Tag Archives: Pentagon Spending

F-35 Full Rate Production Challenges Include Failing Engine Tests And Replacing 1,005 Turkish Parts

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 Image: Senior Airman Quay Drawdy/U.S. Air Force

DEFENSE NEWS

According to the GAO, the number of F-35 parts delivered late skyrocketed from less than 2,000 in August 2017 to upward of 10,000 in July 2019. At one point in 2019, Pratt & Whitney stopped deliveries of the F135 for an unspecified period due to test failures, which also contributed to the reduction of on-time deliveries.

And those supply chain problems could get even worse as Turkish defense manufacturers are pushed out of the program, the Government Accountability Office said in a May 12 report.

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 “Lockheed Martin’s F-35 Joint Strike Fighter is on the verge of full-rate production, with a decision slated for early 2021. But a congressional watchdog group is concerned that as the company ramps up F-35 production, its suppliers are falling behind.

The number of parts shortages per month also climbed from 875 in July 2018 to more than 8,000 in July 2019. More than 60 percent of that sum was concentrated among 20 suppliers, it said.

“To mitigate late deliveries and parts shortages — and deliver more aircraft on time — the airframe contractor has utilized methods such as reconfiguring the assembly line and moving planned work between different stations along the assembly line,” the GAO said.

“According to the program office, such steps can cause production to be less efficient, which, in turn, can increase the number of labor hours necessary to build each aircraft,” which then drives up cost, the GAO added.

Those problems could be compounded by Turkey’s expulsion from the F-35 program, which was announced last year after the country moved forward with buying the Russian S-400 air defense system. Although Turkey financially contributed to the development of the F-35 as a partner in the program, the U.S. Defense Department has maintained that Turkey cannot buy or operate the F-35 until it gives up the S-400.

The Pentagon has also taken action to begin stripping Turkish industry from the aircraft’s supply chain, a process that involves finding new companies to make 1,005 parts, some of which are sole-sourced by Turkish companies.

Ellen Lord, the Pentagon’s undersecretary for acquisition and sustainment, had hoped to stop contracting with Turkish suppliers by March 2020, but in January she said that some contracts would extend through the year, according to Defense One.

While the Defense Department has found new suppliers to manufacture the parts currently made in Turkey, it is uncertain whether the price of those components will be more expensive. Furthermore, as of December 2019, the new production rates for 15 components were lagging behind that of the legacy Turkish producers.

“According to program officials, some of these new parts suppliers will not be producing at the rate required until next year, as roughly 10 percent are new to the F-35 program,” the GAO said.

“Airframe contractor representatives stated it would take over a year to stand up these new suppliers, with lead times dependent on several factors, such as part complexity, quantity, and the supplier’s production maturity. In addition, these new suppliers are required to go through qualification and testing to ensure the design integrity for their parts.”

The F-35 Joint Program Office disagreed with the GAO’s recommendation to provide certain information to Congress ahead of the full-rate production decision, including an evaluation of production risks and a readiness assessment of the suppliers that are replacing Turkish companies.

In its statement, the JPO said it is already providing an acceptable number of updates on the program’s readiness for full-rate production.

Hard times for the F-35’s engine supplier

Not all F-35 production trends reported by the GAO were bad for the aircraft. Since 2016, Lockheed has made progress in delivering a greater proportion of F-35s on schedule, with 117 of 134 F-35s delivered on time in 2019.

However, one of the biggest subsystems of the F-35 — the F135 engine produced by Pratt & Whitney — drifted in the opposite direction, with a whopping 91 percent of engines delivered behind schedule.

At one point in 2019, Pratt & Whitney stopped deliveries of the F135 for an unspecified period due to test failures, which also contributed to the reduction of on-time deliveries.

