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12/22/2011

The Military-Industrial-Congressional Complex

Over the years, I’ve often referred to President Dwight D. Eisenhower’s Farewell Address as being one of the least appreciated, great speeches in American history. The other day, December 15, 2011, Senator John McCain (R-Az.) took to the floor to talk about the current state of what has become the military-industrial-congressional complex.

Sen. John McCain

Mr. President: Fifty years ago, on January 17, 1961, Dwight D. Eisenhower bid farewell to the Nation as the President of the United States. At the heart of his farewell address was a warning – one keenly insightful in its sense of how, in a way new to the American experience, an immense military establishment and a large arms industry had developed in the 20th Century post-war period. While acknowledging the need for a strong national defense, President Eisenhower called for the American People to understand the grave implications of this new aggregation of political and industrial power. In particular, he warned, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

The fiftieth anniversary of President Eisenhower’s address presents us with a valuable opportunity today to carefully consider, have we heeded President Eisenhower’s admonition? Regrettably and categorically, the answer is, no. In fact, the military-industrial complex has become much worse than President Eisenhower originally envisioned: it’s evolved to capture Congress. So, the phenomenon should now rightly be called, the ‘military-industrial-congressional’ complex.

On July 16, 2009, in a speech to Economic Club of Chicago, then-Secretary Gates described the military-industrial-congressional complex this way: “First, there is the Congress, which is understandably concerned…about protecting jobs in certain states and congressional districts. There is the defense and aerospace industry, which has an obvious financial stake in the survival and growth of these programs. And there is the institutional military itself – within the Pentagon, and as expressed through an influential network of retired generals and admirals…”

One aspect of the military-industrial-congressional complex I have focused on considerably over the last few years is its role in congressional earmarks – congressional pet projects, unwanted by the Administration but amounting to billions of dollars annually that frequently take on a life of their own in a way that continues to waste taxpayer resources for years and sometimes decades. In the military-industrial-congressional complex earmarks are the currency of corruption.

Another manifestation of the military-industrial-congressional complex I have called attention to is the ‘revolving door’ that exists between the Pentagon and the defense industry. In 1969, then-Senator William Proxmire said this about the revolving door in the context of defense procurement: “The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse…How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at over 2,000 fellow officers doing well on the outside after retirement?”

Probably the most recently publicized example of the revolving door between the Department of Defense and private industry and the prevalence of the military-industrial-congressional complex in the Department’s planning and procurement processes, is its ‘mentorship’ program. In its most recent story in a series exposing this program, USA TODAY reported that the Air Force allowed a retired general officer who was then-serving as an executive in The Boeing Company to participate as a ‘mentor’ in a war game involving the aerial refueling tanker that Boeing was at the same time competing to build for the Air Force under a multibillion dollar procurement program. Over the last two years, I have exercised keen oversight of the mentorship program, which I understand has been essentially shut down under the weight of newly promulgated public disclosure requirements – in other words, former general and flag officers serving as Department ‘mentors’ preferred to exit the program rather than publicly disclose their corporate affiliations and compensation. 

The aspect of the military-industrial-congressional complex I would like to focus on today relates to how the Pentagon buys its very largest weapons systems. That covers the top 100 or so of the Defense Department’s weapons procurement programs – into which taxpayers have invested to date about $1.7 trillion (that’s ‘T’ for trillion). In particular, I would like to focus on how the military-industrial-congressional complex has kept even some of the most poorly-performing programs funded – siphoning-off precious resources even while they go over-budget, face years of schedule delays and fail to deliver promised capability to the warfighter.

To be clear, the military-industrial-congressional complex does not cause programs to fail. But, it does help create poorly-conceived programs – programs that are so fundamentally unsound that they are doomed to be poorly executed. And, it does help keep them alive – long after they should have been ended or restructured.

