David SimsEssays

Musk and Sims on Insidious Government Corruption

by David Sims

RECENTLY ELON MUSK stated that his company, SpaceX, had a more difficult time getting government contracts compared to companies which cultivated inappropriate financial relationships with decision-makers:

“In an interview with Bloomberg Business Week, Musk accused military procurement officials of holding up the certification [of SpaceX to do certain kinds of military launches] to curry favor with the ULA, the joint venture of defense contracting giants Lockheed Martin and Boeing. ‘Essentially we’re asking them to award a contract to a company where they are probably not going to get a job, against a company where their friends are,’ [Musk] said. ‘So they’ve got to go against their friends, and their future retirement program. This is a difficult thing to expect.'”

That’s exactly how it is. I saw that very thing happen repeatedly while I was in the United States Air Force during the 1980s. Senior officers commanding military agencies that need to have technical services (e.g., interaction with orbiting satellites), will curry favor with particular service providers in the expectation of a quid pro quo, a payback, in the form of a highly paid job or consultancy after he retires from the armed forces.

That is illegal because the law says that military officers, like any other government official, must fulfill their fiduciary obligations to the American taxpayers by seeking the best deal, the best value in terms of service and price. When they do otherwise, usually for selfish reasons, they are engaging in illegal corruption.

But they do it. And they get away with doing it. Routinely. Every time, the hammer will fall on any junior officer who blows the whistle on his boss. Count on it. The criminal colonel will get away scot-free, and a brave lieutenant or captain will be vilified and kicked out of the service.

On every wall inside a military facility, there’s a poster expressing the virtue of exposing “Fraud, Waste, and Abuse” and indicating the goodness of reporting any instance noticed. But don’t you believe for one moment that the brass actually supports that idea. Nossir, they do not. The posters are there as an unavoidable duty, and they are mostly just for show. If a military employee actually does blow the whistle, the odds are pretty good that he will have tons of trouble put on him and be kicked out of the organization at the first opportunity.

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1 Comment

  1. Anthony Collins
    19 January, 2017 at 6:25 am — Reply

    Franklin “Chuck” Spinney’s blog, The Blaster (http://chuckspinney.blogspot.com.au/), has some interesting material on the kind of corrupt arrangements discussed in David Sims’ article above.

    In a 1990 paper, “Defense Power Games,” Spinney wrote:

    “Two power games — known in Pentagonese as front loading and political engineering — help to explain how we set ourselves up for a crash in the 1990s, and why, if we continue business-as-usual, our nation will remain stuck in a quagmire of spiraling costs, shrinking forces, and high defense budgets, Cold War or no Cold War.

    “Front loading is the practice of planting seed money for new programs while downplaying their future obligations. This game, which is a clever form of the old-fashioned ‘bait-and-switch,’ makes it easier to sell high-cost programs to skeptics in the Pentagon and Congress. Political engineering is the strategy of spreading dollars, jobs, and profits to as many important congressional districts as possible. By making voters dependent on government money flows, the political engineers put the squeeze on Congress to support the front-loaded program once its true costs become apparent. Front loading and political engineering are about increasing the flow of money; the former starts the money flowing while the latter tries to lock the spigot open, and in American politics, control of the money spigot is power.”

    Front loading and political engineering are what makes it possible to sell flying turkeys like the F-22, F-35, and V-22.

    Incidentally, terms like front loading and political engineering may remind one of the “Four Freedoms” as defined by cynical “New Dealers”: the rake-off, the shake-down, the pay-off, and the fix. I don’t know exactly what these “freedoms” involved, but none of them sound honest.

    Spinney elaborates:

    “These games do more than reinforce each other in a political sense, however. They also bias the choice of technologies by creating powerful political motives to buy complex high-cost weapons in lieu of simple low-cost weapons. Complex hardware is easier to front load than simple hardware. The more complex a piece of equipment is, the more uncertain we are about its ultimate performance and cost. More things can go wrong, and often the existence of some uncertainties is not even suspected during the early stages of a program’s life cycle. There is, therefore, an intrinsic tendency to overstate performance while understating problems and costs. The front loader cynically exploits this uncertainty by hiding the future consequences of today’s decisions in a fog of overly optimistic predictions. Since complex weapons embody many intricate subsystems, they require more subcontracts in their manufacture than do simple weapons. Increasing complexity, therefore, creates more opportunities for funneling money through sub-contractors to crucial congressional districts. The temptation to use these opportunities as patronage to buy political support is difficult if not impossible to resist, given the competition for resources and the division of power between the President and Congress.

    “The Pentagon and its willing partner, the Congress, have been playing these games with increasing subtlety for the last thirty-five years. During peacetime, both sides benefit: the Pentagon gains money and power, and incumbents in Congress get pork and votes, but these benefits carry a heavy price:

    “• Decision makers on both sides of the Potomac sacrifice the real needs of the military on the altar of porkbarrel politics. These games create a pattern of decisions that guarantees costs will grow faster than budgets, even when budgets grow at very high rates, as they did in the early 1980s. The inevitable long-term results are unworkable complexity, smaller forces, older equipment, shortages of spare parts and ammunition, continual pressure to reduce training for combat — and high defense budgets.

    “• By making money the focus of decisions, front loading and political engineering encourage immoral behavior at all levels within the Defense Department. We exaggerate the threat to justify larger budgets. We use deceitful if not illegal accounting tricks to hide the true costs of programs. We reduce the chances of weapons being terminated for poor performance by designing success-oriented operational tests and by rushing weapons into production before they are fully tested. We obscure future costs behind the cloak of excessive secrecy. We tolerate cost overruns and bad management practices, some of which are spilling over into the civilian economy and damaging our international competitiveness.

    “• By striving to hook specific regions and their representatives in Congress on the narcotic of defense spending, these games corrupt the political relationship between the Defense Department and Congress. Front loading and political engineering aim to neutralize Congress’s power of the purse, and to the extent that they succeed, they subvert the checks and balances that are the heart and soul of our constitutional system of government. A craven Congress, paralyzed by its addiction to the President’s checkbook, corrupted by the selfish actions it must take to keep the money flowing to its constituents, is not the guardian of individual liberty that the Founding Fathers had in mind.

    “That’s a brief introduction to business-as-usual and the damage it causes.”

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