pass the next audit for 2019?

Douglas Glenn, the Pentagon’s assistant deputy chief financial officer

Same way we did last year. We got through it last year — that’ll have been the hardest — we’re going to do it again next year. And you know, it’s that question of how do you eat an elephant? One bite at a time. So we just chip away at the NFRs [notices of findings and recommendations], which will lead to reducing the material weaknesses, which will lead to more clean opinions and we’ll get there.

Fredrick Carr, associate deputy assistant secretary for the Air Force

We’re more efficient now. The first full audit was in 2018. Getting all the documentation to the auditors, timely, entering all the PBCs [provided by client lists], that was really a ruckus. But we really learned from that. We put a tool in place — we don’t have any late PBCs now. That I think is the biggest piece. And we learned from the corrective actions, how to write them, getting at root costs.

Wesley Miller, the Army’s deputy assistant secretary for financial operations

With the Army, I don’t think we’re at a breakthrough point. We’re still focusing on the different types of audits that we’re performing — our working capital fund, our conventional ammo — and taking care of those particular items and then tackling the big general fund as of late.

Victoria Crouse, chief strategy officer for the U.S. Navy’s financial operations office

I think we’re open to any and all findings that we get from the auditors. We try to be pretty transparent on where we think some of our issues are. We’re getting some positive feedback on corrective actions that we’ve implemented. But they’re getting in some areas where they’re able to dig a little bit deeper than they did last year. It’s a continued learning experience, and we’ll go through that prioritization process again and just keep moving forward one step at a time.

All of you might have mentioned robotics during your presentations, how important is this? I know from the Army side, Army Futures Commander Gen. John Murray has talked about using artificial intelligence and automation to improve the Army’s budgeting process. Can you talk a bit about how that’s developing and how each of you is using robotic processes?

MILLER: Compare functions. You look for compare functions where you can take one item and have it do the checking. Rather than have someone swivel from one system to another system, you have the robot do the comparison function for you. We want to use a robot to look at individuals who are leaving the service and then comparing that back to individuals who are still remaining and have permissions remaining on the systems. Those are the types of functions that I see initially. They will grow bigger, become more complex after that.

CARR: Across the board, anything we see that is typically not high-value added and repeatable, we can program it. And our goal is to take all that stuff that’s low value added and see if we can add robotics to it and get it out of the hands of people manually processing. Because every time you have to put something in a system manually, it’s probably going to generate a DFAS [Defense Finance and Accounting Service] bill that’s manual — and that’s a huge cost. We can pay $34 for a transaction or we can use an electronic and do it for $2 or $3 a transaction. So that’s huge.

Any new areas for robotic processes that you’re looking into?

CARR: So the leave balance for our active duty military is the newest one. Being able to do that instead of having a person go in and see where did Airman Snuffy come back from leave because he didn’t clock back in. There’s no incentive to do that when you come back from leave because you’re back at work the next day. But it’s still in the system that way and it shows that you’re still gone. Well if robotics can take all that stuff and clean it up, then the [supervisor] doesn’t have to worry about that. It’s done.

Where’s the Navy on this?

CROUSE: We’re in the early stages. Similar to Air Force, we’re looking at any of those processes that are highly manual where we might have an opportunity to use robotics. One of the areas we’re looking at is retrieval of supporting documentation for the audit.

MILLER: And remember, what we’re attempting to do is open up more time for people to actually do analytical work. We don’t want them to get hung up on the … work of doing comparisons. We want them there to spend more time analyzing what’s behind, what the numbers mean.

Back to DOD, anything to add?

GLENN: There’s a positive ROI [return on investment] there. I forget the numbers, but we estimate that we’re saving more annually than we spend on it, just in the few that we’ve deployed at the office of the secretary level.

At the Pentagon, Fourth Estate level, are there any new areas that you’re looking to apply this sort of automation?

GLENN: We’d love to get into accelerating the de-obligation process and contract close out. I think almost every agency out there is wrestling with closing out old obligations and getting their contracting community to focus on that as opposed to getting new contracts out. So if we could deploy some robots to accelerate that closeout process, lift some of the burden off the contracting officers, it would be a win-win across the government.”

https://defensesystems.com/articles/2019/08/15/dod-survive-audit-williams.aspx?s=ds_220819


Defense Contractors Return $200 Million in Self-Reported Waste to U.S. Government

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BLOOMBERG LP.COM”

“Defense contractors have returned more than $200 million to the U.S. in the decade since it became mandatory to self-report potential fraud, waste or abuse, according to a new tally by the department’s inspector general.”

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“Until late 2008 the Defense Department had a voluntary program for contractors to disclose potential violations. Then lawmakers made timely disclosure mandatory at the risk of potential suspension or disbarment when there’s credible evidence of a criminal violation.

“The disclosures we receive involving recoveries” may be for “labor mischarging or timecard fraud,” such as when employees put in for time they didn’t work or for work they didn’t complete, Patrick Gookin, director of the inspector general’s hotline, said in an email. “We also receive disclosures involving overpayments, or false claims that can lead to additional recoveries than initially reported.” Gookin’s team assembled the tally.

In an example of the self-reporting requirement under the Contractor Disclosure Program, Sierra Nevada Corp.disclosed in December 2012 possible Pentagon overpayments for development costs on some contracts after a preliminary inquiry, according to a summary by the inspector general. The company later supplemented its disclosure, identifying $6 million in potential overpayments.

The inspector general’s criminal investigative arm, as well as the Navy’s, subsequently conducted probes, and the Defense Contract Audit Agency reviewed the paperwork.

‘Inflated Overhead’

The Sparks, Nevada-based company reached a $14.7 million settlement with the Justice Department in February 2017 to resolve allegations that it violated the federal False Claims Act “when it knowingly misclassified certain costs, resulting in inflated overhead rates paid,” according to the department.

Sierra Nevada said in a post-settlement statement that after the disclosure it “implemented rigorous and comprehensive accounting processes, and added additional training and tools designed to ensure adherence to the highest standards of compliance with regulations.”

In addition to the $200 million in self-reported possible overpayments, the inspector general’s latest semi-annual report cited $4 million in potential recoveries for reasons such as non-confirming or counterfeit parts, false certifications and theft of government property.”

https://www.bloomberg.com/news/articles/2019-08-15/defense-contractors-return-200-million-in-self-reporting-waste