Defense Contractor Mergers

Defense contractors are pushing to change the rules of contracting with the government so that they can more easily line their pockets with taxpayer dollars. Because this affects not just defense spending but all federal contracts POGO has placed these issues in the Contract Oversight section.
Follow this link to Cost Accounting Standards

POGO Alert - 'Payoffs for Layoffs:' Much More Than A Sound Bite, March 11, 1997. Concise description of the reasons why the government should not pay defense corporations to merge.

POGO Alert - Defense Corporations Are Hurting and Need a Break, Right? Wrong!, Data showing that defense corporate stocks have been performing far better than the market overall. October 15, 1996.

The Wrong Industrial Policy. Op-ed arguing that the Administration should support transition of defense corporations to civilian work rather than subsidizing their mergers. September 1996.

An Assessment of the Defense Department's Merger Payments Report. An analysis providing counterpoint to a report supporting defense corporate merger subsidies. July 2, 1996.

Government Payments for Defense Industry Mergers: Talking Points. Arguments against unneeded merger subsidies. June 25, 1996.

Defense Contractor Sweetheart Deals

Faulty Aircraft Wiring

Wasteful Defense Spending

Lawmakers Hit U.S. Air Force's VIP Capsules, Defense News, By Erik Holmes and Michael Hoffman, July 28, 2008.
Another day, another black eye.

The U.S. Air Force once again drew criticism from Congress for its $7.6 million project to build special offices and berths for flying senior officials aboard transport planes.

Disclosed July 17 by the Project on Government Oversight, a nonprofit government watchdog group, the so-called "comfort capsules" can be loaded onto cargo and tanker aircraft so generals and senior civilians can work and rest comfortably in transit, even when not flying on designated VIP aircraft.

Gen. Duncan McNabb, who authorized the project in 2006 when he commanded Air Mobility Command, faced tough questions from senators July 22 during a hearing on his nomination to become head of U.S. Transportation Command.

"This is just one little thing, but it speaks to a culture that is offensive to the American people," said Sen. Claire McCaskill, D-Mo. "It seems capricious. It seems like the folks up there have lost touch that this isn't Monopoly money. There is not the level of accountability that I think the American taxpayers deserve."

The project will provide three Senior Leadership In-Transit Conference Capsules and four Senior Leadership In-Transit Pallets that can be rolled onto C-17s, KC-10s, KC-135s and C-130s.

The pallets - which cost $290,000 each - will feature four first-class leather seats and a desk. The capsules will be decked out with 37-inch flat-screen TVs, secure communications, at least two beds, a leather couch, a conference table, two leather chairs, a full length mirror and weapon storage units at a cost of $2.7 million for the first unit and $1.9 million for the next two.

McNabb defended the project before lawmakers July 21, saying the capsules are a cost-efficient way to transport senior leaders because they are cheaper than buying and operating more VIP transport jets, such as C-20s and C-37s.

"The whole idea of the comfort pallet was to save money versus a dedicated airplane," he said.

McCaskill, a frequent critic of the Air Force, said she did not object to the project itself but to the Air Force's attempts to use supplemental war funding to pay for it.

Air Force officials requested supplemental war funding for the first three years of the project, but lawmakers told service leaders to instead fund higher-priority programs.

The Air Force is using baseline funds to pay for the program, according to an Air Force spokeswoman.

The Air Force requested the war funds because the demand to fly military leaders around Central Command has skyrocketed, said Lt. Col. Michael Paoli, a service spokesman. In 2007, Air Force planes shuttled about 1,500 distinguished visitors to the U.S. Central Command area of operations, he said.

McCaskill took issue with an expense of $113,000 to change the color of the leather chairs on the pallets to blue rather than brown. (That amount also included an upgrade of the wood on the pallet.) McNabb said he was unaware of the change, and acting Air Force Secretary Michael Donley agreed that changing the leather color was wasteful. "None of this makes sense to me as a taxpayer," Donley told McCaskill.

GAO report sparks call for DCAA resignations, Washington Technology, July 25, 2008.
Responding to a sharply critical Government Accountability Office report on the Defense Contract Audit Agency, Sen. Claire McCaskill (D-Mo.) is demanding the resignations of the DCAA supervisors who pressured employees to soften audit results on federal contractors.

Saying the agency is caught in what could be the “biggest audit scandal in the history of this town,” McCaskill sent letters to DCAA Director April Stephenson and Defense Secretary Robert Gates seeking resignations related to malfeasance in connection with 13 audit reports reviewed by GAO.

The GAO report says DCAA audits were changed to favor government contractors, and auditors were threatened if they refused to change the reports. In several cases, DCAA auditors were harassed and intimidated for cooperating with GAO’s investigation. … She said she wants assurance that the supervisors involved have been terminated, as well as further explanations of how the improper actions occurred and how they will be prevented in the future.

Meanwhile, a government watchdog group said the GAO report was not the first time DCAA audits were found not to have complied with generally accepted government auditing standards.

In three separate reports in 2001 and 2002, NASA’s inspector general said DCAA did not follow those standards, according to the Project on Government Oversight.

