Noah Shachtman's Blog

And you thought your phone bill was high. The Navy is paying about $4 billion a year for calls, according to Defense News. And not surprisingly, there is a whole lot of padding in that tab.

A check of telephone bills in the Jacksonville, Fla., area “found that when we have a digital receipt for a phone bill in the area…we are being overcharged 30 percent,” deputy chief of naval operations Vice Adm. Mark Edwards told a group of military-industrial insiders at a recent conference.

Telephone service with no digital receipt showed overcharges of 18 percent, he added.

The Navy’s top IT official said he wasn’t accusing telephone companies, but he just might not let it slide. “What I’m saying is: It’s my money and I want it back. And we’re going to get it back,” he said, to some chuckles.

By recouping 30 percent of the $4 billion tab over the five-year defense plan, “we could build another carrier, just on the phone bill,” noted Edwards, a former ship and carrier battle group commander. “It won’t be quite that easy, but we’re working it.”
And it might not end there. Edwards wants the Navy to change course by replacing traditional landlines for VOIP, or “voice over IP,” communications, he said. “It would save us over 24 percent the first year” and 24 percent the second year, he estimated.

“After 10 years and $1.7 billion, this is what the Marines Corps got for its investment in a new amphibious vehicle: A craft that breaks down about an average of once every 4 1/2 hours, leaks and sometimes veers off course. And for that, the contractor, General Dynamics of Falls Church, received $80 million in bonuses,” the Washington Post’s Renae Merle reports in a brutal front page story.

The amphibious vehicle, which can be launched from a ship and then driven on land, is so unreliable that the Pentagon is ditching plans to begin building the first of more than 1,000 and wants to start over with seven new prototypes, which will take nearly two years to deliver, at a cost of $22 million each.

The Expeditionary Fighting Vehicle is one of the Pentagon’s largest weapons programs and exemplifies the agency’s struggle to afford a cadre of new mega-systems that are larger and more complex, but also more trouble, than their predecessors.

Despite reforms meant to rein in costs, it is not unusual for weapons programs to go 20 to 50 percent over budget, the Government Accountability Office recently found. Among the offenders is the Army’s sprawling modernization program, which aims to update everything from tanks to drones and is now expected to cost $160 billion [or much more -- ed.], up from $90 billion, and a Lockheed Martin missile-warning satellite program, which is projected to cost more than $10 billion, up from $4 billion…

The overruns are eating away at the Pentagon’s buying power but not its appetite. The amount the Pentagon plans to spend on major weapons systems has doubled in the past five years, to $1.4 trillion from $700 billion, according to the GAO…

When it was launched in 1996, the Expeditionary Fighting Vehicle was promoted as an example of acquisition reform… But the program has struggled with repeated delays, cost increases, budget cuts and dashed expectations, according to military officials and government reports. Problems range from leaks in hydraulics systems to software glitches, according to the reports. Last year, the vehicles completed just two of 14 planned tests.

“They started out really well, and I was really pleased,” said Philip Coyle, the Defense Department’s former director of operational test and evaluation. “But gradually the complexity of the program has overcome the contractor, so they are years behind schedule.”

General Dynamics defends its progress, noting that the vehicle has met many goals, including being able to reach speeds of 30 knots on the water. The vehicle is fast enough to keep up with the Abrams tank on land, it can carry 17 Marines, and its systems can communicate with other ships and tanks, all key performance criteria, the company says…

An independent review released in December by the Navy’s acquisition office questioned the company’s commitment to solving the development problems that plagued the vehicle. The report said General Dynamics appeared more interested in starting production than trouble-shooting and didn’t manage the groups making many of the decisions. The production phase is typically more profitable for a contractor and often marks a point at which a program becomes more difficult to cancel.

General Dynamics “seems to be focused on production rather than on solving significant design and engineering problems,” the Navy report said. “This must be changed if the Program is to move ahead successfully.”