By ‘poorly conceived,’ I mean major programs that are allowed to begin despite having insufficiently defined requirements; unrealistic cost or schedule estimates; immature technology or too much manufacturing and integration risk; or unrealistic performance expectations. By ‘poorly executed,’ I am referring to programs that poorly perform because of, among other things, unanticipated design, engineering, manufacturing or technology problems. These sorts of programs should either never have been started to begin with or should have been significantly restructured or terminated at the end of the day. And yet, through the influence of the military-industrial-congressional complex, they are allowed to enter the defense procurement process and to persist – often under guise of a ‘concurrent development’ acquisition strategy and executed under ‘cost-plus’ contracts.

Specifically, the military-industrial-congressional complex helps ensure that poorly-conceived programs get on rails – and stay there – with ‘production money’ when they are supposed to still be in development. And, for Industry and many of their sponsors in the Pentagon and on the Hill, that’s desirable because it is far more difficult to restructure or terminate a production program – even one that’s performing poorly – than one that’s in development. In the military-industrial-congressional complex, if excessive concurrency is a drug, then the cost-plus contracts used to facilitate it are its delivery vehicles.

Over the last decade or so, what I have described here has resulted in a massive windfall for Industry. But for the taxpayer and the warfighter, it has been an absolute recipe for disaster.

With the federal budget deficit having hit $1.3 trillion for the 2011 budget year and facing the fact that the defense budget will likely not grow to any significant extent in the near-term, we in Congress must be mindful of how the military-industrial-congressional complex can negatively affect decisions to buy and keep major weapon systems.

So how does the military-industrial-congressional complex help create problem programs and keep them going long after they should be cancelled or restructured? A review of some of the problems with the original Air Force tanker lease deal is instructive. From that first attempt by the Air Force to replace its aging airborne tanker aircraft, which started nearly a decade ago, we now know that very early in the planning of a major defense acquisition program, senior officials from Industry and the relevant Service(s) work with senior Members of Congress to ensure that the economic – and therefore political – benefits of the program will be distributed widely among key congressional states or districts. That ensures long-term political buy-in and support.

How much could the military-industrial-congressional complex’s negative influence ultimately cost taxpayers? Once again, consider the original tanker lease deal as just one example.

That deal would have had new aerial refueling aircraft developed under a cost-plus contract, which exposes the taxpayer to, and protects the contractor from, the negative impacts of cost overruns and schedule delays. Once developed, those new tanker aircraft were supposed to be leased – not bought outright – from a sole-source contractor, as provided under a multi-billion dollar earmark stuck in a defense appropriations bill without having been vetted by the Administration or reviewed by the relevant congressional oversight committees. That unusual acquisition strategy was based on a case that the Air Force presented at that time, which the deal’s congressional sponsors roundly endorsed, that the legacy fleet of tankers needed to be replaced ‘urgently.’ Needless to say, that case was proven false. There can be no doubt that the original tanker lease deal was a classic creation of the military-industrial-congressional complex.

When we compare the likely costs of the sole-source tanker lease with the costs of the recently concluded tanker competition – which calls for ‘fixed-price’ development and a purchase under full-and-open competition, the difference is dramatic. According to recent analysis by the Department of Defense, the original tanker lease deal would have, over the lifecycle of the aircraft, cost taxpayers billions of dollars more – for a less capable airplane.

Those billions that could have been lost under the original tanker lease deal are effectively the cost associated with the military-industrial-congressional complex when it is allowed to run unchecked and unchallenged. And, they are, particularly in the current fiscal environment, utterly unsustainable.

The lesson of the original tanker lease deal is that the powerful combination of interests that comprise the military-industrial-congressional complex can be strong enough to both give birth to procurement programs that should never have been started in the first place and nurture programs that should have been killed or fundamentally restructured early on – to the grave detriment of the taxpayer and our servicemen and –women.

