Govt used a cost-reimbursable contract when it could have been firm fixed price, which contains the ultimate hammer to use on a nonperforming contractor (nonpayment for nondelivery, e.g., all transactions processed by a certain date to a certain quality.) Metrics could have been included; the need was obvious. Do you think government acquisition officials and their customer are being retrained or suffering any accountability for their acquisiton strategy errors? It would be interesting for WaPo to find out.
As for LM, and going only on the staff report, it sounds like the firm"worked to rule," just like a unionized workforce that is trying to get by, per contract terms. LM may have done a lackluster job, or maybe a good job under the circumstances. The quality and timeliness of govt data given LM, and perhaps the quality of "oversight," may have had something to do with the outcome, no?

It usually takes two to tango when people are unhappy with a contract, and this case seems to fit the norm.

Finally, to set the stage for evenhanded posts on your blog: the post's lead juxtaposed the 5-year delay with the "blame" meted out to LM in the report and did not mention, as the report did, the finding of conjoint government culpability. The lead implied strongly that LM alone was responsible for making the veterans wait 5 years. That's wrong and misleading. Another lesson for us all.

Michael, methinks thou doth protest too much. If there is inaccuracy in Government, Inc's blog it is only because, perforce, it is short, and therefore all of the details in the original report cannot be tallied. But the blog certainly specifies that the Government bears some of the blame, contrary to your claim.

Even under the burden of column-inches, though, the blog's point, and the underlying one of the report itself, still shines through: the Government bears blame because of the way it inked the contract with LM, and LM bears blame because it did not perform on the contract as it promised. Even your remarks show that you got that point.

The cited report only represents an Executive Summary, so it is impossible to answer many questions about how badly the taxpayers were gouged for this incestuous little pass-through of public monies from the Treasury to LM's slush fund, and how much blame each party should bear.

But, it you look at the details of the report, as you recommend, the third paragraph says: "For its part, Lockheed was unable to automate calculations of the VA retro claims, as both Lockheed and the Government intended."

Oh, really? Did Lockheed promise to automate the claims, and the Government gave them a contract because of that promise? Sounds like a legally enforceable specification to this untrained ear. Contracts exist because one party says it is capable of doing something, and the other party says it will pay them to do that thing.

Did Lockheed promise to automate claims in order to get the no-bid contract? When it got this no-bid contract, did Lockheed then suddenly turn around and say to the Government: "Oops, sorry Government, we promised you we could do it, but it turns out we can't after all. So why don't you give us a whole lot more money, and we will perform to a lesser standard, give you less, and charge you more."

Let's see, that pretty well describes the methodology that Lockheed followed in the F-22 acquisition, in the SBIRS-HI (and SBIRS-LO) satellite contract, in the new contract for Marine One helicopters, and in the THAAD system. So my guess is Lockheed stayed true to its business plan: get the Government locked up in writing with penalties for early withdrawal, and then hold those penalties over their head. After all, why change your business plan when it works so well?

If Lockheed won a no-bid contract by promising that it could provide a technology and then it turned out that it could not provide that technology, well, most ethics books call that "fraud".

This is how it begins, but the middle game is even more amusing, and intricate. Once Lockheed has the contract signed, and has told the Government it really can't do the work after all, it still has to maneuver to keep the work and lock out other contractors. Here is how that pas de deux works; The Lockheed program manager, in a neatly pressed suit, shows up at the Government Office, looking all fraught, and stern-faced, and forlorn, tracing an arc with a neatly shod foot around on the carpet, and says something like: "Yes, it is true we really can't give you the technology we promised, the way we all hoped, and instead of using automation this work will all have to be done by hand. Yes, we know there are a lot of contractors abroad in the land who could do this by hand, and most of them could do it for a lot less than Lockheed is going to charge you. But we have the contract now, and so stick with us, it will only cost you more delays and money to go out and look for other manual laborers to do this job. Sure our manual laborers cost more than the other contractors, but when you add in all of the costs of rebidding this thing, it just won't be cost effective for the taxpayers. And we can get it back on track quickly, and no one will ever know the difference, Mr. Government Program Manager, so you can just keep your job."

You're right, Michael, the Government is to blame. It falls for this line like a love-struck puppy every time.

