The Pentagon is getting a better handle on maintenance and operating and support costs of major weapon systems, government officials told a new House panel.
The discussion came July 28 during the first hearing of the House Armed Services Committee’s (HASC) Panel on Defense Financial Management and Accountability Reform. It is chaired by Reps. Mike Conaway (R-Texas) and Rob Andrews (D-N.J.), who also chaired a special acquisition-reform panel in the last session of Congress.
Andrews asked if the Pentagon can require estimates of such operating and support costs “be built into the up-front statement of the weapons system.” He lamented that the Pentagon has understated such costs in the past with over-budget weapon systems.
Asif Khan, director of financial management and assurance at the Government Accountability Office (GAO), spoke favorably about the Pentagon’s implementation of a new process to gather data on the lifecycle costs of procurements.
“I think that will go a long way towards having more discipline so you can true up the estimates with what the actual costs are,” Khan said.
Pentagon Comptroller Robert Hale acknowledged defense officials “tend to be overly optimistic about projections of operating-and-support costs, and we don’t make decisions based on them, and you have to make that decision very early in the life of a weapons system to have any meaningful effect.”
Hale argued, though, that those high operating costs are not necessarily a bad thing when they are tied to “game-changing capabilities.”
“I think stealth capability has been extremely costly because every time you exercise with the weapon and it hits a rock or a bird, you’ve got to recode it,” he said. “If you have to do maintenance, you have to recode. It’s very expensive. On the other hand, it has been a warfighter game changer. So I wouldn’t always say higher operating costs are a bad idea. You have to judge them against what you get.
The HASC said the new financial-management panel will “address broad issues surrounding Defense Department financial management including: the extent to which financial management systems deliver timely, reliable, and useful information for decision making and reporting; the ability of the Department to identify efficiencies and waste utilizing financial management systems; the proficiency of financial management personnel in financial and budgetary accounting in order to manage defense resources; and the effectiveness of the Financial Improvement and Audit Readiness (FIAR) plan.”