Half of Top DoD Programs Busting Budget

The Pentagon's system for developing and buying weapons is broken and has failed to improve much over the last 10 years, senators and congressional experts said Tuesday morning during a hearing of the Senate Armed Services Committee.

"These cost overruns happen because of fundamental flaws that are built into our acquisition system," said Sen. Carl Levin (D-Mich.), chairman of the committee.

In a drumbeat of trouble for the Pentagon's acquisition corps, Levin pointed out nearly half of the Pentagon's 95 biggest programs have triggered Nunn-McCurdy reviews by Congress, burdening the country with $295 billion in new and unplanned costs.

Nunn-McCurdy reviews -- named after the lawmakers who mandated their use by DoD auditors -- occur when a Pentagon program is over budget by at least 15 percent.

The bloated programs' research and development budgets grew by an average of 40 percent, and the acquisition costs grew by an average of 25 percent, officials say. On top of that, they suffered an average schedule delay of almost two years.

Senators of both parties were careful to offer support for the Pentagon's top gear buyer, John Young, who testified before the committee June 3. But, as Sen. Joseph Lieberman (I-Conn.) told the hearing, the failure of major programs to stay on cost, schedule and performance are "exasperating, embarrassing and very harmful to our attempts to provide for our national security."

Senator Claire McCaskill (D-Mo.), a former government auditor, was about as biting and sharp as a senator ever gets in public.

"It seems to me the definition of success is: get the money and keep getting the money," she said. "It seems to me we've got to implode something here."

She and Sen. John Warner (R-Va.), ranking member of the committee, mentioned a newly released report that showed Lockheed Martin had changed the management system it used for the Joint Strike Fighter, leading to $257 million in unanticipated charges.

The failure of Lockheed's military aircraft division in Fort Worth, Texas to comply with guidelines mandated by the Pentagon on major procurement programs pushed up costs on a variety of weapons systems over the long run, according to the Project on Government Oversight, which obtained the report from the federal Defense Contract Management Agency.

Warner made it clear he was very unhappy that a program intended to replace scores of Marine Corps, Navy and Air Force fighter planes was in such bad fiscal shape.

"Perhaps no program in contemporary history here is of greater importance to the United States," he said, adding that the problems outlined in the report by the Defense Contract Management Agency "rattles all across the world."

The report comes just a few months after the Government Accountability Office, the investigative arm of Congress, raised concerns about the ballooning costs of the Joint Strike Fighter program. The Defense Department recently put the cost of the Lockheed-led contract at $298.8 billion.

"How did this happen?" Warner wondered.

Young said he had met with Lockheed's CEO to make it clear they had made a big mistake and told the company it should not have changed its accounting system.

Now the Pentagon has a plan in place to fix the problem, Young said, and Lockheed program managers are meeting with Pentagon acquisition experts every two weeks to review progress.

And there's some bite to the Pentagon's bark -- Lockheed will be required to forfeit $10 million every time the company misses one of 12 program milestones mandated by its contracts.

In a statement, Lockheed Martin, said it has worked closely with the Pentagon to address its concerns and has taken steps that "will be effective."

The Associated Press contributed to this report.