Arms Fiascoes Lead to Alarm Inside Pentagon

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http://www.nytimes.com/2005/06/08/business/08weapons.html?th&emc=th

Excerpt: "We're No. 1 in the world in military capabilities," said David M. Walker, who runs the Government Accountability Office, the budget overseer for Congress. "But on the business side, the Defense Department gets a D - giving them the benefit of the doubt. If they were a business, they wouldn't be in business."


June 8, 2005
Arms Fiascoes Lead to Alarm Inside Pentagon
By TIM WEINER

Nine years ago, the Navy set out to build a new guided missile for its 21st-century ships. Fiascoes followed. In a test firing, the missile melted its on-board guidance system. "Incredibly," an Army review said, "the Navy ruled the test a success." Recently, the Navy rewrote the contract and put out another one, with little to show for the money it already spent. The bill has come to almost $400 million, five times the original budget. Such stories may seem old hat. But after years of failing to control cost overruns, the most powerful officials at the Pentagon are becoming increasingly alarmed that the machinery for building weapons is breaking down under its own weight.
"Something's wrong with the system," Secretary of Defense Donald H. Rumsfeld recently told Congress.

The Pentagon has more than 80 major new weapons systems under development, which is "a lot more programs than we can afford," a senior Air Force official, Blaise J. Durante, said. Their combined cost, already $300 billion over budget, is $1.47 trillion and climbing. In the civilian world, next-generation technologies, like cellphones and computers, rarely cost much more than their predecessors. But the Pentagon's new planes and ships are costing three, four and five times as much as the weapons they will replace. As prices soar, the number of new weapons that the American military can afford shrinks, even with the biggest budget in decades. "We're No. 1 in the world in military capabilities," said David M. Walker, who runs the Government Accountability Office, the budget overseer for Congress. "But on the business side, the Defense Department gets a D - giving them the benefit of the doubt. If they were a business, they wouldn't be in business."

Neither the Pentagon nor Congress nor the weapons contractors have any prescription to cure the problem. But in interviews and public testimony, military leaders, arms makers and government auditors generally agreed on why the nation's arsenal costs so much. They said the military conjures up dream weapons, like the Extended Range Guided Munition that the Navy had such trouble with. It sets immensely expensive technological requirements that are far beyond the state of the art of war, weapons executives say. Officials at the handful of major military contractors cross their fingers and promise to fulfill those visions. Almost no one flatly rejects the wish list for weapons and requirements. The military adds new technologies to many weapons already under development. Those systems add complexity and weight, which add costs to planes, ships and tanks. Military officials routinely understate the anticipated costs of weapons, said Winslow T. Wheeler, who analyzed armaments spending as a Senate staff member advising both Republicans and Democrats for 31 years. When costs rise far beyond the promised ceilings, he said, almost no one takes responsibility. Oversight is dwindling, Pentagon officials acknowledge. While the dollar value of weapons contracts doubled over the last decade, the Pentagon halved the size of the work force that polices their costs.

The government work of managing the design, development and production of weapons has been largely outsourced to the weapons contractors themselves. Technological troubles add billions to the cost of armaments, Congressional auditors said. But no one knows precisely how much, since the Pentagon often cannot keep track of the money it spends. Testing is often unrealistic, the equivalent of an open-book exam. For example, Pentagon officials overseeing the 22-year, $100 billion effort to build a missile defense say the program has not passed realistic tests. It is an example, one among many, of daunting weapons technology taking two decades or more to produce - and time is money. Finally, the costs of new weapons are sometimes concealed by secrecy and creative bookkeeping. They now total nearly $148 billion a year, and almost one in five of those dollars is hidden from public view, in the classified "black budget." Of that amount, research and development spending on new weapons has gone up 77 percent since 2000, and now totals $69 billion a year. The price of buying new weapons is scheduled to rise nearly 50 percent, to almost $119 billion annually in 2011, from $78 billion today.

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