Bloomberg News | Army Spent Over $32 Billion on Canceled Programs Since 1995

July 23, 2011 § Leave a comment

Bloomberg News | Army Spent Over $32 Billion on Canceled Programs Since 1995

The U.S. Army since 1995 has spent at least $32 billion on development, testing and evaluation of 22 weapons programs that were later canceled — almost a third of its budget for creating new weapons, according to an internal evaluation released today.

The Army every year since 1995 spent more than $1 billion on doomed programs. Those “lost investments” by 2004 increased to as much as $3.8 billion annually, or up to 42 percent of the Army’s total research, development and test dollars those years, said the report requested by Army Secretary John McHugh.

“Army acquisition has proved ineffective and inefficient as demonstrated by the 22 major programs terminated since the end of the Cold War,” said the study. “This track record is unacceptable” and the Army “cannot afford to continue acquiring materiel the way it has in the last two decades.”

Most of the $32.2 billion, out of a total of $98 billion spent on creating new weapons since 1995, was spent since 2001. Among 15 major Army programs contributing to that total was the manned vehicle portion of Boeing Co. (BA)’s Future Combat Systems, on which $19 billion was spent before it was canceled in April 2009 by Defense Secretary Robert Gates. The system didn’t incorporate combat survival lessons from Iraq, he said.
More than 100 officials and experts interviewed for the study concluded the Army’s normal weapons buying process — outside combat-related rapid acquisition channels — “needs major surgery to improve its effectiveness,” said the report by seven retired service acquisition officials, including former Assistant Secretary of the Army Gilbert Decker.

‘Lost Trust’
“As a result of these problems, Army leadership, the Office of Secretary of Defense, Capitol Hill and industry have lost trust in the Army’s acquisition processes and capability to effectively provide equipment and services in a timely manner,” it said.

The Army’s termination numbers were “roughly twice as bad as the other two services,” Frank Kendall, principal deputy undersecretary of defense for acquisition, told reporters April 20.

“There’s been a tendency” on the Army leadership’s part “to not let things go,” said Kendall, who was aware of the Decker report’s conclusions. “The uniformed leadership in particular is often reluctant to let go of a program that’s been in development for a long time,” he said, and too often has chosen “to stretch programs out with insufficient resources and just keep them going.”

‘Looking Ahead’
Army officials until today had declined to release the report. It was made public after a media roundtable where officials spoke about steps the service is taking to implement the study’s recommendations.

“No one wants to waste any money,” said Deputy Under Secretary Thomas Hawley. ‘I’m not prepared to account for how much we wasted or not but we certainly did get value out of these programs,” he said.

Acting Assistant Secretary for Acquisition Heidi Shyu said “what we are doing is looking ahead — what are the things we need to do, what are the processes we need to do, understanding the problems we had.”

With over 30 recommendations now being followed, “to us, it’s a positive story,” Shyu said, not focusing on “spilled milk.”

‘Vexing Reality’
The Army study underscores a point Gates made in a May speech in Washington when he outlined a “vexing and disturbing reality” — weapons spending of over $700 billion since Sept. 11, 2001 that “resulted in relatively modest gains in actual military capability.”

Todd Harrison, defense budget analyst for the Center for Strategic and Budget Assessments, a private Washington study group, this week likened the situation to “Hollow Growth” where “acquisition costs increased while the inventory of equipment grew smaller and older.”

Harrison calculated that since 2001 the Pentagon and military services canceled 12 programs on which $46 billion was spent. His list included seven of the biggest Army terminations.

Bloomberg News | Army Spent Over $32 Billion on Canceled Programs Since 1995


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