THURSDAY, JUNE 9, 2005 Nine years ago, the U.S. Navy set out to build a new guided missile for its 21st-century ships. Fiascoes followed. In a test firing, the missile melted its on-board guidance system. "Incredibly," an army review said, "the navy ruled the test a success."
Recently, the navy rewrote the contract and put out another one, with little to show for the money it already spent. The bill has come to almost $400 million, five times the original budget.
Such stories may seem old hat. But after years of failing to control cost overruns, the most powerful officials at the Pentagon are becoming increasingly alarmed that the machinery for building weapons is breaking down.
"Something's wrong with the system," Defense Secretary Donald Rumsfeld recently told Congress.
The Pentagon has more than 80 major new weapons systems under development, which is "a lot more programs than we can afford," said a senior air force official, Blaise Durante. Their combined cost, already $300 billion over budget, is $1.47 trillion and climbing.
In the civilian world, next-generation technologies, like cellphones and computers, rarely cost much more than their predecessors. But the Pentagon's new planes and ships are costing three, four and five times the weapons they will replace. As prices soar, the number of new weapons that the U.S. military can afford shrinks, even with the biggest budget in decades.
"We're No.1 in the world in military capabilities," said David Walker, who runs the Government Accountability Office, the budget overseer for Congress. But on the business side, he said, he would give the Defense Department the lowest possible passing grade, "giving them the benefit of the doubt."
"If they were a business, they wouldn't be in business," he said.
In interviews and public testimony, military leaders, arms makers and government auditors generally agreed on why the U.S. arsenal costs so much.
They said the military conjures up dream weapons. It sets immensely expensive technological requirements that are far beyond the state of the art of war, weapons executives say. Executives at the handful of major military contractors cross their fingers and promise to fulfill those visions.
The military also adds new technologies to many weapons already under development. Those systems add complexity and weight, which add costs to planes, ships and tanks.
Military officials routinely understate the anticipated costs of weapons, said Winslow Wheeler, who analyzed armaments spending as a Senate staff member advising both Republicans and Democrats for 31 years. When costs rise far beyond the promised ceilings, he said, almost no one takes responsibility.
Oversight is dwindling, Pentagon officials acknowledge. While the dollar value of weapons contracts doubled over the last decade, the Pentagon halved the size of the work force that policed their costs.
The government work of managing the design, development and production of weapons has been largely outsourced to the weapons contractors themselves.
Technological troubles add billions to the cost of armaments, congressional auditors said. But no one knows precisely how much, since the Pentagon often cannot keep track of the money it spends.
Testing is often unrealistic, the equivalent of an open-book exam. For example, Pentagon officials overseeing the 22-year, $100 billion effort to build a missile defense system say the program has not yet passed realistic tests. It is an example, one among many, of daunting weapons technology taking two decades or more to produce - and time is money.
Finally, the costs of new weapons are sometimes concealed by secrecy and creative bookkeeping. They now total nearly $148 billion a year, and almost one in five of those dollars is hidden from public view, in the classified "black budget." Of that amount, spending on research and development for new weapons has gone up 77 percent since 2000, now totaling $69 billion a year.
The price of acquiring new weapons is scheduled to rise nearly 50 percent, to nearly $119 billion annually in 2011 from $78 billion today.
"The Pentagon does get it right from time to time," said Walker, the congressional auditing chief. "There have been some systems where things have gone well. Unfortunately that's tended to be the exception rather than the rule."
The military gets much less value for money than it once did, said the air force chief of staff, General John Jumper. He called in an interview for a "national debate" on the costs of weapons.
"We've got to do something about it," he said.
Franklin Spinney, who spent three decades at the Pentagon analyzing the cost of weapons, said their growing costs constituted "a time bomb with a slow fuse that is now going off."
"No one has a clue what it will all cost." Spinney added.
Some members of Congress have raised alarms about the army's Future Combat System, a network of 18 weapons and vehicles for about 45,000 soldiers. First advertised at $78 billion, it may cost nearly twice that.
They have also worried aloud that the Navy's DD(X) destroyers are crushingly expensive at approximately $20 billion for as few as five ships. Navy requirements for the ships added thousands of tons of weight, and billions in costs.
They have asked why the air force needs three different new jet fighters, including the F-22. That program was first sold, more than two decades ago, as 760 planes for $35 million each.
It is now planned for about 180 jets, costing at least $330 million each.
Senior uniformed officers and top military contractors pointed to the "requirements process" - the conception and birth of ideas for new weapons - as a key to the problem.
Jumper said requirements often exceeded realities.
"We have to make sure we are controlling requirements," he said.
A senior executive at a major military contractor said the Pentagon had yet to impose that self-control. The army, navy and air force "push the technology beyond what a contractor is capable of achieving," said the executive, a former weapons-buying official, who spoke on condition of anonymity.
"Yet the contractors say, 'We can do it!"' the executive continued. "Why? Because you're competing with another guy who says he can do it."
After a decade of mergers and acquisitions, only a handful of military-contracting giants are left to handle the work.
"The promise was that the newly consolidated companies would be endowed with core competencies," Jumper said, "and we could turn over quality control" to the contractors.
Market Data 
Markets 
AI
