Pentagon officials are racing to meet tight deadlines to overhaul the weapon acquisition system, prescribed by the White House in two executive orders issued in April. But their haste should not obscure the likelihood that the Trump administration is ushering in a new era of overpriced weapons—and missing the larger point, to boot.
The U.S. military is already overspending on its arms. The Congressional Budget Office projects that annual acquisition spending from 2025-29 will be about 9 percent higher, in real terms, than from 2001-24. White House officials say the problem is weapons programs that blow their schedules and budgets, and they blame “onerous bureaucracy.” They propose eliminating or exempting weapons manufacturers from broad sections of the Federal Acquisition Regulation, which they say will unleash manufacturers to produce more weapons faster and at a lower cost.
The FAR guides Pentagon efforts to purchase weapons, from soliciting bids to negotiating and awarding military contracts—in essence, establishing the rules of the road for military contracting. Gutting it to a degree not seen since the 1990s would actually impede the government’s ability to negotiate fair prices on military contracts. Contractors would be largely uninhibited by requirements to substantiate their prices with cost information, leaving the Pentagon to negotiate with them blindly.
This would affect more than the initial design-and-build contracts that get the headlines when costs and schedule balloon. Some 70 percent of the lifecycle spending on a weapon goes toward sustainment, and these contracts are susceptible to cost increases as well. Defanging the FAR would rob the Pentagon of leverage to negotiate with military contractors on these contracts.
Another dynamic that drives up costs is the lack of competition in the over-consolidated U.S. arms industry. With just one or two suppliers to bid on many contracts, the Pentagon’s best tool to determine whether prices are fair and reasonable is certified cost and pricing data—that is, accurate, complete, and current information about the costs associated with performing a government contract. Yet lawmakers have created so many exemptions that contractors are rarely required to provide the Pentagon with this information. Congress has, in a word, effectively legalized price-gouging.
One way to keep Pentagon weapons buyers from overpaying would be to limit such exemptions. Policymakers could, for example, lower the value of contracts subject to mandatory disclosure from $2 million to $500,000. They could also narrow the definition of “commercial items,” whose makers need not disclose certified data.
Instead, leaders on both the House and Senate Armed Services committees have offered bills that would expand such exemptions. One is the Fostering Reform and Government Efficiency, or FoRGED, Act proposed in December by Sen. Roger Wicker, who leads the Senate Armed Services Committee.
Not to be outdone, Reps. Mike Rogers and Adam Smith—the chair and ranking member of the House Armed Services Committee—recently introduced the Streamlining Procurement for Effective Execution and Delivery, or SPEED, Act. One section of the bill uses inaccurate and exceptionally misleading language to target the Cost Accounting Standards. These provide the department with a mechanism to adjust contract prices when costs are misassigned to contracts, helping the Pentagon ensure that taxpayers only pay contractors for their government work.
If passed or integrated into the National Defense Authorization Act, both the SPEED and FoRGED Acts would reduce the Defense Department’s ability to negotiate fair prices on military contracts.
Meanwhile, other pernicious dynamics go unaddressed. Congress and the Pentagon order more weapons than the defense industry can produce, which helps lead to cost and schedule overruns. Too often, companies use the extra cash to line shareholders’ pockets instead of investing in new production capacity, all while crying poor to lawmakers.
Still, it’s far easier for policymakers to blame bureaucracy than to critically assess the military and technical dimensions of weapons acquisition programs—all within workforce- and production-capacity constraints. It’s time to pick and choose between weapon acquisition programs, not to enable contractors to charge whatever they want on military contracts, regardless of their costs. Unfortunately, policymakers don’t get ahead by saying no to new weapon acquisition programs.
Even more broadly, policymakers could eliminate other dynamics that lead to superfluous or duplicative weapons programs: careerism, interservice rivalry, and even the U.S. obsession with global military dominance. The purpose of the military is to defend the United States, its people, and its treaty allies against attack—not to project force all over the world. It’s no wonder the acquisition system cannot keep up.
The programs in development today, including the B-21, Constellation-class frigate, and F-47 will move into full-rate production in the next decade or two. If policymakers gut the FAR and cost accounting standards, they will all but guarantee that the costs to buy and sustain new programs will require annual military budgets that dwarf this year’s trillion-dollar-plus spending plan.
Julia Gledhill is a research analyst for the National Security Reform Program at the Stimson Center. She previously worked for the Project On Government Oversight and the Friends Committee on National Legislation.
Read the full article here