Defense and the National Interest
 
 

Defense Economics & Acquisition Reform

Something's wrong with the system - Secretary of Defense Donald Rumsfeld to the Senate Appropriations Committee, April 27, 2005.

Traditional economics envisions a marketplace of many buyers and sellers.  The discipline of the marketplace selects out vendors who cannot offer the prices or quality or features of their competitors.  The defense "marketplace," however, usually consists of one buyer and a small number of sellers. Market influences are even more restricted for big ticket items. Once such a major program enters EMD (engineering and manufacturing development, several years before a procurement go-ahead) the selected contractor has a monopoly. At this point, market forces cease entirely and "power games" become decisive. In such an environment, are there ways we can assure ourselves that we are buying the weapons the warfighter needs at prices that are reasonable?


8/20/06 The National Cake and Defense, by Victor O'Reilly.  Economics, and life in general, is all about baking cakes and divvying them up.  When it comes to defense, can we have our cake and eat it, too?  What happens if we just pretend that we can?

8/24/04 Don't Mind If I Do, Winslow Wheeler.  How Congress shortchanges the troops, to the tune of $2.5 billion, while loading up on pork.

6/26/06 Is a Global Economic Deluge Increasingly Likely? By Gabriel Kolko

4/06/04 Report of the Task Force on a Unified Security Budget for the United States. The 2005 Budget proposes spending seven times as much on the military as on homeland security (including border and port security), law enforcement, diplomacy, and other instruments of national defense. This report proposes more balanced and likely more effective alternatives. (PDF 129KB)

11/25/03 The Cross of Iron, by Conn Hallinan.  Why diverting money from Cold War weapons systems is proving so difficult.

"Statement by Franklin C. Spinney Staff Analyst, Department of Defense, Before THE SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS AND INTERNATIONAL RELATIONS COMMITTEE ON GOVERNMENT REFORM, UNITED STATES HOUSE OF REPRESENTATIVES," June 4, 2002.  A succinct summary of why just throwing more money at the Pentagon won't solve its problems, and recommendations for what might.

The FY2003 DoD Budget Request.  An analysis by the Republican staff of the Senate Budget Committee.

DoD's FY2003 budget request in historical perspective.  If enacted, FY2003 spending will exceed the cold war average (in constant FY2002 dollars.)

"Mr. Smith Is Dead: No One Stands in the Way as Congress Laces Post-September 11 Defense Bills with Pork," by Spartacus

US News & World Report's series on war profiteering, from the May 13, 2002 issue.

"Congressional Staffer Lifts Veil On Post-Sept. 11 Defense Pork Projects," by Elaine Grossman

"Informed Budgeteer," produced by the Congressional staff, October 1, 2001.  As we rapidly add money to the DoD budget, how do we know it will be spent wisely?  During WW II (see p. 2), the answer was a "Special Committee to Investigate the National Defense," chaired by "an obscure junior senator from Missouri, Harry S. Truman." (22K PDF file)

"Major Management Challenges and Program Risks: Department of Defense" (GAO-01-244, January 2001) In this important and well researched report, the General Accounting Office (GAO) found that DoD's business practices fail to approach the standards of excellence demanded of troops in the field. In particular, "power games" such as front loading (basing program decisions on unrealistic assumptions) waste money that could be used to improve readiness and support modernization.  The report reiterates the importance of fixing DoD's unauditable financial systems as the basis for reasonable decisions.

The latest DoD IG report on the unauditable state of the Pentagon's financial management system (on the Financial Systems page).

"More Spending is not a Reform Strategy," the Werther SITREP (Commentary 419).  July 2001. Why chaos in the Pentagon's review processes ensures that most of the 2001 and 2002 spending add-ons will be wasted.

Congressional Add-ons to the FY 2001 DoD Budget.  From the Center for Defense Information.  Documents $3.6 Billion in procurement items not requested by the Pentagon but added by Congress.  This figure, by way of comparison, would equal 42% of the entire procurement budget of the United Kingdom.

The Plans/Reality Mismatch into the New Millennium. The upcoming train wreck between social spending (general health care, Social Security, Medicare) and defense can be avoided, but not ignored.

