Monday, October 24, 2011

Haste Makes Wasteful RE Projects: DOD IG Grades ARRA Spending

On Feb. 17 2009, Congress passed the American Recovery and Reinvestment Act. President Obama signed it into law four days later. As part of the stimulus package DOD received funds to support various renewable energy projects. Because of the nature of the funding, many renewable energy projects classified as Military Construction (greater than $750K), got funded very fast. As any one familiar with MilCon will tell you, this is normally a laborious and much scrutinized process. Years are spent in planning and preparation before a project is "shovel ready". But what happens if you don’t do that? Some predictable bad things.

Annie Snider has an excellent piece on a series of DOD IG reports addressing $117M received by AF and DON. (This article is outside the usual paywall; the really good stuff is on the other side.) Turns out if you want it bad, you get it bad. Windmills without wind, in front of radar; ROI rules that were unwritten and many senior positions in DOD vacant when decisions were required. If that weren’t enough of a recipe for less than sterling outcomes, compressed timelines forced decisions to be made before their time.

It is a shame that every dollar of the $335.7M earmarked for RE didn’t work 10% better than the proposal required and that the return on investment wasn’t 40% with a nine month payback. Damn shame. But what must be remembered was what ARRA was supposed to do. It was supposed get people working and money into the economy. Regardless of your opinion of the act, it did those things. What DOD got out of it was lessons learned. The DOD board that now clears RE projects to ensure that they do not detract from the mission and the Army’s Energy Initiative Task Force are examples of those lessons. Let’s hope they can reduce the errors in future projects.

What should bother us about the article is the lack of response from OSD in addressing the issue, specifically Dr. Robyn's office. I checked with Ms. Snider. She queried them, but they had no comment for record. If DOD has learned anything from previously bad events, it is to address it up front. When this stuff comes out, get it out. Tell us what you know, what you don’t know and what you are doing about what you don’t know. DON's Tom Hicks is always accessible and we appreciate his candor. The rest of the folks could take a cue. Why should OSD do this? If the Army wants $7.1B in private investment, they (and the rest of DOD) need to engender trust. Transparency goes a long way to doing just that. Other wise the press has only old retire guys with whom to talk. Dan Nolan

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