Service, Sacrifice and the Luxury of Choice

This will be one of my briefest articles, but a couple of things have compelled me to write about service, sacrifice and the luxury of choice.  First and foremost on my mind is the upcoming Veterans Day, a national tradition dating back to November 11th, 1918.  The end of the “War to end all Wars”, marked by a cessation of hostilities between German and Allied forces, was put into force on “the eleventh hour of the eleventh day of the eleventh month.”  When President Wilson declared Armistice Day to be observed beginning in 1919, his intent was to have nationwide parades and events at 11AM on November 11th.  The Congress eventually formalized Veterans Day in 1938, when it was declared that this date would be a time to honor American veterans of all wars. There was a time in the 60’s when there was a push for the big Federal Holidays (Washington’s Birthday, Memorial Day, Veterans Day, and Columbus Day) to occur on Mondays, allowing for three-day weekends to encourage “travel, recreational and cultural activities and stimulate greater industrial and commercial production,” but it was confusing and in the end Veterans Day moved back to November 11th in 1978.  I don’t know if Wikipedia is the final authoritative source on Veterans Day, but according to Wiki, the purpose of Veterans Day as we now celebrate it is to “honor America’s veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good.”

“I do solemnly swear or affirm (as the case may be) to bear true faith and allegiance to the United States of America, and to serve them honestly and faithfully against all their enemies or opposers whatsoever, and to observe and obey the orders of the president of the United States of America, and the orders of officers appointed over me.” 1789 Oath of Enlistment

While many veterans who served before 1973 may have been drafted and therefore not necessarily “volunteers” they still certainly sacrificed much in service to America.  And many indeed volunteered to serve, even during the period when the draft was in effect.  Since 1973 we have been an all-volunteer force and except for a few lean years, the Services haven’t had much trouble in filling enlistment quotas.  I marvel  at the extraordinary sacrifices our active duty, guard and reserve men and women in uniform make every day: risk to life in conflicts, separation from family and friends, careers put on hold, dangers at work,  and countless others sacrifices that only they know.  So I am proud to be among their number, although I am mindful that many have sacrificed so much more than I.  They will be on my mind this upcoming Veterans Day.  If you are looking for a way to honor those who have sacrificed much, there are many options….go to a Parade, give a homeless vet food and shelter, donate to a veteran-focused charity, etc.  But for me, please don’t say “Thank you for your service.”  As far as I’m concerned that’s a mindless phrase, a cop-out which allows one to feel good without having to commit anything.  It’s expected and akin to saying “Bless You” after a sneeze.  They are words spoken without commitment or consciousness by many who utter them.  I would much rather hear, “I never served, but as a way of showing my gratitude for those who did, I work with homeless veterans at the local shelter”, or maybe, “Where did you serve and what did you do?”  That shows interest not a clever, trendy reflex.  And I would be OK with a “Thank you for your commitment America.  I am grateful for your service.”  At least put some thought and feeling in it!

“I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; and that I will obey the orders of the president of the United States and the orders of the officers appointed over me, according to regulations and the Uniform Code of Military Justice. So help me God..” Current Oath of Enlistment

I said I was going to be brief, so I better wrap up..The other event on my mind was the recent election of Representative Paul Ryan as Speaker of the House.  I certainly wouldn’t want that job.  But I was struck with his “demands” and how they contrast with the service our veterans rendered to our nation.  They didn’t get an opportunity to bargain for weekends off to be with family or to say “I will serve, but only in CONUS.” Seems to me that he’s only going to be Speaker for a few years (probably less time than the average enlistment contract), so suck it up!  Remember all those who don’t get a chance to spend weekends with their families while being shot at……a far cry from dangerous caucuses or risky debates in the halls of Congress. So it must be nice to have the luxury of choice and get credit for service without too much sacrifice as so many on the Hill are wont to do. I guess that explains why there is no “Congress Day” on our national calendar.


Here’s a way to honor our Veterans this year.  Attend the Navy Safe Harbor Foundation Veterans Day luncheon at the Army Navy Country Club at the 11th Hour of the 11 Day of the 11th month:  Click here to register.FoundationAnchorLogo

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One for the Price of Three!

