May 7, 2009

Senate Passes Amendment to Combat Military Cost Overruns

Washington, D.C. – The U.S. Senate today passed an amendment to S.454, the Weapons Systems Acquisitions Reform Act of 2009, to crack down on multi-billion dollar cost overruns in major defense acquisitions programs. The amendment, which was proposed by Senators Sheldon Whitehouse (D-RI) and cosponsored by Senators Russ Feingold (D-WI) and Bernie Sanders (I-VT), would provide a transparent early warning system to clearly identify risks for cost overruns in defense contracts for weapons, fighter jets, and other major defense projects.

“Congress is responsible for ensuring that tax dollars are spent wisely and well,” said Whitehouse. “This amendment will help us identify at an early stage, through independent assessments, the likelihood of cost overruns for major defense programs, and will potentially save billions of taxpayer dollars.”

“While President Obama and leaders in Congress deserve credit for beginning to address the longstanding problem of wasteful and abusive defense contracting, we need to go further,” Feingold said. “I would have preferred an even stronger bill but I am pleased that it at least includes this amendment to help ensure Congress is notified when cost overruns are likely or the Pentagon decides to purchase equipment before it has been properly tested. I will continue to work with members of both parties to reform the weapon procurement system, which is riddled with cost overruns and delays.”

“This is a step in the right direction to rein in out-of-control spending and cost overruns. Our amendment will help ensure that outrageous overruns won’t stay hidden for years,” said Sanders.

Currently, military branches are required to establish cost estimates for major defense acquisition programs, and to establish confidence levels in these estimates to counter the danger of cost overruns for military contracts, which have cost U.S. taxpayers billions of dollars in recent years. If an estimate has a low confidence level, that signals a high percentage likelihood that cost overruns could occur. The Weapons Systems Acquisitions Reform Act of 2009 (S. 454) seeks to improve this process. As part of that effort, it would establish a new Director of Independent Cost Assessment to provide unbiased analysis of the cost of weapons systems.

Whitehouse’s amendment requires the new Director of Independent Cost Assessment to develop confidence levels as part of the new independent cost estimates that he or she will develop. The amendment would also require that these new, independent estimates and confidence levels, as well as DoD’s own estimates and confidence levels, be provided to Congress, allowing Congress to effectively exercise its oversight role before large cost overruns are likely to occur.

As an additional safeguard against cost overruns, the amendment also helps ensure that Congress is notified when the Pentagon decides to purchase equipment before it has been properly tested.


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