According to the Defense Contracts Management Agency, “there have been 18 engine test failures in 2019, which is eight more than in 2018, each requiring disassembly and rework,” the GAO wrote. “To address this issue, the engine contractor has developed new tooling for the assembly line and has established a team to identify characteristics leading to the test failures. Plans are also in place for additional training for employees.”

https://www.defensenews.com/air/2020/05/12/some-f-35-suppliers-are-having-trouble-delivering-parts-on-schedule-and-turkeys-departure-could-make-that-worse/

A 14 Year Military Reporter Describes “Budget Day” At The Pentagon

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https://rosecoveredglasses.wordpress.com/2018/07/06/beltway-bandits-cronyism-and-department-of-defense-exclusive-contracts/

EDITOR’S NOTE: The following article in “Task and Purpose” by Jeff Schogol, although a bit risque, is an apt description of the annual event I witnessed for 36 years on the inside of the Military Industrial Complex among the nations largest defense contractors. At times those of us who know the venue well appreciate a lighter view of it. I found Jeff’s talent for knowledgeably creating that view delightful and along the lines of the legendary HBO Movie, “Pentagon Wars” https://www.youtube.com/watch?v=aXQ2lO3ieBA Ken Larson

TASK AND PURPOSE” By Jeff Schogol  

One thing your friendly Pentagon correspondent has learned is there are two things you can write about on budget day: Toys and people.

Right now, the U.S. military is like a 5-year-old at a birthday party. Every time it sees that another kid has received a present, it decides that it must have the exact same thing. (Oh, China got hypersonic weapons this year? I want one!)”

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“Beloved readers: Monday is the most wonderful all days – budget day!

The Defense Department will unveil its part of the president’s budget request. If you’re a trade reporter, budget day is like Independence Day, Christmas, and the Super Bowl wrapped up in a crushing orgasm.

Your friend and humble narrator has covered quite a few of these budget rollouts over the years. Each time, this reporter asks himself the same question: “How the hell did I get through this last year?”

The answer is simple, really: Budget day is a smorgasbord of figures that have little bearing on reality because lawmakers will end up rewriting the budget to reward their constituents. Defense officials also spend hours speaking in tongues by using arcane acronyms like “POM.” (A Program Objective Memorandum outlines defense spending for the next five years. Since that spans two election cycles, POMs are altered so many times that they become totally unrecognizable from their original form.)

Each defense budget is loaded with toys so that defense industry executives can pay the mortgage for their winter homes in the French Riviera. For reporters who cover the Navy, the big question is how many ships the service plans to build.

Navy leadership has stressed that it is committed to having a total of 355 ships by 2030 even though they have no plan to get there. (For their next miracle, they will walk on water and hand out enough fish and loaves for everyone to enjoy.)

Air Force watchers want to know how many F-35 fighters, KC-46 tankers, and B-21 bombers the service plans to pay for – and then act surprised when the aircraft don’t work. The KC-46, for example, is years behind schedule and the need for a new tanker is urgent because the Air Force’s KC-135s first entered service in the 1950s. (Rather than listing everything that is wrong with the KC-46, I’ll sum up by saying this: It’s built by Boeing.)

While the Air Force is tucking $100 bills into the aerospace industry’s bra strap, the Army will get to talk about all of its new and wonderful modernization programs that don’t have a prayer of becoming a reality. Do you remember the multiple times the Army has tried to replace the Bradley Fighting Vehicle? Yeah, they couldn’t even do that.

God bless the Army, but they are always looking for the gold-plated solution so they can never make a decision. Instead, they will down-select from 150 vendors to 75, and then order five years of intensive testing to find out things such as whether the new squad automatic rifle can fire in space. By the time the Army is comfortable choosing between two options, all the people who were originally in charge of the project have retired or died of old age and Congress will end up cancelling the project.

If you cover the Marine Corps, budget day is about looking for scraps. The Corps’ acquisition budget is tiny compared to the other services because they don’t buy aircraft carriers or bombers. They are constantly looking for a new amphibious vehicle or other weapon systems that are the equivalent of Dollar Store specials. That’s one reason why Marines know there is no better acquisition system than stealing gear from the Army.

The other major category of budget stories looks at whether the military services are adding people – like the Army and Marine Corps did during the Iraq War – or drawing down, as all the military branches did during President Barack Obama’s second term. (The Air Force was so enthusiastic about cutting airmen that one can imagine the service’s leadership singing “It’s Raining Men” at the time.)

