Mr. Chairman and Members of the Committee, thank you for this opportunity to comment on the restructuring of the nation's missile defense program.
The Project On Government Oversight (POGO) investigates, exposes, and seeks to remedy systemic abuses of power, mismanagement, and subservience by the federal government to powerful special interests. Founded in 1981, POGO is a politically-independent, nonprofit watchdog that strives to promote a government that is accountable to the citizenry.
While we take no position, pro or con, on missile defense, we nonetheless have serious concerns that recent missile defense program changes at the direction of Defense Secretary Donald Rumsfeld are not in the best interest of our nation's security or the U.S. taxpayer. Today, we are releasing our report, Big Dreams Still Need Oversight: Missile Defense Testing and Financial Accountability Are Being Circumvented. It illustrates why and how reductions in financial and testing oversight of the Missile Defense Agency could signal a step backward to the often misguided acquisition practices of the 1970s and early 1980s.
As we rush to deploy the missile defense program we would be wise to consider the lack of financial accountability plaguing a growing number of corporations. Though the Pentagon has increasingly been encouraged to conduct business more like the private sector, in this case, we must learn from these mistakes so taxpayers are not victimized as many shareholders have been.
We are concerned that Secretary Rumsfeld's directive opens the door for a broader use of special contractual agreements called "other transactions." These types of contracts waive many of the financial oversight requirements of typical contracts for goods or services with the aim of attracting so-called "nontraditional" defense contractors. "Other transactions" allow contractors to avoid taxpayer protections and transparency requirements in the Federal Acquisition Regulation and Cost Accounting Standards. These important protections give the federal government the information it needs to ensure fair and reasonable contract prices. An "other transactions" contract, on the other hand, can even exempt a defense contractor from undergoing government audits or providing the federal contracting agency and government auditors with access to the contractor's pertinent records.
Unfortunately, two "other transactions" have already been awarded by the Missile Defense Agency since the Rumsfeld memo was penned. Both went to traditional, large contractors when Boeing and Lockheed Martin Mission Systems were awarded sole-source "other transaction" agreements. Obviously, these are not the intended target of these agreements.
The Director of the Missile Defense Agency should be required to follow the intent of the law permitting "other transactions." The Director should only be permitted to negotiate such agreements with nontraditional defense contractors that would otherwise not offer their expertise.
Prior to the establishment in 1984 of an independent Pentagon testing office - the Director of Operational Test and Evaluation - far too many overpriced and under-tested weapons systems were being placed in the hands of our fighting men and women. We are here today to remind you of some of those notorious past weapons failures in the hope that history won't repeat itself. We're concerned that a new "buy now, fix later" acquisition chapter could be in the making. Not only does the Rumsfeld directive potentially weaken the mission of DOT&E, it also will allow Missile Defense Agency officials to essentially waive financial contracting requirements that could allow millions of dollars in missile defense spending to disappear into the Pentagon's financial management black hole.
Frankly, one of our purposes for being here today is to bring back a few unpleasant memories. No doubt, acquisition officials at the Pentagon would love for Congress and the public to forget notorious weapons like the Sgt. York Air Defense Gun, a mobile, armored anti-aircraft system that was approved for production in 1980 before it was battle-tested. Nearly five years later, after more than a billion dollars of public investment, the Sgt. York gun became such an embarrassment that it had to be cancelled.
We also hope you don't forget the story of the Bradley Fighting Vehicle, an armored troop carrier and scout that was approved for full-rate production in 1979 even though the Pentagon knew at the time that the vehicle's armor couldn't protect its occupants from hostile fire. Upgrades and design fixes to the Bradley have since been very costly.
We'd also like to jog your memory about the fast-track procurement of the B-1B Bomber, a costly aircraft rushed into production during the late 1980s despite catastrophic engine blade failures, munitions limitations, and electronic warfare deficiencies; and the C-5 cargo aircraft, a financial boondoggle once dubbed the "notorious granddaddy of Pentagon overruns."
In all of these examples, production decisions were made before DOT&E was created, foreshadowing the potential trouble of returning to a system before independent testing. The bottom line of all this is that testing should not be sacrificed in the interest of expediency, nor should financial contracting transparency be abandoned merely to decrease paperwork. The lessons of history tell us that when this happens the nation's fighting men and women, as well as the taxpayers, become the losers.
POGO is a solid supporter of rigorous independent operational testing. We are well aware of DOT&E's numerous accomplishments over the past 17 years. We want the Director to continue to provide much needed objective analysis. We are concerned that a new era of secrecy at the Missile Defense Agency will cut him out of the loop on some important aspects of early testing.
Right now Mr. Christie says he has a amicable relationship with the agency, and that he's confident it will continue. But what happens if that relationship sours? What happens if he gives the program a bad report card, or presses too hard for data that the agency doesn't want to relinquish? History has shown us that such relationships can quickly go south when the facts don't fit the Pentagon's story.
The Director, Operational Test and Evaluation should not be required to negotiate the nature of information it is provided by missile defense program managers. The office should have unfettered access, and be an active participant in early testing of missile defense systems.
In addition, Congress mandated that the Pentagon successfully complete DOT&E's operational testing before deploying a national missile defense system. I cannot stress the importance of holding them to this requirement.
Thank you for inviting me to testify before the Subcommittee. I am happy to answer any questions.