After perusing some of my favorite Military rags the other day, I came across a lesser known, but gem of a magazine called National Defense. It was time for the February edition. This publication is well read at the Pentagon and no doubt by those contractors who work with the DoD. It usually has a flare of “look at my knew gun” or “I woke up and there were seven new digits in my bank account” type stories, however, Sandra I. Erwin wrote a piece about Pentagon procurement officers working to keep their programs on budget. She was borderline cavalier with some of points of egregious overspending, but she brought up a wonderfully overlooked law called the Nunn-McCurdy Amendment.
Nunn-McCurdy is a provision that was attached in the 1982 Defense Authorization Act requiring Congress to be notified about any program that exceeds the original bid by 15%. If that program requires a cost growth of more than 25% the Secretary of Defense must then submit a letter explaining why the program has gone over budget and that 1) funding is necessary to national security, 2) “that no suitable alternative of lesser cost is available,” and that 3) “the management structure is (or has been made) adequate to control costs.” So far, sounds like a good idea.
According to Erwin’s report, “Since 2000, thirty-five programs have infringed Nunn-McCurdy — 22 of them exceeding the 25 percent threshold.” Of those 22, 19 programs have been given the green light to see just how far over budget they can go. Erwin goes on to explain that Pentagon acquisition officials have gone back to school to take “triage assessments” lasting six weeks to study why programs get off track and how to help them back on budget.
The Government Accounting Office is less than impressed, however, with the idea that DoD “investment” accounts for major weapons (research, development and acquisition) has increase $70 billion from 2000 to 2007. Paul Francis, director of acquisition and sourcing management at GAO concluded that, “More money only allows additional un-executable programs to get started.” Paul hit the nail on the head: contracts are not unlike any 12-year-old child, they will always try to push the bounds of their allowance. So when you’re dealing with a gun-toting, laser beam infatuated administration – the $10 bills keep coming (in the form of $10 billion bills). In 2006, there was some movement in the House to make Nunn-McCurdy stricter by lowering the cost growth threshold to 15%, requiring recertification by the senior acquisition agent, but the idea never made it into the Senate’s bill.
It’s hard to say if this measure makes it harder for those contractors who go over budget by the 15 and then 25% cost growth rate, but I do know that contracts do hate negative press, which leads to negative stock tickers. The media needs to yell, and yell loud, the next time a DoD program breaches the 15% mark – and it needs to scream bloody murder when recertification is made on those programs who eclipse the 25% margin. The media’s all-too-fine brush would be just about the only way to shed the proper amount of light on the shady situation.
