Tuesday, March 31, 2009

The Broken Military Budget Estimation Process

A wire story was out yesterday called, "Nearly 7 in 10 major U.S. arms programs over budget." The details come from a GAO report. Here are some key points:
Of those reporting relevant cost data, 69 percent, or 64 programs, chalked up increases in total acquisition costs, the GAO said. 

A total of 75 percent, or 69 programs, reported increases in research and development costs and these were 42 percent above their original estimates in 2008, up from 40 percent above the year before.

And delays in delivering weapon systems increased. What ever happened to underpromising and overdelivering as a principle for estimating? For as long as I can remember, the Pentagon has based its acquisitions on rosy estimates of cost & development times. This is typical government inefficiency taken to the extreme. Instead of basing our acquisitions on worst-case realistic estimates, we base them on fantasy projections that lead to massive cost overruns and undelivered or non-functioning systems. The spiraling costs lead to cuts, some of which affect promising platforms that have to be killed because we can no longer afford their development -- all because we can't be bothered to use reasonable, conservative estimating practices.

What are the administration's plans?

Ashton Carter, the Obama administration's choice to become the Pentagon's top arms buyer, told his Senate confirmation hearing on Thursday he would go program by program to crack down on cost overruns if confirmed.

That's like treating the symptoms of a cancerous tumor, while ignoring the tumor itself. The Obama administration should call for a complete overhaul of the military cost estimation process. It's one area where reform is desperately needed.

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