While, over the last couple of years, former Secretary Gates ended some of the most poorly performing major programs in the defense enterprise, the situation remains serious. The new National Military Strategy calls the growing national debt a ‘significant security risk.’ And, as the Government Accountability Office (GAO) noted in its March 2011 report, since 2008 the total acquisition cost of the Pentagon’s major defense acquisition programs in its current portfolio has increased by $135 billion – about half of which is attributed to pure cost growth and the other half due to cuts in the intended number of weapons we planned to buy. It shouldn’t come as any surprise that, as a result, about half of the Pentagon’s very largest weapons procurement programs exceed cost-performance goals agreed to by the Pentagon, the Office of Management and Budget and GAO. In fact, GAO’s March report found that about one-third of all major weapons programs since 1997 have had cost overruns of as much as 50 percent over their original projections. And, noting that ‘the costs of developing and buying weapons have historically been, on average, 20 percent to 30 percent higher’ than Pentagon estimates, the Congressional Budget Office (CBO) recently projected that, in addition to health care, higher costs for weapons systems will increase the Pentagon budget by about $40 billion over the next five years.

Congress and current leadership at the Department of Defense have tried to attack these problems, but they have not been successful in changing the prevailing culture yet….

In conclusion, providing for the common defense is the first, highest, and most explicit duty of the federal government from which all other political rights, economic well-being, and freedoms flow. But, in times of austerity such as we now face, the Defense Department cannot waste resources. The Pentagon must do the hard work and make the hard choices to prioritize better and manage limited resources better, and reinvest any savings in providing more return and benefit to the warfighter and the taxpayer. Defense spending will be part of the budget debate going forward, simply as a result of its size within the overall federal budget. We cannot allow the military-industrial-congressional complex to obscure that fact any longer and, even worse, disrupt our ability to make hard choices.

There can be no doubt that we have clearly failed to abide the warning President Eisenhower issued in his speech fifty years ago. But, I do find some comfort that times of fiscal restraint and austerity can drive desired change – even in the face of daunting systemic obstacles like the military-industrial-congressional complex.

What we must do is embrace the opportunity to alter our myopic course, starting now, recognizing – as President Eisenhower did – that “[we cannot] mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.”

Given the stakes involved, it is not too late to start. The times, in fact, demand it.

[Source : mccain.senate.gov]

Hot Spots will return in two weeks with more on this topic.

Merry Christmas and Happy New Year.

Brian Trumbore


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-12/22/2011-      
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Hot Spots

12/22/2011

The Military-Industrial-Congressional Complex

Over the years, I’ve often referred to President Dwight D. Eisenhower’s Farewell Address as being one of the least appreciated, great speeches in American history. The other day, December 15, 2011, Senator John McCain (R-Az.) took to the floor to talk about the current state of what has become the military-industrial-congressional complex.

Sen. John McCain

Mr. President: Fifty years ago, on January 17, 1961, Dwight D. Eisenhower bid farewell to the Nation as the President of the United States. At the heart of his farewell address was a warning – one keenly insightful in its sense of how, in a way new to the American experience, an immense military establishment and a large arms industry had developed in the 20th Century post-war period. While acknowledging the need for a strong national defense, President Eisenhower called for the American People to understand the grave implications of this new aggregation of political and industrial power. In particular, he warned, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

The fiftieth anniversary of President Eisenhower’s address presents us with a valuable opportunity today to carefully consider, have we heeded President Eisenhower’s admonition? Regrettably and categorically, the answer is, no. In fact, the military-industrial complex has become much worse than President Eisenhower originally envisioned: it’s evolved to capture Congress. So, the phenomenon should now rightly be called, the ‘military-industrial-congressional’ complex.

On July 16, 2009, in a speech to Economic Club of Chicago, then-Secretary Gates described the military-industrial-congressional complex this way: “First, there is the Congress, which is understandably concerned…about protecting jobs in certain states and congressional districts. There is the defense and aerospace industry, which has an obvious financial stake in the survival and growth of these programs. And there is the institutional military itself – within the Pentagon, and as expressed through an influential network of retired generals and admirals…”

One aspect of the military-industrial-congressional complex I have focused on considerably over the last few years is its role in congressional earmarks – congressional pet projects, unwanted by the Administration but amounting to billions of dollars annually that frequently take on a life of their own in a way that continues to waste taxpayer resources for years and sometimes decades. In the military-industrial-congressional complex earmarks are the currency of corruption.

