GAO says Pentagon failing to commit weapon funds
By Donna Borak, AP Business Writer | July 3, 2008

WASHINGTON --Increased costs and delays in delivering vital weapons to soldiers in war zones are due partly to a lack of full funding for those systems, according to a government audit.

In a follow-on report released Thursday, the Government Accountability Office reviewed 20 of the Pentagon's 95 major weapon programs, including Lockheed Martin Corp.'s F-35 Joint Strike Fighter, the Army's $160 billion combat modernization program led by Boeing Co. and SAIC Inc., and Northrop Grumman Corp.'s Global Hawk unmanned aerial vehicle.

Among its findings, the GAO said more than 75 percent of the programs reviewed were not fully funded in the Pentagon's long-term investments strategy. To compensate for funding shortfalls, the Pentagon shifted money between programs, deferred work and associated costs into future years, or reduced the quantity of its purchase.

"Ultimately, such reactive practices obscure true program costs and contribute to the instability of many programs," the GAO said.

The Pentagon estimates it will cost $1.6 trillion to develop and buy major weapon systems, $335 billion of which is expected to be spent over the next five years. The 20 programs reviewed by the GAO between June 2007 and May 2008 represent more than one-third of the Pentagon's estimates.

The department's "flawed funding process is largely driven by decision makers' willingness to accept unrealistic cost estimates and DOD's commitment to more programs than it can support," the GAO said in its report, which echoed findings released last year.

In responding to a draft of the latest report, the Defense Department said while it has control over its programming and budget process, it does not govern the amount included in future years budget planning or congressional appropriations.

"At times, these external influences will also cause turbulence in program execution," according to the Pentagon.

Northrop Grumman spokesman Randy Belote said the company needed more time to analyze the GAO report before commenting. Representatives from Boeing, SAIC and Lockheed Martin had no immediate comment Thursday afternoon.

Increased costs and delays in delivering vital weapons to soldiers in war zones are due partly to a lack of full funding for those systems, according to a government audit.

By that I mean, rather than buy, say, 100 F-35s average per year over five years and, say, 12 tankers per year, pay up-front for 500 F-35s and 60 tankers. So, one year you fund your fighter requirements, next year you take care of the tankers, year after the missiles, etc. This way you get rid of "funding instability" and reduce risk for the contractors and subcontractors. A lot of the cost associated with these programs is purely a factor of not being able to plan ahead of time and issues involving supply chains and what not, with some lond-lead items requiring orders years in advance, as with a carrier. This is all so logical, though, that I don't think anyone in goverment could actually wrap their minds around it...

So I have this crazy idea. Go to four- or five -year budgets. Not even multi-year, where funding is still allocated on a yearly basis. Figure out those things you are sure you are going to be buying and allocate funds in one lump sum, creating economies of scale. By that I mean, rather than buy, say, 100 F-35s average per year over five years and, say, 12 tankers per year, pay up-front for 500 F-35s and 60 tankers. So, one year you fund your fighter requirements, next year you take care of the tankers, year after the missiles, etc. This way you get rid of "funding instability" and reduce risk for the contractors and subcontractors. A lot of the cost associated with these programs is purely a factor of not being able to plan ahead of time and issues involving supply chains and what not, with some lond-lead items requiring orders years in advance, as with a carrier. This is all so logical, though, that I don't think anyone in goverment could actually wrap their minds around it...