
Why the Pentagon’s many campaigns to clean up its accounts are failing - joshuahedlund
http://www.reuters.com/investigates/pentagon/
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holograham
Lots of comments below are accurate e.g. terrible gov't oversight, extremely
large and complex projects, corporations responding correctly to bad
incentives, corporations thriving off the complexity of govt contracting

However I will posit an additional layer to this...and it lies with the
American people themselves. We just cant handle gov't officials and
contractors making a ton of money. The real root of the complexity in govt
contracting is FAR (Federal Acquisition Regulations) Which create the
complexity to avoid egregious corruption and profits in the federal space.
While on paper it sounds great...lets make rules that limit what corporations
can make off of the government... what you actually get is tremendous waste.
Redundancy, arcane billing practices and auditing, and huge bureaucratic RFP
bidding systems that limit competition. A classic case in not doing a complete
cost-benefit analysis.

The solution is not palatable to the general American public. Put up with some
fraud and corruption in the federal government which would be offset by
increased competition from the private sector (thus better products and
prices). And dont kid yourself if you think fraud and corruption doesnt still
go on...it's just more sophisticated.

~~~
Retric
IMO, the real solution is to let the government compete with the private
sector on 'government' contracts. Basically, do an analysis on how much it
would cost to do in house and then put the same contract up for bid. (aka a
Sanity check) However, you need to add a companies reputation to their bid so
if they say it costs X and they tend to be 30% over budget or have quality
issues then you don't just accept X. With that said and done if someone can
really deliver high quality and still make a 20% profit then let them.

~~~
JPKab
The government's hiring process makes this impossible. They are too slow, the
people who know what needs to be done are completely separate from the
centralized offices which hire, and therefore the government only hires people
based on arbitrary measures including keywords on resume, number of years in x
industry, certifications from Craposoft and Orac-ket. They are fucking
fantastic at hiring useless middle-management fucks whose only ambition in
life is a paycheck and to stop using their brain when they leave the office
(at 4:00 or 3:30 pm on a weekday)

Ambitious people leave in droves, because an organization run entirely on
"other people's money" always steers towards complacency and lack of
accountability, translating to ambitious people who care about delivering on-
time being surrounded by people whose kid's softball game takes precedence
over leaving customers out in the cold.

Anyone who has EVER dealt with the federal government in any fucking way knows
that what you are saying would never work. The laziest people I have ever
encountered in my life are in the Federal government. I'm a huge advocate for
the environment, and my first dealings with the EPA made me want to cry. They
are horrifically lazy at a cultural level. The DoD is fucking awful. Go to a
military base at 3:00 PM on a Friday afternoon and watch as a traffic line
builds up at the exit gates as the civillian workers go home 2 hours early,
EVERY weekend.

~~~
Bahamut
There are some hard workers in government - you see many around DC. But I
don't disagree that there are some lazy people in government - I have heard
much worse about the EPA than you have stated for example.

The military is some of the hardest working but criminally underpaid.

The whole contracting system is broken - the amount of money government leaks
there is criminal.

~~~
JPKab
Military are not criminally underpaid. When you factor in housing benefits,
pension, health care, education, etc, the military is a fantastic career
option, which is why so many people join it. For a non-college graduate, it is
absolutely the best career path you can take in the US.

When you get out, you have access to federally subsidized loans that nobody
else gets, as well as the ability to have Tricare (ultra cheap health
insurance) for the rest of your life. When you consider that less than 10% of
active duty military will ever see combat, this is a bargain.

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rayiner
One aspect that's missing in these comments is an acknowledgement of the
complexity of the projects which are the subject of defense contracts. The
Pentagon and its contractors are literally at the edge of the state of the art
in fields like aerospace. Very few companies have the expertise to even
attempt to take on these contracts, and most projects have ill-defined
specifications simply because nobody is quite sure what is technologically
possible until the project is well underway. And nobody knows how much money
will be needed up front. That's like asking Zuck in his dorm room: "how much
money will you need to build Facebook as it exists circa 2013?"

I used to work at a company that did DOD contracts (in the wireless sector).
In that area, what the DOD was playing with in the early 2000's is what VC-
funded companies are playing with just in the last few years. For the work we
did, there were no detailed specs because nobody really knew what was within
reach. In response to the question: "what do you want?" the DOD's response is
often: "what could we have?" Pointing at how much more efficient private
industry is makes no sense. Take an example like Space X. They're a shining
example of private industry, and are doing very innovative stuff, but they're
treading a lot of the same ground NASA and DOD contractors did in the 1960's.
Of course they're getting it done for a lot less money! They know what's
possible, they have a general idea of what works. The contractors doing this
stuff in the 1960's had none of that to work with.