When President Donald Trump was elected, there was some speculation that the Marine Corps could become much larger because Trump had endorsed a recommendation from the conservative Heritage Foundation think tank that the Corps have a total of 36 battalions. But in 2017, then-Defense Secretary James Mattis told the Corps to fix its readiness problems without adding more Marines. (Once again, the Marine Corps was SOL. Note the pattern.)

Whatever great and wondrous things are included in the Pentagon’s latest proposed budget, expect your friend and humble narrator to be listening with rapt attention as military officials go through endless Power Point presentations that have all of the excitement of J-Lo and Shakira’s halftime show – without the vibrating derrieres.”

Image result for jEFF SCHOGOL TASK AND PURPOSE
Jeff Schogol

ABOUT THE AUTHOR:

Jeff Schogol covers the Pentagon for Task & Purpose. He has covered the military for 14 years and embedded with U.S. troops in Iraq and Haiti. Prior to joining T&P, he covered the Marine Corps and Air Force at Military Times. 

https://taskandpurpose.com/pentagon-budget-day

Department Of Defense Updates Mid-Tier And Urgent Acquisition Policies

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Image: Roper Center, Cornell University

FCW

The Defense Department issued updates to mid-tier and urgent acquisition policies that allow the military to quickly develop prototypes and field systems. The policies took effect in the last days of 2019.

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“Reworking the DOD 5000 series instructions that govern acquisition practices has been a top priority for DOD acquisition chief Ellen Lord, who told reporters Dec. 10 the changes “the most transformational change to acquisition policy in decades.”

The Pentagon has said it expects to publish the adaptive acquisition framework in January, which will include acquisition pathways specific to “the unique characteristics of the capability being acquired,” Lord said.

The mid-tier acquisition instructions address rapid prototyping and fielding and are meant to serve as a path to “accelerate capability maturation before transitioning to another acquisition pathway or may be used to minimally develop a capability before rapidly fielding.”

Lord said the new mid-tier instructions under an 18-month pilot facilitated a dramatic increase in the number of programs.

“Since our pilot started 18 months ago, we have gone from zero middle-tier programs in November 2018 to over 50 middle-tier programs today delivering military utility to warfighters years faster than the traditional acquisition system,” Lord said in the media briefing.

The urgent instructions focus on capabilities needed during conflict that can be fielded in less than two years but cost less than $525 million in research and development funds or $3 billion for fiscal 2020 procurements.

Lord said the department’s changes to the acquisition would make it easier for professionals to match programs with acquisition pathways as well as reduce lead time for pathfinder projects.

The rewrites for major capability, software, defense business systems and services acquisition are pending release.”

https://fcw.com/articles/2020/01/06/dod-5000-update-williams.aspx?oly_enc_id=

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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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/


Pentagon Officially Fails Second Audit

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Illustration by Victor Juhasz for Rolling Stone

DEFENSE NEWS

For the second year in a row, the Pentagon has officially failed its audit. And for the second year in a row, that result was expected.

The audit effort covered more than $2.9 trillion in total assets and $2.8 trillion in liabilities, with 1,400 auditors, visiting 600 sites around the world and requesting more than 100,000 samples of equipment as they surveyed the department’s inventory.

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“Elaine McCusker, the Pentagon’s acting comptroller, told reporters ahead of the formal audit release — which occurred late on a busy Friday night in Washington — that “as expected,” the department would be receiving what is known as an “overall disclaimer,” a technical term that means the results of the audit did not come back clean.

Still, McCusker said she sees real progress being made. “I think the department has been pretty open with the fact that it’s got material weaknesses, it’s got things that need [to be] fixed,” she said. “But, you know, our ability to really demonstrate solid progress, I think is the headline.”

The department’s overall audit is really a series of 24 individual audits, led by the Department of Defense’s inspector general, in collaboration with the comptroller’s office. Of those, seven came back clean, an improvement by one (the Defense Commissary Agency) over the previous audit. Two audits are still ongoing and will be completed by January.