Another manifestation of the military-industrial-congressional complex I have called attention to is the ‘revolving door’ that exists between the Pentagon and the defense industry. In 1969, then-Senator William Proxmire said this about the revolving door in the context of defense procurement: “The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse…How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at over 2,000 fellow officers doing well on the outside after retirement?”

Probably the most recently publicized example of the revolving door between the Department of Defense and private industry and the prevalence of the military-industrial-congressional complex in the Department’s planning and procurement processes, is its ‘mentorship’ program. In its most recent story in a series exposing this program, USA TODAY reported that the Air Force allowed a retired general officer who was then-serving as an executive in The Boeing Company to participate as a ‘mentor’ in a war game involving the aerial refueling tanker that Boeing was at the same time competing to build for the Air Force under a multibillion dollar procurement program. Over the last two years, I have exercised keen oversight of the mentorship program, which I understand has been essentially shut down under the weight of newly promulgated public disclosure requirements – in other words, former general and flag officers serving as Department ‘mentors’ preferred to exit the program rather than publicly disclose their corporate affiliations and compensation. 

The aspect of the military-industrial-congressional complex I would like to focus on today relates to how the Pentagon buys its very largest weapons systems. That covers the top 100 or so of the Defense Department’s weapons procurement programs – into which taxpayers have invested to date about $1.7 trillion (that’s ‘T’ for trillion). In particular, I would like to focus on how the military-industrial-congressional complex has kept even some of the most poorly-performing programs funded – siphoning-off precious resources even while they go over-budget, face years of schedule delays and fail to deliver promised capability to the warfighter.

To be clear, the military-industrial-congressional complex does not cause programs to fail. But, it does help create poorly-conceived programs – programs that are so fundamentally unsound that they are doomed to be poorly executed. And, it does help keep them alive – long after they should have been ended or restructured.

By ‘poorly conceived,’ I mean major programs that are allowed to begin despite having insufficiently defined requirements; unrealistic cost or schedule estimates; immature technology or too much manufacturing and integration risk; or unrealistic performance expectations. By ‘poorly executed,’ I am referring to programs that poorly perform because of, among other things, unanticipated design, engineering, manufacturing or technology problems. These sorts of programs should either never have been started to begin with or should have been significantly restructured or terminated at the end of the day. And yet, through the influence of the military-industrial-congressional complex, they are allowed to enter the defense procurement process and to persist – often under guise of a ‘concurrent development’ acquisition strategy and executed under ‘cost-plus’ contracts.

Specifically, the military-industrial-congressional complex helps ensure that poorly-conceived programs get on rails – and stay there – with ‘production money’ when they are supposed to still be in development. And, for Industry and many of their sponsors in the Pentagon and on the Hill, that’s desirable because it is far more difficult to restructure or terminate a production program – even one that’s performing poorly – than one that’s in development. In the military-industrial-congressional complex, if excessive concurrency is a drug, then the cost-plus contracts used to facilitate it are its delivery vehicles.

Over the last decade or so, what I have described here has resulted in a massive windfall for Industry. But for the taxpayer and the warfighter, it has been an absolute recipe for disaster.

With the federal budget deficit having hit $1.3 trillion for the 2011 budget year and facing the fact that the defense budget will likely not grow to any significant extent in the near-term, we in Congress must be mindful of how the military-industrial-congressional complex can negatively affect decisions to buy and keep major weapon systems.

So how does the military-industrial-congressional complex help create problem programs and keep them going long after they should be cancelled or restructured? A review of some of the problems with the original Air Force tanker lease deal is instructive. From that first attempt by the Air Force to replace its aging airborne tanker aircraft, which started nearly a decade ago, we now know that very early in the planning of a major defense acquisition program, senior officials from Industry and the relevant Service(s) work with senior Members of Congress to ensure that the economic – and therefore political – benefits of the program will be distributed widely among key congressional states or districts. That ensures long-term political buy-in and support.

How much could the military-industrial-congressional complex’s negative influence ultimately cost taxpayers? Once again, consider the original tanker lease deal as just one example.

