[Congressional Record Volume 140, Number 74 (Tuesday, June 14, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               GAO REPORT ON THE ADVANCED CRUISE MISSILE

  Mr. GRASSLEY. Mr. President, I want to speak about a General 
Accounting Office report just out that deals with the advanced cruise 
missile, the ACM program.
  This is a continuation of a series of speeches on how the ACM program 
has been mismanaged by the Air Force.
  The GAO report verifies and confirms my worst fears and suspicions, 
those fears and suspicions expressed last year and earlier this year.
  The GAO report is entitled ``Strategic Cruise Missiles: Issues 
Regarding Advanced Cruise Missile Program Restructuring.'' If anybody 
wants to read it, and I hope they will, it is report No. 94-145, dated 
May 31 of this year.
  The pick-and-shovel work on this report, Mr. President, was done by a 
Mr. Matt Monigin.
  Mr. Mongin is one of GAO's best auditors--along with Mr. Larry 
Logsdon, who works in another part of GAO.
  Mr. Mongin and Mr. Logsdon like to get on the audit trail and stay 
there until they get to the heart of the problem and crack the nut. 
They are very effective. They are always thorough and careful to 
document each point. Their audit results are always precise and very 
much to the point.
  This report is no exception. All the key points are there.
  Unfortunately, I am sorry to say, you have to dig a little bit to 
find the meat in the report.
  The sharp point on Mr. Mongin's spear was ground down during the 
cumbersome GAO inside review process.
  This report was heavily massaged by the higher ups at GAO 
headquarters like Mr. Rob Stolba, who may have a bad case of weak knees 
when it comes to really criticizing what is wrong at the Defense 
Department.
  But it does not matter. Every point that needs to be made about the 
mismanagement of the ACM Program is there. Of course, you just have to 
work a little harder to find it, thanks to Mr. Stolba and company.
  This is how I read that report. The Air Force experienced serious 
cost overruns in the fiscal year 1987 and 1988 production contracts on 
the ACM. General Dynamics was the contractor. Unfortunately, the Air 
Force had no money to cover the cost overruns; the Air Force had 
exhausted all the money in those accounts and was thus in violation of 
the Anti-Deficiency Act. And the Air Force knew about the money 
shortfall even before the contract was signed.
  The Air Force is required by law to report and to investigate any 
violation of the Anti-Deficiency Act, and it is supposed to request a 
deficiency appropriation from the Congress so we keep our hands on the 
purse strings.
  The Air Force did none of these. It ignored the law. Instead, the Air 
Force developed a devious, destructive and wasteful plan to conceal a 
violation of this law. The Air Force is still continuing to hide the 
violation, even this very day.
  In May 1992, the Air Force began terminating contracts to generate 
cash to pay the contractors for the cost overruns way back there in the 
1987 and 1988 contracts. The Air Force had bills to pay. They had no 
money to pay them. Obligations exceeded available appropriations.
  That is a serious matter for any manager. So the Air Force terminated 
the fiscal years 1990, 1991, and 1992 production contracts to pay the 
bills for the in 1987 and 1988 contracts.
  The fiscal year 1990 to 1992 missiles were thus sacrificed to save 
the 1987- and 1988-year missiles. Since the law forbids the use of 
fiscal year 1990 to 1992 moneys to cover cost overruns on fiscal year 
1987-88 contracts, the Air Force then devised a very clever money 
laundering scheme.
  First the Air Force terminated 1987-88 contracts 1 day and then 
immediately reawarded a new one to the very same company.
  That is called ``reprocurement.'' It is a laundry operation, however. 
It was a way of trying to make old work look like new work. You douse 
the old work with a little perfume and, presto, it smells and looks 
like new work.
  The Air Force even gave the contractor, believe this, $587,000 to 
relabel the old missiles. That was another futile attempt to make the 
work and the money match up.
  But that did not quite do it. You can put a new label on an old 
missile but, Mr. President, it is still an old missile.
  What was the job that had to be done? That is the question. The 
answer is simple: Just plain and simple, finish 144 fiscal year 1987-88 
missiles. Fiscal year 1990 to 1992 dollars, that is 3 years, were used 
to finish those 144 old missiles. That is a violation of section 1501, 
title 31, United States Code.
  The net result of this illegal maneuver was the loss of 60 missiles. 
Can you believe that? The loss of 60 missiles.
  These missiles were partially completed when their contracts were 
terminated. None of the terminated missiles were ever completed. They 
were left for scrap on the factory floor. They remain in bonded storage 
at a Hughes plant in San Diego, CA.
  Now the General Accounting Office estimates that the stored ACM 
material is worth $227 million, but suggested that some portion of this 
material could be used for spare parts. That does not make sense to me 
because those spare parts should be excess to requirements.
  The Air Force bought enough spares to support all operational ACM 
missiles. So more spares are redundant.
  Having unneeded spares in no way lessens waste and mismanagement in 
the program. It just covers up a problem. The excess spares are nothing 
more than ACM missiles that were never assembled and never delivered. 
The Air Force paid for all-up missiles, but got nothing of value. That 
is the bottom line--nothing of value.
  The Air Force threw at least 60 ACM missiles on a scrap heap --in 
effect into a scrap heap--to conceal a blatant violation of law. That 
is destructive. That is very, very wasteful. At $5 million a shot, that 
amounts to at least $300 million poured down a rat hole. When 
termination costs and everything else is included, the total loss on 
ACM contracts could easily approach $400 million or more.
  Bottom line, hence my taking time here on the floor, is simply to 
call for accountability. Those responsible for such mismanagement and 
waste must and should be identified and must and should be removed from 
office. They must be held accountable.
  I yield the remainder of my 10 minutes.
  The PRESIDING OFFICER. Who yields time?
  The Senator from New York [Mr. D'Amato] is recognized.

                          ____________________