Analysis-US Navy ship cancellation seen good first step, Reuters News, By Andrea Shalal-Esa, July 25, 2008.
The DDG-1000 next-generation destroyer program was a case study in what's wrong with Pentagon procurement, but the U.S. Navy's plan to kill the $29 billion program is a step toward reform.

The immediate outcry from lawmakers and politically connected defense contractors, coupled with signs that even top Pentagon officials aren't fully on board, all underscore how difficult it is to kill big weapons programs once they have begun.

"They need to cut the number of programs to a manageable number and then adequately fund them per year," said Nick Schwellenbach with the Project on Government Oversight.

The Pentagon also needs to get a better handle on what weapon systems it truly needed to fight tomorrow's wars, and balance competing demands from the military services, said Loren Thompson, analyst with the Lexington Institute.

"During the 20th century we were always worried about imperialism, fascism or communism. Today we're much less clear on what we need," Thompson said.

Sometimes programs are trimmed, or planned purchases are stretched out, until the political will is there to accelerate spending again. Often, spending on one weapons program is immediately rolled into another program.

In this case, the Navy says it will cancel its new DDG-1000 destroyer after the first two ships are built by General Dynamics Corp and Northrop Grumman Corp. …

I’m Comfortable. How About You?, New York Times, Editorial, July 24, 2008.
After the secretary of defense, Robert Gates, fired the Air Force’s top civilian and top general last month, reform and accountability have become the service’s new bywords. Congress was rightly skeptical this week as the replacement nominees pledged to repair the reputation of the Air Force — tattered by misplaced nuclear weapons, costly contract miscues and more.

One revealing symptom of the ongoing leadership drift was revealed by The Washington Post last week. The paper reported that at least four ranking generals have been deeply involved in designing airborne “comfort capsules.” These two-room luxury pods, with all the amenities of sports arena skyboxes, would be inserted into the fuselage of military aircraft to carry top brass and their V.I.P. guests.

The most offensive part of this project is that the Air Force has been pressing Congress for the last three years for permission to tap $16 million in counterterrorism funds to pay for this indulgence.

Congress never envisioned comfort-class counterterrorism, particularly with beds affording “no more than 50 percent compression of the mattress material” for a general’s comfort, according to one specification. It rebuffed the generals, yet the service still diverted $331,000 in counterterrorism money to cover last-minute design changes ordered up as the brass waxed stylistic over the color of seat belts, carpets and swivel executive chairs. (Apparently everyone was happy with the drapes and the full-length capsule mirror.) The chic pods would be in addition to the Air Force’s existing fleet of 100 planes meant for V.I.P. travel.

The Air Force began to scale back its ambitions for Project SLICC, or Senior Leader Intransit Comfort Capsules, as soon as it was uncovered by a private watchdog group, the Project on Government Oversight. But it has already stoked deep resentment among lower-ranking officers concerned about plummeting morale and other serious problems.

Those include what Mr. Gates described as a “pattern of poor performance” in securing sensitive military components. Last year a B-52, carrying six nuclear-tipped cruise missiles, flew across the country without anyone realizing the weapons were missing. In another dangerous mix up, the Air Force shipped four nose-cone fuses for Minuteman nuclear warheads to Taiwan. Most recently, the Air Force bungled the bidding on a $35 billion contract for refueling tankers.

Mr. Gates is right to demand a lot more accountability from the Air Force. We recommend that the new leaders start by questioning at least four generals about how comfort capsules, with Air Force blue leather seats, will help defeat Al Qaeda.

POGO Letter to Senate Armed Services Committee regarding misleading testimony by General McNabb before the Committee, July 24, 2008.

POGO urges the DOD IG to investigate CIRCUITS and an apparent employee retaliation action, July 23, 2008.

Schwartz, Donley face Senate panel today, Air Force News, By Erik Holmes, July 22, 2008.
The men nominated to be the Air Force’s new secretary and chief of staff will testify Tuesday before the Senate Armed Services Committee ahead of a full Senate vote on whether to confirm them.

While both Michael Donley, the acting secretary, and Gen. Norton Schwartz, nominated to become chief, are expected to be confirmed, committee members are likely to ask hard questions and will be looking to see if the new leaders’ heads are in the right place.… One of the Air Force’s fiercest critics, Republican Sen. John McCain of Arizona, is not expected to attend the hearing because he will be campaigning for president in New Hampshire.

But a McCain ally, Independent Sen. Joe Lieberman of Connecticut, said Friday he plans to ask the leaders about an Air Force program to spend $7.6 million to build offices and berths for top generals and senior civilian officials that can be installed on transport planes, the Connecticut Post reported.

The Air Force faced criticism about the program last week from the Project on Government Oversight, a nonprofit government watchdog group. The group said the program is a waste of taxpayer dollars….

Watchdog: Leaked photos show troops fly in squalor, Raw Story, By Nick Juliano, July 22, 2008.
A government watchdog has uncovered pictures that suggest US troops on their way to battlefields in Afghanistan travel in squalor while top military and government officials are cocooned in "comfort capsules" with reclining leather seats and flat-screen TVs.

