Big Projects, Big Budgets: Fixing Government Procurement

• Pentagon
• NASA
• military
• Air Force
• Navy
• government
• legislation
• aircraft
• ships
• Mars
• weapons
• Barack Obama
• Marines
• tech watch

1. Supply Chains Are Hopelessly Tangled

Space and defense contractors have long relied on networks of subcontractors to make critical parts. But in recent years, they have offloaded more work to their suppliers—forcing those smaller companies to develop sophisticated technology. That has advantages, but more links in the chain can also mean more delays or mistakes—and an error from a single supplier can derail an entire project.

Deloitte’s Fix: Big firms should exercise more oversight of suppliers and delegate a supply-chain “architect” to integrate the entire job.

2. Big Contractors Lowball Time and Cost

Large aerospace firms often promise overly optimistic timelines, sincere or feigned, to win a contract bid. Then, when the firms do not deliver and costs rise, Congress may cut back on the total order, causing the cost per item to skyrocket. Further, money from well-run programs is often rerouted to troubled ones, creating a domino effect of inefficiency and delay.

Deloitte’s Fix: Set hard milestones and scout potential problems from the start; build more slack into timetables to account for unforeseen problems.

3. Officials and Engineers Lack Critical Experience

NASA builds fewer spacecraft these days, denying young engineers valuable experience that might instill healthy skepticism. Modern missions rely on new technology, but inexperienced staff may only see the promise and not the risk. (The same is true in the defense industry, where contractors build fewer—though more pricey—systems.)

Deloitte’s Fix: Retain baby-boomer engineers and technicians with incentives; create mentorships for students; finalize contracts after suppliers prove their tech actually works as needed.

Case Studies

Expeditionary Fighting Vehicle | $13 billion


The EFV is a Marine Corps amphibious assault vehicle that can be launched from a ship and then driven on land. The design changed during development, but General Dynamics neglected to deliver the new plans to its subcontractors. The unsurprising result: Expensive parts didn’t fit together. After 10 years, the Marines got a craft that leaks, breaks down an average of about once every 4.5 hours and sometimes veers off course.

F-22 Raptor | $65 billion


Lockheed Martin and Boeing, who teamed up to create this stealth warplane, entered production with only about half the critical manufacturing processes in place. Canopies cracked while they were being installed, and the overall rework and repair rate of the first airplanes was 30 percent. Rising costs are one reason the Air Force is buying far fewer F-22s, but that bumps up the cost per airplane to about $140 million.

Mars Science Laboratory | $2.2 billion


The Mars Science Lab now under construction is the largest rover ever designed to explore another planet, and it will use nuclear power to do it. After years of development, engineers shelved advanced gearboxes they’d originally planned, starting a chain reaction of redesign of other moving parts. The resulting delay caused mission planners to miss their launch window, and they must now wait until 2011. NASA officials say they “underestimated what it was going to take” to build the new rover.

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