Thursday, August 17, 2006

The 5-sided money pit

So, think we can build and fight "The Long War" from a train wreck?
These O & M and Military Personnel trends will likely be in place even as the newest generation of weapons systems – such as the Joint Strike Fighter, the Future Combat System, and the DDG-1000 (formerly DD(X)) destroyer – reaches full production at the end of this decade. CBO estimates that DOD’s current plans would require annual appropriations over the 2012-2024 period that are 18-34 percent more in real terms than the amount appropriated in 2006. Given the relative inflexibility of O & M and personnel costs, it would seem the main option for living within DOD’s top-line is in controlling the cost of weaponry, especially those programs that the Pentagon has said it does not need. But there are some apparent disincentives for eliminating programs. For example, if the military services receive fewer new weapons systems to replace their wornout systems, it would have the effect of increasing the aging of the U.S. weapons inventory. In addition, all weapons-system contracts contain a termination liability clause to indemnify the contractor should the government prematurely end the contract for reasons other than default by the contractor. The termination liability payment is often larger than the amount the government would have had to pay in the budget year had it chosen to continue production. In using a myopic outlook that considers only the “next” year, it appears to cost less to continue paying for an unneeded system than to end production altogether.

When these factors are added to the ramifications of weapon system politics – every project has local employment implications – it becomes clear that controlling the long-term costs of the Pentagon’s arsenal are very nearly as complex as restraining the cost of government entitlements like Social Security and Medicare. Controlling such costs will require expertise in military requirements, knowledge of contracting and industrial base considerations, and an informed perspective on the federal government’s long-term fiscal problems.
All from a link inside a Phibian like article in Slate.
The list now contains 87 programs projected to cost $1.61 trillion. In other words, the estimated cost of the Pentagon's big-ticket items has gone up by $30 billion in just the past six months.

And the cost is likely to grow higher still. Of that $1.61 trillion, $909 billion—or 56 percent—has yet to be spent. In other words, a lot of these weapons programs are still in their early stages.

Here's another way to look at the picture. Of those 87 weapons programs, 11 have already exceeded their cost estimates by 30 percent to 50 percent—and 25 have done so by more than 50 percent. This latter group includes some of the most expensive programs—the F-22 Stealth fighter plane, the Army's Future Combat System, and the V-22 vertical-lift aircraft.
Mmmmm. Anyone fired? In jail? Given a bad FITREP even?

Hat Tip LBG.

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