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Top Five Reasons Weapons Programs Are Canceled

Forbes loves lists. The richest counties. The worst cars. The priciest
colleges. In nearly a year of blogging for Forbes, though, I haven’t managed to produce a single list about national security, the topic about which I usually write. Clearly, this oversight needs to be corrected. But what should my list be about? The biggest contractors? The best defense secretaries? The most popular military bands on YouTube?

I was contemplating that question last week while on spring break with my 14-year-old twins when a top policymaker gave me the answer I needed. Pentagon acquisition chief Ashton Carter told a meeting at the Heritage Foundation that more cancellations of big-ticket weapons systems are coming in the years ahead, beyond the $330 billion in programs that defense secretary Robert Gates claims to have already killed since President Obama took office.
That got me to thinking about why weapons programs get terminated, and suddenly I realized, ―Jeepers, this might make an interesting list for Forbes!   So what follows, based on a quarter-century of tracking Pentagon weapons programs, is my list of the top five reasons that weapons programs get canned. Now, this isn’t like most Forbes lists, which typically rank items according to unambiguous statistical criteria. Weapons programs are usually killed for more than one reason, and the drivers of political outcomes often don’t lend themselves to quantitative analysis. Thus, ranking the reasons for killing weapons programs is largely an intuitive exercise. But heck, I’ve got lots of intuition. I’m only wrong on the big stuff about once per quarter (like when I predicted in mid-2001 that America wouldn’t be in a land war in Asia for the next ten years). Anyway, here’s my list.

Number One: Changing Threats. The biggest reason that weapons programs get canceled is that threats change in ways that make the programs seem no longer necessary. Defense Secretary Dick Cheney demonstrated this principle in spectacular fashion at the end of the
Cold War when he managed to kill a hundred major programs — everything from the Abrams tank to the Seawolf submarine to the B-2 bomber — during a four-year run at the Pentagon. Cheney has a reputation these days for being a big spender on national security, but when the Berlin Wall came down he was more than willing to reap a ―peace dividend‖ by killing weapons developed for fighting the Red Army. However, this dynamic doesn’t just unfold at the end of wars. A decade later Cheney had returned to government service as vice president in the Bush Administration, and strongly supported the plan of his old mentor Donald Rumsfeld to transform the military by investing in digital networks. The Pentagon was gearing up to make huge investments in new satellites, communications links and other gear when 9-11 radically rearranged U.S. defense priorities. Within a few years it became apparent that military transformation as initially conceived by the Bush-Cheney security team wasn’t going to be much use in coping with Al Qaeda and Iraqi insurgents. So one by one all of the big networking initiatives began disappearing, and by the time President Obama arrived on the scene military planning was all about ―boots on the ground‖ rather than infotech.

Number Two: Excessive Requirements. In military parlance, requirements are the performance expectations that new weapons programs must satisfy. The most important such expectations are set forth as “key performance parameters,” the features that define what a weapon must do to meet the needs of users. For instance, a submarine must be quiet and a smart bomb must be accurate.
Unfortunately, as weapons systems have grown more sophisticated and warfighting has become more of a ―joint‖ enterprise shared
by diverse players, the list of requirements imposed on new systems has gotten longer and longer. So long, in fact, that programs are sometimes too complicated to execute.  A case in point is the Space Based Infrared System, a constellation of satellites conceived in the 1990s to provide warning of hostile missile launches by detecting the heat they generate from 22,000 miles away in space. That’s the altitude at which satellite orbits match the Earth’s rotation, so they can remain above the same piece of real estate indefinitely. Building a geostationary satellite that can monitor such emissions for many years is very challenging, and the existing constellation therefore was designed to do just that. However, the new satellites had a dozen additional performance specifications to make them useful to tactical commanders, intelligence analysts and other users. Not
surprisingly, the satellites have taken a decade longer to get into orbit than planned and cost over twice the expected price. They survived because missile warning is crucial to nuclear deterrence, but plenty of other military systems ended up being killed when an undisciplined requirements process produced designs that were unworkable or unaffordable.

