Fixing Defense - First Understand the Problems

I'm troubled over the lack of calm, clear analysis on the Obama administration's views of defense programs and what is within the realm of possible to get defense on the right track. To read some newspapers and bloggers, the Obama administration is winding up to put some hurt on defense contractors by cutting major defense acquisition programs. But he won't be successful because the Democrats are putting too many earmarks in the defense budget.

To address the first point - here's what Obama said:

It starts with reforming our broken system of government contracting. There is a fundamental public trust that we must uphold. The American people's money must be spent to advance their priorities, not to line the pockets of contractors or to maintain projects that don't work. Recently, that public trust has not always been kept.

Over the last eight years, government spending on contracts has doubled to over $500 billion. Far too often, the spending is plagued by massive cost overruns, outright fraud, and the absence of oversight and accountability.
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First, with the presidential memorandum that I'm signing, I am instructing my administration to dramatically reform the way we do business on contracts across the entire government. So, starting today, Peter Orszag, my budget director, will work with cabinet officials and agency heads to develop tough new guidelines on contracting by the end of September.

We will stop outsourcing services that should be performed by the government and open up the contracting process to small businesses.

We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people.

And we will strengthen oversight to maximize transparency and accountability. All together, these reforms can save the American people up to $40 billion each year.

Second, we must make investments to keep our country safe while cutting back on the waste and inefficiency that isn't.
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Now, I can assure you that this will be a priority for my administration. It's time to end the extra costs and long delays that are all too common in our defense contracting. We need to invest in technologies that are proven and cost-effective. We need more competition for contracts and more oversight as they're carried out.

If a system isn't ready to be developed, we shouldn't pour resources into it. And if a system is plagued by cost overruns, it should be reformed. No more excuses; no more delays. The days of giving defense contractors a blank check are over.

Now, let me concisely explain where the bullshit is and why it matters. President Obama's intent is all good and fine - identify areas of waste and inefficiency, identify where the government deliberately took short-cuts in procurement practices for whatever reason - laziness, timeliness, lack of trained personnel, whatever - and fix them. He's unfairly targeting defense contractors, and that's all well and fine, because the defense firms know that they're expected to take the whipping - and then we can get back to business as usual.

The reasons why defense contractors have gotten fat and comfortable over the past eight years has nothing to do with their gaming the system. Rather, defense firms have been profiting because of the shortcuts that government civilians have taken to get done what they needed to do. If defense requirements developers took the time to develop rational requirements that were achievable using today's technology, we would save billions. If government project managers took the time to exercise their oversight of defense programs and show any sort of leadership, we would save billions. You want to accuse defense firms of being the bad guys when all they did was nod their heads  and get the job done when the government said "I need this done now" ? Fine. Just don't trot out this horse manure about "dirty contractors." 

The same goes with this ridiculous discussion on earmarks. Andrew Exum would have us believe that the Evil Democrats are working against the president because the defense bill has earmarks (as does the larger stimulus bill and hell, about any budget that Congress develops). As much as I admire his commentaries on Middle East issues and COIN, he's not an acquisition or budget expert by any stretch of the imagination. Just a few quick points: 

• The Democrats are responsible for funding about 60 percent of the identified $900 million in earmarks. Coincidentally, the Democrats make up 60 percent of the Congress. Republicans, for all their protesting about "pork", are getting their "quota" of the earmark process.
• Not all earmarks are wasteful (see volcano monitoring). Not all discretionary funding for federal agencies is well-spent (see farm bill and agricultural subsidies).
• Most importantly, the earmarks account for about 1 percent of the overall budget. This ought not be the focus of the discussion if one is truly concerned about the size and effectiveness of the budget. As many times as this has to be pointed out to the "reformers" (see John McCain, presidential debates), how quickly we lose sight of this fact.

If - and I do stress if - the Obama administration is able to convince Congress and reform the defense acquisition process, the defense firms will not lose out. The overall budget isn't going down, and neither are the number of responsibilities that government has to perform in the execution of research, development and acquisition. The federal government needs contractors as badly as a crack addict needs his/her daily fix. Government wouldn't work without us - that really annoys some govvies, but it's the truth. We're not going away, despite all the hand-wringing and crocodile tears you see shed by defense firms.

The earmark process isn't going away either. It's a nonpartisan issue that has nothing to do with who's for or against defense projects. It's just business, and it's such a small part of business, it's not worth the time to argue about (other than to resolve the issue that it's not the Dem's or Repubs' fault). We ought to be focused on the more systemic problems that require reform of government practices, and more importantly, that require government leadership that has been far too absent over the past decade.

Comments

[Cheryl Rofer]

Rather, defense firms have been profiting because of the shortcuts that government civilians have taken to get done what they needed to do.

J., my experience in contracting (from both sides of the table) is that the problems frequently arise from collusion:
"We can get that done for you."
"Okay, let me set that up."

Or
"Man, we really need something like this."
"Sure, we can do that."

What follows is contortions on the government side to make the regs follow what the low-level "decider" wants to do and furnishing of paper by the potential contractor to justify it.

There's irresponsibility on the government side and dishonesty on the contractor side.

Like most bad situations, there's plenty of blame to go around.

[J.]

I take exception to the hit on contractors. We are told from the moment we get the contract, you always say "yes, we can do that" to the client. There is no exception to that unless it is illegal. It's poor business manners to turn down work, and it's certainly not "dishonest" to support the client in getting work done. Because if you say, "well, you need to compete that task or change the SOW" or "we need more time/resources and it will be more expensive", then the client will find someone else who will.

You want to tell me that there are government clients who don't fully understand federal acquisition regulations, fine, I will accept that. And there are contractors who keep their mouths shut when a purist might murmur some crap about "open competition." But at the end of the day, the reason we have bad situations is because we have poor government managers who refuse to make the right decisions. Just because we contractors are "tempting" them with apples in the Garden of Eden should not to be an excuse for them not doing their job.

All I am saying is, Obama's "reforms" are not going to hurt the defense industry or consulting business. We'll still be around. Pimps, drug dealers, and gun runners would not be in business if there wasn't a steady stream of customers.