The budget battles in Congress have an interesting, if not wholly unexpected casualty, the Defense Department. Due to budget uncertainty DoD has been forced to slow down its notoriously extravagant contracting process:
Speaking to soldiers in Vicenza, Italy, last week, Defense Secretary Leon Panetta explained the Pentagon’s “burn rate” — the speed at which the department has been spending its cash — was based on the belief the Pentagon would eventually get a budget that resembled what it requested last February for the current fiscal year.
The longer Congress waits to resolve sequestration and pass a budget for 2013, the faultier that assumption seems, so the Pentagon is taking several steps to spend only the money it absolutely has to.
Might this finally force responsible budgeting at the Pentagon? Since 9/11 the Defense Industry has gone on an incredible binge with DoD happily shoveling money out in contracts. Now it seems that even the threat of cuts has lead to fiscal discipline in an institution that previously came up trillions short in an internal audit.
Ashton Carter, Deputy Defense Secretary, has set a cap of $500 million in spending on contracts before the contract must be reviewed by senior DoD staff. Not surprisingly, this new policy has lead to some gamesmanship.
On Dec. 29, the Air Force awarded Lockheed Martin a $1.9 billion contract for the Advanced Extremely High Frequency space vehicle, a new communications satellite.
Under Carter’s new guidance, this contract would have required review by Kendall, but according to Gen. William Shelton, head of Air Force Space Command, contracts of this size come along only a couple of times a year, at least for his command.
“We’ve got several that are just coincidentally $499 million,” Shelton joked with reporters at a breakfast in Washington on Thursday.
Nonetheless, the issue going forward is whether such phenomenal amounts of money should be spent for defense while austerity programs are launched against the poor and middle class. For the moment the Pentagon is keeping its budget in check.




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DoD always finds a way to game whatever restrictions Congress attempts to put on them. Years ago, Congress attempted to reign in spending by putting a hold (or some extra review requirements) on new construction. DoD and its contractor brigade figured out they could game the system by declaring every building project as a “renovation” project, not subject to the new constraints. Of course these “renovations” cost 3-4 times the cost of tearing down the old building and building a new one, but, hey Congress said we couldn’t build new.
As you state the DoD plays wonderful games. Carter, as an example could have set a time limit to orders to the same contractor and imposed “a family of orders” where the aggregate cost imposes higher costing standards as opposed to smaller, stand alone contracts.
The more Security the less Liberty. We should free up the money so we end up free. Corporations should pay for their own security abroad since they are the ones creating all the enemies.
The DoD is bleeding us dry and I doubt that we are any safer at this point. They want all their toys and don’t care if the middle class and the poor have to pay for them.
Maybe CPB, NEA, and NEH should apply for $499 million grants.
http://www.theonion.com/articles/national-endowment-for-the-arts-crafts-criticized,1160/
The U.S. military was designed for civilian oversight and that includes its procurement systems.
But an utterly corrupt government means that there is no longer much valid civilian oversight.
… and thus any “savings” are pretty much guaranteed to be wasted even with the best efforts of military personnel.
I used to hear stories of how corrupt other Countries were and that a Company had to account for bribes and other corrupt practices when doing business with them. We seem no different now. “Multi national” has entered the corruption business as well.
That’s a novel approach.
I won’t hold my breath.
Lemme see if I undersand you. So there has been an oversight on the oversight???Wow!!!!
Is that ironic or what????
A problem that is frequently overlooked by multi-national corporations is that bribery in different countries had different protocols. Not to mention having to deal with crooked people in different languages, different currencies.
Fortunately, the graft and corruption HERE in the United States has been well choreographed over the years. Mosts corporations are well versed and have an efficient infrastructure.
I heard that the Pentagon was designed such that nowhere is more than 80 yards by concourse from any other place.
Yes, they get the most bang for their buck here in the good ol USA don’t they. Even the billions spent on elections is just passed around from one Corp to the next. Wouldn’t be surprised to find out Bain Capital owns the lawn sign companies and balloon facories that supply the R’s and D’s.
The Pentagon reports all contracts over $6.5 million daily. I’ve looked at the awards this month, and there were three over $500 million (none at $499 million).
iGov Technologies, Reston, Va., received an increase in the contract maximum from $530,000,000 to $566,000,000 for U.S. Special Operations Command’s (USSOCOM) tactical local area network (TACLAN).
Analytical Services Inc., Huntsville, Ala., (W9113M-13-D-0001); COLSA Corp., Huntsville, Ala., (W9113M-13-D-0002); Engineering Research and Consulting Inc., Huntsville, Ala., (W9113M-13-D-0004); DMD, Huntsville, Ala., (W9113M-13-D-0003); Quantum Research International Inc., Huntsville, Ala., (W9113M-13-D-0005); Radiance Technologies Inc., Huntsville, Ala., (W9113M-13-D-0006); Sigmatech Inc., Huntsville, Ala., (W9113M-13-D-0007); System Studies and Simulation Inc., Huntsville, Ala., (W9113M-13-D-0008); and Warfighter Solutions L.L.C., Huntsville, Ala., (W9113M-13-D-0009); were awarded a $997,000,000 cost-plus-fixed-fee, multiple-award-task-order contract between nine contractors. The award will provide for the systems engineering and technical assistance services in support of the U.S. Army Space and Missile Defense Command.
Lockheed Martin, Grand Prairie, Texas, was awarded a $755,134,781 firm-fixed-price contract. The award will provide for the procurement of PATRIOT Advanced Capability-3, which includes support for Foreign Military Sales, and related services.
We could fix allot of bridges with just the money you list here. Fear of crossing bridges is stronger in me than fear of underwear bombs I guess.
The Pentagon chief of procurement is Frank Kendall. Can we count on Kendall to watch out for taxpayers dollars, and to make sure we get the most bang for the buck?
Well no. Here’s Frank being frank with his corporate masters.
Chicago Tribune, Nov 28, 2012
Pentagon says “lot of money” still to be made in arms business
It’s not entirely the good Congress versus the bad DOD. It’s a shared effort.
A new plane for the Air Force will have contracts let scattered among a vast majority of states. It will ensure a critical mass of support by enough pols liking jobs in their respective states.
So for a few dollars more there can be DOD funded jobs in, say, Illinois (or “joawbs” in Mass, where I’m from). Add a state or two here and there until that map is covered.
Then, just dare to try and stop the virus. Everyone’s co-opted.