The following editorial was written by Bloomberg View editors on July 17:
This year’s Pentagon budget debate in Congress has been heated — on issues such as prosecuting sexual assault and shutting the prison at Guantanamo Bay, Cuba. But little attention has been paid to, you know, how much money the Pentagon should get and how it should be spent.
Yet the explosion in military spending — it has doubled since 2001 — urgently needs to be brought under control.
This can’t happen overnight, because most big-ticket acquisitions are budgeted over years and decades, and lawmakers always step in to protect factory jobs and unneeded bases in their states. And even the smallest changes to health care and retirement programs face backlash from veterans’ groups. But by overhauling the way military budgeting gets done, it may be possible to seriously cut spending down the road.
Fortunately, the new heads of both the Senate and House Armed Services committees, John McCain and Mac Thornberry, are pushing for radical change.
Rep. Thornberry’s bill would require those in the Pentagon purchasing process to get “private-sector” training in acquisitions, speed up the process for buying off-the-shelf technology, take some of the legal complexity out of the purchasing process, and cut away some of the red tape that makes it hard for small businesses to bid on federal contracts.
Sen. McCain’s bill would do even more — by shifting fundamental responsibility for acquisitions. It would give the service chiefs themselves primary authority, in effect demoting the Defense Department’s acquisition, technology and logistics office to an advisory role. Under the current system, in which the secretary of defense’s office has authority for research, development and procurement, too many committees have a hand on the steering wheel, and too many offices have to wait for a green light from others. And when the people who buy military hardware have too much time on their hands, it turns out, the inevitable result is “requirements creep” — multiplying requests for gold-plated widgets. It’s a big reason the new Gerald R. Ford supercarrier ended up $2.4 billion over estimate.
McCain’s system would reduce the amount of paperwork and manpower involved, and it would give the services more freedom to save money, including by working with tech companies and others that aren’t traditional Pentagon contractors. It would also create a $600 million fund for “rapid acquisition authority” to let the services bypass rules on competitive contracting — and to get weapons more quickly into the hands of troops fighting Islamic State. The Senate bill also urges the military to switch to fixed-cost contracting where possible, shifting the cost of runaway projects to the big contractors such as Lockheed Martin, Boeing, General Dynamics, Raytheon and Northrop Grumman. That’s a radical change for an organization whose overruns on major purchases average about 25 percent.
This new freedom would come with responsibility. The top brass in each service would be personally on the hook for cost overruns and delays, subject to an annual fine of 3 percent of the cumulative cost overrun (assessed from its general research and development budget).
All these reforms are worthwhile. Needless to say, the civilian side of the Defense Department is pushing back on shifting the spending authority.
Nonetheless, McCain’s radical shift of authority to the services and Thornberry’s efforts to streamline should be combined in the conference committee and sent to President Barack Obama for his signature. In the next half century, as the military will have to face up to budget reality and rein in runaway spending, big-ticket budgeting will need to be more efficient.
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