"Defense Time Bomb," Chuck Spinney's 1996 study of how rising procurement budgets--as Cold War era weapons programs enter production--will devour money needed for pay, readiness, social security, and other priorities.  To make matters worse, the enormous spending required for the F-22, JSF, V-22, F-18E/F, etc., will not even modernize the force (as GAO report in the next item confirms). Originally a staff study, then published in its current form in Challenge: The Magazine of Economic Affairs, July-August 1996, pp. 23-33. (70KB .pdf file)

"Tactical Aircraft: Modernization Plans Will Not Reduce Average Age of Aircraft," GAO Report GAO-01-163, February 2001.  The 30-year service spending plans, even if perfectly executed (no slips, no overruns), will not modernize the force. Despite spending between $258 billion $338 billion on new aircraft, the average age of tactical aircraft in 2026 will be higher than it is today (currently, 13 years for the USAF, 10 for the Navy -- both numbers higher than service goals).  These plans do not include the $1,344 billion needed for structural mods to current aircraft. (808 KB .pdf file)

"As Readiness Debate Rages, Pentagon Implement Budget Boost," Adam Herbert, Inside the Air Force, September 1, 2000.  More on the debate over the "Four Percent Solution."

Comments

540 Why is the Military Stressed out by Iraq???
March 19, 2005
531 Defense Budget Time Bomb Explodes: The Rising Cost of Low Readiness Comes Home to Roost ... and our Troops are Paying the Price , December 18, 2004
516 Certain to Win, July 19, 2004
509 Werther Report: The Sunk Cost Fallacy, Why Sir Douglas "Stayed the Course" for 5 Months After after Losing 60,000 Men on 1st Day of the Battle of the Somme, April 22, 2004
495 Why Outsourcing Military Operations is Bunk, September 19, 2003
493 The Auerbach Report: Was Lenin's Theory of Capitalists Hanging Themselves Incomplete??? September 13, 2003
482 Star Wars, Punctuated Epistemology, and the Triumph of Medieval Scholasticism, May 23, 2003
474 Offsets: Legalized Bribery or Half-Baked Policy or Both? February 18, 2003
468 The Defense Budget Time Bomb Has Been Outted By the Congressional Budget Office, January 10, 2003
463 F/A-22 ... Another Non-Trivial "Minor" Setback in the Hall of Mirrors, November 8, 2002
458 Is a Predatory Elite Shaping the War Scare of 2002, September 14, 2002
450 Teach the Pentagon to Think Before it Spends, June 5, 2002
448 Tiny Program Triggers Credibility Battle in Versailles, May 17, 2002
423

Is War a Business? or Why it is Necessary to Teach the Pentagon to Think Before it Spends. August 7, 2001

422

Down the Tubes: The Family Farm's Dangerous Romance with Technology. August 5, 2001

421

Dumbing Down the Indefensible Defense Debate, July 29, 2001

419 The Werther SITREP: Is the Pentagon  Hostage to a Frankenstein Monster?  July 15, 2001
418

Richards Report: A Swift Elusive Sword ... or ... An Alternative to "Transformation Pentagon Style"  July 12, 2001

409 A Critique of Pure Superstition: The Question of What Revolution in Military Affairs, April 6, 2001
407

Sneak Attack Reveals Why Bureaucrats Love Anonymity, March 5, 2001

395 Strategy Quo Vadis: The Cycle of Adaptation Through Rationalization & the Case for a New SSC, November 17, 2000
391 John T. Correl & the Question of Integrity?  October 11, 2000
387

The Kind of Questions No One Wants To Hear, September 21, 2000

386

The Real Cost Of Spending 1% More Of GDP On Defense, September 20, 2000

383

Madness of Versailles: The Pentagon's Presidential Auction, August 30, 2000

379

The JSF: One More Card In The House, August 16, 2000

378

JO's Lament Illustrates Hollow Defense Debate, August 16, 2000

341 The Howling Wilderness of Acquisition Reform or Why the Super Hornet is a Super Failure (II), January 17, 2000
338 The Howling Wilderness of Acquisition Reform or Why the Super Hornet is a Super Failure, December 16, 1999
331

Virtual Decision Making in the Hall of Mirrors, November 10, 1999

329

Theory of Self-Licking Ice Cream Cone to Replace Value Theory of Stock Pricing on Wall Street, November 6, 1999

328

Flash - Plummeting Defense Stocks Poised to Accelerate Defense Death Spiral
November 4, 1999

299

The Howling Wilderness of Acquisition Reform: F-22 a Case Study of How Business-as-Usual Shapes the Anatomy of Decline, July 20, 1999

298

The Howling Wilderness of Acquisition Reform: A Discourse on Inside the Beltway Magic, July 9, 1999

297

Why Did Slobo Cave? (IV), July 6, 1999

292

A 'Walk-About' Through the Howling Wilderness of Acquisition Reform, June 25, 1999

290

The Dark & Satanic Forces Proliferating Gobbledygook in Versailles on the Potomac, June 22, 1999