Last week, the Project on Government Oversight asked for photos of the dilapidated airline seats; it wasn't long before pictures of torn, moldy, stained seats started rolling in. POGO did not identify the source of its photos, but it said they were taken at Al Udeid Airbase in Afghanistan.

The watchdog, which focuses on exposing waste, fraud and abuse in the US government, recently worked with the Washington Post to expose an Air Force program to spend money earmarked for the War on Terror to upgrade luxury cabins used to ferry top officials. Internal e-mails POGO obtained through a public records request showed "that Air Force generals frivolously blew hundreds of thousands in taxpayer dollars because they didn't like the color of seat belts, carpet, leather and wood used in work and living space units being developed for use on cargo planes," the group says.

In its request for the photos, POGO said it was "aware" of deplorable conditions in troop transport seats and noted that a program aimed to "remedy the current deplorable state of these seats ... is moving too slowly," as opposed to the plans to upgrade the cabins for top brass, which were known as Senior Leader Intransit Comfort Capsules. …

POGO Alert - Photos Show the Brass and Troops are Worlds of Class Apart, July 21, 2008.

Making defense cuts seen tough for McCain, Obama, Reuters, By Andrea Shalal-Esa, July 21, 2008.
Republican John McCain and Democrat Barack Obama both emphasize the need to curb Pentagon costs and focus on weapons relevant to today's wars, but canceling big programs will be difficult no matter who is elected president.

Conventional wisdom holds that Democrats tend to scale back defense spending, but McCain, a leading member of the Senate Armed Services Committee, has a long history of criticizing waste in Defense Department programs.

That has prompted speculation about declining orders for big defense contractors like Lockheed Martin Corp, Boeing Co, Northrop Grumman Corp, General Dynamics Corp, Raytheon Co, and others. … But defense analysts agree a host of factors will make it tough for Obama or McCain to quickly scale back big weapons projects.

Key issues include the wars in Iraq and Afghanistan, an urgent need to replace billions of dollars of equipment worn out in those conflicts, homeland defense needs, plus a long history of intervention by lawmakers to protect high-paying defense jobs in their home districts.

"It's very difficult to kill weapons programs," said Nick Schwellenbach of the Project on Government Oversight, a nonpartisan watchdog group. "Even if you did have a McCain or Obama administration go after major weapons programs, the contractors and their congressional allies would keep those programs alive -- even on life support." … Lawmakers frequently talk about the need to reform defense spending, but even the end of the Cold War and pressure to generate a "peace dividend" did not result in the outright cancellation of many programs, Schwellenbach said.

Vice President Dick Cheney did manage to cancel some big programs, including Northrop's B-2 bomber, when he served as defense secretary under former President George Bush, but Boeing and General Dynamics are still fighting legal battles over Cheney's 1991 termination of the A-12 stealth fighter.

Cheney tried to cut the V-22 tilt-rotor aircraft built by Boeing and Bell Helicopter, a unit of Textron Inc, but it ultimately survived, and the planes are now in use in Iraq.

Once a program has started, proponents fight to maintain funding since "so much has been spent already," or if it's early in the program, for continuing development efforts and transferring results to other projects later, Schwellenbach said.

Extravagant digs don't sit well in wartime, Kennebec Journal Morning Sentinel, July 21, 2008.
What does it take to catch Osama bin Laden?

Expensive leather seats, flat screen TVs, stereo speakers and a full-length mirror enclosed within a luxury capsule and occupied by Air Force generals.

Really.

That's what the Air Force is using some of its anti-terrorism funds for.

So far, the brass has spent $16 million on the still-incomplete capsules, which would be installed on planes as a sort of room within the plane so generals could have a level of comfort and convenience commensurate with their egos, er, status.

The Project for Government Oversight, a nonprofit watchdog, has written to Secretary of Defense Robert Gates, about the project.

The group's letter states:

"At a cost of millions of dollars, the highest levels of the Air Force have emphasized two little-known programs to build 'world-class' luxury aircraft accommodations for military and senior civilian leaders under the justification of a 'deficiency gap.' These accommodations do not provide any additional operational capabilities (e.g. communications advantages) beyond those currently existing, according to contract documents. Funding for these programs was requested in the recently passed Global War On Terrorism supplemental."

Among the costs was $116,000 to accommodate a request from a general to re-upholster the leather chairs in Air Force blue rather than brown.…

Pimp my glide, St. Louis Post-Dispatch, July 20, 2008.
Generations of military men and women have complained about uncomfortable accommodations when flying on military transport aircraft. But they weren't in a position to do anything about it.

Air Force generals are, and at least four have. They've contributed to the design of a "world class" modular seating pod that features general-worthy leather chairs, a bed, couch and 37-inch flat-screen video monitor with stereo speakers.

Those are some of the amenities built into what the service initially called "comfort capsules" — sealed suites that can be loaded into military aircraft that ferry top brass to distant outposts around the world.