Only in the DoD acquisition world would this sound like a good deal!  But before we cast too many arrows at the acquisition community, I must admit the idea is mine.  I developed this idea over the course of years of working in the Bizarro World of DoD ship financing.   You remember Bizarro? Bizarro It’s the world where everything is backwards….the name of the bizarro world planet is Htrae (so clever!) and the world is square.  As I recall, it was featured occasionally in Superman comics in the 1960’s. One of the mottos in Bizarro World was ” Us do opposite of all earthly things.”  Bizarro bonds were a hot item on Htrae because they were “guaranteed to lose money.”  So I don’t think it’s a huge stretch to make the analogy here.

As I learned during my time as Chief Resources and Requirements Officer for the Navy, the normal things you learned about economics don’t necessarily hold true when it comes to buying ships.  My initial experience was during my first year on the job.  We were working on balancing the budget and were about $400 Million off.  The staff proposed that we slide the purchase of a ship we were buying for the Army called the LMSR (contrary to popular belief, the Army moves primarily by sea, not air).  The price tag was about $400 Million and the staff had determined that we could stand to slide it a year.  “Sounds good to me!” I answered, happy at the prospect of putting a bow on the $130 Billion Navy budget and delivering it to OSD just in time for Thanksgiving.  By the way, that’s how you make sure that you don’t get rejected right away…..Submit something just prior to a big holiday so no one is around to grade your work.  This rule works in a variety of scenarios:

  • DoD generally drops significant RFPs just before holidays to force contractors to work feverishly at the expense of their families to get the proposal complete by some arbitrary deadline (which generally gets extended anyway).
  • The Congress always passes bills at the eleventh hour before big holidays, in hopes that the particulars will escape the media.  What’s more interesting? The details of the CR passed the day before Thanksgiving or the press conference where the President pardons the turkey?  Or maybe the 3 minute spot on the evening news which shows the neighbor’s Christmas lights display of 100,000 watts, synchronized to “All About That Bass.” I vote for the turkey pardon and the light show!!!!!(and sadly, so do most)
  • Controversial changes to Federal Register seem to always drop the day before a holiday in hopes that no one will notice.
  • My favorite, RFP’s released with 5 days to respond…(a favorite way to make sure the desired contractor wins)

Anyway, I’m sure you have your own sea story that would make mine look minor.  But back to the LMSR caper……

USNS Bob HopeA few days after the decision was made, the staff came back and noted that since we slid the ship a year, it’s going to cost more…..I don’t remember how much, but it was around $100 Million or so.  “Really?” I commented.  ‘Oh, yes,” came the reply, ” money will cost more the next year, we have shipyard loading issues that we will have to pay for, the cost of steel is going up, blah, blah blah.”  So I began to understand that the economics of shipbuilding were different.  I formulated The Shipbuilding Entropy Rule: “Nothing ever costs less.  NO matter what you do, it will always cost more.”  You buy less, they cost more.  You cancel the buy, you still have to pay the overhead.  You remove capability, it costs more to redo drawings.  Its all very counter-intuitive.  This became very clear to me during the following year’s budget build when the staff came back and said “We made a mistake.  We have to move the LMSR back to the original purchase year.”  “Fine,” I replied, “No harm, no foul.”  Sensing it wasn’t “Fine“, based on the furtive glances between the staffers (an admiral sees a lot of those looks in the Pentagon) I asked “What’s wrong?”  Turns out, if we moved the ship back into the original purchase year, it added another $100 Million to the cost!  Whadakknow?  We essentially did nothing and paid $200 Million not to do it!  That, my friends, is Bizarro accounting!

Anyway I could go on and on about this, but I want to get to the reason I chose the title of this article, One for the Price of Three.

The DDG-1000 (AKA CG(X), Arsenal Ship, Zumwalt Destroyer, DD21, DD(X), etc) was originally intended to have a buy of around 32 ships or so.  USS ZumwaltThey became so expensive and the requirements bounced around so much, we began advertising it as a fire support ship vital to the survival of the Marines during amphibious assaults.  As such, we only needed about 10-12, just enough to support the number of amphibious ready groups (ARGS) we had at the time.  The Marines were happy about that, even though they preferred to have 2 per ARG.  I even went over to the Hill with my Marine counterpart extolling the virtues of the DDG-21 as the perfect fire support ship for the Marines.  But once the Marines realized that the cost of the ship was so high that it would probably limit the amount of other stuff they could buy, they dropped it like a hot potato…..they would much rather have the 360 V-22’s than 24 DD(X)’s.  So in the space of about a month we changed our tune from”vital” to “not so vital.”  Now that they are $3 Billion a copy, we are only building 3 of them and I’m not sure there’s a real requirement out there.  As my Grandmother said when she got her first taste of champagne in one of those dinky champagne flutes at my son’s baptism, “That’s not enough to wet my whistle.”  So it is with DDG-1000 IMHO.  The real requirement as far as I can tell is to have something for Bath Iron Works to build ( they will build all three) so they can stay in business in order to address industrial base concerns.  Hence the title of the article.

