Lydia Dennett, one of our ace investigators here at the Straus Military Reform Project, recently noted the Department of Energy’s skyrocketing costs to maintain the nation’s nuclear arsenal (the Department of Energy builds them for the Pentagon). The multi-billion-dollar overruns in the five programs she surveyed ranged from 51 percent to 753 percent. She wondered why the Energy Department’s National Nuclear Security Administration doesn’t have to comply with the same accounting rules as the Pentagon.
You know you’re in trouble when Pentagon procurement is held up as a model.
But let’s not get carried away: the Defense Department requirement, as Dennett conceded, is crude, reactive and wasn’t even the Pentagon’s idea. It was imposed by Congress 36 years ago. But she has a point. The law has pushed the Pentagon to fess up whenever the cost of one of its major procurement programs mushrooms by more than 30 percent over its original estimate.
It’s amazing what can happen if Congress gets ticked off. That’s what happened during the Reagan administration’s defense buildup as costs of the Pentagon’s UH-60 Black Hawk helicopter and Patriot missile programs skyrocketed (and don’t forget the era’s $435 hammer, $640 toilet seat and $7,600 coffee makers, which angered taxpayers far more because they rarely bought helicopters or missile-defense systems).
Senator Sam Nunn (D-GA) and Representative Dave McCurdy (D-OK) championed the legislation that bears their names. In a nutshell, it requires the Pentagon to submit a public report to Congress if a weapon system’s cost has grown by at least 30 percent over its original estimate (a “significant breach”) or 50 percent or more (a “critical breach”). Either triggers reviews and changes needed to get the program’s cost under control—including what would replace it if it were killed. The law’s logic was that bad publicity “would force senior Pentagon officials to address the question of whether the program in question—at their newly reported, higher costs—were worth continuing,” McCurdy said.
Programs busting the caps in recent years have included the Navy’s DDG-1000 destroyer (scrapped after three of 32 were bought, for a stunning $23.5 billion), the Marines’ VH-71 presidential helicopter (which crashed after spending $4 billion without getting even one of the 28 choppers as the total cost exploded to $13 billion), and the tri-service F-35 fighter (full-speed ahead for all 2,457 planes for a cool $400 billion. In fact, the F-35 has busted its Nunn-McCurdy ceiling twice).
Under the law, Congress requires the Pentagon to assume that any program more than 50 percent over its original estimate will be terminated. But, in actuality, that’s not as draconian as it sounds. “Though this presumption [of termination] is in place, critical breaches do not normally result in program cancellation,” the Army noted last year. All the defense secretary has to do is (1) pledge the weapon is essential (and you thought every weapon the Pentagon buys is vital), (2) revise cost projections (upward, of course), (3) assert that the program is more important than those that will be cut to fund the added costs, and (4) promise not to do it again (at least on this program).
The Army itself conceded its 2010 breach for its chemical-weapons demilitarization effort was caused by an original estimate that “did not adequately recognize program uncertainty or complexity.” But it’s a rare Pentagon program that fastidiously prices for uncertainty and complexity. Generals and admirals know that launching a program is easier with rosy cost-and-schedule projections.
There’s a lot of talk in the debate over the merits of Nunn-McCurdy about the “root causes” of cost overruns. They boil down to this: too often the Pentagon asks for too much too fast, and contractors respond with low-ball bids and crossed fingers. While Nunn-McCurdy gives Congress information about weapon costs going off the rails—the Congressional Research Service found cost growth has slowed since it has been on the books—it is hard to know just how much of the decline it due to the law.
A key downside is that the law is reactionary, highlighting problems only after they have happened. It’s like “closing the gate after the horse has galloped off into the boondocks,” Senator John Tower, the late Texas Republican who chaired the armed services committee in the early 1980s, complained back then.
Fair enough. But unless we want lawmakers sitting in on Pentagon meetings deciding what level of risk is acceptable, this loud-but-late alarm is better than nothing. And there remains a lot that Congress can insist the Pentagon do: make sure its budget estimates track with independent assessments, avoid buying weapons while their blueprints are undergoing wholesale revisions, ensuring that it “flies before it buys,” and getting congressional approval before the Pentagon relaxes requirements for arms in the pipeline.
In the lessons-learned department, a pair of reports examining why weapons’ costs break through Nunn-McCurdy limits is instructive because their conclusions are so similar. After three decades of operating under the law, the Government Accountability Office concluded in 2011 that breaches were caused by “cost increases resulting from engineering and design issues [that] may indicate that those programs started without adequate knowledge about their requirements and the resources needed to fulfill them.” They went on to note “many programs also cited revised cost estimates as a factor behind breaches, suggesting estimates were based on inaccurate assumptions.”
The Rand Corporation has issued eight volumes exploring why breaches happen. It concluded: “Underestimation of baseline costs; increases in component costs; insufficient Research, Development, Test, and Evaluation; inflation; and increased, inadequate, or unstable program funding.”
In other words, in the world of Pentagon procurement, with its backwards incentives (“Of course we can do that”) and perverse logic (“U.S. troops will die if we don’t buy this”), everything that can go wrong usually does.
These snafus happen inside the Pentagon, not on Capitol Hill. And it’s a significant and critical (sorry) point: the Defense Department didn’t come up with this mechanism to try to restrain costs. It came from angry lawmakers across the Potomac. A generation ago, there was a slew of such congressionally-mandated changes that fitfully improved Pentagon operations.
Nunn-McCurdy dealt with cost overruns. The 1986 bill sponsored by the late Sen. Barry Goldwater (R-AZ) and the late Rep. Bill Nichols (D-AL) streamlined the chain of command, and gave more authority to the chairman of the Joint Chiefs of Staff in an effort to thwart the lowest-common-denominator log-rolling that had long plagued the Joint Chiefs. Before Goldwater-Nichols, the Joint Chiefs—mostly made up of the chiefs of the services—operated largely by consensus. That led to compromises aimed more at satisfying the services than winning on the battlefield. Nunn and Senator Bill Cohen (R-ME) forced a recalcitrant Pentagon to create the U.S. Special Operations Command in 1987. Nunn (notice a pattern here?) and Senator Richard Lugar (R-IN) spearheaded the Cooperative Threat Reduction Program in 1991, which helped secure the collapsing Soviet Union’s nuclear, chemical and biological weapons.
When I came to Washington during the Carter administration, 70 percent of the 535 members of Congress were military veterans. Tower, the bantam-sized Texas senator (whose purported drinking problem led his former Senate colleagues to reject him as President George H.W. Bush’s defense secretary) saw combat in the Pacific during World War II. He had been a lowly sailor aboard a small, flat-bottomed gunboat known as a “seagoing bedpan.” His enlisted time gave him, and fellow veterans, the authority to challenge admirals.
Today, fewer than one in five lawmakers has ever worn the nation’s uniform. Many, unfamiliar with the facts and foibles of the military, simply salute when it comes to national defense. There’s less skepticism of the Pentagon on Capitol Hill, and a largely hands-off approach when it comes to combat. It’s the key reason we have been at war for 17 years without victory or accountability.
Congress hasn’t declared war in 75 years, nor passed substantial Pentagon reforms in the past 25. In the military, that’s called AWOL.