A House-Senate conference is preparing to permanently tighten Pentagon accountability to Congress for large cost overruns on any of at least 50 expensive weapons systems.
The conferees are expected to extend indefinitely a new law that already has compelled the Pentagon to alert Capitol Hill to cost overruns of 15 percent or more in 21 major weapon systems, adding up to tens of billions of dollars, according to congressional sources.
The current law, which Congress enacted over Pentagon opposition on a one-year trial basis, is an amendment to the 1982 Defense Authorization Act, which expires Sept. 30. In May, Sen. Sam Nunn (D-Ga.), the sponsor, won Senate approval to extend the amendment indefinitely, in slightly modified form.
The amendment now being considered by the conferees sets a cost baseline for each weapon program and requires a report to Congress in any quarter in which the baseline is exceeded by at least 15 percent, over and above the inflation allowed for by the Office of Management and Budget. If the growth exceeds 25 percent the president must certify the report. The current baseline is the Pentagon's March 31, 1981, quarterly "Selected Acquisition Report" (SAR). The baseline hereafter would be the SAR for Dec. 31 of each year starting in 1982.
The conferees have before them both the new Nunn amendment and a broader, stricter proposal that the House approved July 28. Its sponsor is Rep. Dave McCurdy (D-Okla.). One of his key aims is to prevent Pentagon circumvention of a 1975 disclosure law, which requires it to file SARs on the cost and status of "major" military systems with expected outlays of more than $75 million for research, development, testing and evaluation, or more than $300 million for production.
In a unanimous report last March, a five-member special panel of the House Armed Services Committee headed by McCurdy accused the Defense Department of regularly violating the 1975 law in order to exclude weapon systems costing billions of dollars each by declining to classify them as "major." Until recently, he pointed out, Defense excluded the B1 manned bomber program although its cost, as estimated by the Congressional Budget Office, will be $28.3 billion.
The CBO, in a May report that listed more examples, cited six weapon programs that have a combined estimated cost of at least $70.6 billion, but that the Pentagon held to be not "major," thus excluding them from the reporting requirements of the 1975 law. They were:
MX missile and base construction, $28 billion; Trident II intercontinental ballistic missiles, $27 billion; DDG51 guided-missile destroyers, $6.3 billion; new engines for KC135 aircraft, $6 billion; battleship reactivations, $1.8 billion, and light armored vehicles, $1.5 billion.
The McCurdy bill would cover such weapons by requiring the Pentagon to provide a comprehensive annual report on all programs with R&D costs of at least $200 million or procurement costs of at least $1 billion. Quarterly reports would be required when a change occurs in a program's cost, performance or schedule.
"The bottom is that the proposal will, if implemented, allow more congressional input into cost growth and encourage the Defense Department to take stronger cost-control measures," McCurdy says.
Under the Nunn amendment, the Pentagon began in February to notify Congress of breaches of the 15 percent or 25 percent thresh-holds, either in the cost of acquisition per unit (CAPU), or in the "total program acquisition unit cost" (TPAUC), which includes R&D and military construction as well as procurement.
In the most recent notification, dated July 30, the Air Force reported an increase of "at least 25 percent" in the TPAUC of the controversial second-generation Maverick antitank missile. The Air Force attributed the increase largely to a restructuring of the program.
In another example, the Army reported a 142.5 percent increase in the cost of Roland missiles, "solely" attributable to the Army's decision last September to buy no more of the missiles for reasons of "affordability."
The decision takes about $1 billion "down the drain," Rep. Joseph P. Addabbo (D-N.Y.), chairman of the House Appropriations defense subcommittee, said at the time. In the early 1970s, over Army resistance, Malcolm R. Currie, then Pentagon director of research and engineering, successfully pressed for the award of a $104 million contract to "Americanize" the French-German version of this anti-aircraft missile, which was already standardized and in production in Europe. The original estimated cost of the "Americanization" plus the wherewithal to use Roland nearly tripled, to $3.3 billion, before the program was dropped.