Speaking of brass, get this: The Air Force repeatedly asked Congress for permission to pay for these posh pods from money earmarked for the war on terrorism. If the generals are uncomfortable, the terrorists win.

The Air Force long has had a reputation for providing superior accommodations to airmen and officers, with more perks such as movie theaters, swimming pools and health clubs than any other branch of the service. More recently, it's been under fire from Defense Secretary Robert Gates for not doing enough to support the conflicts in Afghanistan and Iraq.

While the Army was scrambling to find sufficient armor for vehicles in Iraq, the Air Force was spending hundreds of billions on sleek "next generation" fighters such as the F-22 Raptor — even though for the forerseeable future no potential adversary is capable of fielding anything that could challenge the older U.S. fighter jets in the foreseeable future.…

It's one thing to make upgrades that increase security or improve communications for traveling dignitaries. But the comfort capsules provide nothing that's not already available, according to the Washington watchdog group Project on Government Oversight, which first disclosed the capsule boondoggle. Nothing except luxury, that is. …

Air Force brass flying in style, Connecticut Post, By Peter Urban, July 20, 2008.
Connecticut Sen. Joe Lieberman vowed Friday to hold Air Force brass accountable for using terror funds so that their top brass can fly like millionaire jetsetters.

A government watchdog group wrote Defense Secretary William Gates Thursday to complain about Air Force spending millions of tax dollars to build "world class" luxury aircraft accommodations for the military and senior civilian leadership.

"As you well know, in a time of war, it is critical for senior officials to visibly prioritize the needs of the men and women on the frontline because it is the right thing to do and for reasons of morale," said Project On Government Oversight Executive Director Danielle Brian in the letter.

"Yet an egregious failure of leadership has come to our attention that involves breathtaking extravagance when every dollar needs to be wisely spent in a time of war."

The Air Force plans to purchase three "Senior Leader In-Transit Conference Capsules" or SLICCs, SLICCs, which are an enclosed pod with work and rest areas that fit inside C-130 Hercules, C-17 Globemaster III and KC-10 Stratotanker aircraft, at a cost of $4.6 million. And, they are purchasing four "Senior Leader In-transit Pallets" or SLIPS, which feature a conference table and reclining chairs, at a cost of $290,000 each.

Top brass now use a modified Aerostream trailer that is loaded aboard cargo aircraft when they travel long distances.

POGO found that the Air Force upgraded the leather, carpet, and wood thousands of dollars to the program cost. The estimated cost of the first prototype SLICC is currently $2.735 million, up from an original November 2006 cost estimate of $1.743 million - reflecting a cost growth of 64 percent in less than two years.

"The recent Project on Government Oversight report regarding the Air Force procurement of portable command workspaces is troubling," Lieberman said. "The Air Force has continued to struggle with numerous procurement programs, and this reaffirms Secretary Gates' decision to change Air Force leadership." …

Even before the redesign, the capabilities document for the SLICC contains a detailed list of amenities required such as: a 37-inch wall mounted flat screen monitor, wall-to-wall carpeting, and a single remote control unit to control all video devices as well as the flat screen monitor, POGO noted.

And, Air Force Maj. Gen. Robert McMahon directed that the first SLIP be reupholstered in Navy Blue leather rather than gray. And, he ordered the original wood replaced with cherry.

The cost to change to cherry wood and reupholster the four seats on each of the four SLIPs is estimated at $113,000. As of March, the Air Mobility Command headquarters had directed $493,000 of additional spending for retrofits and further customization of the SLIPs, according to POGO.…

Criticism over luxury capsules, CNN, July 19, 2008.

Off we go, into the styled blue yonder ..., The New Mexican, July 18, 2008.
Lest the taxpaying American public — and you know who you are, and aren't — wonder how well its dollars are being applied to the president's war against terrorism, we should take, well, comfort, from a report yesterday in The Washington Post.

Some of the Air Force's top brass have been applying their smarts, and our nation's money, to the creation of "comfort capsules." These are structures that can be slipped in and out of military planes, so that, when those craft are carrying generals, fat-cat contractors, Cabinet members, senators and such, the passengers are properly pampered.

Work is well under way on the first 9-by-18-foot capsule.

The Post, thanks to the watchdog group Project on Government Oversight, got hold of documents spelling out how each of the capsules is to be "aesthetically pleasing and furnished to reflect the rank of the senior leaders using the capsule" — with beds, a couch, a table, a 37-inch flat-screen monitor with stereo speakers, and a full-length mirror. …

Watchdog Group Targets AF “Comfort Capsules,” WHIO-TV.COM, By Jim Otte, July 18, 2008.
A government watchdog group has targeted Air Force plans to spend millions of tax dollars to acquire new “comfort capsules” for the top brass when they travel.

The Air Force would use the special units to be loaded onto large military aircraft like the C-17, KC-10, C-130 and KC-X.

But when the Air Force sought to upgrade the new units and fill them with “world class” leather seats, flat screen TVs, and other extras, the Project On Government Oversight stepped in.

Nick Schwellenbach, POGO National Security Investigator, said when he first learned of the level of spending he was shocked, but wanted to learn more to see if the expenditures could in any way be justified.

