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Lockheed Shares F-35 Price Data With CAPE; Worth Emulating, Says Morin

Posted by Colin Clark on

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WASHINGTON: Jamie Morin, head of the Pentagon’s quiet but powerful Cost Assessment and Program Evaluation (CAPE) office, offered an understated and emphatic explanation today of why Congress’s inability to do its basic work and pass spending bills poses dramatic challenges to the US military.

Morin and his colleagues at CAPE rarely appear in public and even more rarely express opinions on the record, so this is particularly worthy of note if you’re a lawmaker.

CAPE is one of the most powerful offices in the Pentagon, yet relatively few people in the building deal with it. It builds and tests the overall budget, analyzes and judges the costs and effectiveness or our weapons, and makes recommendations to the Defense Secretary about what to buy and how to apportion the taxpayers’ money.

Jamie Morin CAPE

“We are in an environment where the national political dialogue is essentially saying to the (Defense) Department, we don’t care about the strategic directions you are trying to take us in,” Morin said at the Atlantic Council today. “We are seriously considering putting that entire defense establishment — a half a trillion dollar establishment that touches millions of Americans every day — and putting it on dangerous autopilot.”

Morin mentioned a letter from both the Aerospace Industries Association and the National Defense Industrial Association (NDIA) sent yesterday that calls on the House and Senate leadership to do something other than snipe at each other and leave America without a defense bill. “Avoiding a government shutdown with a CR is not enough. In certain respects, a year-long CR is worse than a short government shutdown, because the latter almost always produces a satisfactory budget compromise, while the former produces only more determined intransigence. CRs lead to more and longer CRs, not budget stability and bipartisan compromise. We urge Congress to not put our national security in a ‘CR trap,’ the letter says. It adds, in as close to pleading tone as you are likely from two pretty powerful organizations: “Please come together again in a bipartisan fashion and strike a multi-year budget deal that will create stability and efficiency in our spending.”

Morin argued cleanly, simply and without histrionics that leaving the US military with a CR won’t just leave the Pentagon unable to start new programs, cut $38 billion from the administration’s request but will leave the force unbalanced and without the ability to respond to the rapidly changing threats of the world. He didn’t mention them but his bosses have: ISIL, Iran, Russia and China and, of course, North Korea.

In the meantime, Morin detailed an important tectonic shift underway at the Pentagon. “I think the department is on the verge of making an important shift in how it allocates its resources,” he said. A key to this is an experiment they’ve been running for several years with Lockheed Martin. The company has been sharing its F-35 cost data directly with CAPE. It’s not real time, Morin said, but the data can be analyzed. He said he hopes more companies will agree to share this sort of cost information.

On the broader front, Morin said that the Pentagon is bolstering the number of cost reports provided by industry. During the 1990s everyone agreed to save money and the number of Cost and Software Data Reports slid to under 200 from over 1,200 in the 1980s. That left CAPE and others groping for data to provide detailed and highly accurate independent cost estimates. “We didn’t have the analytic foundations to make estimates,” he said.

That is changing. Add to that efforts by Deputy Defense Secretary Bob Work and others to rebuild the Program Objective Memorandum budgeting process, which has been hammered by the last 14 years of war, include detailed and focused analysis by CAPE of weapons effectiveness (mission oriented modeling) and add a dollop of strategic portfolio reviews of broad areas of weapons and their tradeoffs and you’ve got what Morin believes may be a significant and long term improvement in the Pentagon’s abilities to make and manage budgets and assess weapons and their costs. He said he and Frank Kendall have not had the unenviable task of signing any Nunn-McCurdy breaches this year. Since the year ends soon, it’s a good bet there won’t be any, which is certainly worth noting. All in all, Morin told the audience, costs really are coming under control.

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