That deal would have had new aerial refueling aircraft developed under a cost-plus contract, which exposes the taxpayer to, and protects the contractor from, the negative impacts of cost overruns and schedule delays. Once developed, those new tanker aircraft were supposed to be leased – not bought outright – from a sole-source contractor, as provided under a multi-billion dollar earmark stuck in a defense appropriations bill without having been vetted by the Administration or reviewed by the relevant congressional oversight committees. That unusual acquisition strategy was based on a case that the Air Force presented at that time, which the deal’s congressional sponsors roundly endorsed, that the legacy fleet of tankers needed to be replaced ‘urgently.’ Needless to say, that case was proven false. There can be no doubt that the original tanker lease deal was a classic creation of the military-industrial-congressional complex.

When we compare the likely costs of the sole-source tanker lease with the costs of the recently concluded tanker competition – which calls for ‘fixed-price’ development and a purchase under full-and-open competition, the difference is dramatic. According to recent analysis by the Department of Defense, the original tanker lease deal would have, over the lifecycle of the aircraft, cost taxpayers billions of dollars more – for a less capable airplane.

Those billions that could have been lost under the original tanker lease deal are effectively the cost associated with the military-industrial-congressional complex when it is allowed to run unchecked and unchallenged. And, they are, particularly in the current fiscal environment, utterly unsustainable.

The lesson of the original tanker lease deal is that the powerful combination of interests that comprise the military-industrial-congressional complex can be strong enough to both give birth to procurement programs that should never have been started in the first place and nurture programs that should have been killed or fundamentally restructured early on – to the grave detriment of the taxpayer and our servicemen and –women.

While, over the last couple of years, former Secretary Gates ended some of the most poorly performing major programs in the defense enterprise, the situation remains serious. The new National Military Strategy calls the growing national debt a ‘significant security risk.’ And, as the Government Accountability Office (GAO) noted in its March 2011 report, since 2008 the total acquisition cost of the Pentagon’s major defense acquisition programs in its current portfolio has increased by $135 billion – about half of which is attributed to pure cost growth and the other half due to cuts in the intended number of weapons we planned to buy. It shouldn’t come as any surprise that, as a result, about half of the Pentagon’s very largest weapons procurement programs exceed cost-performance goals agreed to by the Pentagon, the Office of Management and Budget and GAO. In fact, GAO’s March report found that about one-third of all major weapons programs since 1997 have had cost overruns of as much as 50 percent over their original projections. And, noting that ‘the costs of developing and buying weapons have historically been, on average, 20 percent to 30 percent higher’ than Pentagon estimates, the Congressional Budget Office (CBO) recently projected that, in addition to health care, higher costs for weapons systems will increase the Pentagon budget by about $40 billion over the next five years.

Congress and current leadership at the Department of Defense have tried to attack these problems, but they have not been successful in changing the prevailing culture yet….

In conclusion, providing for the common defense is the first, highest, and most explicit duty of the federal government from which all other political rights, economic well-being, and freedoms flow. But, in times of austerity such as we now face, the Defense Department cannot waste resources. The Pentagon must do the hard work and make the hard choices to prioritize better and manage limited resources better, and reinvest any savings in providing more return and benefit to the warfighter and the taxpayer. Defense spending will be part of the budget debate going forward, simply as a result of its size within the overall federal budget. We cannot allow the military-industrial-congressional complex to obscure that fact any longer and, even worse, disrupt our ability to make hard choices.

There can be no doubt that we have clearly failed to abide the warning President Eisenhower issued in his speech fifty years ago. But, I do find some comfort that times of fiscal restraint and austerity can drive desired change – even in the face of daunting systemic obstacles like the military-industrial-congressional complex.

What we must do is embrace the opportunity to alter our myopic course, starting now, recognizing – as President Eisenhower did – that “[we cannot] mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.”

Given the stakes involved, it is not too late to start. The times, in fact, demand it.

[Source : mccain.senate.gov]

Hot Spots will return in two weeks with more on this topic.

Merry Christmas and Happy New Year.

Brian Trumbore