In an interview with WHIO-TV.COM, Schwellenbach said he began by looking at the contract documents and found the capsules offer no operational advantages.

The new accommodations, Schwellenbach said, offer no special communications abilities and were actually more luxurious than the unit used by Secretary of Defense Robert Gates.

Internal emails indicate even Air Force acquisition personnel began to question the project, especially when it came to cost.

“A lot of people expressed frustration with the program and thought it was a waste of money because the senior leaders already have fairly nice accommodations,” Schwellenbach said.

The Air Force requested $16 million for the special capsules, intending at first to purchase ten, but later reducing the plan to acquire three.

The money was to come from federal funding set aside to fight terrorism.

Much of the increased cost is due to the luxurious accommodations.

The latest figures show the project will cost $7.6 million.

“In the Defense Department they think of hundreds of thousands and millions of dollars as chump change and there was no one watching,” Schwellenbach said.

Schwellenbach said one change order in the project cost more than $68,000, to switch the color of the leather seats. …

Air force sought anti-terror funds so generals could fly in comfort, Agence France-Presse, July 18 2008.
The US Air Force has sought millions of dollars in "war on terror" funds for "comfort capsules" so that the military brass can fly first class to war zones in Iraq and Afghanistan, a spokeswoman confirmed Friday.

The capsules, which are loaded into the bay of a military transport plane, come with a sofa, work space, two leather seats, a flat-screen TV, ports for a satellite phone and a separate module with two bunk beds and closets, the air force spokeswoman said.

Air force generals added hundreds of thousands of dollars to the costs with upgrades to leather, carpet and wood choices, according to the Project on Government Oversight (POGO), a non-profit watchdog group that obtained internal emails about the program.

One email alluded to concerns of General Robert MacMahon, an air force deputy chief of staff, that the capsules be designed for the highest standards of luxury travel, POGO said.

"General MacMahon's concern is so significant that we need assurance by the end of the week from AFRL (Air Force Research Laboratory) that the SLICC will be 'World class' inside," the e-mail is quoted as saying.

"While we know the requirements document says 'business class', we all know there are levels of that," it said.…

In a letter to US Defense Secretary Robert Gates, POGO called it "an egregious failure of leadership ... that involves breathtaking extravagance when every dollar needs to be wisely spent in a time of war."

Is there a military term for metrosexual? How about egregious waste?, OhMyGov!, By Andrew B. Einhorn, July 18 2008.
Please fasten your seat belts, put up your tray tables and make sure your seat backs are in their full upright and locked positions...unless of course you are an Air Force general traveling in one of their newly designed and reupholstered 'comfort cabins.' Then you can just recline in your leather lazy-boy and marvel at the flat screen television before your eyes.

In the midst of the most expensive war in U.S. history, Air Force generals are busy primping and pimping their rides. Yesterday, the Project On Government Oversight (POGO), a non-profit Washington-based government watchdog group, sent a letter to Defense Secretary Robert M. Gates that raises questions about two little-known programs to build "world-class" luxury aircraft accommodations for the military and senior civilian leadership.

The accommodations-called SLICC (Senior Leader In-transit Conference Capsule) and SLIP (Senior Leader In-transit Pallet)-were justified as filling a "deficiency gap," but emails obtained by POGO show that there was significant internal dissent within the Air Force over this extravagant waste of taxpayers' funds.

Air Force documents obtained by POGO and authenticated by the Washington Post spell out how each of the capsules is to be "aesthetically pleasing and furnished to reflect the rank of the senior leaders using the capsule." These lavish "necessities" included business class seating, beds, a couch, a table, a flat-screen TV of "at least 37 inches" with stereo speakers, a full-length mirror, "aesthetically pleasing wall-to-wall carpeting, wall treatments, and ceiling treatments," self-adjusting lighting, and universal remote controls. …

Those who optimistically believe that the design changes were all necessary for nationality security, secure communications, etc, should read the following statement from POGO's press release: "Contract documents obtained by POGO reveal that these accommodations do not provide any additional operational capabilities (e.g. communications advantages) beyond those currently existing."

A new travel style for Washington VIPs? It's SLICC, Reuters, By David Morgan, July 18, 2008.
They sound like first-rate in-flight accommodations -- leather chairs, a 37-inch (94-cm) flat-screen monitor, bed, couch, table -- all the comfort a traveling VIP could want.

But critics say the new amenities intended for top U.S. defense, military and other officials come with a price tag of $4.4 million, and counting.

That, plus the fact that some money for the facilities was requested in a bill meant to fund the wars in Iraq and Afghanistan, has exposed the already scandal-hit U.S. Air Force to charges of extravagant waste.

The Project on Government Oversight, or POGO, a Washington-based non-profit group, revealed details about the accommodations known as Senior Leader In-Transit Conference Capsules, or SLICCs, in a letter this week to Defense Secretary Robert Gates.

"In a time of war, it is critical for senior officials to visibly prioritize the needs of the men and women on the front line," POGO told Gates.