Through all that research, auditors found no evidence of fraud for the second straight year. They also turned up what McCusker called “completeness” of major military equipment inventories, which is to say, major defense articles are where they were supposed to be.

In a statement, acting inspector general Glenn Fine said the “Department of Defense has made progress in improving its financial management processes since the prior year audit, but much more progress is necessary. The Department of Defense still has a long way to go before it will be able to obtain a clean opinion.”

A 1990 law passed by Congress required audits for all government agencies. But the Pentagon had been the sole holdout, with leadership across several administrations arguing the building is too large and has too many systems that don’t link up, to give any kind of helpful result that would be worth the cost.

Finally, last year the Pentagon’s first audit was completed, much to the relief of long-annoyed members of Congress. DoD officials have pledged to keep the audit going every year.

Of the 2,300 Notifications of Findings and Recommendations, which is to say specific issues found by the audit, issued after the FY18 effort, 23 percent were closed by the FY19 audit, which McCusker called “solid progress for our first year.” She also warned that the NFR number will grow “as auditors go deeper into our systems and processes. This is a good thing. We need continued focus on property accountability, inventory and property in the hands of contractors and our systems.”

According to the IG report, 1,300 new NFRs were discovered during the course of the audit.

The department also released a list of positives from the audit, including:

  • A deep dive into inventory at Naval Air Station Jacksonville identified $280 million of items not tracked properly. Of that, $81 million of material was identified as available for immediate use for Naval operations that the service had no idea it had on hand. Getting rid of old, unusable material freed up approximately 200,000 square feet of storage space.
  • The Army implemented a new automated solution for data entry into the U.S. Standard General Ledger. Moving to automation should save the service around 15,500 labor hours.
  • The Air Force also tapped automation, in order to identify user accounts that are no longer relevant in military IT systems, closing an average of 55 a month, which should improve cyber security.

That Air Force project ties into the biggest single area of concern identified by the FY18 audit: information technology realm, both from inventory issues and from failure to follow security recommendations. McCusker said the department closed roughly 30 percent of the overall NFRs in the IT area this year, with a particularly high closure rate among the services.

“We’re really getting at physical access controls, authority documentation, you know, policies that we were updating controls on privilege of users. We really went after all those areas,” she said. “Still plenty to do, but we did focus on that.”

The audit cost around $1 billion to execute, of which roughly half was the cost of fixing issues previously identified. McCusker said she expects the $1 billion figure to be “pretty consistent for a few years” going forward, and argued the investment was small compared to not just the financial return, but improvements for the warfighting capability of the department.

“As far as the return on investment from the audit, you know, when we do automation, and we reduce manual workloads, we free up manpower, and that’s a savings,” she said. “DLA did some inventory and saved over $200 million when they found some inventory that they put back into the system.”

However, those savings won’t be plowed right back into the 2021 budget plans, with McCusker saying “We’ve got a lot of I think examples that get to the savings side of things, but it’s not going to be something that I would translate into, you know, a trackable way that goes into the ‘21 budget, that would be more of some of the reform stuff that we’re doing and you’ll see that.”

https://www.defensenews.com/pentagon/2019/11/16/the-pentagon-completed-its-second-audit-what-did-it-find/

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/


How The Pentagon Can Save Over $1.2 Trillion

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Image: “The Fiscal Times

DEFENSE NEWS”

To reach the $1.2 trillion-plus reduction, spending cuts would come from three general areas:

  • Force structure and weapons procurement reductions.
  • Overhead and efficiencies.
  • Nuclear weapons, missile defense and space.

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“The Pentagon could save more than $1.2 trillion with a number of tweaks to its spending plan for the next decade, including canceling the creation of a Space Force and nuclear weapons projects, according to a report by the Center for International Policy.

The report, “Sustainable Defense: More Security, Less Spending,” offers new strategies that challenge the National Defense Strategy by encouraging more diplomacy (specifically in regard to the Iran nuclear deal) and less military confrontation to cut costs. It also says the NDS “exaggerate[s] the challenges posed by major powers” like China and Russia.

