By Matthew Fay and William D. Hartung
June 15, 2015
Everyone from Defense Secretary Ashton Carter to House Armed Services Committee chairman Mac Thornberry (R-TX) agrees that the Department of Defense is desperately in need of reform. The question is what reforms to make.
Earlier this month a group of defense experts from across the political spectrum – ranging from the American Enterprise Institute to the Center for American Progress -- released a letter targeting three major areas of reform at the Pentagon: reduction of the civilian bureaucracy, compensation reform, and a new round of military base closures
The fact that these common sense reforms require such an all-hands-on-deck effort to try to move them forward underscores the fact that our system for making decisions on how to spend resources allocated for defense is broken. Getting the Pentagon back on track will require additional changes in the status quo.
The first place reformers should look when thinking about hard choices is at the centralized Pentagon management structure that eliminates the need to make those choices in the first place. Robert McNamara put the current planning system at the Department of Defense in place a half-century ago, and it has survived with only marginal changes. The system demands formal planning and assumes predictability over set planning periods. When predictability proves illusory, formal planning becomes an exercise in bolstering the status quo. Instead of seeking tradeoffs, the incentive is to protect programs for which plans were already made.
Similarly, since the passage of the Goldwater-Nichols Act in 1986 logrolling by the military services has become institutionalized. A tacit quid pro quo exists when jointness demands that the services work together to determine system requirements. Why would the Army speak out against the Navy’s costly or unnecessary program upgrade, knowing the latter can veto its similar request later? Costly programs such as the F-35 continue unabated because multiple services have skin in the game. But even service-specific programs face few risks under this system. Senator John McCain’s recent proposal to bring the services back into the acquisition process will help ameliorate some of the uncertainty inherent weapons development, but they will not exhibit genuine budget discipline as long as they can work together to ensure their favorite programs remain in place.
Ultimately, promoting better procurement practices at the Pentagon will require the cooperation of industry, not just internal changes at the Pentagon. That’s why it was so disappointing that the National Defense Industrial Association and other industry representatives moved to weaken the Pentagon’s independent testing office during the House’s recent consideration of the National Defense Authorization Act. The testing office serves a critical function in determining when specific weapons programs aren’t ready for prime time due to cost and performance problems. Getting things right the first time serves the interests of industry, the Pentagon, and the taxpayers. Hopefully the shortsighted effort to hobble the testing office will be abandoned before the defense bill becomes law.
Another area where industry can make a contribution can best be described as “truth in advertising.” All too often companies put in bids on new weapons programs that they know are well below the price they can actually deliver. While making these kinds of predictions is not a precise science, the industry can do better. Doing so would make it easier to make realistic, long-term budget plans. In exchange for more accurate estimates, the Pentagon and the services should resist “requirements creep” – the process of making repeated changes in a program after it is well along. These changes should be made only when they are essential to improving major areas of performance that would make a real difference once a weapon system is fielded.
Congress has the opportunity to provide the proper incentives for both the Pentagon and the defense industry to adopt the proper reforms: maintain the Budget Control Act spending limits. The military services will not seek tradeoffs until budgets and missions are at stake. Industry will not look for new opportunities to provide its customer with better products if its profits are guaranteed making the old one.
There is a long way to go before we have a process in place in which the Pentagon can make hard choices that result in the best possible use of the ample resources at its disposal. But if the debate doesn’t begin now, nothing is likely to change.
Matthew Fay is a foreign and defense policy analyst at the Niskanen Center. William D. Hartung is the director of the Arms and Security Project at the Center for International Policy.
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