Shadow Government

Gates and Carter tackle Defense budget

No one doubted that Secretary of Defense Robert Gates was serious when he announced that he would seek efficiencies amounting to at least $100 billion over the next five years. Gates made it clear that he understood that unless he could curb the Pentagon's seemingly insatiable budget appetite, either the White House (in the form of the Office of Management and Budget) or Congress would put the DOD on a starvation diet. Only if he could identify real cost efficiencies did Gates feel he would be justified in requesting modest growth in defense spending.

Gates has asked his undersecretary for acquisition, Ashton Carter, to oversee the efficiency drive. In turn, Carter has identified five major areas that are critical to meeting Gates' objectives.

First, Carter wants both the acquisition force and DOD suppliers, to plan programs on the basis of what they should cost, and not merely extrapolate on the basis of historical cost figures. Second, he would create incentives for contractors to control costs through improved business practices. Third, he will seek real competition by eliminating the practice of "directed" purchases from multiple suppliers, which effectively guarantees both suppliers a share of a program and reduces any incentive for them to compete against each other. Fourth, he plans to come down hard on the bureaucracy's management of service contracts, which account for more than $200 billion of the $400 billion acquisition accounts. Finally, Carter would reduce the number of reports that the Pentagon produces, or that contractors produce for the Pentagon.

Carter's plan is a worthy one. But it is not entirely new. Long serving -- and often cynical -- senior bureaucrats will claim that they have seen it all before. 

There have been many attempts to impose 'should cost" approaches to system acquisition. None have succeeded. As for contractor incentives, these too are not new. Until now contractors could receive "award fees" for performance; they are being eliminated for development and initial production contracts because the awards rarely accounted for cost control. But another problem with these contracts is that awards often became almost automatic, and at times therefore seemed to have little to do with actual contractor performance. 

Again, there have been attempts in the past to avoid having "directed" competitions, which, as Carter rightly points out, are not competitions at all. Yet these too seem to endure.

Clearly, what will make a difference in each of these three areas will be the enforcement of Gates' plan and Carter's objectives. If "should cost" methods are not properly applied, will those responsible for producing the cost estimates be fired? Will the programs be halted immediately? Will award fees and similar incentives be granted only when contractors really deserve them? Carter points to a pilot program called "Preferred Supplier." Will the program get past the pilot stage?

Finally, Carter points to the Navy's Littoral Combat Ship program as an example of the Department's cutting back on directed buys. But the program is still in its nascent stages -- it involves the selection of one of two competing hull designs that has yet to be made. Meanwhile, the cost of the ship has skyrocketed. Carter points to program savings of $1 billion. He will need a lot more than that.

All of the foregoing challenges reflect a culture of inefficient spending that has become embedded in the collective bureaucratic psyche of the Department of Defense. The culture of inefficiency also underlies the other two areas that Carter has highlighted, and in which he is truly breaking new ground.

Service contracts have proliferated in the past two decades. This development was due to the cutback in the size of the military during the 1990s, which created vacancies that contractors -- generally retired military or civil servants -- would fill, often by continuing to do the work they had done while in government, but now with a contractors' identification badge. Moreover, as a result of this development, both the military and civil servants came to realize that, by capitalizing on what is euphemistically termed 'staff augmentation" contracts, they could both dump work on contractors, who would work long hours and weekends (while the "govvies" could leave work at 4:30 or 5:00 PM), and then lay the blame on them for anything that went wrong.

In cracking down on the worst practices associated with service contracts, Carter will have to go after the root cause of the problem, which is not the contractors, but those who hire them. It will take nothing less than a change in bureaucratic culture for him to succeed.

Carter is also right to clamp down on the proliferation of reports that threaten to denude our forests and gather mountains of dust on back room shelves. Too much money is being spent on too many reports that too few people bother to read. And the reports get redone almost annually, precisely because no one pays much attention to what has already been reported. Again, Carter's challenge is cultural, and resides within the bureaucracy. The contractors will churn out the reports if they are asked -- and paid -- to do so. If the money is not available, contractors will look elsewhere for work.

Because they are tackling the Pentagon's culture, Carter and Gates face an uphill battle. Ultimately, they will not succeed unless they can meet two critical conditions. They will need to convey the same sense of urgency to their successors, and indeed, ensure that those who succeed their successors do not drop the efficiency baton. In addition, they will need the support of the Congress, and the behavior of the Virginia delegation over the closing of the Joint Forces Command does not bode well in that regard. 

The culture of Congressional parochialism is every bit as much of a threat to the future of a balanced defense program as is the Pentagon's culture of inefficiency. Gates and Carter will therefore have to fight on two fronts if they are to have any chance of even coming close to finding $100 billion in savings, and they will need as many Congressional allies as they can attract. If the Congress is unwilling or unable to change its own culture, the Gates-Carter initiative will go down in the history books as yet another heroic but failed attempt to find efficiencies in that massive endeavor called the defense program. 