In its new budget for fiscal year 2008, the Pentagon says it’ll parcel out about $142 billion to pay for the wars in Iraq and Afghanistan. But the Defense Department doesn’t really believe in its own figures, apparently. The number was was calculated before the new 35,00-48,000 troop “surge” plan was put in place, Pentagon comptroller Tina Jonas said in a news conference. So $142 billion is just a “best estimate.”

“We know it will be wrong,” she added. “Conditions will change, and we’ll have to adjust at that point.”

The number is also $28 billion dollars less than the $170 billion being spent on Iraq and Afghanistan this year. Does that mean there’s some sort of secret plan to start bringing troops home? Hell, no. “White House spokesman Tony Fratto said that fact shouldn’t be interpreted as an indication of likely reduction in U.S. troops in Iraq,” according to the AP.

There was another item of note from the Pentagon news conference introducing the new budget. Vice Admiral Stephen Stanley, Director for Force Structure, Resources, and Assessment for the Joint Chiefs of Staff, listed a number of major “risks” to the health of the American armed forces. One of the biggest was increased wear and tear that the wars in Afghanistan and Iraq were putting on military gear. Another was the increased “operational tempo” from those wars, which were grinding down our troops. In other words, the wars themselves are a threat to the American military. Interesting to hear that, in a Pentagon briefing.

You might think, with two wars draining hundreds of billions from the country’s coffers, that the Pentagon would be inclined to slow down its modernization efforts. Especially ones that have little or nothing to do with fighting terrorists — or even battling North Korea or Iran. That’d be wrong.

The Pentagon fiscal year 2008 budget adds another $8.8 billion to its modernization accounts, Defense Department comptroller Tina Jonas justed noted in a news conference. That’ll include “the first significant funding” — $3 billion — in the next generation of aircraft carrier,” the CVN-21. The Joint Strike Fighter fleet will grow from two in FY07, to twelve the following year — including the first short take-off version. It’ll take $6 billion in 2008, the Pentagon projects. Despite major cost inflation, the Defense Department budget request “funds three littoral combat ships and will continue funding for two DDG-1000-class destroyers and another amphibious assault ship,” according to a American Forces Press Service article. “The Air Force F-22 Raptor fighter is budgeted at $3.8 billion for 20 aircraft.”

The F-22, it should be noted, was recently deemed “too sensitive… to be useful” in places like Iraq. Most of these other systems — big destroyers, new aircraft carriers, and the like — wouldn’t have much to do with an Iraq-style situation. Neither would the $8.8 billion for missile defense (although that is a more than a half-billion less than what the program got last year).

Of the major service’s weapons programs, only the Army’s massive modernization effort, Future Combat Systems, seems to have been trimmed. The $3.6 billion requested for FCS is just slightly less than what the Pentagon asked for last year.

One bit of good news is that the Army, after years of requests, is starting to get a bigger slice of the budget. “If the budget is enacted as submitted, the Army will receive $130.1 billion in fiscal 2008, for an increase of more than 20 percent,” the American Forces Press Service says. “The Navy will receive $119.3 billion, up 9 percent. The Marine Corps will receive $20.5 billion, up 4.3 percent, and the Air Force will receive $136.6 billion; an increase of 8.2 percent.”

Bloomberg’s ace Pentagon-watcher, Tony Capaccio, has more.

UPDATE 02/06/07 4:06 PM: “Any fear that war costs would crimp spending on new weapons evaporated Feb. 5 when the Pentagon unveiled its proposed 2008 budget,” says Defense News. Check out these stats:

• $14.4 billion for new ships, a 29 percent increase over 2007.
• $6 billion for satellites and related equipment, a 25 percent increase.
• $27.4 billion for warplanes, an 18 percent increase.
• $3.7 billion on the Army’s Future Combat Systems, a 9 percent boost.

How much cash do we spend on defense, really? Center for Defense Information budget guru Winslow Wheeler provides this handy chart. Check out the $50 billion increase in the “peacetime” Pentagon coffers — the money that doesn’t get spent on Afghanistan and Iraq.

And where does that money go? Healthcare, paychecks, and new weapons, mostly. Check out this Pentagon chart.

