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Contract Protests May Be Here to Stay
Travis | Nov 18, 2009 |
1 The Pentagon is evaluating why protests over weapons contracts increased by 24 percent in 2008. The brouhaha over the Air Force refueling tanker last year was an obvious factor, but there are larger forces at work, too...
Defense contractors today likely see an existential threat in failing to secure new contracts. Big ticket procurement items don’t come around that often, so if a company fails to get in on the action, which in the tanker’s case may be around $100 billion over the entire life cycle, it is pretty much screwed.
The consolidation of the defense industrial base over the last two decades has also made procurement much more of a zero-sum game. There were over 20 fully competent prime contractors in 1985, so losing out on a contract didn’t seem as life-threatening (i.e. you win some, you lose some). Since there are only six prime contractors today, a win for the competition can only be interpreted as a catastrophic loss.
Finally, the much-anticipated decline in procurement spending that is expected under President Obama probably has companies thinking that their opportunities to ride the gravy train will disappear soon.
Another factor, in my mind, is general erosion in the faith shown to governmental referees. This reflexive distrust of impartial observers, which is rearing its head in the health care debate, is related to Americans’ skepticism about media objectivity and is an extension of the paranoid style in American politics. In the context of military procurement, it translates into cynicism toward any assessment of competing weapons prototypes issued by GAO, CBO, the Office of Program Analysis and Evaluation, or anyone else. This ingrained cynicism is one of the shortcomings that I highlighted in the Levin-McCain acquisition reform bill:
…the long-term benefits of life-cycle competition are difficult to forecast and are subject to manipulation and misrepresentation by lawmakers (who have a political interest when jobs are at stake) and companies (who have a proprietary interest when contracts are at stake). The second engine for the Joint Strike Fighter is a perfect illustration of these difficulties. Under Levin-McCain, who would make the determination between future benefits versus additional competition costs?
Last year’s spike in contract protests, which threaten to overload defense oversight agencies already burdened with record-level military spending, may be here to stay. While I understand the value of peer-review and the importance of objecting to flawed analysis, let’s not pretend that political and proprietary stakeholders are ever going to say, “You know what, we agree with GAO on the merits and as a result will give up.” This is not some academic exercise or debate club – billions of dollars and people’s livelihoods are at stake. At some point, governmental policymakers have to say enough is enough and just make a decision so that U.S. troops can get the equipment they need. Analyze thoroughly, decide accordingly, and implement aggressively.
Security Matters, Acquisition, Defense Spending (all tags)
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