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Pentagon Faces Battle in Effort to Reverse Military Contracting

Pentagon chief Robert Gates recent call for a cutback of $15 billion in military spending on contractors and government bureaucracy was an acknowledgment that the financial costs of U.S. military expansion since 9/11 are not sustainable.

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Inter Press Service

Pentagon chief Robert Gates’ recent call for a cutback of $15 billion in military spending on contractors and government bureaucracy was an acknowledgement that the financial costs of military expansion since Sep. 11, 2001 were no longer sustainable.

Military contractors – from multi-billion-dollar jet manufacturers to small businesses who make money overseeing other contractors – are taking the fight to the U.S. Congress where they are lobbying to maintain their lucrative deals with the Pentagon.

“Realistically, it is highly unlikely that we will achieve the real growth rates necessary to sustain the current force structure,” said Gates. “Given America’s difficult economic circumstances and parlous fiscal condition, military spending on things large and small can and should expect closer, harsher scrutiny. The gusher has been turned off, and will stay off for a good period of time.”

Gates was speaking at the presidential library of Dwight Eisenhower in Kansas, on the 65th anniversary of the defeat of Nazi Germany. Drawing on historical parallels, Gates noted that Eisenhower, who was the supreme commander of allied forces in Europe in 1944 and 1945, had chosen not to go to war in Vietnam and in the Middle East when he was president in the late 1950s.

“This restraint came in no small part from an understanding that even a superpower such as the United States – then near the zenith of its strength and prosperity relative to the rest of the world – did not have unlimited political, economic and military resources,” said Gates.

Today, the U.S. faces the same crippling financial reality after the unchecked spending of the last 10 years. “The attacks of September 11th, 2001, opened a gusher of defence spending that nearly doubled the base budget over the last decade, not counting supplemental appropriations for the wars in Iraq and Afghanistan,” said Gates.

Gates noted that it was politically virtually impossible to cut back on major weapons systems or spiraling healthcare costs for veterans. Ironically, however, Gates said that the one of the few areas of real decline in overhead was “in the area where we actually needed it: full-time contracting professionals, whose numbers plunged from 26,000 to about 9,000.”

These “contracting professionals” used to be federal employees who oversaw government purchasing programmes from pencils to billion-dollar jet fighters and bombers to make sure that the contractors gave taxpayers a fair deal. Today much of that procurement oversight is done by contractors like CACI of Arlington, Virginia.

William Hartung, director of the Arms and Security Initiative at the New America Foundation, welcomed the belated realisation that military spending has spiraled out of control and that military contractors were partly to blame.

“A lot of people have been saying that, and the Pentagon has pretty much blown them off. But the fact that Gates is now saying the same thing, it gives the reform groups a lot more leverage to push that agenda,” he told IPS.

In recent months, some members of Congress have backed strict new controls on wasteful spending at the Pentagon. Last May, Senator John McCain, and Senator Carl Levin, the Democratic chair of the Senate Committee on Armed Services, pushed through the Weapons Systems Acquisition Reform Act of 2009 to restrict unchecked spending on new weapons systems.

Two months later, the Senate voted in favour of ending F-22 production after intense lobbying by President Barack Obama. Gates issued a supporting statement that said “the Pentagon cannot continue with business as usual when it comes to the F-22 or any other programme in excess of our needs”.

But in his Kansas speech this weekend, Gates admitted that further cuts in major weapons systems were an uphill battle. Instead, the Pentagon will now seek to cut the military bureaucracy, he said.

In doing so Gates mentioned briefly that his predecessor, Donald Rumsfeld, had attempted the same thing almost a decade prior.

“The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America,” Rumsfeld told senior staff in a major speech on Sep. 10, 2001. “This adversary is one of the world’s last bastions of central planning. It governs by dictating five-year plans. From a single capital, it attempts to impose its demands across time zones, continents, oceans, and beyond.”

“You may think I’m describing one of the last decrepit dictators of the world,” Rumsfeld thundered. “The adversary’s closer to home. It’s the Pentagon bureaucracy. The technology revolution has transformed organisations across the private sector, but not ours, not fully, not yet. We are, as they say, tangled in our anchor chain.”

Rumsfeld said that the Pentagon was wasting at least three billion dollars a year at the time. “We must ask tough questions. Why is DOD one of the last organisations around that still cuts its own checks? When an entire industry exists to run warehouses efficiently, why do we own and operate so many of our own? At bases around the world, why do we pick up our own garbage and mop our own floors, rather than contracting services out, as many businesses do?”

In the ensuing decade, Rumsfeld oversaw a major transformation in the way the Pentagon did business – by outsourcing most of these services to companies like Halliburton and Kellogg, Brown and Root of Texas and Agility of Kuwait.

Gates acknowledged that mistakes had been made since that speech. “We ended up with contractors supervising other contractors – with predictable results.

Last April, Gates made a first stab at change by ordering that 13,000 civilians be hired at the Pentagon in fiscal year 2010, including 4,100 in the field of contract oversight. By 2015, the Pentagon hopes to hire another 30,000 federal workers to replace contractors.

Not surprisingly this has raised hackles in some quarters. While service contractors are not quite as powerful as Lockheed Martin and Boeing, manufacturers of the F-22 and the C-130, there is evidence that they too are girding for battle with the Pentagon to prevent Gates from slashing their lucrative contracts.

Recently, a new coalition called the “Small Business Coalition for Fair Contracting” led by Venable, a Washington DC law firm, was launched to fight the proposed changes.

“Although well intentioned, the federal government’s current in-sourcing initiative threatens to take away work from hundreds of small entrepreneurs,” said Venable partner Rob Burton, who served at the Office of Federal Procurement Policy at the White House.

In a press release issued Monday, Burton said that the in-sourcing initiative has already forced small contractors across the nation to dramatically reduce the scope of their operations as their contracts are cancelled and their employees are hired into government jobs.



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