The Folly of Consequence-free Budget Scoring
Abstract
Current Congressional Budget Office (CBO) budget scoring rules cheat taxpayers and warfighters by ignoring the high cost of not acquiring cost-effective upgrades to critical combat weapons. Treating paid-over-time procurements as if they are paid-up-front budget outlays necessarily perpetuates waste and inefficiency where we can least afford it: on the modern battlefield. As a result, the current acquisition process for such upgrades involves a simplistic, two-step process. First, determine if paying the entire cost up-front of an upgrade is less expensive than the net present value of paying for the upgrade over time. Once paying up-front is "discovered" to be the cheaper option (as nearly always occurs), the next step is to abandon the upgrade as soon as it fails to compete successfully for scarce procurement budget dollars. An extremely conscientious program official may repeat this process for a number of budget cycles. But in the end, the outcome is predictable. The game is just rigged that way. The problem is that these policies have real consequences that squander taxpayer dollars while degrading battlefield performance. Many of America's major combat weapons systems have engines that are so old and obsolete that modern upgrades would easily pay for themselves in fuel and maintenance savings while dramatically increasing combat range and battlefield reliability. The private sector is willing to give the DoD such upgrades at no up-front cost in exchange for annual "mortgage-like" payments that are never greater than verified savings in fuel and maintenance. How can we know this? Because the DoD has routinely used such "paid-from-savings" contracts for over a decade to upgrade infrastructure on military bases. Similar contracts are widely used by the DoD to acquire vast amounts of information technology and telecommunication assets.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 30, 2007
- Accession Number
- ADA493710
Entities
People
- Gerald S. Koenig
Organizations
- Naval Postgraduate School