DOD Procurement Delays, Cost Overruns Rile Lawmakers

Wed. Apr. 30, 2008


Lawmakers and auditors hammered the Pentagon Tuesday for failing to match wishes with fiscal reality in weapons programs procurement, even as some members said the real problem is congressional failure to curb defense spending.

"Apparently there is no fiscal discipline at the Pentagon," Rep. John Duncan, R-Tenn., said at a House Oversight and Government Reform hearing on defense acquisition. "Apparently they believe the Congress will just keep giving them more money no matter how wasteful and inefficient they become."

The hearing addressed a GAO report that found 95 major weapon programs were $295 billion over budget and on average 21 months behind schedule in FY07. While members noted cost overruns on military equipment and related reforms have existed since the founding of the country, the annual GAO report said the number of over-budget and overdue programs has increased steadily since 2000, despite the Pentagon's adoption of some auditor recommendations.

James Finley, deputy undersecretary of Defense for acquisition and technology, said the department is moving toward eliminating problems outlined by GAO. But Finley also asserted that the "acquisition process was not broken" and could be fixed through "basic blocking and tackling," in the procurement process.

But Michael Sullivan, GAO director for acquisition and sourcing management, largely blamed cost overruns on the department's failure to connect processes for identifying needs and paying for them.

"The requirement-setting process and the funding process should be responsible for matching need with available funds. However, they do not work together very well," Sullivan said at the hearing. "The requirements process tends to be stove-piped with different services offering different solutions for different processes."

With programs competing for money, "the definition of success is pretty much to become a program of record with a funding stream attached to it," Sullivan added. As a result, weapons procurements often get funding despite unrealistic business plans and before required technology is proven, Sullivan said.

Oversight and Government Reform Chairman Henry Waxman focused on the Marine Corps' Expeditionary Fighting Vehicle, an amphibious tank built by General Dynamics Corp., as an example of what he called an especially flawed procurement.

The EFV continues to get funding although an early design was scrapped after $1.2 billion in spending. "The signal that sends is unmistakable, no matter how bad a job you do, there will be no accountability," Waxman said, noting that General Dynamics won a contract to build a new prototype.

Waxman questioned "cost-plus" contracts in which government contractors are paid even if the product fails.

But Sullivan and Oversight and Government Reform ranking member Tom Davis said contractors need cost-plus arrangements to spend money developing complex technology the Pentagon wants, even though such deals discourage many contractors from telling the government that new technological requirements might cause a product to fail.

While Rep. Dan Burton, R-Ind., indicated willingness to fund any program the Pentagon deems necessary, other members said cost overruns on defense acquisition are due to the open checkbook Congress maintains for military programs.

"Is there any fiscal discipline being exerted to hold down costs and to make difficult trade-offs?" asked Oversight and Government Reform National Security Subcommittee Chairman John Tierney, D-Mass. "We just keep giving the Pentagon as much as they want," Tierney said.

by Dan Friedman

Wed. Apr. 30, 2008