I propose instead of spending $9 Billion for 3 ships we don’t need, why not pay the shipyard to build it, take it apart and then build it again?  It keeps them busy. The Navy doesn’t have to shoulder the Operations and Maintenance costs necessary to support a ship class of 3 ships, and we don’t have rustle up the personnel and training facilities which must be specially developed on this one-of-a-kind weapons systems.  Heck, we will save money by doing that!  Of course, this idea only works on Bizarro World.

That, by the way, is how Bizarro JosBanks works too.  You pick out one suit and pay for three!

What a world, what a world!

 

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A Day Younger

I was honored to be on the waterfront last week and had an opportunity to meet officers and Sailors on a soon-to-deploy ship and boy did I leave feeling good about our Navy.  Everyone I talked to, from seaman to the Captain, were excited about their ship, their contribution to national security and the upcoming deployment.  Their enthusiasm was genuine as it was a weekend and I’m sure they would have rather been with their families.  It reminded me of a saying I used to share with my audiences when I was important (at least in my own mind): Every day I spent at sea I got a day younger, and every day I spent in the Pentagon I got ten days older!  That certainly explains why I look so old now–too many days in the Pentagon and not enough days at sea.  It’s probably not intuitive to you land-lubbers, but being at sea and on deployment is the easiest part of the whole cycle.  Before deployment there are endless exercises, training and long hours preparing for the task ahead.  Many would say that’s the hardest part of being in the Navy.  That’s not to lessen the impact of being away from family and friends…there’s always that.  But Navy leaders have done a lot to lessen the distance between families during deployments.  Sailors are generally well connected to their loved ones by internet, email and instantaneous telephone connectivity.  During my first deployment in 1975, the lovely Mrs. Crenshaw and myself exchanged daily letters, sequentially numbered on the back flap so we could read them in chronological order.  Nothing’s worse than reading about your son being released from the hospital when you didn’t even know he was in the hospital to begin with.  I wish we could establish a program that gets all Pentagon confines out in the field a couple of time a year so they could recharge their batteries.  I felt even better when I had the opportunity to meet with Soldiers this morning, many just returned from Afghanistan and many more looking to go back in less than a year.  I didn’t hear one sour note.  They were all ready and willing to go back, despite the hardships on their families.   As I read the news about the possibility of us pulling our of Afghanistan, I can’t help but think about the 2176 brave Americans who gave their lives for this cause.  We could argue all day about rather or not Afghanistan is a critical aspect of protecting America’s freedom and I frankly don’t care which side of the argument you are on…..The fact is 2176 have died for the cause.  To pull out lock, stock and barrel would be a dishonor to them and the families who remain behind.

And I can’t imagine how anyone can look them in the eye and tell them that they are pulling the plug on their Commissary benefits, or telling them that their health care is too expensive so when they retire, they will have to pay more.  I would rather see us spend all the money and effort people are spending on marginal costs on homeless veterans and jobs for veterans and other programs which honors their service, not puts a price tag on it.

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Too Big To Fail

If you saw the Sixty Minutes piece on the JSF last night, you probably not a happy camper.  The opening salvo was pretty staggering: The program is costing $400B for 2400 airplanes, or about twice as much as the US spent to put men on the moon!  So how did we get here?  When I was a squadron Commanding Officer in the 1991 timeframe I witnessed a rare occurrence at the Pentagon, The cancellation of the A-12 Avenger program by then Secretary of Defense Cheney.  The A-12,intended to be the next generation aircraft for the US military, was scheduled for a buy of about 850 jets.  But it was 18 months behind and already $1 Billion over budget, so SECDEF axed it! The JSF didn’t just wind up 7 years behind and $163 Billion over budget overnight, so one wonders why subsequent SECDEFs let it get this far.  I think we got here in much the same way that the DoD ethics problem evolved……just a little at a time.  Despite all the warning signs and poor performance,  leadership allowed it to continue with the “hope” that with the proper amount of money and leadership, the problems would go away.  They didn’t.  All successful military officers and corporate executives know one fundamental tenet of leadership: Hope is not a good strategy.  Yet it appears that was the main strategy at work with the JSF.  I am reminded of the classic The Screwtape Letters, by C.S. Lewis in which a senior executive devil, Screwtape, provides advice to his nephew, Wormwood, an apprentice devil.  When asked by Wormwood what big event he should use to cause his assigned mortal to turn to the dark side, Screwtape replies, “Indeed the safest road to Hell is the gradual one–the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts,…” Sound familiar?

