Federal cost-cutting should be a central focus of the next president. One effort that should be bipartisan is overhauling the government’s out-of-control procurement system. Federal contractors routinely get away with outrageous cost overruns at taxpayer expense. From today’s Wall Street Journal:
More evidence that when the government says a project will cost $1, taxpayers will end up paying $2 or more.
The Washington Post notes that Congress is considering further funding of a Navy ship program: ”The congressional action followed months of delays as costs ballooned. The cost for the initial two ships was estimated at about $220 million each but now appear to cost up to double that.”
The Washington Post reported yesterday that the cost of new combat ships from Lockheed Martin and General Dynamics will likely be at least $350 million each, instead of the originally budgeted $220 million.
That 59 percent cost increase is routine for big federal procurements. The table below summarizes official government estimates of costs for various defense, energy, and transportation projects.
The Washington Post reports yesterday on cost overruns for weapons procurement. "It is not unusual for weapons programs to go 20 to 50 percent over budget, the Government Accountability Office found."
That’s for sure. As I’ve documented, it’s not unusual for weapons to more than double in cost. I’m talking about the F/A-22 Raptor, the V-22 Osprey, the CH-47F helicopter, the Patriot missile, and on and on. See here, and see the discussion in Downsizing the Federal Government.
The same pattern occurs in federal highway projects, energy projects, and many other government endeavors.
Part of the reason this occurs is that contractors and government officials have a quiet understanding that the initial cost numbers that are used to get projects launched should be low-balled. Both sides know that later on, after projects are underway, excuses can be found to raise the price tag. "The scope of work has expanded." "We couldn’t have foreseen those additional problems." "The mission requirements have changed." "There are new regulatory requirements."