Rocket Welfare

Posted by Sam Churchill on

The United States military’s new rocket program is $14.44 billion over budget and counting, raising questions about how long taxpayers can subsidize two of America’s biggest aerospace companies to keep them in the launch business, reports Florida Today.

The Air Force’s rocket overrun is about as much as NASA spends in a year for all its projects. It’s more money than President Bush asked Congress to provide to help Florida rebuild after four hurricanes. And it is three times what NASA has overspent so far on the International Space Station, something that drew cries of waste and mismanagement from Congress.

Congressional leaders are asking how the government’s contribution to the rocket project grew from just more than $17 billion to almost $32 billion in a few years. But they have not erupted in the way that led Bush to order severe cuts in the space station program.

Why not? Probably because Congress has grown numb to military projects costing more than first estimated, according to analysts such as Jeffrey Drezner of the Rand Corp. Drezner has spent decades studying Pentagon cost overruns.

FLORIDA TODAY review of Defense Department budget documents shows all of the Pentagon’s major space projects are over budget. Most are behind schedule, too.

How did the cost increase so much in such a short time?

“This is not an EELV fault, and it’s not an Air Force fault, and it’s not a Lockheed Martin or Boeing fault,” said Tom Young, a former Lockheed Martin executive. Last year, he investigated why the Pentagon’s space projects are over budget and behind schedule.

Most of the $15 billion increase has to do with overly-optimistic forecasts about how many commercial customers Boeing and Lockheed might get for their rockets.

This summer, Congress slightly cut the 2005 budget for the Evolved Expendable Launch Vehicle Program, known by the acronym EELV. And it ordered the Air Force to study whether it could save by picking Boeing’s Delta 4 or Lockheed’s Atlas 5 — but not subsidizing both.

In a report on the latest Defense Department budget, the Air Force case for subsidizing two launch providers was questioned.

“The Committee is concerned that by maintaining two ‘standing armies’ without adequate funding, the government could inadvertently be motivating the contractors to cut corners in a way that could hurt launch reliability,” the report said.

“Put simply,” it said, “the Committee believes fully funding one contractor may be a wiser approach to assured access than the current approach of underfunding two contractors.”

Contrast that corporate welfare program with Asian broadband initiative delivering 8 Mbps service for $25/month. The Yankee group predicted ubiquitous broadband would result in a $233 billion direct cost saving with ancillary benefits totaling $500 billion. They estimate 1.2 million new and permanent jobs as a result of broadband.

The federal government was supposed to offer 100 percent of its employees the ability to telecommute by this year, according to a Congressional mandate. But agencies have offered just 14 percent of employees the option largely due to a lack of broadband connections.

TechNet believes it would cost $35.2 billion annually to bring fiber optics to all Americans. Wireless broadband might be one tenth the cost of fiber.

The $15 billion corporate welfare checks given to Boeing and Lockheed might have delivered ubiquitous broadband for every American.

Posted by Sam Churchill on Saturday, October 16th, 2004 at 1:31 am .

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