The Insider

The Missile Defense Agency this week issued revised request for proposals documentation for the Ground-based Midcourse Defense development and sustainment contract competition. The original RFP, which was first released on Dec. 2, includes a decision to change the effort's performance period from 10 years to seven.

Among the revised documents included in the Dec. 22 notice posted on Federal Business Opportunities are an updated statement of work, transition strategy, compliance matrix, industry comments and clarifications, and a Ground-Based Interceptor "section tracker."

Click here to view them.

The Senate's approval of the follow-on Strategic Arms Reduction Treaty this afternoon by a 71-26 vote is somewhat "bittersweet" for arms control, according to an essay just published by the Monterey Institute's Center for Nonproliferation Studies. The pact, according to analysts Nikolai Sokov and Miles Pomper, "will aid strategic stability and international disarmament, bolster President Barack Obama's international and domestic standing, and further contribute to the effort to 'reset' U.S.-Russian relations on a more constructive path."

However:

Nonetheless, the issues raised during its consideration, the concessions granted to win its approval, and the closeness and urgency of the vote, indicate the limits and nature of the arms control and disarmament opportunities that the Obama administration will be able to undertake in the final two years of the president's first term. Indeed, those opportunities will narrow even further next year when Republicans will hold five more seats in the Senate and a few of the minority of Republicans who supported the treaty will have retired. The result is that President Obama's effort to build a world free of nuclear weapons, announced with much fanfare in Prague less than two years ago, is likely to be sidetracked for the time being, if not shelved altogether.

One setback to that effort may have occurred even before senators cast their new vote on the treaty in the weapons complex. In seeking to win Republican support, Obama pledged to devote well over $180 billion over 10 years to the modernization and maintenance of the complex that manufactures US nuclear weapons and the missiles, bombers, and submarines that deliver them a sizable investment that may lead some states to question the sincerity of the administration's pursuit of nuclear disarmament.

The second casualty is likely to be US ratification of the Comprehensive Nuclear-Test-Ban Treaty (CTBT). The United States is among a handful of countries that still must ratify this ban on nuclear weapons tests for it to enter into force. In his Prague speech, Obama had pledged to again seek Senate ratification of the treaty. In 1999, the Clinton administration had failed to convince a Republican-controlled Senate to muster the required two-thirds majority for approval. With the Republican minority growing and becoming even more ideological, the Obama administration is unlikely to want to tempt defeat again. Moreover, in agreeing to the modernization pledges as part of the New START ratification process, administration officials have already traded away what was seen as their potential trump card in any CTBT negotiation with Senate Republicans.

Finally , the conditions, understandings, and declarations attached to the treaty's resolution of ratification as well as proposed (if defeated) amendments to the treaty itself, indicate the pressure and limits Obama administration officials would have to operate within should they seek to carry out their desire for a more ambitious series of cuts in the US and Russian nuclear arsenals. New START in many ways merely retains the status quo. The reduction in nuclear weapons it entails is very modest—to 1,550 warheads from 2,200 in the 2002 Strategic Offensive Reductions Treaty (SORT, also known as the Moscow Treaty). The new treaty also does not solve any of the truly contentious issues that dominate the US-Russian arms control agenda—missile defense, conventional long-range weapons, uploading capability, nuclear weapons stockpiles, or non-strategic nuclear weapons, which negotiators have expressed a willingness to tackle, but which were postponed until the next stage. Essentially, the main purposes of New START are two: first, to restore the transparency and verification regime that expired with the expiration of START I in December 2009; and, second, to provide a stable and predictable environment for negotiating a new, more ambitious treaty. Given the modest goals of New START, the drama surrounding ratification in the United States is nothing short of perplexing and demonstrates that emotions and politics, rather than impassioned analysis, dominated debates.

A continuing resolution authorizing a dual-block buy of Littoral Combat Ships is on its way to the president’s desk following a vote to pass the bill in the House last night.

After lawmakers cast their last votes on the bill around 7:30 pm, Navy Secretary Ray Mabus and Chief of Naval Operations Adm. Gary Roughead sent out statements lauding Congress for the decision.

