New York Times, March 29, 2011

Audit of Pentagon Spending Finds 70 Billion USD in Waste

The auditors said the biggest problems occurred when the Pentagon changed the capabilities it sought or started production before critical technologies were ready

By Christopher Drew

Despite improvements, more than half of the Pentagon’s big weapons systems still cost more than they should, with management failures adding at least $70 billion to the projected costs over the last two years, government auditors said Tuesday.

The Government Accountability Office, a Congressional watchdog, said the biggest program, the F-35 Joint Strike Fighter, accounted for $28 billion of that increase. Other systems also had significant cost overruns, the agency said, adding that the increases could force the Pentagon to cut the number of ships and planes it buys.

The auditors said many of the problems occurred because the Pentagon began building the systems before the designs were fully tested.

The findings were significant because Congress and the Obama administration have promised to change many of the practices that have long allowed weapons costs to spiral out of control.

President Obama signed a law in 2009 to improve contracting. The accountability office said that Pentagon officials had done a better job in starting new programs. But the agency also found that most of the new programs were not “fully adhering” to the best procedures, leaving them “at a higher risk for cost growth and schedule delays.”

Pentagon officials questioned some of the calculations. But Nancy L. Spruill, a Pentagon acquisition official, added in a letter to the auditors that the military was determined to “address cost growth where it is real and unacceptable.”

The defense secretary, Robert M. Gates, has acknowledged that the Pentagon lacked discipline as its budget more than doubled after the 9/11 terrorist attacks. But with military budgets tightening, Mr. Gates has canceled several expensive systems and sought simpler alternatives.

All told, the accountability office said, the projected cost of the Pentagon’s largest programs has risen by $135 billion, or 9 percent, to $1.68 trillion since 2008.

It estimated that about $65 billion of that increase resulted from decisions to buy more of some systems, like mine-resistant vehicles and Navy destroyers, than had been planned.

But it said the other $70 billion of increases appeared “to be indicative of production problems and inefficiencies or flawed initial cost estimates.”

The auditors also found that a significant part of the total cost increase for nearly 100 programs came from just a few of the largest and oldest ones.

The F-35, which is supposed to become the main fighter for the Air Force, the Navy and the Marines, had by far the worst problems. The Pentagon has revamped the program, led by Lockheed Martin, twice over the last year. It has budgeted an additional $6 billion for development, as well as the projected $28 billion increase in production costs, for a program that is expected to cost well over $300 billion.

The report indicated that the Pentagon also had to spend $9 billion more on research and development to fix problems with satellites and other systems that had already entered production.

The auditors said the biggest problems occurred when the Pentagon changed the capabilities it sought or started production before critical technologies were ready.

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