Because traditional market forces operate only weakly in the defense environment, companies have evolved other ways to compete. The most common idea is to try to influence the single customer directly, that is, to compete on the basis of political skills instead of-or at best complementary to-price, quality, delivery span, and performance. The result, unfortunately, can be weapons bought from suppliers with the best lobbying strategies, rather than the best engineering or production capabilities. Two of the most common tactics are “front loading,” which is understating the complete cost of a weapon in order to smooth its launch, and “political engineering,” which involves placing contracts in a large number of congressional districts so that a program once launched is difficult to evaluate clearly and if necessary, to scale back or cancel.
“Defense Power Games,” by Franklin C. Spinney. Comprehensive and thoroughly documented report that presents hard data to reveal the tactics of political engineering. These practices corrupt our national security strategies and ensure that the hard decisions necessary to refocus DoD towards the 21st Century do not get made. Although such power games are usually played within the boundaries of current law, taken in toto, they are having a corrosive effect on our Constitutional system of government. Since no defense contractor today can afford not to employ them, to some degree, they represent systemic problems and it will take action by Congress to solve them.
11/25/03 The Cross of Iron, by Conn Hallinan. Why diverting money from Cold War weapons systems is so difficult.
Front-loading: It’s Not Just for Procurement Anymore. As documented in a new GAO report (740 KB .pdf document on the GAO web site.), the Air Force announced – and budgeted for – huge improvements in depot maintenance costs (thereby freeing up money for modernization). Unfortunately, the “reforms” produced only 39% of the promised savings. This is another example of the technique of front-loading (downplaying the future consequences of current decisions in order to get approval for a given course of action), which has long been used to justify new program starts (see “Defense Power Games.”)
Comment #169, “The Constitution, Situational Ethics & the Phony Debate Over More Defense Spending,” now with all references. Inside the Pentagon reported that DoD has apparently successfully opted out of the Constitution’s “Accountability Clause” (Article I, Section 9, Clause 7). Commentator Chuck Spinney explains why this should outrage Americans of every political viewpoint.
O&M Migration: Front-loading at the Macro Level. To quote from a recent GAO report (360 KB .pdf file): “We identified several areas in the operation and maintenance accounts where costs may be understated or savings overstated, adding risk that DOD in the next FYDP will have to shift more funds to these accounts from other accounts, such as procurement.” Although the 2001 FYDP is funded at $16 billion more than the 2000 FYDP, DOD programmed some $3 billion less for procurement, and even this figure assumes that savings from various “defense reform initiatives” will come in as predicted. As one can see from the preceding GAO report, such reforms often produce only a fraction of the needed savings.