Number Three: Cost Growth. Although the Pentagon has hundreds of analysts engaged in cost estimation, it is a rare weapons program that does not end up greatly exceeding expected
costs. Cost growth often is the first cause cited when a program is canceled, although cost increases may be symptomatic of more fundamental problems. For instance, if threats are changing and requirements are burdensome, then programs may be delayed in a way that drives up costs. But cost can also be an independent variable driving outcomes, because the government’s whole approach to predicting and programming costs is biased toward under-estimation in the early years of a program.  The bias
begins by making optimistic assumptions about the pace at which new technology can be developed and integrated. Without those assumptions it might not be feasible to begin a program in the first place, but the optimism is then compounded by a budgeting process that cuts available funds to reconcile all the claimants participating in the process. The optimism grows even greater as contractors compete to win the right to execute the program in a process that
is euphemistically referred to among industry insiders as “buying in”
or “pricing to win.” The unstated assumption is that companies can somehow improve margins later, which happens mainly because
the price-tag goes up. It isn’t that bureaucrats and contractors are conspiring to understate costs, it’s just that everybody in the system is incentivized to be more optimistic than past experience warrants. Reality eventually catches up with hope-based plans, though, and then the resulting cost growth may lead to program termination.

Number Four: Missing Constituencies. The companies that develop and produce weapons systems often have a misunderstanding about the nature of their federal customer. That
customer isn’t a military service or a defense agency, it’s a political system.
Political systems aren’t about technology or budgets, they’re about acquiring and preserving power. So if a program requires some significant expenditure of political capital to be executed, then it must develop a constituency big enough to sustain it. Big weapons programs eventually do that by providing thousands of production jobs scattered across the nation, but if they fail to make the transition from research to production soon enough, they risk losing funding to other programs that are more firmly rooted in the political culture.
The danger of taking too long to develop a political constituency has grown as the Pentagon has shifted its investment focus from stand-alone warfighting systems to complex “systems of systems” that take a long time to design and test. The R&D on these systems can create a lot of jobs, but it doesn’t begin to generate the kind of political clout that a big defense factory with thousands of unionized workers would. So the fact that new weapons programs may take 20 years to reach the field in a political system that operates on two- and four-year cycles is a real threat to keeping those programs on track. Experience shows that Congress will keep troubled programs going indefinitely if they are attached to lots of votes in key states, but if a program takes too long to find a constituency, then it becomes an endangered orphan on Capitol Hill.

Number Five: Bad Management. When purchasing organizations routinely overstate requirements and understate costs, it’s a safe bet that they have defective management cultures. That is uniquely true of the U.S. Department of Defense, where it is typical to find some of the most senior positions in the weapons acquisition system populated by people who have little understanding of new technologies or business processes. The three most common categories of people to make it to the top of the defense acquisition system — civil servants, military officers and politically-appointed academics — generally have less experience with the business world than just about any other group of adults you could name.  So my number-five reason why weapons systems get canceled is sheer managerial incompetence. Several years ago, a well-known industry executive shared this assessment of a major military buying command with me: “The uniform military workforce is heavily weighted to junior officers who don’t have enough experience or technical expertise. Career civil servants who have been in position for long periods tend to be mediocre, because rewards are so poor that the competent people have left for industry.”
This particular command managed about $10 billion in purchases annually, but the overall defense acquisition system buys forty times that much goods and services each year. Is it any wonder that weapons programs sometimes get canceled because they have been mismanaged to a point where they can’t be saved?

Posted by Loren Thompson for Forbes


Dr. Loren B. Thompson is Chief Operating Officer of the non-profit Lexington Institute and Chief Executive Officer of Source Associates, a for-profit consultancy. Prior to holding his present positions, he was Deputy Director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. He has also taught at Harvard University’s Kennedy School of Government.

Mr. Thompson holds doctoral and masters degrees in government from Georgetown University and a bachelor of science degree in political science from Northeastern University. He was born in 1951 and currently resides in McLean, Virginia and Plymouth, Massachusetts with his wife Carla and two children, Matthew and Ariel, twins born in 1997.

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