"I'm grateful Congress has authorized the Navy to move forward with the dual block buy for LCS,” Mabus wrote. “This is a unique and valuable opportunity to lock in the benefits of competition and provide needed ships to our Fleet in a timely and extraordinarily cost effective manner. It is the right thing to do; for our Navy, our industrial base, and the taxpayers."

"I am very pleased and grateful Congress has enabled the Navy's plan to add these needed ships to our Fleet,” Roughead added. “This is good for the Navy, shipbuilders and taxpayers."

The Navy has been pushing since November for Congress to approve its new acquisition strategy for the LCS. Earlier in the year, the service planned to downselect between the Lockheed Martine-Marinette Marine team and Austal USA, but after bids came in with lower-than-expected prices, Navy officials switched gears and asked for permission to buy both versions of the ship.

Getting the approval had been a race against the clock because the price guarantees in the bids originally expired on Dec. 14. They were later extended to the end of December.

Language permitting the dual buy was included in several bills, most of which died on Capitol Hill. The one that passed was a stripped-down continuing resolution that extends the federal budget to March. It included a single clause stating, “Subject to the availability of appropriations, the Secretary of the Navy may award a contract or contracts for up to 20 Littoral Combat Ships (LCS).”

A just-released Government Accountability Office report states that the agency "cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations," particularly at the Pentagon. Further, according to the statement:

"Even though significant progress has been made since the enactment of key financial management reforms in the 1990s, our report on the U.S. government's consolidated financial statement illustrates that much work remains to be done to improve federal financial management.  Shortcomings in three areas again prevented us from expressing an opinion on the accrual-based financial statements," said Gene Dodaro, Acting Comptroller General of the United States.

The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government's inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government's ineffective process for preparing the consolidated financial statements. . . .

Dodaro also cited material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies-DOD, the Department of Homeland Security, and the Department of Labor-did not get clean opinions. Nineteen of 24 major agencies did get clean opinions on all their statements.

"Given the federal government's fiscal challenges, it's imperative that Congress, the administration, and federal managers have reliable, useful, and timely financial and performance information. Improved accuracy and transparency in financial reporting are urgently needed," Dodaro said.

Here are some more DOD-related excerpts from the GAO Auditor's Report:

Property, Plant, and Equipment and Inventories and Related Property

The federal government could not satisfactorily determine that property, plant, and equipment (PP&E) and inventories and related property were properly reported in the accrual-based consolidated financial statements. Most of the PP&E and inventories and related property are the responsibility of the Department of Defense (DOD). As in past years, DOD did not maintain adequate systems or have sufficient records to provide reliable information on these assets. Other entities, most notably the National Aeronautics and Space Administration, reported continued deficiencies in internal control procedures and processes related to PP&E.

Deficiencies in internal control over such assets could affect the federal government’s ability to fully know the assets it owns, including their location and condition, and its ability to effectively (1) safeguard assets from physical deterioration, theft, or loss; (2) account for acquisitions and disposals of such assets and reliably report asset balances; (3) ensure that the assets are available for use when needed; (4) prevent unnecessary storage and maintenance costs or purchase of assets already on hand; and (5) determine the full costs of programs that use these assets.

Liabilities and Commitments and Contingencies

The federal government could not reasonably estimate or adequately support amounts reported for certain liabilities. For example, DOD was not able to estimate with assurance key components of its environmental and disposal liabilities. In addition, DOD could not support a significant amount of its estimated military postretirement health benefits liabilities included in federal employee and veteran benefits payable. These unsupported amounts related to the cost of direct health care provided by DOD-managed military treatment facilities. Further, the federal government could not determine whether commitments and contingencies, including any related to treaties and other international agreements entered into to further the federal government’s interests, were complete and properly reported.

Problems in accounting for liabilities affect the determination of the full cost of the federal government’s current operations and the extent of its liabilities. Also, deficiencies in internal control supporting the process for estimating environmental and disposal liabilities could result in improperly stated liabilities as well as adversely affect the federal government’s ability to determine priorities for cleanup and disposal activities and to appropriately consider future budgetary resources needed to carry out these activities. In addition, if disclosures of commitments and contingencies are incomplete or incorrect, reliable information is not available about the extent of the federal government’s obligations.

