Leadership: Rotten At The Top, Crowded At The Bottom


April 29, 2010: The United States, in yet another effort to curb cost overruns and delays in defense related projects, is doubling the number of auditors (to 10,000) employed by the Department of Defense to check on contract compliance for the half trillion dollars a year spent on military matters. The Department of Defense will also add several thousand contract officers, to personally oversee specific contracts. All these additional people won't solve the problem, as similar efforts  haven't worked in the past. The simple reason is that this solution tries to substitute quantity for quality.

The problem with all the cost overruns and delays is not a lack of auditors or contract officers, but a lack of talent at the top of the procurement chain. The defense contractors hire very talented people to deal with Department of Defense contract managers. In contrast, the Department of Defense has a lot of inexperienced civil servants, political appointees and rapidly rotated military personnel dealing with planning and management of these contracts. As a result, the weapons development projects are often poorly thought out to begin with. Since the Department of Defense is ultimately in charge, the contractors do what they are told, and the meter keeps running. The more experienced contractor management personnel keep their bosses out of legal trouble by giving the Department of Defense what it wants (or thinks it does), not what it needs. The Department of Defense has a hard time even identifying the problems, because of a lack of experienced procurement officials. In contrast, some other Western nations have a professional corps of procurement experts, and these people make an enormous difference. If the project starts off right, it is much easier to keep it right. If a project gets into trouble, having an experienced procurement professional available to fix it, it will tend to get fixed.

Department of Defense veterans have noted that projects that went smoothly, rarely did so because of luck. There were a few key people involved who got it off to a good start, and kept things running smoothly. Thousands of new auditors and contract tenders will not do that, but it will make the people at the top look, to the media anyway, like they are actually doing something about the problem.

Why not hire better qualified (and more expensive) people to manage the projects? Mainly because paying what these people would cost (in the face of very high pay offered in the civilian sector) is politically embarrassing. Moreover, these hotshots would be more difficult for politicians and generals to push around. Billions in wasted defense spending is preferable.





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