Eisenhower was right: the military-industrial complex has the US government tight within its grip, and there’s no easy fix. Strategy Page has a useful overview:
For decades the U.S. Armed Forces has been having problems with rapidly growing (much greater than inflation) costs of weapons. Congress passes laws to try and cope and the laws are ignored. One example is the laws calling for accurate life-cycle costs (for development, manufacturer, and maintenance of weapons over their entire service life). A recent study found out that, despite laws calling for accuracy and consistency in these numbers, most manufacturers manipulated the data to make their systems look less expensive than they actually were. The Department of Defense is increasingly taking extreme measures in the face of this corruption and cancelling more and more very expensive systems. But the manufacturers continue to use smoke and mirrors to get new projects started and failed ones funded.
New weapons get approved because of another form of procurement corruption, the Low Ball Bid. Last year the U.S. Air Force demanded that defense contractors stop low balling, which in practice means submitting unrealistically low bids for new weapons (to make it easier for Congress to get things started) and then coming back for more and more money as “unforeseen problems” appear and costs keep escalating and delivery is delayed. Currently, procurement projects are about a third over budget and most items are late as well. Procurement of weapons and major equipment make up about a third of the defense budget. While this is expected to decline over the next decade, as defense budgets shrink, the problem also extends to upgrades and refurbishment of existing equipment.
The most intractable problem is the decades old contractor practice of deliberately making an unreasonably low estimate of cost when proposing a design. The military goes along with this, in the interest of getting Congress to approve the money. Since Congress has a short memory the military does not take much heat for this never ending “low ball” planning process.
