Contracting for the Common Defense

COMMENTARY Budget and Spending

Contracting for the Common Defense

Jun 2nd, 2009 2 min read
James Jay Carafano

Vice President, Kathryn and Shelby Cullom Davis Institute

James Jay Carafano is a leading expert in national security and foreign policy challenges.

As first governor of the Louisiana Territory, Meriwether Lewis - yes, of Lewis and Clark fame - asked Washington for money, weapons, and supplies. He needed to raise a militia to guard the nation's new frontier. What he got was the cold shoulder.

The administration could not afford it, he was told. Still, "providing for the common defense" remained the most fundamental obligation of government. The governor was determined to find a way to fulfill his responsibility. He did.

Lewis contracted with a private company for military services. He caught hell for that. But the border was secured.

It was the start of a long American tradition: Public officials struggling to meet government's sacred obligation to defend the people, and folks in Washington making the challenge worse, not better.

Playing politics with the private sector's role in national defense has become something of a national sport. When planes first started delivering mail, the government contracted with private companies. But President Franklin Roosevelt objected to this "outsourcing." After all, he had an air corps. Why not just have the military deliver the mail?

It was a disaster. Pilots didn't know the routes. Their planes were not configured to carry hundreds of pounds of mail. Washington didn't budget any money for the mission. FDR's experiment lasted six months. In that time, 65 planes crashed; 12 pilots died. Congress investigated, and FDR capitulated.

Even Eisenhower's famed warning about the "military-industrial complex" was overblown. In the years before and after Ike's speech (from 1958 to 1966), military spending as a percentage of the whole economy dropped significantly.

Spending spurted at the height of the Vietnam War (from 1969 to 1975), then fell precipitously. That meant more hard times for defense contractors. The giants of the time--McDonnell Douglas, Boeing and Lockheed--shrunk 40 percent in size.

Here's the plain, historic fact: When government buys a lot, contractors make a lot; when government buys less, contractors make less. But at no time does America wind up getting more defense by paying less.

That's why it's particularly troubling to hear President Obama and defense Secretary Robert Gates suggest they can cut defense spending--and magically deliver more defense--by the simple expedient of cutting contractors.

It's politically appealing to blame contractors for everything from Abu Ghraib abuses to combat ship cost-overruns and then kick some contractor butt. But contracting, per se, is not the problem, and making it the scapegoat will only make more difficult the task of providing for the common defense.

The American military has relied on goods and services from the free market since Bunker Hill. One of America's greatest military advantages is the private sector's creativity, innovation, and determination to contribute to our defense effort.

Yet, last week, Obama signed the Levin-McCain defense Acquisition Reform Bill. In all likelihood, it will inhibit rather than improve the Pentagon's ability to buy things efficiently.

Why? Because it layers even more levels of bureaucracy and red tape into the acquisition process. And it does nothing to counter congressional micro-management and earmarking, the two biggest impediments to the military's effort to buy things fairly and efficiently.

To save money, Washington would be better off using more contractors, not less. The Pentagon spends about $270 billion a year on logistics - buying, shipping, and fixing stuff. A big chunk of that, over $70 billion, goes just to managing the military's equivalent of Wal-Mart...and the military manages that business pretty poorly.

Adopting state-of-the-art commercial supply chain practices would reduce the average delivery time for parts from 16 days to two; allow the military to more than halve its on-hand inventories, and cut costs by about 15 percent. The potential direct savings: about $30 billion a year.

The White House, however, has no interest in relying more on the private sector. Instead, they plan on playing politics - pandering to a fear of "outsourcing" inflamed by the politics of opposition to the war in Iraq. They will use this opportunity to purge contractors, cut defense spending, and give us exactly what we usually get when we spend cut defense spending - less defense.

James Jay Carafano is Senior Research Fellow in national security policy at The Heritage Foundation.

First Appeared in the Examiner