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Project on Government Oversight

POGO’s Recommendations to the Senate to Improve National Security and Make the Pentagon More Accountable in the Defense Budget for FY 2012

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June 8, 2011

As the Senate Armed Services Committee (SASC) takes up the National Defense Authorization Act (NDAA), POGO makes the following recommendations to decrease waste, fraud and abuse; increase transparency and accountability, including contractor accountability; and improve our efficiency and effectiveness in national security. We hope to see these measures in the bill reported out by the Committee. Unfortunately, there is no way of knowing what legislation is being considered by SASC since these deliberations are closed to the American people. There is no justification for secrecy around the NDAA, particularly since defense is more than half of discretionary spending.

We urge SASC to make every committee and subcommittee meeting on the defense budget open.

Decreasing Waste, Fraud or Abuse

  • Military Whistleblower Protections: Section 531 of H.R. 1540 enhances the administrative and judicial review of cases where military personnel seek justice for retaliation for lawful and protected communications of wrongdoing. It provides for judicial review of correction board decisions, but only after the administrative remedies have been exhausted. POGO supports this expanded access to justice for military whistleblowers, but also recommends strengthening the policy to guarantee judicial review should the administrative process fail to reach a decision within 270 days. Otherwise, a whistleblower might be caught up in an interminable administrative process.
  • Strip $100 million from the Missile Defense Agency (MDA): The head of the MDA told members of the House Armed Services Committee MDA cannot spend the extra $100 million the committee gave it in the defense spending bill. This was Amendment #64 to HR 1540 offered by Rep. Loretta Sanchez (D-CA).
  • Eliminate funding for the V-22: The GAO has cited inherent design flaws in the V-22 as limiting the Pentagon's ability to improve its operation in high-threat operations, and the program has become too costly to continue to fund. This was Amendments #2 (formerly #19) offered by Reps. Lynn Woolsey (D-CA).
  • Oppose Higher Spending Thresholds for Iraq and Afghanistan: Proposals to raise the thresholds for simplified acquisitions and micro-purchases, as in Sec. 822 of H.R. 1540, are unnecessary. DoD has statutory exceptions to full and open competition that allows it to make speedy purchases in contingency operations in Iraq and Afghanistan. At the least, more transparency and oversight of all purchases made pursuant to the higher thresholds is needed. Regular reports to Congress would be one way to prevent waste, fraud, and abuse. POGO supports giving more support to troops through a greater ability to procure for this purpose, but we are concerned that new thresholds would leave contracts prone to abuse.
  • Repeal the National Drug Intelligence Center: The Senate should adopt Section 1099M of H.R. 1540 to repeal the establishment of the National Drug Intelligence Center, which duplicates work already being performed by the FBI and the Drug Enforcement Agency (DEA).    
  • Limit Expenditures on Musical Units: Section 599C of H.R. 1540 limits Pentagon expenditures on military musical units to $200 million in FY 2012. The Senate should follow suit.
  • Restrict Compensation for Contractor Executives: Section 803 of H.R. 1540 expands allowable executive compensation charged on DoD contracts to “any individual performing under the covered contract.” Current law applies the compensation restriction of $693,951 for the top five highest paid employees in management positions only. Expanding the cap to cover all contractor employees working on the contract will prevent taxpayers from footing outrageous contractor payrolls.
  • Reduce Cost-Plus Contracts: The Senate should similarly adopt Section 2801 of H.R. 1540 to prohibit cost-plus for military construction and military family housing projects. Under cost-plus contracts, contractors can bill the government for all their costs. It is no surprise that, under this extremely generous policy, corporations have little incentive to cut costs. Instead contractors face temptations to bill the government for costs they should cover themselves.

Transparency and Accountability in National Security

  • Balance National Security with Other Public Interests and the Public’s Right to Know: The Department of Defense’s (DoD) request for an exemption from the Freedom of Information Act (FOIA) to keep secret information related to “critical security infrastructure” is overly broad and should be more narrowly tailored. There are alarming examples where the DoD kept citizens in the dark about health hazards, such as groundwater contamination, by claiming it was a matter of national security. H.R. 1540 contains a provision in Section 1091 that would allow the DoD to claim an exemption to FOIA to protect critical infrastructure security information from terrorist threats that strikes the right balance between security and other public interests such as health and safety. The Senate should follow suit.

