New Balance snub latest in long line of Pentagon miscues
The Eagle-Tribune, North Andov | .
published: May 02, 2016
LAWRENCE (Tribune News Service) – Can Americans trust the Pentagon to pick out a pair of sneakers?
Fifteen years in development at a cost expected to reach $1.4 trillion over its lifetime, the Department of Defense's next generation fighter jet has yet to get off the ground in more than a test flight or to fire a single shot in combat.
Newsweek magazine recently mocked the jet, the F-35, as “the plane that ate the Pentagon's budget.”
Years of indecision and false starts also has delayed action on the next generation of handgun to replace the Army's much maligned M9 pistol. A few weeks ago, Army Chief of Staff Gen. Mark Milley blamed the Pentagon's bureaucratic procurement system for the delay and sought permission to shop for the sidearm himself.
The military's “fragmented approach” to buying camouflage uniforms is putting troops at risk and wasting millions of dollars, the Government Accountability Office recently alleged. The office urged the services consolidate the effort.
All this comes on top of other procurement boondoggles by the military over the last decade or two, including that it has paid $7,600 each for coffee makers, $435 each for hammers and, probably most famously, $640 each for toilet seats. Add this to the list: The Pentagon has begun buying rocket engines made in Russia.
Now the Pentagon has stepped into more procurement quicksand, this time here in Lawrence, where it touched off a war of words with the New Balance footwear company, the Lawrence City Council and U.S. Rep. Niki Tsongas, D-Lowell, by alleging the company's athletic shoes are not fit for military duty. The company is not allowed to sell shoes on military bases, which it says will cost it the sale of many as 225,000 pairs to recruits and soldiers annually.
Trade pact fight
It was a snub heard 'round the world, sparking allegations that the Department of Defense prefers shoes made in Vietnam and Malaysia rather than in American hometowns like Lawrence, and amplified by New Balance's decision to retaliate by taking up arms against President Obama's Trans-Pacific Partnership. The trade pact would lower tariffs on goods imported from 11 other nations, which New Balance says would flood the market with cheap foreign-made athletic shoes.
Rob DeMartini, New Balance's president and CEO, said he agreed not to oppose the trade pact in exchange for assurances from Michael Froman, the Obama administration's top trade official, that he would ease the impact by helping the company get a Defense Department contract to produce up to 225,000 pairs of athletic shoes a year for military recruits and soldiers. That never happened, the company said, then unleashed its attacks on the trade pact after years of reluctant silence.
“I'm definitely not a defense appropriation or procurement expert, but in the seven years I've been working on this, I've seen nothing but a bureaucratic nightmare, where middle managers at the Pentagon are making decisions that affect real jobs and real lives in America,” said Matthew LeBretton, a New Balance vice president. “There's something really wrong with the system.”
LeBretton refuted DoD allegations that New Balance shoes are too expensive, noting that the company offered to supply the shoes at cost in an effort to keep its assembly lines humming and its supply lines full. He also disputed Pentagon claims that the test shoes it provided were not durable; published reports say the shoes were given to just six service members who were asked to run 30 miles over two months and then fill out a questionnaire.
Eric Badger, a spokesman for the Defense Department, on Friday took a list of questions from The Eagle-Tribune about those issues and others related to its dealing with New Balance, but did not respond to them.
Beyond the allegations that the Pentagon shops overseas to dress its servicemen and that it used a contract to bait a U.S. manufacturer on a political matter, the Pentagon also is accused of flouting the will of Congress on a major procurement issue.
On Wednesday, Congress reasserted itself when the House Armed Service Committee approved an amendment to a defense appropriations bill that would direct the Defense Department to follow a World War II-era law requiring it to provide service members with made-in-America clothing whenever possible. The law exempted footwear because little was made in the United States at the time, but the industry has rebounded and one or two manufactures, including New Balance, now produce models made entirely in the United States.
Tsongas co-sponsored the amendment.
“Procurement and acquisition for the Department of Defense is a challenging process. Some of that is by design,” Tsongas said when asked whether the layers of apparent missteps by the Pentagon in its dealings with New Balance would merit adding the issue to the list of its procurement boondoggles over the decades.
Mandy Smithberger, who monitors Defense Department spending for the nonprofit Project on Government Oversight, went a little further.
“They stem from different problems, but overall they reflect a broken procurement system,” Smithberger said about whether there is a link between the widely inflated prices the Pentagon sometimes pays contractors, the overladen bureaucracy that even generals and admirals have little patience for and the contract Obama trade officials dangled before New Balance to get it to shut up about the Pacific trade pact.
“If the Defense Department wants to make an argument that they want to buy non-American goods, that's one thing,” Smithberger said. “But what a company's political position is should have no bearing on whether they would get a contract or get a fair hearing and an ability to compete. It's definitely improper.”
'All too familiar'
Charles Tiefer, a professor of government contracting at the University of Baltimore law school and the author of the text “Government Contract Law in the 21st Century,” said the “various tactics the Pentagon has used against New Balance are all too familiar.”
“It all makes sense,” Tiefer said. “The Pentagon has always wielded its giant purchasing power to disfavor small but high-quality American producers. In Washington, from what I see, the tactics for the government departments that want the Trans Pacific Partnership (trade agreement) are to assemble as long a list as possible of industrial supporters of the agreement, including those who become supporters by arm-twisting.”
The Lawrence City Council entered the crossfire between the feds and a major hometown employer earlier this month, when all nine members signed a letter to the city's congressional delegation expressing support for New Balance.
“We have 848 employees in the Lawrence facility,” Councilor Marc Laplante said Friday, summarizing in eight words what's at stake for the poorest city in Massachusetts.
“There's long been problems in the (military procurement system) with oversight, accountability, transparency, mismanagement, maybe corruption over the years – definitely fraud, waste and abuse,” said Neil Gordon, an investigator with the Project on Government Oversight. “As far as the New Balance situation, that's unheard of.”
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