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Washington's budget hawks want to decimate the federal workforce to shrink the deficit. It will have the opposite effect.
One of the greatest targets of all those cuts was the Defense Department’s acquisitions workforce—the lowly ashtray buyers, yes, but also the cadre of professionals who write the military’s more sophisticated contracts for goods or services, negotiate their terms, manage their execution, and audit their end results. This tribe of bureaucrats came under fire on multiple fronts. The biggest blow came not from Reinventing Government, but from the Republican Congress, which in 1996 ordered a 25 percent decrease in the Defense acquisitions workforce before the year 2000. With that plus other workforce reductions that had already taken place earlier in the decade, the number of Defense contracting officers fell by 50 percent—from 460,000 to 230,000—over the course of the 1990s.
It turned out to be a case of modernization gone horribly awry. At roughly the same time as the Defense contract management workforce was being hollowed out, the military was reorganizing itself around a vastly increased dependence on outside contractors. The balance of “acquisitions” was shifting from the relatively straightforward purchase of goods (Gore’s ashtray) to the more sophisticated enlistment of services (the rapid construction of a field power station). And the weapons systems that the Pentagon was buying were only becoming more technologically complex. If anything, the workforce needed beefed-up expertise. “A lot of people in acquisition and procurement were people with a high school education,” says John Kamensky, a senior fellow at the IBM Center for the Business of Government who was among the leaders of Reinventing Government. “What we needed was people with degrees who knew how to manage contracts.” But instead the workforce simply eroded.
The signs of impending danger were already apparent in 2000. “Staffing reductions have clearly outpaced productivity increases,” said a Pentagon inspector general’s report that year, citing contract backlogs and rising costs. From there, things only got worse. First came the terror attacks of September 11, 2001, then the war in Afghanistan, and then the war in Iraq, all under the watch of a president—George W. Bush—whose administration favored the use of contractors wherever possible. Defense spending soared, but the diminished contracting workforce was largely passed over in all the hubbub. “After 9/11, the Defense Department chose to increase war-fighter abilities,” says Jacques Gansler, a former undersecretary of defense for acquisition, technology, and logistics under Clinton. “And yet in Iraq and Afghanistan we actually have more contractors on the battlefield than people in uniform.”
In 2007, Gansler was appointed by the secretary of the army to lead a commission looking into the problem of contracting in Iraq and Afghanistan. The commission’s report called the buildup to the crisis a “perfect storm”: the workload of contracting officers had increased sevenfold in recent years, but their ranks had never recovered from cutbacks in the ’90s. “Essentially,” the report said, “the Army sent a skeleton contracting force into theater.” The battlefield had become a complex, uncoordinated, and chaotic overlay of soldiers under command and private contractors roaming free. “When the critical need is to get a power station running, and there are no resources to monitor contractor performance,” the report said, “only the contractor knows whether the completed work is being sabotaged nightly.” For the military at war, the job of getting what it vitally needed from contractors had become a “pickup game.”
But perhaps the most ringing effect of the hollow acquisitions workforce is higher costs. Every year, the Government Accountability Office analyzes a portfolio of major weapons contracts to see how the Pentagon is handling its acquisitions process, and the past decade has seen a staggering trend of increased cost overruns. In 2000, the average weapons system contract ultimately cost 6 percent more than originally projected. In 2009, the average weapons program ended up costing 25 percent more. Cost overruns for that year alone amounted to $296 billion. Among the causes of the problem, the GAO’s 2009 report cited “shortages of acquisition professionals” as well as “degradation in oversight, delays in certain management and contracting activities, increased workloads for existing staff, and a reliance on support contractors to fill some voids.”
The acquisitions nightmare is, unfortunately, not just a problem at the Pentagon. For years now, the FBI has famously (and expensively) struggled to create a centralized, web-based case management system—in large part, according to the agency’s inspector general, because of “weak government contract management.” Or consider the case of the Coast Guard: after 9/11, when the agency was subsumed under the new Department of Homeland Security, its leaders secured $24 billion to refurbish the Guard’s badly antiquated fleet. But having been subject to the same 1990s personnel cuts as the Pentagon, the Coast Guard didn’t even have a dedicated acquisitions department. So the agency seized on an “innovative” solution: Northrop Grumman and Lockheed Martin managed the contracting themselves. The result was a disaster (see “Sunk Costs,” November/December 2008). The extended hulls on a fleet of refurbished boats buckled, while eight large new ships that had been commissioned came in with serious design flaws, causing huge delays and cost overruns in the hundreds of millions of dollars.
In the realm of acquisitions, then, elected officials whittled down the ranks of key personnel just as the government was becoming strategically married to the use of outsourcing—and just before a national crisis dumped a ten-year avalanche of work on anyone involved in managing contracts for the government. A decrease in the workforce coincided with an increase in responsibility—and a rise in stray costs. As it happens, an uncannily similar pattern has played out in the biggest regulatory failures of recent years.
Chronic manpower problems at the Minerals Management Service—the office within the Interior Department charged with regulating offshore oil wells—stretched all the way back to the 1990s, when a long boom in deepwater drilling coincided with a bust in the agency’s funding. In December of 1996, the year when the agency’s budget bottomed out, the Houston Chronicle reported that offshore fires, explosions, and blowouts had increased by 81 percent in the years of heightening offshore oil extraction since 1992. Yet over the remainder of the decade, the frequency of surprise inspections took a nosedive and never recovered. “Precisely when the need for regulatory oversight intensified,” wrote the National Oil Spill Commission in its report this January, “the government’s capacity for oversight diminished.”
The situation barely improved in the 2000s. The Washington Post recently reported that, between 1988 and 2008, the number of deep-sea oil extraction projects in the Gulf of Mexico increased tenfold. But the number of inspectors assigned to the region barely budged. By the time of last year’s Deepwater Horizon oil spill—the largest environmental disaster in U.S. history—Minerals Management had fifty-five inspectors matched against some 3,000 far-flung offshore facilities across the Gulf—a ratio of 1 to 55.
Elizabeth Good on August 31, 2011 10:32 AM:
This is one of the most informative articles I have ever read,Explaining why we need good and appropriately educated and trained personnel on the oversight committees.I have past this on to friends and used it as info for debates with some Republican friends.Bravo