POGO Letter to Defense Secretary Donald Rumsfeld on briefing attended by POGO Executive Director Danielle Brian

Honorable Donald H. Rumsfeld Secretary of Defense

1000 Defense, The Pentagon

Washington D.C. 20301-1000

Dear Secretary Rumsfeld:

Thank you for inviting me to your October 18, 2002 defense briefing and also including me in the December 23, 2002 teleconference briefing with Stephen Cambone. I wanted to send you a follow-up letter with my suggestions to assist you in reaching your goals for reforming the military system. I have asked our founder and current board treasurer, Dina Rasor, to co-write this letter with me because of her past knowledge of and unique insight into the many attempts to reform the military. She is now working with the National Whistleblower Center on a military reform project concerning accountability in military spending.

These recent briefings revealed that we share a number of similar objectives and have left us optimistic that several critical decisions on the future of several weapons systems will be made during 2003: The F-22 this year and every future year, the V-22 Osprey this spring, the Future Combat System in March, and the Stryker armored vehicle in July. We applaud you for your recent successful campaign to eliminate the Crusader armored vehicle and reduce the size of the B-1 Bomber fleet - two weapons systems protected by many powerful interests on Capitol Hill.

When you proposed cancelling the Crusader program, you told us in the October briefing that the reaction in Congress was as if you "shot a little old lady in the grocery store." You also said the Crusader fight underscored the notion that a Secretary of Defense needs to "pick his battles" when it comes to eliminating weapons systems currently under development. We hope one will include the F/A-22, which you suggested was a battle you may be willing to fight.

We also are pleased you are closely watching the development of the V-22 Osprey, a weapon we feel is not only unsafe, but overpriced and unneeded. Mr. Cambone told us that the V-22 Osprey program is currently undergoing critical air worthiness testing. Even if this testing is successful, he said the V-22 will be evaluated sometime in the spring of 2003 to ensure it fits President Bush's and your plans to transform the military. Mr. Cambone said that even if the V-22 passes testing, you will still give serious consideration to slicing the number of V-22s purchased by the Marines, or even cancelling the program outright.

Likewise, the Comanche helicopter program already has been reduced in scope, and Mr. Cambone told us there are plans to limit production of the Stryker armored vehicle. We think both the Comanche and Stryker are worthy of inclusion on your list of weapons systems that should be eliminated, and are worth the fight with Congress. We are convinced, however, that these weapons systems will not be stopped unless you undertake an aggressive campaign to cancel them.

You also told us you believe the accounting system was so disastrous you had no way of knowing exactly how the Pentagon spends its money. We are concerned though that you are now relying on advice from the largely discredited accounting profession, most of whose companies have contracts with defense contractors, to straighten out the mess.

We also fear that as you scrutinize these and other weapons systems, the normal Pentagon chain of command can make it difficult for you to be provided with the grass-roots information needed to fully defend the hard choices. As you know, there are large constituencies that both protect individual weapons systems and work against significant accounting reform. Both Dina and I have been working with Pentagon sources who have unique perspectives on the problems and inner workings of the bureaucracy. We also have sources who possess a tremendous historical knowledge on why attempted weapons acquisition and accounting reforms have failed in the past. We believe that several of these individuals may be willing to meet with you and give you a candid and refreshing perspective on how to out maneuver self-interested parties.

Please see the attached sheet outlining our thoughts and suggestions on some of the important issues that you mentioned during the briefing, as well as a brief discussion of some of our other concerns. We applaud your stated goals to cancel unneeded, ineffective and overpriced weapons systems, strengthen civilian control over the finances of the Pentagon and put accountability back into the financial system. Our intent is to help ensure those goals are realized.

Thank you.

Sincerely,

Danielle Brian

Project On Government Oversight, Executive Director

Dina Rasor

Military Reform Project

National Whistleblower Center

510/235-5021

POGO Responses to Defense Secretary's Concerns

• Weapons acquisition decisions should not be determined by self-interested parties from the defense contractor community. For example, Secretary of the Air Force James Roche and Secretary of the Navy Gordon England both came directly from the defense industry. The DOD "brain trusts," such as the Defense Science Board, are stacked with current or former industry people who benefit from the status quo. We have sources who are able, as Colonel John Boyd was in the 1970s, to guide you to real transformational weapons and strategies. We believe that until you talk to people who have no stake in the defense contractor community, DOD will continue to buy technologically fashionable weapons or those suited for the last war, regardless of the nature of future conflicts.