The report offers Congress several solutions to reduce Defense Department spending in the short term, including restricting overseas contingency operations funds, cutting the Pentagon’s private contractor workforce by 15 percent, blocking plans for the Space Force, avoiding placing weapons in space and rolling back the nuclear modernization plan. Capitol Hill is in the middle of a funding debate over fiscal 2020 military spending.

The Defense Department’s top-line budget hit $691 billion in FY10 and generally decreased until FY16, when the budget saw an increase and continued since, reaching $686 billion in FY19. The White House has proposed a $750 billion budget for FY20.

Recommendations from the report call for a reduction in end strength for the Army and Marine Corps. If this approach is adopted, the Army’s active-duty force would see about a 13 percent reduction in planned end strength, from 488,000 to 426,000. The Marine Corps would see a reduction in its active infantry battalions and combat and support units, and an approximately 15 percent reduction in end strength, from 186,000 to 157,000.

The Navy would also face cuts to the current size of its fleet from about 297 ships to 264 under the report’s recommendations. This would interrupt the Navy’s goal of building a 325-ship fleet by 2028, the report adds.

The report suggests eliminating efforts to produce a new nuclear, air-launched cruise missile, known as the Long Range Standoff Weapon, which it calls “redundant.” This would save $13.3 billion over a 10-year period, the report claims. The Pentagon could also save $30 billion over 10 years by canceling plans for a new intercontinental ballistic missile.

On the U.S. nuclear strategy overall, the report recommends the country move toward “a posture of sufficiency — a large enough arsenal to deter attacks on the United States and its allies. No additional capability is needed.”

Canceling plans for a Space Force would save the department $10 billion over the same period, the report says. Plans for the Space Force were adopted by the House Armed Services Committee on Thursday during its markup of the National Defense Authorization Act. The language of the bill renames the organization Space Corps and places it under the purview of the Department of the Air Force.

The report states that the U.S. is much safer today than it once was, adding that while international terrorist organizations remain a threat, their existence does not warrant an expansion of military force.

“[T]the wars of the last 18 years — including large-scale counterinsurgency efforts, nation building, and global terrorist-chasing, as occurred in Iraq, Afghanistan, and beyond — have done more harm than good, in some cases disastrously so,” the report asserts. It suggests abandoning policies that led to war and reducing the size and geographic reach of the military to “stop unnecessarily risking the lives of U.S. troops.”

The report also claims Russia and China pose no threat to the U.S. in terms of conventional military power. Rather, the competition with those countries lies in “economic dominance (particularly with China) and diplomatic influence.”

The report says the most urgent national security risks lie in climate change, cyberattacks, global disease epidemics, and income and wealth gaps. “

https://www.defensenews.com/pentagon/2019/06/19/how-the-pentagon-can-save-over-12-trillion/

Congress to Pentagon: “You Can’t Tell Us Where You’re Spending Your Money Or How Much Inventory You Have.”

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“FEDERAL NEWS NETWORK”

Image: “Rose Covered Glasses” https://rosecoveredglasses.wordpress.com/2017/12/27/the-unaffordable-pentagon-audit/

“FEDERAL NEWS NETWORK”

“With the Defense Department’s first audit in hand, lawmakers are scrutinizing the Pentagon’s request for $750 billion in 2020 with a new vigor and questioning what “future risk” really means for the nation.

Congress asked the Pentagon to deliver a budget in 2020 that creates an “acceptable level of risk” for the military in 2025. However, after DoD showed it could not account for most of the money it’s been spending over the years in it’s 2018 audit, Congress is questioning if the military truly needs such enormous budgets.”

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“What critics of larger defense budgets are floating as a topline isn’t far off from the Pentagon’s request, — $733 billion — but those critics have new ammunition in the form of the audit to counter the military’s claim that it needs a higher $750 billion topline.

That ammunition was on full display during the April 2 House Armed Services Committee budget hearing with leaders.