Cost of Government Operations and Disbursement Activity

The previously discussed material weaknesses in reporting assets and liabilities, material weaknesses in financial statement preparation, as discussed below, and the lack of adequate disbursement reconciliations at certain federal entities affect reported net costs. As a result, the federal government was unable to support significant portions of the total net cost of operations, most notably those related to DOD.

With respect to disbursements, DOD and certain other federal entities reported continued material weaknesses and significant deficiencies in reconciling disbursement activity. For fiscal years 2009 and 2008, there was unreconciled disbursement activity, including unreconciled differences between federal entities’ and the Department of Treasury’s (Treasury) records of disbursements and unsupported federal entity adjustments, totaling billions of dollars, which could also affect the balance sheet.

Unreliable cost information affects the federal government’s ability to control and reduce costs, assess performance, evaluate programs, and set fees to recover costs where required or authorized. If disbursements are improperly recorded, this could result in misstatements in the financial statements and in certain data provided by federal entities for inclusion in The Budget of the United States Government (President’s Budget) concerning obligations and outlays.

The Joint Strike Fighter program office says the F-35 is "the Department of Defense's focal point for defining affordable next-generation strike aircraft weapon systems for the Navy, Air Force, Marines and our allies. The focus of the program is affordability -- reducing the development cost, production cost, and cost of ownership of the JSF family of aircraft."

But Sen. Tom Coburn (R-OK) says the Pentagon is wasting taxpayer money in its pursuit of JSF.

Coburn today released his most recent annual government oversight report,"Wastebook 2010: A Guide to Some of the Most Wasteful Government Spending of 2010." The JSF is the only Pentagon program to make Coburn's list.

Here's what Coburn has to say about the JSF:

The Department of Defense's Joint Strike Fighter (JSF) program is the military's most expensive weapon system acquisition program, but constant cost overruns have kept the price tag climbing ever higher to get less and less. Pentagon officials plan to spend over $323 billion to acquire nearly 2,400 fighter planes, but in 2001, the military expected to pay $231 billion for 2,800 fighter planes. despite the more than 50 percent increase, taxpayers will be paying much more for fewer planes.

According to Coburn, at least $1.5 billion of the program's increased costs this year "are a result of DOD mismanagement."

Coburn does not call for the outright cancellation of the JSF. In a statement, he said he issued the oversight book to "give taxpayers and concerned citizens the information they need to hold Washington accountable."

Noting that military leaders consider the nation's debt to be the gravest national security threat, Coburn does give some insight to his thinking about his choices for this year's wasteful spending list. "Well-intentioned people across the political spectrum will argue about the best way to get us back on track. But we can all agree that cutting wasteful and low priority spending from the budget is not only sensible, but essential," he states.

Each year the Army asks its headquarters staff, its major commands and what are known as direct reporting units to deliver a report card on their individual programs aimed at detecting and correcting instances of waste, fraud and abuse. The report card, called the "Annual Statement of Assurance," is sent to the Army secretary.

On dec. 16, the assistant secretary of the Army for financial management and comptroller sent out a 40-page memo that provides guidance for the fiscal year 2011 statement. According to the memo, the statements are due to the Army comptroller's office by May 16, 2011, for everyone but the headquarters staff. That staff has until May 31 to submit its report card.

The Army's acquisition shop has one specific task for FY-11, according to the comptroller:

In May 2008, the Office of Federal Procurement Policy in [Office of Management and Budget] published guidelines for Federal Agencies to use in conducting internal control reviews of their acquisition functions. The DOD is required to integrate the internal control review of acquisition with the existing internal control assessment and annual Statement of Assurance reporting processes, beginning with the Fiscal Year 2009 cycle. Office of the Secretary of Defense Acquisition, Technology and Logistics -- has developed a template that provides focus areas ("cornerstones") and related questions that should be addressed when reviewing the acquisition processes. The execution of this requirement has been included by OSD as a validation requirement during Fiscal Year 2011.

The Army's FY-11 review began Oct. 28 with a meeting of a "Senior Level Steering Group/Senior Assessment Team."