Che,
You have captured it nicely. This humdrum contract seems to illustrate nicely a kind of "partnership" that contractors and the government don't advertise. Interests are comingled, responsibilities and accountabilities unclear or not stated in enforceable ways, and the company and client muddle through. We should fear that on some outings, contractors meet the government more than half way in doing business, well, like the government, rather than bringing some real value added, e.g., a tool, more productive staffing, etc.
This is the profitable rut that the industry is in. Staff aug work or its equivalent, or contracts that default to that low-value added regimen(and the LM contract wasn't couched this way), is less expensive to market, requires little or no skill to manage per the contract, and no particular pain for failure. The work in the LM contract is work that tens or hundreds of firms could have done, and it should have been competed and awarded to a firm that really wanted to knock the ball out of the park. But instead, the report depicts a business-as-usual approach--and that's not acceptable to many consumers of government work.
As for the lead paragraph of the blog post, it was obviously leading, familiar, and like most blogs, not constrained by space.

I don't understand why Lockheed-Martin was chosen to do these kinds of claims in the first place. What am I missing????

I isn't unusual for the government to screw up contracts and waste money.

Linda and Meg,

Here is the deal, and it's a doozy: The government contract officer is protected from any legal prosecution through a theory called: "Government Knowledge".

It is like the ancient bull of Papal Infallibility. A government person can do no wrong when he is acting on behalf of the Government. It says so right in the law of the land. No one can sue him/her or put them in jail. No Patrick Fitzgerald can say "J'accuse!". So the government has created the exquisite loophole, and the only one that no one can beat. It cancels out every regulation that Congress could ever write, or has ever written.

In my day, when Milo Minderbender was trying to set up M&M Enterprises, this was called "Catch-22".

So in play this is how it works: if you are a big-time defense contractor, you find one or two Government contracting officials, and then you promise them an easy-money job, and country club membership, anytime they want to hang up the GS designation, and make the real money with the company.

The only catch is that the Government contract monitor, while still in power, must occasionally invoke his "Government Knowledge" authority to scare the bejesus out of any pesky GAO investigators who might be looking into the skulduggery of the contractor.

This is what Darleen Druyan was up to and when she was finally caught, and why she went to prison. In her case. Unfortunately she was a little too full of hubris, and she tripped up a couple of places and forget to get the Government Knowledge thing in writing before the bad cops at the GAO showed up. (The good cops had already grilled her and turned away, the bad cops found the lack of paperwork.)

It is also what the DCAA auditors were up to in the Dana Hedgpath story in the Post this morning.

But once you have that crooked person on the inside the skids are greased for you, Mr. Contractor, and all bets are off. You can rob the Treasury at will. The whole of Fort Knox is your ATM.

The US Government contracting officer merely has to say that the Government knew all along that the contractor was nor performing to the rules, but the greater good was being done (national security, trailers for Katrina victims, overlooking banking regulations for Bear Stearns, tapping your phone to make sure that Joe Wilson wasn't talking to the NYT, you name it). The contractor has one gigantic "get out of jail free card" in perpetuity.

If anyone gets too close to the truth, the contractor can always say that it was really an incompetent (note: not "corrupt") Government contracting official that told them to perform badly on the contract, while the contractor is writing the very specifications that allow them to turn in shoddy work. What is the profoundly capable contractor supposed to do, after all when the Government itself is telling it to turn in shoddy work.

Contractors who are really good at this have what are known as a wholly different contract called an A&AS (Advisory and Assistance Service) contract. The contractor personnel on the A&AS contract actually write the specifications for their own company to perform on behalf of the Government.

So the deal here was that LM knew in advance it could not perform on the contract that the Government was going to give it. But it said it could nonetheless, and the no-bid contract got used to funnel the money to them.

Then, of course, when they couldn't perform, they still used their own (very expensive) personnel to essentially fill in the steno pool to do everything by hand. They told the Government contract official that he didn't want to show how stupid he was in the first place for giving the contract to LM when a lot of other contractors could have done the same work for a lot less money. (this is the beauty of the "no-bid" arrangement". You get the Government Contracting Official to say with a straight face: "We needed this work done so badly that we had to give it to LM, because they were the only ones we had a contract with.")

If the government had wanted to save money, it should have done the right thing, and just gone out and found the cheapest contractor to supply steno pool labor. Instead, it let LM use its $300/ hr software engineers do this same job that most real people would do for $20/hr.