You’d think that the Defense Department’s higher-ups would be happy, when their research agencies start demanding results from the scientists and engineers that they fund. Not necessarily. Inside Defense reports that the Pentagon’s comptrollers have slashed Darpa’s budget by $300 million — about 10% – for the next fiscal year. Another $200 million is supposed to come off the top, the year after that. The reason: “A project management oversight structure introduced in DARPA… mandat[ing] that projects are reviewed at regular execution intervals to ensure that they are meeting defined program goals and objectives.”

The switch “has resulted in more effective linking of resources to outcomes,” according to “Program Budget Decision 704,” an internal Defense Department document obtained by Inside Defense. Which would be a good thing, ordinarily. Except that Darpa hasn’t been spending the money it’s been given, apparently. While funding for the agency has gone up, up, up since 9/11, the number of program managers hasn’t increased as fast. Combined with the new, results-driven process, that “has slowed execution of DARPA’s funding…. resulting in a significant decline in obligations and expenditures,” says PBD 704. So what happened to all that excess cash? I haven’t been able to get a straight answer, yet.

The subtext to all this wrangling is the leadership of Darpa chief Tony Tether. In the military research world, he’s known as a hands-on manager — a very, very hands-on manager. No item in his $3 billion budget is too small; even some of the names of Darpa research efforts require his approval. “Nothing happens without his say-so,” one Darpa-funded researcher tells me.

That’s a change for the agency, which has traditionally let its program managers — and its researchers — more or less follow their imaginations. Some current and former Darpa types mumble that the quality of research has been undermined, as a result; after all, “Darpa-hard” problems can take longer than six months to solve. But with the wars in Afghanistan and Iraq are sucking up more and more money, Defense research budgets are tightening up; demanding results doesn’t seem like such a bad thing. We’ll see how this one shakes out.

While PDB 704 takes from Darpa, it adds $300 million to the Reliable Replacement Warhead program. That’s the widely-criticized effort to build new nukes — a construction effort many sage observers thinks is completely unneeded.

Nobody puts more money into bleeding edge R&D than the Pentagon. And a surprising number of those studies actually pan out. So why is the military still relying on gear that’s decades old? The problem is crossing the so-called “valley of death” between research projects and “acquisition,” when the Defense Department actually starts to buy stuff in bulk. National Defense magazine offers up some examples.

Last year, the Georgia Tech Research Institute developed a lightweight ceramic armor for a vehicle… The message from military officials was that they needed this technology immediately for troops in Iraq. “We prototyped one vehicle and delivered it to Quantico,” where the Marine Corps acquisition command is based. “We are waiting to hear from the Marine Corps on what the next steps are,” Cross says. “This is where we all get frustrated … We think it’s a good solution. There’s no technology impediment for moving forward. It’s the acquisition process.”

The armored vehicle is not likely to go into production any time soon. The Army and the Marine Corps are studying proposed designs from major defense contractors for a new light tactical vehicle that would replace the Humvee. The program is not expected to deliver new vehicles for at least two more years.

Frustrations with the defense bureaucracy also can be found at a California university where Congress created a “technology transfer” office specifically to expedite the transition of promising concepts from the commercial sector to the military.

“The challenge is getting into acquisition programs. That consumes most of our time,” says Stu Gordon, director of the Office of Technology Transfer and Commercialization at California State University San Bernardino…

Recent products that, with CSU’s help, contractors successfully sold to the Defense Department include biological detectors, radios, batteries and fuel cells.

“We have contacts at the office of the secretary of defense,” Gordon says. “They are very supportive … But when we ask them how we get into acquisition programs, frankly, they don’t know. This is true for many of the technologies we have.”

Getting to the right person who can write a purchase order so someone in the military can buy the product is “really a hard thing to do,” Gordon says. Some officials at the Defense Department “want to help us but they don’t know how.”

UPDATE 3:40 PM: John Robb has some interesting ideas on how “tinkerers’ networks” should be brought into the R&D process.