Recoupment of Costs

Between Sequestration and DoD proposed budget cuts we are looking at the Defense portion of the Federal Budget going down a Trillion dollars in ten years, or about $100 Billion a year.  Given that the Defense portion of the 2013 Federal Budget (starts 1 October of 2012) is $525.4 (Of course we have to add the Overseas Contingency Operations (OCO) costs of $88.5 billion, for a total of $613.9), one hundred billion is a lot of money.  Frankly, the only way to quickly save such money is to lay off people.  But, there are some alternatives to help pay the bills.  Here is a proposal by a bright young light at the Defense Acquisition University.  First off, he attacks the idea that the Department of Defense should be run like a business, as has been suggested from time to time, including a report from the 2008 Defense Science Board (DSB), which suggested:

DoD's business practices need not be worse than the commerical sector's norm.

Of course DoD has no profit motive to guide it.  Now one might think that Professor Elizabeth Warren has a magic formula for putting DoD on the proper track, but since the founding of this nation, including the period when we had NO US Army, such a sound commerical footing has not been achieved.

Thus, this article, which proposes "Recoupment" of costs by the Government, per 32 CFR § 165.6, which requires:

Recovery of nonrecurring costs recoupment charges shall cease upon recovery of total DoD costs.

The writer suggests that for DoD developed material the recoupment go beyond total DoD costs, which would require a change in the law.

For example, for the ubiquitous GPS system, the DoD could add $10 to each GPS navigation system sold—a minor addition.  For each cell phone that uses GPS a charge of $1.00 could be added to each month's bill.  These charges would help recoup the $35 billion DoD (read taxpayers) have spent on GPS since the 1970s.  On the other hand, one could say that this cost is something that all the taxpayers should shoulder, GPS users and non.

I like the idea of adding these little additions to the cost of accessories, in that it is a clean way to allocate costs.  If you use the GPS, you pay a little toward its maintenance.  And, the 33 Space Vehicle GPS IIF constellation is being replaced by the GPS III Space Vehicles, first one launched in May of 2010, and the follow-on GPS III is already on contract.  All of that costs money.

Recoupment.  Here is a chance to implement the ideas of Professor Elizabeth Warren and President Barack Obama, but without having to tell businessmen that they are duds.  Just tell them there is a tax bill coming—a tax bill they can pass on to consumers.

Regards  —  Cliff