Another request by DoD to keep secret information regarding the performance of military aircraft from the Military Flight Operations Quality Assurance Systems also should be sufficiently narrowed. Information remains available to the public regarding how well the aircraft their taxpayer dollars buy are performing and if our uniformed military are safe using the equipment, while safeguarding truly sensitive data that would reveal flight patterns or tactical techniques or procedures. The exemption should be narrowed to only apply to information “that would reveal flight patterns or tactical techniques or tactical procedures.”

  • Increase Disclosure for DoD Consultants: Section 1114 of H.R. 1540 would disclose senior mentors’ names. A USA Today investigation found that of 158 retired military officers consulting for the Pentagon, 80 percent had financial ties to the defense industry. The Senate bill also should require disclosure of the names of these mentors and build taxpayer confidence that this program operates with integrity.
  • Make Public DCAA Reporting: Section 806 of H.R. 1540 makes DCAA report publicly available. Requires the Director of the Defense Contract Audit Agency (DCAA) to prepare an annual report describing significant problems, abuses, and deficiencies found during contractor audits, the number of audits completed and pending, the amount of time taken for each audit, and the total dollar value of questioned costs. DCAA does a great deal of valuable work, but its report findings are almost never made available to the public – the reporting of significant audit findings will enhance DCAA’s oversight function. More publicity of DCAA will also allow better oversight of DCAA, an organization that has been rocked by revelations in recent years about the quality of its work, massive subsequent changes in how it does its work, decline in its audit coverage, and a realignment of its role within DoD.

Reforming Defense Contracting for More Transparency and Accountability

  • Reject Attempts to Allow Contractors to Pay-to-Play in Secret: Section 847 of H.R. 1540 prohibits the federal government from requiring a contractor to disclose political spending on federal elections, preventing much-needed transparency and accountability already in place in several states. This provision would keep secret information in the public’s interest that could prevent contractors engaging in “pay-to-play” to curry favor with policymakers and secure federal funding. The Senate should not adopt this provision, and instead should pass legislation to require the disclosure of political spending by entities that receive federal funds.
  • Eliminate Immunity for Contractors: Section 846 of H.R. 1540 requires the Pentagon to notify congressional defense and budget committees when entering or modifying indemnification agreements with exceptions. This is a step towards more oversight—a better step if the exemptions to notification were removed. However, POGO recommends an outright ban on indemnifying contractors, since taxpayers shouldn’t be bailing out big contractors and since risky and hazardous work should not be performed by contractors in the first place.
  • Improve Inventories for Contract Services: Section 936 of H.R. 1540 changes requirements for inventory of contracts for services. This provision would improve the usefulness of current service contractor inventories in determining the actual use and cost of awarding service contracts. However, the Senate should adopt it, but also should include a requirement to report the occupational classification(s) of the person(s) performing the service, the actual number of contractor employees and subcontractor employees performing the service by occupational classification, the billing rate(s) for each occupational classification of persons performing the service, and the full compensation the federal government would have to pay a federal employee to perform the service.
  • Increase Oversight of Foreign Contactors: Section 823 of H.R. 1540 allows the Secretary of Defense to examine records of foreign contractors who are working in support of U.S. operations in Iraq and Afghanistan. Limits on access to foreign contractor records have been a key oversight weakness of contracting in these war zones, according to the Wartime Contracting Commission. The Senate should be clarify this to ensure that others within DoD with a need to know have access, including the DCAA, DoD OIG, and contracting officers and other procurement officials.
  • Improve DoD’s Ability to Do Contractor and Civilian Employee Cost Comparisons: The Senate should adopt language similar to Section 939 of H.R. 1540 to require DoD to be better informed about work that should be performed by Defense civilian employees. Additionally, it will ensure cost comparisons are conducted to better determine if cost savings will be realized if the work is performed by civilian employees.
  • Increase Weapons Acquisition Competition: Section 326 of H.R. 1540 would expand competition requirements for Weapon System Acquisition Reform Act to include subsystems and components, yielding a better value overall for taxpayers. The Senate should include a similar provision.
  • Extend the Availability of Funds for the Acquisition Workforce: The Senate should extend the availability of funds in the Defense Acquisition Workforce Development Fund to ensure that the acquisition workforce is receiving additional much-needed funding, as in Section 805 of H.R. 1540.
  • Extend Task and Delivery Protect Authority: Section 813 of H.R. 1540 extends the task and delivery bid protest authority which will help ensure that taxpayer dollars are not subject to faulty procurement processes.
  • Prohibit Contracting with “Adverse Entities”: The Senate should prohibit certain contracting with “adverse entities” in contingency operations in Iraq and Afghanistan as in Section 821 of H.R. 1540.