289 The Lose-Lose Dilemma: Why Task Force Hawk is a Paradigm for Fiascos Waiting to Happen, June 22, 1999
289A

Correction of Error #289, June 22, 1999

288

Task Force Hawk -- Lessons Learned in Albania, June 21, 1999

236

F/A-18E/F Reveals the Exit Strategy From the  Howling Wilderness of Acquisition Reform, February 11, 1999

235

The Howling Wilderness of Acquisition Reform: Why Endless Lawsuits are at the Center of Its Vortex, February 10, 1999

215

Fortress America: Why America Lost Its Peace Dividend After the Cold War Ended, November 29, 1998

213

The Howling Wilderness of Acquisition Deform (I) ... or Why Illegal Contracts Speed Up & Simplify Decision Cycles, November 9, 1998

205

Notes from the Sausage Factory: AF May Accelerate C-130J Procurement to Control F-22 Costs!!!!  October 27, 1998

204

Notes from the Sausage Factory: C-130J -- Healthy or Rancid Pork?  October 27, 1998

203

Toys vs. Boys (II) Crony Capitalism American Style, October 24, 1998

202

Toys vs. Boys (I): The Emerging Defense Policy Debate It's Either the Contractors or the Troops, October 23, 1998

200

Readiness Trap Sprung--The Real Game Begins, October 10, 1998

198

Hollow Defense Debate . Why Hope IS the Method, October 1, 1998

197

Readiness Trap Sprung - More Money Spent the Same Way is Not the Answer, September 30, 1998

192

Hollow Defense Debate Heats Up as Congress Moves to "Save" Readiness by Adding Unneeded Weapons Systems, September 25, 1998

184

More on the Phony Debate to Increase the Defense Budget, September 11, 1998

183

DoD's Death Spiral (II) Why the End Game is Either Program Death or a Complete Overhaul, Not Higher Budgets, September 3, 1998

182

DoD's Death Spiral or ... Why Did It Take Five Years for the Light to Click On? September 3, 1998

168

Today's Contribution to the Hollow Defense Debate ... The Washington Post Weighs in Against Tax Cut to Protect Defense Budget, August 16, 1998

167

Notes From the Sausage Factory (III) - The Banality of Defense Spending, August 15, 1998

166

READINESS TRAP SPRUNG (III) - Crony Capitalists in Washington Funhouse Set Stage for Phony Debate Over Defense Spending, August 13, 1998

165

READINESS TRAP SPRUNG (II)? - Defense Intelligentsia Leads Stampede into Howling Wilderness of the Post-Information Era, August 10, 1998

159

READINESS TRAP SPRUNG? - Senate Passes Amendment as Part of a Plan to Increase Defense Budget by $60 Billion over Next Three Years, August 1, 1998

157 Congressional Scam to Increase Defense Spending ... or ... Why "It's going to cost a lot to adjourn this year," the Hill Staffer said with a laugh.  July 28, 1998

Books

CERTAIN TO WIN: The Strategy of John Boyd, Applied to Business, by Chet Richards. Boyd's real OODA loop and ancient strategies working for business today. More...
Advance Reviews;
Amazon and B&N

 

RAISING THE BAR, by Donald Vandergriff (U.S. Army, ret.) Published by the Center for Defense Information Press. Read the DNI review. Order from Amazon.

 

SCIENCE, STRATEGY AND WAR, by Col Frans Osinga, RNAF. Read the DNI Review.  Order from Amazon or B&N. New! Now in paperback directly from Routledge, $35.95.

 

NEITHER SHALL THE SWORD, by Chet Richards.  If you thought A Swift, Elusive Sword was too tame.  Read the Introduction and view the Briefing. Podcast review.  Available now on Amazon

 

BOYD: The Fighter Pilot Who Changed the Art of War by Robert Coram
Amazon & B&N.

 

BLUEPRINT FOR ACTION : A Future Worth Creating, by Thomas P. M. Barnett. Read the DNI review. Buy at Amazon and B&N

 

NOT A GOOD DAY TO DIE: The Untold Story of Operation Anaconda, by Sean Naylor. Read the DNI Review; Amazon and B&N

 

THE WASTRELS OF DEFENSE: How Congress Sabotages U. S. Security by Winslow Wheeler.  You'll be disgusted, then just mad.
Read Comment #527.
Amazon and B&N

 

THE AFGHAN CAMPAIGN, by Steven Pressfield.  Read the DNI Review. Amazon and B&N.

 

The Virtues of War by Steven Pressfield
Read the DNI Review.
Amazon and B&N. Now in trade paperback.

 

The Sling and The Stone by Col T. X. Hammes, USMC
Amazon and B&N

 

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