"Yet an egregious failure of leadership has come to our attention that involves breathtaking extravagance when every dollar needs to be wisely spent in a time of war."…

COST DISPUTED

The Air Force last year handled 1,500 flights by senior U.S. officials to U.S. Central Command's area of operation, which spans 27 countries including Iraq, Afghanistan, Sudan, Egypt, Saudi Arabia and Pakistan.

The dispute follows the forced departure last month of the Air Force secretary and chief of staff over two high-profile scandals involving mix-ups in the U.S. nuclear arsenal.

POGO said the Air Force has spent nearly $2.75 million to produce a SLICC prototype still five months from being completed. That amounts to a 64 percent rise from an initial cost estimate of $1.7 million, according to the group.

Another $1.7 million has been spent on a related amenity called the Senior Leader In-Transit Pallet, or SLIP, which consists of a pallet with four leather business-class chairs with tables.

Paoli put spending for the SLICC prototype and four SLIPs at $3.8 million, a sum $600,000 below POGO's estimate.

The Air Force originally referred to SLICCs as "comfort" capsules but dropped the word comfort in favor of "conference," POGO said.

The group also found that some Air Force generals have been intimately involved with development of the SLICC and SLIP.

One general, who POGO said pressed for "world class" accommodations, rejected an initial brown-leather SLIP chair design. He demanded the leather's color be changed to Air Force blue and the original wood to cherry. The reupholstering alone cost $21,000, the group said.…

Air Force defends 'luxury' travel capsules, NBC News, By Courtney Kube, July 18, 2008.
Air Force officials are denying allegations that millions of dollars appropriated for the war on terrorism are being diverted to build luxury air accommodations for VIPs to travel around the world.

The Washington Post reported on its Web site Thursday night that the Air Force's top leadership sought to spend counterterrorism money on "comfort capsules" to be installed on military planes that carry senior officers and civilian leaders.

But an Air Force spokesman said the service is drawing the money for the project from elsewhere in its budget. Lt. Col. Mike Paoli said the service had requested that the project be included in a supplemental budget for the war on terrorism, but Congress rejected the request. The supplemental war budget is supposed to directly fund troops in combat zones.

"No (terrorism) money is being used for this," Paoli said.

The capsules are basically mobile conference rooms that, from the outside, look like large boxes; Defense Secretary Robert Gates travels in one nicknamed the "silver bullet." The capsules can be moved from aircraft to aircraft to provide a private room for traveling VIPs, including senior officers and civilian leaders, such as members of Congress. Paoli said much of the travel using the capsules would be to combat zones.

A watchdog group called the Project on Government Oversight alleges that the Air Force is spending large amounts of money to buy three new capsules and equip them with "world-class" luxuries.

Among the luxury items cited:

Wall-mounted flat screen monitors capable of playing back CDs, DVDs, and VHS, with a diagonal measurement of at least 37 inches.
First-class airline seats, with storage for carry-on bags for each seat.
Full-length mirrors.
Wall-to-wall carpeting.
Wall treatments/coverings.
Ceiling treatments/coverings.

The watchdog group alleges that the Air Force intends to spend $113,000 to reupholster the leather chairs to Air Force blue and to upgrade the wood tables to cherry.

The Air Force defended the project.

"That's bunk," said Paoli, the Air Force spokesman. "The carpeting comes from Home Depot, not Ethan Allen." He added that the capsules are "less than business-class standard" and "really not that nice."

But the Post reported that internal Air Force e-mails provided by the watchdog group showed pressure on lower-ranking officers to create what one described as "world class" accommodations exceeding the standards of a regular business-class flight. A military officer who spoke to the Post on condition of anonymity said the project had provoked widespread contempt among lower-level personnel. …

Air Force uses counterterror funds to pay for VIP 'comfort capsules,' USA Today, By Mike Carney, July 18, 2008.
The U.S. Air Force has been trying to use counterterrorism funding to pay for "comfort capsules" that will allow government VIPs to enjoy "world class" travel on military transport planes, according to reports.

The Washington Post says at least four generals have been involved in discussions about the "design details" associated with this $7.6 million program, including the color of carpeting and leather chairs in the so-called SLICCs and SLIPs.

Air Force commanders tried to convince appropriators to let them reassign more than $16 million to the project from the "Global War on Terrorism," according to the Post. Lawmakers said no, but the paper says officials still used $331,000 in counterterror money to pay for cost overruns associated with their first-class cabins.

A senior officer tells the Post they'll now reverse that decision.

E-mails obtained by the Project on Government Oversight, a watchdog group, show that Maj. Gen. Robert McMahon "directed that the leather be reupholstered from brown to Air Force blue leather and to replace the wood originally used to cherry."

McMahon tells the Post he doesn't remember ordering changes to the seats. "He said that it was probably because blue would not show dirt as much as tan or brown would," the paper reports.