Now the program has a gun to our heads.  It’s the only TACAIR replacement on the books, not withstanding the excellent and under-rated F-18E/F, which, by the way, is a perfectly acceptable alternative well into the 21st century.  It’s ironic that in order to pay for the ever increasing JSF price tag, DoD wound up taking money highly successful programs, like the F/A-18 .  We now must resort to a strategy of hope to deliver the JSF.  There’s a lot of similarity here with ERPs, don’t you think?

There’s a lesson to be learned here.  Be vigilant early in procurement programs. Don’t let the little things get by without correction, lest one finds oneself on “the gentle slope, soft underfoot” of Too Big To Fail.

 

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Hall of Heroes and Auditors

USMC_Audit_AwardIt’s like pushing a heavy block across sandpaper.”  That’s what DoD Comptroller Bob Hale said yesterday in the Pentagon’s Hall of Heroes  at a ceremony celebrating a significant milestone– the USMC’s clean audit opinion on the current year Statement of Budgetary Resources.  For those in the federal financial world, that is BIG news!  In typical USMC “Out in Front” style, the Corps took on the task of being the first Service to declare audit readiness  and complete the process to prove they are ready.  It was an effort like no other seen in DoD financial management.  I’m hoping that over the next two years there will be three more ceremonies celebrating audit completion of the remaining Services.  The DoD IG is skeptical given the wording in their recent report to Congress for good reason. These audits are complex, large and little understood by most in the DoD.  The USMC audit involved hundreds, if not thousands, of Marines, civilians and auditors from Grant Thornton LLP (GT)  (lead by audit partner Tracy Greene) and its subcontractors and involved combing through terabytes of data and tons of paperwork around the globe!  One can imagine how much more complex it will be to audit the Army, Navy and Air Force.

So what can the Services learn from the USMC accomplishment?  As the Partner at GT responsible for the DoD account when this journey began I have a few observations from a non-CPA:

  • All senior leaders need to be united in their support of the audit and not just those in  financial management.  In other words, this has to be a priority for the Service Secretary, the  Service chief and every commander in the field.  Most of the transactions take place in individual commands, far removed from the Pentagon. They have far more impact on a successful audit that those in the Pentagon.
  • Don’t let the audit become a bill payer.  Given that there’s well over a trillion dollars  involved, the costs of an audit are immaterial.
  • Fix problems as they arise.  Don’t play “Stump the Monkey” and protect rice bowls. Make it a cooperative effort.
  • Have a dedicated team devoted to accomplishing the audit (a Task Force AUDIT) whose sole purpose is audit.  You can’t be successful by dumping yet another task on an already stressed workforce.
  • Don’t rely on IT systems.  In the end, most problems are people-related.

When I was in uniform I thought audits were just “science projects for the green eyeshades.”  After all, the Congress continued giving us money and rarely questioned our accounting.  If we told Congress we spent $800 for a toilet seat, they believed us!  No one ever said, “Surely there was just a bookkeeping error.”  They believed us.  But I was wrong then because I have come to realize that audits are not about making sure the credits and debits balance.  They are about ensuring the DoD can manage its money, not by figuring out how much money they have after the fiscal year is over, but knowing how much they have today and every day.  DoD is so unsure about balances that it maintains huge cushions of cash in many accounts just to make sure they do not violate the Anti Deficiency Act.  Imagine not looking at your checkbook for six months and writing checks anyway because you know you have put way more money in your account than you could ever spend.  That’s basically what happens.  But the budget environment has changed and money is getting tight.  That cushion is not likely to be around for long.  In order to still accomplish their missions, the Services must have an accurate accounting of their money day-by-day.  Audits allow the services to have confidence in their accounting procedures and thereby allow them the ability to efficiently obligate and track money.

Let’s stop planning and start doing the Service audits and in doing so become even better stewards of the nation’s treasure.

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