“The issue is not knowing where this $750 billion is going to go,” said Committee Chairman Adam Smith (D-Wash.). “It’s impossible to overstate this point. We literally don’t know where a chunk of that $750 billion is going to go. We can identify some of it here and there, but by any normal accounting measure, you can’t tell us where you’re spending your money, or how much inventory you have.”

Only five of DoD’s 21 auditable agencies came back clean from the 2018 audit, and those clean agencies were smaller entities.

The Pentagon currently has 2,410 notices of findings and recommendations it needs to work on after its first audit. Another thing to keep in mind is that it took $1 billion alone just to complete the first audit.

While military leaders could only tell lawmakers that they were working to be more accountable on funds, they did have answers for what might happen if the military wasn’t fully funded to the $750 billion topline given the way DoD currently spends money.

Air Force Chief of Staff Gen. David Goldfein said the Air Force would suffer in its training ranges.

“What would be at risk is out ability to replicate the threat with the proper environment, both virtually and physically on our ranges going forward,” Goldfein said. “What’s also at risk is this significant movement that we started last year, and Congress supported this. It was a significant move for the Air Force to shift from a platform solution on command and control and battle management to a network solution going forward. That is our future in the business of joint warfighting, to ensure that we are taking every sensor and every shooter and connecting them together.”

Army Chief of Staff Gen. Mark Milley said the Army would have to trim back some of its manning and “not fill holes” it has been filling. The Army would also lighten some of its major training exercises.

“Right now, for example, we’re doing our first emergency deployment readiness exercise, deploying an armored brigade combat team out to Fort Bliss, Texas, all the way to Europe,” Milley said. “That’s the first time that’s been done in 25, 30, maybe even 40 years. Exercises like that would come down.”

He added that the Army would slow down the delivery and procurement of spare parts.

What is risk?

Smith challenged the military’s definition of risk, however, questioning if an “acceptable level of risk” is ever attainable no matter how much money Congress appropriates DoD.

“My point is, this has no end,” Smith said. “You cannot eliminate risk… We could spend $1 trillion and I’m halfway convinced that you’d all be sitting there telling us, ‘OK, that’s great, but here’s all the things we can’t do.”

Smith said he wants a long-term understanding of what risk entails.

“We could throw money at you all day long and you’re going to come back at us and say there’s still an unacceptable level of risk,” he said. “I don’t find that helpful.”

In the meantime, it seems like Congress will be battling over about $17 billion — the difference between a $733 billion and a $750 billion topline.

“The House Budget Committee, the number that they’ve talked about for defense is $733 billion,” Smith said earlier this month. “It’s a not insubstantial number. If you take out the roughly $10 billion in emergency spending that’s folded in, you’re not that far apart on the budget numbers. I don’t see that being a problem, but we will have to find savings in some places, obviously.”

The $9.2 billion DoD requested for emergency spending would be used mostly to build the wall along the southern border and refill military construction accounts it plans to use for wall construction in 2019 under the president’s emergency declaration.

Part of that money would also go into rebuilding Tyndall and Offutt Air Force Bases after they were impacted by extreme weather.

Another issue Congress needs to hammer out is exactly how DoD’s budget is allocated. Currently, the budget funds right up to the $545 billion budget caps and then makes up the rest of the budget with emergency war accounts that are not subject to the Budget Control Act.

Critics say putting base budget funding in emergency accounts shrouds accountability and makes it harder for DoD to plan for the future.”

https://federalnewsnetwork.com/defense-main/2019/04/congress-holds-up-2018-audit-as-reason-to-rein-in-defense-spending/

The Pentagon’s New Stealth Bookkeeping

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Pentagon Stealth Bookkeeping

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)

“The Pentagon (and CIA) have asked the U.S. government’s accounting overlords to let them fudge their costs in the name of national security. The Pentagon Inspector General warns the proposed change represents a “major shift” in federal fiscal management while doing little to “effectively protect classified information.

The change is expected to win final approval from Treasury Secretary Steven Mnuchin, Comptroller General Gene Dodaro, and Mick Mulvaney, chief of the Office of Management and Budget (OMB), this fall.”