How did LM pull this off you ask? By telling the Government Contracting Officer one of three things:

1) Go tell the GAO auditors that in your professional opinion this was the most cost effective way to handle the situation after the stupid and incompetent Government professional had really asked LM to do far too much, and if the Government official wasn't so stupid about IT services he would have realized that no one could have performed this contract as expected and would have never written such a poor spec in the first place. If you can find someone else to blame besides yourself for stupidly underestimating this project, LM will certainly not rat you out. Now hop to it: invoke Government Knowledge at once and stop bothering us with more whining.

2) We have a corner office waiting for you, and a Corniche roadster with the Insurance fully paid as a perk.

3) I know your supervisor, he is an ex-LM employee and if you don't invoke your Government Knowledge power at once, he will make sure that your first born flips burgers at a McDonald's in Rapid City, South Dakota for the rest of his natural life.

The result is that LM gets to keep the contract even after they've admitted they can't perform, all of their $300/hr LM software engineers are fully employed with a Government (taxpayer) charge number, and every small steno contractor in the DC area has to declare bankruptcy and default on their credit cards, because LM has kicked them in the teeth.

Michael tends to believe that all Government Contracting officers really are stupid and incompetent. I believe instead they are corrupt and acting in their own self interest and are well informed when they turn a blind eye to this corruption.

Pick your poison.

Ahhh, Che. You can't put your words in my mouth without drugging me (pls don't). COs work in a rule-bound world; there's an answer for everything (little analysis, but some judgment necessary). They just plug it in--they're bureaucrats, not corrupt, working to rule. They are part of a malfunctioning institution. A very few, such as the handful of COs in Iraq going to the slammer, take bribes. The ones to worry about are not sufficiently skilled, smartly supervised, or just too relaxed or sloppy about "responsibility" determinations, sole-source justifications, COI, best-value analyses, etc. They take direction (often implicit or inferred) from career and politial execs in their functional chain, and, more importantly, the execs in or above the requiring offices for the contracts. There's rarely accountability on the COs part (anybody's part?) for bad calls. No one gets fired, really. No one loses a pension (not even Darlene Druyun after serving time). Companies that benefit don't tend to complain and rarely can be tagged with manipulating a CO's decision. Other actors in the drama, such as the end-client in the requiring offices, are another matter. Your cynical, ultra-negative scenario requires more criminal discipline and management skill than a fleet of contracting officers and their bosses could muster. It's a silly concept, actually; there's nothing in the annals of procurement studies, enforcement actions, or oversight that suggests that corrupt COs are a serious problem in the system. Think bigger, Che. There are many, juicier targets to blame, or better yet, energize to reform.

Michael,

I cede a point to your analysis, and apologize for providing too many words for you to chew on.

Many, many, many Contracting Officers are good people, who have to make bad choices just to maintain a semblance of sanity. It just depends on how high up the ladder they happen to be perched.

My analysis applied to a select segment of the field, those who can legitimately get an offer from LM for a big time corporate position without it smacking of blatant paternalism. The "lower orders" in the Government's experiment in social Darwinism that is known as the general service schedule, simply have to do what they are told, or risk the consequences.

The break occurs at about the SES-2 level. To hit the SES-2 in Government these days you have to be managing about a $1.2 Billion portfolio of Government programs. With that much cash in your accounts, LM, or GD, or NG, or any of the others can say, "Gee, you should really come on board. How does 'Mr. Vice President' sound?" No one blushes at this suggestion, because $1.2 Billion is still a big portfolio in the corporate world, as well, so you have just segued through the revolving door, and it looks like you didn't change stride to do it.

On the other hand, if LM offered a GS-15 a VP slot, every bell in the world would go off: "A GS-15 managing maybe $15 Million on a good day, is suddenly a VP at General Dynamics. Gimme a break! Get the FBI on the line; its time to search his freezer for unmarked C-notes."

On the other hand the SES-2 has to distribute his funds to the lackeys at some point, and then he has to go around and tell all of those lackeys where to send the checks. The poor GS-15 doesn't get anything out of this deal; no corner office, no designer drapes, nada. He just has to suffer through and keep the SES-2 happy, and do what he is told if he wants to go home and see his grandkids in the evening.

And so he has the worst of all possible worlds, handing out taxpayer money to contractors he knows can't do the job, but running the risk of getting fired if he doesn't.

Again refer to Dana Hedgpath's article today. DCAA did exactly this to the poor lower orders who didn't get the memo about how to fudge the audits.

But here is where you are off base, Michael. The regulations have evolved over time as a result of learning something. Every time this country goes through another set of scandals, an investigation occurs - and I know this is surprising to you - but a lot of times we learn the reason bad things happened. The result of learning something is to write a rule so that we don't do it again, and break something in the bargain.