• Stop the military takeover of financial management of the DOD and the services. We have seen a disturbing trend of appointing retired and even current military officers in top financial positions in the services. The loyalty to the military service should be about fighting a war and picking out the most effective weapons, not on managing the finances. The late Colonel John Boyd fought this trend during his career because he wanted the warriors to think about war, not finances. During Ms. Rasor's preliminary review for her Military Reform Project of the staffing of the Pentagon's financial management, she discovered several disturbing items that support this alarming trend:
• Both the Assistant Secretary of the Air Force for Financial Management and Comptroller, Michael Montelongo and his assistant, Principal Deputy Assistant Secretary of the Air Force, Financial Management, Bruce Lemkin are retired officers employed in very important civilian oversight slots. Mr. Montelongo retired from the Army in 1996 as a Lt. Colonel and Mr. Lemkin retired from the Navy in 1999 as a Commander. They are now acting as the main civilian financial oversight in the Air Force.
• The military assistant to the head of financial management in the Army, Colonel William Landrum, Commander, US Army Finance Command, is also placed in his civilian boss's slot, as the acting Deputy Assistant Secretary of the Army for Financial Operations. In other words, the civilian slot, which is the top oversight position in the Army financial management, is filled by the military assistant. There is no current civilian oversight for that whole financial division.
• Inventories are in such shambles that they have seriously impacted effectiveness of combat troops. We would suggest bringing in private sector people who have no ties to the military/Congress/contractor system to help build a new inventory system for DOD. For example, see how Walmart or Target handle their enormous inventories, subcontractors and millions of financial transactions in the United States and in many other countries. Walmart has over $200 billion in sales a year (over one half the size of the DOD budget) and many more individual transactions. Its stockholders would never tolerate not being able to account for one out of every four dollars the DOD says it cannot find in its last few audits. Walmart is also able to tell through its inventory system where each type of consumer good is and at what store. Compare that to the military services who could not tell where many of the missiles were during the Kosovo air war and still cannot locate over 250,000 defective biological warfare protective suits.
• DoD accounting systems remain in disarray. As you stated in your briefing, we are also concerned about the lack of accounting standards within the DOD, and we're doubtful that members of the largely discredited accounting profession will produce the solutions needed to rectify the widespread loss of internal controls within the DOD acquisition process. In 1999, POGO issued a report that outlined the decline of these controls during the past administration. We have included the report for your review. In addition, Ms. Rasor is currently working on a project detailing DoD's accounting problems, and we have sources inside the system who have tried to fix the financial mess, but have been frustrated in their attempts.

Moreover, it is imperative that the Defense Contract Audit Agency (DCAA) be exempt from the Circular A-76 outsourcing. Functions performed by DCAA are obviously inherently governmental and consequently, should not be subject to outsourcing. DCAA's annual denial of nearly $3 billion of costs proposed and claimed by contractors results in additional funds directed toward the war fighter rather than in defense contractor pockets.

In the past year, the public has learned that many large public accounting firms generally find in favor of the company, rather than the investor, when dealing with "gray" area type accounting issues. Enron is just one example of such unscrupulous accounting practices by a large accounting firm. The conclusion of a recent review by IDA for the Department - if a public accounting firm is called upon to do what DCAA auditors do, it seems unlikely that major savings will accrue - is more proof that DCAA should not be subject to outsourcing.

• Civilian control of the Pentagon is eroding. You have told us you are forced to appoint military personnel to perform civilian tasks because the civilian workforce can't be fired or moved around. Is it possible you have been misinformed? The Senior Executive Service has made it especially easy for demotion and reassignment for both career and appointed people. We have further information on that if you are interested. Indeed, President Bush has been claiming that he wants the same rights to reorganize the Department of Homeland Security civilians in the same special way as he can with other civilians in national defense positions, such as in the DOD. We are concerned that placing the military in historically civilian positions will loosen the Secretary's grip on civilian control, especially in the area of financial management. You need the checks and balances of true civilian oversight of the finances to fix the system. Retired military still get their military pensions, still go to the officers' club to socialize and still have life long loyalty to the military services.

In short, we believe that there are people in the DOD and the services who want reform and want to make the system work. We are in regular contact with people who would be informal advisors who could tell you how the Congressional/military/contractor entrenchment is thwarting your stated goals of reform and how to realistically reform the system. Some of these people are willing to talk to you directly to show you why all attempts at reform are being thwarted within the bureaucracies. Please contact us if you are interested in talking to these people.