Improving National Security Efficiency and Effectiveness

  • Oppose Multiyear Procurement of the DDG-51: Multiyear procurement (MYP) of a weapon system should only be pursued when there is a stable design and minimal technical risks. The DDG-51 does not meet this test. Uncertainties regarding the changes in the ship's radar, power-generation, and cooling system warrant delaying MYP until design is sufficiently stabilized.
  • Improve Cost Benefit Analysis for the Littoral Combat Ship Program: Section 125 of H.R. 1540 requires the Secretary of the Navy to perform a life-cycle cost benefit analysis comparing alternate maintenance and sustainability plans for the Littoral Combat Ship program. POGO supports this provision, but urges the Senate to require an Office of Cost Assessment and Program Evaluation (CAPE) assessment as well. The Senate also should ensure that that this evaluation looks at costs of two different LCS lines explicitly. Congress last year approved the Navy’s controversial decision to pursue a dual sourcing strategy for the LCS program, based on two radically different designs, which some critics, including POGO, fear could end up costing more in the long run as a result.
  • Preserve Improvements to F-35: Section 215 of H.R. 1540 bars expenditure of funds to improve the performance of the F-35 propulsion system. Proponents of a second engine for the F-35, of which funding has been stripped, want to hold back any improvements to the F-35’s main engine. This is a deliberate attempt to sabotage a year’s worth of improvements that would make a weapon system more effective. Whether one supports or opposes the second engine, the Senate must not allow improvements to an engine that definitely will be in F-35s to be blocked.
  • Improve Reporting on F-22 and F-35 Corrosion: Section 327 of H.R 1540 requires reporting on the DoD’s corrective actions for the F-22, F-35 corrosion, and other weapons programs in response to GAO recommendations. Corrosion has been a serious problem with the F-22 and lessons learned from that program need to be implemented to stave off this issue in the F-35 and other program. Corrosion increases life cycle costs for weapons programs and decreases the availability of weapons as they require more depot maintenance time.
  • Improve Reporting on Weapons Programs: Section 1074 of H.R. 1540 modifies DoD reporting to Congress on its annual aircraft procurement plan. One of the changes would require the DoD to designate whether the aircraft program cost estimates comes from the military service or the independent CAPE, and if there is a difference of greater than .5% a requirement to annotate and explain the difference, also includes certainty levels with cost estimates for each program. This is important because it would improve assessments of the service cost estimators – the CAPE was created because it is believed that the service cost estimators are not as accurate as an independent office. More accurate cost estimates give decision makers within Congress, DoD, and the Office of Management and Budget (OMB) better information to make budget and management decisions regarding weapons programs.
  • Improve Coordination Between DoD, State, and USAID: Section 1093 of H.R. 1540 requires the creation of an advisory panel that would seek to improve coordination between DoD, the State Department, and the U.S. Agency for International Development (USAID). Interagency coordination is key to effective U.S. work in conflict zones and coordination problems are often at the root of faltering U.S. efforts in Iraq and Afghanistan.
  • Improve Reporting on Cost Efficiency Opportunities in the Nuclear Weapons Complex: Section 3123 of H.R. 1540 requires a report on cost efficiency opportunities in the nuclear weapons complex from the Sec. of Energy, and with a GAO assessment of DOE's findings. Like DoD, the nuclear weapons complex is riddled with waste, fraud, and abuse. This report would help cost cutters in the executive branch and in Congress find ways to save taxpayer dollars.
  • Oppose Attempts to Hold Hostage the Reduction of Our Nuclear Stockpile: Section 1055 of H.R. 1540 prohibits the reduction of the nuclear weapons stockpile until two nuclear facilities currently under construction are operational. It is irresponsible to hold hostage the reduction of our unneeded stockpile of nuclear weapons which pose enormous security risks and excessive storage costs to taxpayers when these could be reprocessed for fuel. Moreover, these new facilities are not expected to be completed until 2024. Also, the justification for these buildings is questionable, and yet current cost estimates for the Uranium Processing Facility at Y-12 and the Chemistry and Metallurgy Research Replacement facility at Los Alamos are approximately $6 billion per year each. The Senate should reject such proposals, and instead should require more reporting on the these projects.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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