All told, POGO says one official estimated in an e-mail that it would cost $113,000 to change the wood and leather in all four of the Senior Leader In-transit Pallets. …

Terrorism Funds May Let Brass Fly in Style, The Washington Post, By R. Jeffrey Smith, July 18, 2008.
The Air Force's top leadership sought for three years to spend counterterrorism funds on "comfort capsules" to be installed on military planes that ferry senior officers and civilian leaders around the world, with at least four top generals involved in design details such as the color of the capsules' carpet and leather chairs, according to internal e-mails and budget documents.

Production of the first capsule -- consisting of two sealed rooms that can fit into the fuselage of a large military aircraft -- has already begun.

Air Force officials say the government needs the new capsules to ensure that leaders can talk, work and rest comfortably in the air. But the top brass's preoccupation with creating new luxury in wartime has alienated lower-ranking Air Force officers familiar with the effort, as well as congressional staff members and a nonprofit group that calls the program a waste of money.

Air Force documents spell out how each of the capsules is to be "aesthetically pleasing and furnished to reflect the rank of the senior leaders using the capsule," with beds, a couch, a table, a 37-inch flat-screen monitor with stereo speakers, and a full-length mirror. ...

In a letter of complaint sent yesterday to Gates, POGO asserted that the new capsules will provide no special communications or work capabilities beyond those already available for top officials on Air Force transport aircraft. It is "a gross misuse of millions of taxpayer dollars that could otherwise be used to train and equip soldiers," wrote Danielle Brian, the group's executive director.

POGO Alert - SLICC Deal for Pentagon Brass, July 18, 2008.

POGO Letter to DoD Secretary Robert Gates regarding extravagant "Senior Leader In-Transit Comfort Capsules", July 17, 2008.

POGO Letter - POGO Urges Navy to Study Utility Cost Program, July 7, 2008.

Pentagon Report: High-Flying Spy Drones Hobbled, Wired News: Danger Room, by Noah Shachtman, December 20, 2007.
The Pentagon's highest-flying spy drone isn't able to "consistently " perform, even on a "limited schedule," according to a draft Defense Department report. The Global Hawk unmanned aerial vehicle (UAV) is designed to fly at altitudes of up 60,000 feet, for a day at a time -- staring down on foes with a combination of synthetic aperture radar, infrared sensors, and long-range cameras. Flown remotely from a set of cramped trailers at Beale Air Force Base in California, a Global Hawk typically looks down on more than 450 targets per day in Iraq and the greater Middle East -- spying on everything from improvised bomb sites to insurgent trucks to individual guerrillas. That is, when they can fly. According to a draft report, from the Defense Department's Director Operational Test and Evaluation (DOT&E), the current Global Hawk models -- so-called “Block 10s” -- aren't able to get into the air nearly as often as they ought to. The document was obtained by the Project on Government Oversight and provided to Danger Room. "Increased combat operational tempo combined with less-than-predicted reliability and limited sparing of key components resulted in a declining Block 10 mission capable rate," the report notes. "Low Global Hawk system reliability adversely affects the ability... to consistently fly on a limited schedule." After the 9/11 attacks, Global Hawk prototypes were rushed into service -- flying missions over Afghanistan, Iraq, and elsewhere. The first two production models -- the Block 10s -- arrived at Beale in early 2006. Nine have been built, overall. And defense contractor Northrop Grumman is already working on larger, longer-flying "Block 20" and "Block 30" versions. The first Block 20 flew earlier this year. Those later models have become controversial projects, within the military. The Block 20 program went approximately $2 billion over-budget after a redesign. And the DOT&E report says the project is still running the risk of delays, with "sensor suite development and production continu[ing] behind the originally scheduled pace.”

Pentagon report dings N. M. Guard's Gen. Montoya, KRQE’s Larry Barker Reports: July 16, 2007 (originally from February 2, 2006).
A Pentagon investigation found that the New Mexico National Guard inappropriately dispatched F-16’s to a flyover at the opening of a car dealership in Roswell, NM.

Hawks and Hogs: Why no one dares attack the waste in defense spending, ReasonOnline, by David Weigel, July 2007.
Shortly after the midterm elections, as his fellow Republicans lay moaning on a row of hospital stretchers, South Carolina Sen. Jim DeMint made a decision: He wasn’t going to stick earmarks for his state into any more spending bills. If some greedy constituent expected him to bring some pork back home, that was just tough. He was through with earmarking—with one caveat. “There should be some very limited earmarks in defense spending bills,” the senator says. ... Part of the problem is outright pork, the kind of projects that legislators like DeMint have doggedly pursued, with occasional success, in nondefense discretionary spending. ... In the early months of this year, the Democratic Congress passed an emergency spending bill for Iraq that included $20 billion in pork, including $74 million for peanut storage and $100 million for citrus growers, to bring stragglers on board. President Bush and the GOP denounced these spending items vehemently and repeatedly. But that was just camouflage for their real objection to the bill: that it set a timetable for a troop withdrawal. Bush didn’t have trouble signing a pork-laden defense bill just a year earlier, when the emergency appropriations for Iraq somehow included $700 million to relocate railroad tracks in Mississippi. In the absence of controversial timetables, neither party will even talk about cutting spending that goes largely to the Defense Department or to fund a war. The Democrats, in particular, have many reasons to shy away from slashing military spending. “The Democrats are out to prove themselves in the area of national security,” says Nick Schwellenbach, a fellow at the Project on Government Oversight, a nonprofit group that monitors federal spending. “They won’t touch the budget for defense because they’re afraid of those negative ads. It’s impossible to kill weapo ns systems right now.”