Shadow Government

How the Woodward saga could make for a Greek tragedy in the White House

If the full feature lives up to the trailer, Bob Woodward's book about how President Obama has handled the commander-in-chief duties is a very damning indictment of the first two years. Reportedly, the Obama White House fully cooperated with Woodward in the hopes of securing more favorable treatment. But instead of enjoying a valentine, it seems they are better considered victims of a vendetta.

Some caveats are in order. When I finally get the chance to the read the full book, perhaps some of the more damaging quotes and anecdotes will seem less problematic in context. And as Woodward's books on the Bush presidency show, sometimes the author's argument overtakes the evidence -- a problem that gets "fixed" in later installments. Thus, Woodward's argument about a Bush White House in a "State of Denial," is rather thoroughly eviscerated by the reporting Woodward does in his sequel, The War Within. But in my experience, Woodward's accounts are generally very well sourced and reliable in what they cover (the problems are usually in what they leave uncovered).  

To me, the account reads like a Greek tragedy, with the protagonists committing the very errors that hubris foreshadowed. In fact, if you want to compile a list of the debilities of the Obama administration that Woodward uncovers, just draw up a list of the Obama campaign's favorite attack lines against the Bush administration. Thus we find:

  • A president "misleading" the American public. He campaigned on the claim that Afghanistan is a war of necessity that was under-resourced because President Bush ignored military advice, but he privately was forcing his national security team to embrace arbitrary resource and time constraints and to rush to a minimum footprint, and in doing so running roughshod over his military advisors.
  • Feuding advisors arguing as much over personality as over policy. The clashes between Rumsfeld, Powell, Cheney, and Rice in the first Bush term were legendary and, according to the beltway wisdom that fueled the Obama campaign, resulted in egregious strategic missteps. Woodward documents feuds every bit as personal and petty, indeed with more colorful quotes: a team comprised of "waterbugs," "Politburo," "mafia," and "the most egotistical bastard [VP Biden has] ever met." And, more ominously, the turf fights and mistrust seem to crisscross the civil-military divide as well as the official hierarchy, with Cabinet principals dissing deputies (look for the revenge of the deputies in later installments).
  • National security policy dictated more by partisan interests than by the national interest. Thus Woodward reports Obama imposing an artificial timeline on the Afghan surge because the President is adamant that "...I can't lose the whole Democratic party."
  • The White House political team front and center in national security policy. Given how virulent Democrats attacked Karl Rove for eight years, it is striking how prominent his Obama counterpart, David Axelrod, is in all of the proceedings. Axelrod, not a national security policy lead, is responsible for managing the Woodward relationship even though the author's focus was clearly on the wars. And Axelrod's role in setting Afghan war strategy is so divisive it leads General Petraeus to dismiss him as "the complete spin doctor." Indeed, in perhaps the most surprising anecdote, the uber-cautious Petraeus is reported to say, over a glass of wine, that the Obama administration was "[expletive] with the wrong guy."
  • A White House discounting inconvenient intelligence warnings about terrorist attacks planned against the United States. In one of the most damning anecdotes from the previews, "Mr. Blair warned the president that radicals with American and European passports were being trained in Pakistan to attack their homelands. Mr. Emanuel afterward chastised him, saying, "You're just trying to put this on us so it's not your fault." Mr. Blair also skirmished with Mr. Brennan about a report on the failed airliner terrorist attack on Dec. 25. Mr. Obama later forced Mr. Blair out."
  • A White House ignoring a war where U.S. troops are engaged. Obama campaigned against the Bush administration's "inattention" to the Afghan War, but Woodward appears to document an even more profound disregard for the ongoing war in Iraq.
  • A fundamental naiveté about military operations. Thus one finds a commander-in-chief willing to authorize a surge of combat troops but unwilling ("I am done doing this") to authorize the requisite enabling troops that make those combat troops effective. Or a commander-in-chief refusing ("Why do we keep having these meetings?") to revisit, review, and revise earlier decisions as the enemy reacts and as the situation on the ground develops.

Now in every case the Obama campaign's critique of Bush was tendentious, resting as much on myth as on reality. Perhaps with time we will come to a similar judgment about Woodward's account, which appears to have the Obama team committing the very sins of omission and commission that fueled their own earlier partisan attacks. But the pattern with Woodward's Bush books is an ominous harbinger: the initial books were the most flattering and they got progressively more damning until the last one, which provided a very small measure of rehabilitation. If that pattern holds with the Obama team, the Woodward saga will be an epic Greek tragedy.

Update: Let's make that: "Now in almost every case the Obama campaign's critique of Bush was tendentious, resting as much on myth as on reality." I certainly do not think the Bush administration did everything right and that every criticism is completely without foundation. For instance, by all accounts, there really did seem to be debilitating personality conflicts that made policy debates less functional than they otherwise might have been -- especially in the first term, but not limited to then. For precisely this reason, I take seriously the charges here of similar debilitating feuds in the Obama administration. President Obama did to, as his stern message to his team upon the dismissal of General McChrystal made clear. Perhaps things have improved markedly since then and the Woodward book is overtaken by events. We will know pretty soon if that is the case."

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