The Real Reasons Weapons Cost So Much Aren’t What You Think
If there’s one thing that everybody in Washington can agree on, it’s that the Pentagon’s system for purchasing weapons is broken. Every presidential administration commits to “acquisition reform;” every Congress passes new laws to remedy cost overruns, schedule delays, and performance shortfalls. Officials frequently cite major savings from these initiatives, and yet somehow the system never seems to get fixed – despite the fact that top acquisition positions at the Pentagon are populated by the best and brightest minds America has to offer.
When you see a pattern like this unfold over multiple generations — billions of dollars spent each year on a problem for decades with no appreciable improvement — you begin to suspect that politicians and policymakers don’t grasp the true nature of the problem. After all, this is a government that put men on the Moon within a hundred months after setting the goal. It built the first digital computer, developed the first atomic bomb, and launched the internet. So if it can’t get a handle on the high cost of weapons, maybe there are reasons that transcend mere management.
Indeed there are. Contrary to misconceptions in popular culture, the main drivers of high weapons costs have little to do with mismanagement, or corruption, or the profit margins that military contractors generate. The Pentagon acquisition system is better managed and more honest today than ever before, and compares favorably with the systems in just about any other country. As for defense-industry profits, they trail those of many other economic sectors. The really big reasons why weapons cost so much lie elsewhere, mainly in national strategy, global threats, electoral politics and well-intentioned but counter-productive oversight. Let’s briefly examine each of those.
Strategy. The United States is the only nation in history that has assumed responsibility for quickly countering threats to peace anywhere in the world. No matter where threats arise and what their character may be, from Northeast Asia to the Persian Gulf to Eastern Europe, America always leads the response. This creates a requirement for weapons that are extraordinarily versatile, resilient, mobile and aware — weapons that are relevant across the full spectrum of conflict. Reformers often complain that an undisciplined requirements process for specifying what weapons must do drives up their cost, but when you have a national strategy that calls upon the joint force to bear any burden in defense of democracy, it isn’t hard to justify performance specs no other nation deems necessary. So Americans — 5% of the world’s population — end up spending as much on advanced military technology as the rest of the world combined.
Threats. The information revolution has empowered villains of every variety, so the array of dangers U.S. forces must be prepared to defeat on the ground, in the air, at sea and in cyberspace is quite diverse. What really drives up the cost of weapons, though, is the rapidity with which threats change in the current era — unlike during the Cold War. The Pentagon began the new millennium preparing to transform its forces for information-age warfare, and then discovered it instead was facing suicide bombers. Thus the military is constantly rethinking the performance features of new combat systems and making modifications to the weapons it already has. The changes cost hundreds of billions of dollars, but who knew China would develop maneuvering anti-ship ballistic missiles or insurgents could get so much mileage out of improvised explosive devices?
Politics. The main customer for weapons is a political system that is focused first and foremost on securing its own reelection. That’s the way political systems are — they are preoccupied with preserving power rather than pursuing efficiency. So while legislators talk incessantly about fixing the Pentagon’s broken acquisition system, in practice they are constantly imposing constraints on how weapons can be developed, produced and sustained with the aim of rewarding key constituencies. These claimants on federal resources typically get their cut of the action by adding costs, and new mechanisms added to the system to restrain cost growth like auditors and testers over time themselves become hungry mouths that must be fed. It’s a messy, wasteful system, but for a suitable political premium it still produces the best weapons in the world — which is more than any dictatorship can say.
Oversight. As I mentioned earlier, Congress frequently passes legislation aimed at strengthening oversight of acquisition functions. There is now so much of this legislation on the books that program managers are suffocated by a stifling burden of regulations, rules, and reporting requirements that often add cost without adding value. Former Deputy Secretary of Defense John Hamre says that “fully a third of our procurement dollars are going to ‘overhead,’ much of it dictated by choking layers of redundant and competitive overseers.” One former Pentagon acquisition chief complained that “we spend millions to save pennies,” meaning that the cost of oversight as currently conducted is far higher than the cost of corruption or incompetence in the functions being monitored. A customer that is the sole source of demand for much of what it buys should be able to get by with a lot less overseers simply by exercising its pricing power.
So far, it hasn’t succeeded in doing so. Charles Clark of Government Executive recently offered a sad insight into why the government seldom gets a good deal on weapons, citing the congressional testimony of Pentagon acquisition chief Frank Kendall — probably the best-prepared person to ever hold that position. Kendall told members of the Senate Armed Services Committee that he would like to leave “a stronger and more professional defense acquisition workforce” as a legacy of his tenure, but then went on to observe: “The tide would seem to be against me because of events like pay freezes, sequestration, furloughs, shutdowns and workforce reductions.” Democracy is not a tidy affair; even if the nation’s strategic goals were pared and threats were in abeyance, it would be very hard to make weapons programs operate efficiently in the current political and bureaucratic climate.