Whenever the budget is tight, certain people like to complain about wasteful spending by the Department of Defense. And to be sure, the DoD is not the most efficient entity in the world (tho it is about the most efficient in the federal government). Always popular targets are procurement programs that run over budget. And as a rule of thumb, they ALL run over budget.
Here’s a perfect example of just how bad DoD procurement is. The Navy spent 10 years and a billion dollars trying to buy a minisub to deliver Navy SEALs from submarines. They failed miserably. But a private company, in one year, at a cost of about $10 million dollars, built a minisub that, while not perfect, is good enough for 90% of the job.
Why is procurement so broken? I can think of two reasons. The first is the services fault, the second is Congresses fault.
First, when a program is started, not just the end-user community has input as to what will be bought. And everyone that has input into the program insists on adding its own bells and whistles to whatever it is being bought. What starts out as something relatively simple often becomes a bloated monstrosity. A couple years ago, when the Navy started to process to replace the VH-3s used as Marine One, the list of requirements exploded. The President just needs a helicopter to get from the White House to Andrews AFB or maybe Camp David. But by the time the requirements were nailed down (and this was after the contract was awarded!) the chopper needed to have secure voice, data and video teleconference capability. And it had to have a galley. A galley! Dude, I know we’re talking about the President, but even he can go half an hour without a meal. Give him sammich and a thermos! What should have been about a $20 million dollar helicopter was rapidly approaching a $1 billion dollar helicopter. Without a single manager responsible for setting requirements, and ruthlessly working to eliminate gold-plating, costs will balloon incredibly fast.
Secondly, the rules of procurement aren’t set by the DoD. They are set by Congress. In an effort to keep the process fair, competitive and free of fraud, the DoD is burdened with possibly the most complex set of contracting regulations in the history of the world. Many companies simply refuse to bid on DoD business because it is such a pain. Add in that for any expensive program, the pressure to hold a competitive bidding process. And since Congressmen represent districts that have interests in the bidding process, very often, the competition parameters are set not to reflect what the services need, but to lean the competition to a favored constituency.
A third problem is that for very complex programs, like ships, the Army’s Future Combat System, and especially any aircraft program, developing the programs is far more lucrative for the contractors than building it. You have a perverse incentive for the contractor to never be ready to produce anything.
I think the simplest way to cut this Gordian knot would be to eliminate any and all oversight, fire all the auditors, and take the best guess of what a program should cost, add 100% for graft and fraud and just cut a check that includes development and procurement. In the long run, it would probably be cheaper.
Hat tip to the headlines at Ace of Spades