Obviously the time is due for modernizing the accounting system. But it's
important to realize that a lot of the mess dates from the Cold War, where
keeping up with the Soviet Union was the priority, not satisfying the bean
counters.

~~~
omegant
This is very well explained at the book moon lander, it's an amazing inside
story of the problems they encountered during the design and comstruction of
the modules. What has surpriced me is that the design effort was minor
compared with the management and quality control. They had to multiply the
budgets severaltimes to be able to correct unexpected problems.

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a2tech
The biggest problem I see in these articles is the insistence on using off the
shelf systems. SAP and Oracle are always at the center of these deals, and
they end up being disasters. If you have MULTIPLE billion dollar failed
projects using COTS systems, maybe its time to step back and look at a custom
system.

~~~
michaelt
The root of the problem isn't using or not using COTS.

The root of the problem is the government keep hiring consultants they pay by
the hour. They they act surprised when the consultants respond rationally to
the incentives.

Or they agree to a fixed price contract where everyone knows the government
will pay you more if you say you can't deliver and threaten to go bankrupt.
Then they act surprised when the contractors respond rationally to the
incentives.

The government needs to break projects down into smaller chunks, to mitigate
the losses if a supplier doesn't deliver, you don't pay them, and they go
bankrupt. Then they need to establish and enforce an incentive system where
suppliers are punished, not rewarded, for failing to get the job done.

~~~
tomohawk
Or, the root of the problem is in treating these companies as too big to fail.

If the big companies were allowed to fail, that would develop a market for
others to enter who could succeed.

With gov't contracting, it is unrealistic to leave aside the political
connections the companies have. It is simply unacceptable to the political
crony class to allow one of their own to fail.

~~~
nucleardog
> If the big companies were allowed to fail, that would develop a market for
> others to enter who could succeed.

If the big companies were allowed to fail, maybe they'd stop underbidding on
contracts to get them based on their reputation and smallest bid (knowing that
there's no risk), and instead bid actual costing.

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pitchups
From the article :

> _" The Pentagon alone has never been audited, leaving roughly $8.5 trillion
> in taxpayer dollars unaccounted for since 1996, the first year it was
> supposed to be audited."_

Wow - that means an average of $500 billion per year of taxpayer money
unaccounted since then!

From reading the article, one distinct impression is that the real reason for
failed accounting may be simpler and more troubling than all the other obvious
ones : because it is so much easier to hide inefficiency, incompetence, and
gross abuse/misuse of funds if there are no proper accounting systems in
place. The freedom from oversight can be addicting. While there may be no
grand conspiracy in place at the top to achieve this - the will to fix what is
broken could certainly be weaker if it gives you the freedom to do as you
please.

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smtddr
Of course it's failing. Screwed up accounting allows for easier stealing and
harder to pinpoint who/when/where money ended up.

~~~
arethuza
"Who in their right mind would send 363 tonnes of cash into a war zone?"

[http://www.theguardian.com/world/2007/feb/08/usa.iraq1](http://www.theguardian.com/world/2007/feb/08/usa.iraq1)

~~~
smtddr
That's ridiculous! These wars are just fronts for money laundering & control
of oil. It's only by coincidence that they can align some wars with some
human-rights violation. Otherwise, they'll just make stuff up.

We need a revolution, there I said it. Go ahead NSA and add me to the watch-
list. Nobody here doubts that you scan this site daily.

~~~
arethuza
Well, there _might_ be good reasons for having that amount of cash - but you
can't help wondering what the processes and systems there were for controlling
what it was all used for..

Edit: This attitude by a US general doesn't exactly come across well:

Q: "But the fact is billions of dollars have disappeared without trace."

Oliver: "Of their money. Billions of dollars of their money, yeah I
understand. I'm saying what difference does it make?"

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Shivetya
If its anything like what happens when Oracle or similar come in its this,
they spent so much that it would be a waste to not keep spending.

That and the higher level people who started it, bought into it, put their
name on it, are the last people who ever back down and are damn near not
approachable by those in the trenches.

Seen it far too many times. Backing down cost reputation which is more
expensive than money from someone else

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mathattack
I couldn't imagine the pain involved in being attached to one of these
projects for multiple years. I suspect most smart and ambitious people agree
with me. So in the end, you add a lack of talent to all the other very real
things that others have added.

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wehadfun
Did anyone read the first article? This is the third