Waste Management Congressman Jim Cooper unearths a multimillion dollar middleman sapping taxpayer money from the U.S. Army’s budget, Business TN Magazine, June 2007, by Alexei Smirnov.
A $10 million donation from Uncle Sam to a private venture capital fund in return for a vague promise of eventually investing in new technologies for the U.S. Army — in his time as investment banker between 1995 and 2002, Nashville Congressman Jim Cooper never came across a deal this sweet. Which is probably why an obscure item in the Defense Department’s recent authorization bill peaked Cooper’s interest in the first place. After a week of intense research, Cooper’s D.C. staff discovered that somehow, several businessmen previously unknown in the nation’s venture capital circles, convinced the U.S. Army to hand over $61.9 million in unspent military funds since 2002. ... The Central Intelligence Agency’s venture capital arm In-Q-Tel of Arlington, Va., has invested $150 million in more than 90 companies since its inception in 1999, including satellite-mapping software Google Earth. NASA’s Red Planet Capital fund is yet to announce its initial investments. It’s not surprising that OnPoint and MILCOM received little oversight from its client, the Office of the Army. According to the Government’s Accountability Office, the U.S. Department of Defense has never undergone a financial audit, and of the 26 “high-risk” areas found by GAO within the federal government, 14 are at the DoD. Given that the Congress approved a $440 billion budget, not including the war expenses, for fiscal year 2007, OnPoint’s $61 million appear to be mere pennies. Still, “it’s disgusting that the Army is shoveling their resources out the door,” says Beth Daley, director of investigations at the 26-year-old, not-for-profit Project on Government Oversight, “especially in a war time situation, when a number of requests from the front lines were not fulfilled because of bureaucratic inaction and lack of resources.”

Heady days for makers of weapons, New York Times, December 26, 2006, by Leslie Wayne.
These are very good times for military contractors. Profits are up, their stocks are rising and Pentagon spending is reaching record levels. The only cloud might seem to be what the Democratic takeover of Congress could mean for their business. After all, this is an industry that has generally supported the Republican Party by sending about 60 percent of its political contributions to Republican candidates. But, even so, few in the military industry are worried. … "These contractors clearly are relieved," said Danielle Brian, executive director of the Project on Government Oversight, a nonprofit that has been critical of Pentagon practices. "These reforms won't be the No. 1 priority for the committee, but it will be an important priority."

RAND study for DoD states that new tankers are not needed, GovExec.com, January 27, 2006.
A new analysis of the Air Force's tanker modernization plans has found that the military can safely delay expensive plans to replace its fleet of aerial-refueling planes, contradicting longstanding Air Force claims that the aircraft were aging and in disrepair, according to sources familiar with the study. read this article »

Tuning Up Weaponry Budgets, Washington Post, June 15, 2005
The House is expected to consider a $409 billion defense appropriations bill this week, with legislators targeting several programs for cuts and others for generous increases. read this article »

Tanker Backers Come Up Empty, Wichita Eagle, June 13, 2005.
Sen. Pat Roberts held part of the corroded belly of a KC-135 at a Senate hearing, claiming U.S. military personnel could be endangered if they keep flying in 45-year-old planes that need replacement. read this article »


"Too Many Weapons," Andy Rooney Commentary on CBS's 60 Minutes, October 24, 2004.


"Report: Pentagon Wasted $100 Million," NBC Nightly News, June 8, 2004.
The Pentagon wasted as much as $100 million on commercial airplane tickets that were never used between 1997 and 2003, according to a new report by the investigative arm of Congress, due to be released Wednesday.


Military waste under fire $1 trillion missing -- Bush plan targets Pentagon accounting. San Francisco Chronicle, May 18, 2003.
The Department of Defense, already infamous for spending $640 for a toilet seat, once again finds itself under intense scrutiny, only this time because it couldn't account for more than a trillion dollars in financial transactions, not to mention dozens of tanks, missiles and planes.


POGO Alert - Concern Over Rumsfeld Transformation Grows. Members of Congress express concern about proposal to reduce Congressional oversight of the Pentagon. May 13, 2003.


"Key Details Lacking On Post-9/11 Billions." The Pentagon refuses to account for $28.5 billion allocated to fight terrorism. Learn more about the lack of financial accountability in this Defense Week article. May 12, 2003. Defense Week material is copyrighted and unlawful to reproduce without permission of the publisher.


POGO Letter to House Armed Services Committee on 2004 Defense Authorization. Transparency and financial accountability are threatened by several proposals in the Pentagon budget. May 2, 2003.


Kamen Skunks the Garden Party. The Pentagon canceled its taxpayer-paid romp at the Atlantic City Trump Taj Mahal after the Washington Post's Al Kamen exposed it. To read Kamen's columns, click here, February 24, 2003.