Really, truly. If it didn't work that way, then we all really would be condemned by Santyana's exhortation about repeating history because we don't know it.

And this is where I challenge your statement that I am being silly. If one looks, ala the Scientific Method at what has happened over the last eight years it is usually the result of a Bush hack trying to somehow ignore the rules that accreted from learning new things over many decades of failure.

A few blogs ago, Government, Inc, wrote about the TSA and the disaster that resulted when the Bush Administration simply tossed the FARs out the window.

How many other examples does it take before we see a pattern here? Toss out the leverage rules for Fannie Mae...Oops, it goes bankrupt. Toss out the rules for interrogating prisoners...Ooops, we kill a few of them. Toss out the rules for inspecting meat...oops a few people die from e. coli poisoning.

I know the Ur-text of the neo-cons is that "regulations=bad dog". But somehow the reverse of their theory keeps popping up, and maybe they should think about that. Try explaining why we are paying two or three times the bid value for our defense equipment (that doesn't work when we get it) any other way than by saying we have just thrown away all the common sense rules for how to buy things that have taken years of experience to learn.

So that is not negativity, that is pure observational science.

And I think the misplaced cynicism might be on your part about the regulations. Every regulation isn't bad just because it is a regulation. Really. If you challenge me by saying that every bureaucrat isn't corrupt just because he is a bureaucrat, then, I think you will have to agree with the same point about regulations.

It is no surprise that humans behave the way we expect human behavior to make them behave. If you give away free money, with no consequences for getting caught, well surprise, surprise, people will keep dipping in until it is all gone.

Regulations don't restrain the freedom of capitalism, they, in fact, encourage it. I don't think the next big idea is going to come out of LM. It can't. LM is too big to even move, let alone think. Regulations that even the score for the next little guy to come along with the great big idea, and not be squashed like a bug by the Juggernaut are what is going to make the next big market revolution and save the Republic, mark my words. And the only way that will happen is if Congress enacts a new law that forbids ID/IQ contracts and strings up by the thumbs any CO who tries to slip one through.

As for bigger targets to energize, I couldn't think of any better way to spend my time. Care to join me in calling for Congressional Hearings into the abuse of the Government Knowledge defense?

Che,
If I had thought "silly" would so upset you, I would not have used it. Sorry. I have no time for extended colloquy today, but I agree with some points, including re regs. Most regs are OK, but as a set, they are an awful patchwork, confusing and with a mangled business strategy. The real problem is: they are often not followed and there is scant management ("oversight"?) and rarely penalties for ignoring regs. I gotta get back to my business. We should have coffee some time.

Michael,

Thank you for the comments, and you certainly have my concurrence regarding the disarray in the Regs.

That is a serious problem, I agree, as well as properly training people in why these regulations exist, and what they are intended to prevent, as you point out. The spirit of the regulation has far more value than the letter. And as you point out that notion is mostly forgotten by the time it gets to the enforcer who is just punching the time clock.

But, I didn't realize that I was appearing defensive about being called "silly", as in the ironic phrase "silly me."

Actually, I was chiding you for your statement, which I felt pegged the meter for silliness. That would be this one:

"It's a silly concept, actually; there's nothing in the annals of procurement studies, enforcement actions, or oversight that suggests that corrupt COs are a serious problem in the system."

There most certainly is a large, important and concrete body of evidence in the courts and with the DOJ that proves corporate fraud, in collusion with Government Contracting Officers. That evidence is ignored by George Bush's DOJ in its rush to let the corrupt contractors out the back door, and defang any true investigation.

In the coming days keep your eyes out for filings with the DOJ Office of Professional Responsibility, particularly in about two months after the corporate officers and COs have had the opportunity to review the evidence.

Look at the evidence that is posted with the OPR for duplicity in DOJ investigations of Defense and IC contracting fraud. And then make up your mind again if there is nothing in the annals "that suggest corrupt COs are a serious problem in the system."

If you can maintain that statement with a straight face after publication of the material, then the drinks are on me.

My friend has been waiting for over 10 years now for his back pay and disability. Does he have to die before he will receive anything. He has been told that its in the works. He spoke with someone fromWashington last yer the Judge Advocate saw no problem that he should receive his payment by Dec 2007 but he didn't
He served his country in Viet Nam and this is the pay back he gets from the PTSD imposed on him from this service.
What's the true story about when he might see some pay?