“The Defense Department’s finances have been an unauditable black hole for decades. But as the military has struggled mightily in recent years to remove the cobwebs and fog from its books, it has run into another problem: where to hide its work on classified programs?

Not to fear: where there’s a will, there’s a waiver.

That’s why the Pentagon (and CIA) have asked the U.S. government’s accounting overlords to let them fudge their costs in the name of national security. Think of it as the latest in fiscal transparency: while the U.S. military struggles to make its accounts finally auditable, it needs new nooks and crannies to mask spending. Only U.S. national-security apparatchiks would plead for future budget secrecy to justify past budget sloppiness.

And they have received preliminary approval for the change from the Federal Accounting Standards Advisory Board (FASAB), which sets the so-called “generally accepted accounting principles” for federal bean-counters. Government accountants may “modify” spending levels, the accounting agency says, and allow spending “to be excluded from one reporting entity and consolidated into another reporting entity” to keep work on classified programs secret. Government secrecy sleuth Steven Aftergood revealed this latest Pentagon ledger legerdemain in a recent post on his Secrecy News blog for the Federation of American Scientists”

The Pentagon announced last December that it was dispatching 1,200 auditors—that’s about two battalions’ worth—to conduct the first-ever across-the-board audit of the Department of Defense. Conflicting accounting systems and programs—and wars—spread over decades make it challenging to track military spending. But armed with calculators and reinforced by an army of independent public-accounting firms and a nearly $1 billion budget, the Pentagon is due to offer up its most accurate bottom line ever in November.

The push for better bookkeeping leavened with lying wasn’t unanimous. The Pentagon Inspector General warned the change would represent a “major shift” in federal fiscal management while doing little to “effectively protect classified information.” The change “jeopardizes the financial statements’ usefulness and provides financial managers with an arbitrary method of reporting accounting information,” the IG said in its filing opposing the new math. “We do not agree that incorporating summary-level dollar amounts in the overall statements will necessarily result in the release of classified information.”

Outside experts agreed. Gordon Adams, who oversaw national-security spending at OMB during the Clinton Administration, says the change represents a new kind of “duck and cover,” the Cold War exercise where schoolchildren would crawl under their desks to avoid nuclear fallout. “The goal is to duck the need for public reporting by concealing—covering—the numbers somewhere else,” Adams says. “They don’t provide details or examples, probably because that would give the game away, but the goal is to conceal the classified data by hiding it in plain sight in some other number.”

Congressional budget veterans find the proposal unsettling, especially given what they say is the weaker oversight lawmakers now give to national-security spending. “Lots of CIA spending used to be hidden in the Pentagon budget, and it’s still there—but we can’t find it anymore,” says one Capitol Hill budget hawk who has spent decades spelunking military spending. Speaking anonymously, he fears the proposed accounting tweak will give the Pentagon free rein to use its so-called “unsupported adjustments”—known colloquially as “plugged figures”—that have long been used to mask Pentagon spending, dubious and otherwise.

U.S. defense and intelligence agencies have long argued that revealing too much budgetary information can harm national security. They secretly spent more than $50 billion on their “black budget” in 2013, according to a tally intelligence contractor Edward Snowden providedto the Washington Post. But the Pentagon also hides spending on well-publicized programs like its fledgling B-21 bomber. The Air Force fears divulging how much of that sum is going to certain parts of the program—fuselage, engine, radar-eluding “stealth” technologies—could let potential foes beef up their efforts and dull the bomber’s advantage.

“Seventeen years after 9/11 and we still can’t get out from under the `it’s for national security, don’t worry about it’ rubber-stamping of too much data and information that shouldn’t, and otherwise wouldn’t, qualify as needing to be classified,” says Mackenzie Eaglen, a defense analyst at the American Enterprise Institute. “The problem with this rubber-stamping is regular folks like us can’t get to the core, or raw, data to better question or shine light on the final decision. We can only pooh-pooh the outcome weakly.”

https://www.pogo.org/analysis/2018/08/the-pentagons-new-stealth-bookkeeping