The Navy estimates it will save 19 cents on electricity for every dollar it spent putting these solar panels atop the Naval Postgraduate School in Monterey, Calif. / DoD IG report
Washington was buzzing last week with the news that Solyndra LLC, a California solar-energy firm with ties to the Obama White House, had gone belly up – after pocketing a half-billion loan from the federal government. Seems the Navy also has been suffering from fiscal sunstroke, to judge from a just-released Pentagon inspector general probe.
It’s the oldest story in government: when there’s pressure to spend money, it will be spent, and not always wisely. The Navy, and other services, have been under pressure from the Obama Administration and Congress to try to jump-start the moribund economy by pumping funds into various projects under the American Recovery and Reinvestment Act of 2009 – otherwise known as the stimulus. The IG report looked into the Navy’s funding of several photovoltaic – PV – projects, designed to turn sunshine into electricity.
This next part will come as a surprise to anyone who follows military spending:
During project planning and selection, officials did not consider whether projects were cost-effective or analyze different types of energy projects to determine the best investments for meeting legislative energy goals. Instead, they relied upon project titles, location, cost, and amount of time to award contracts to select projects. Officials incorrectly concluded that cost effectiveness was not required for planning Recovery Act energy projects.
Savor that last sentence again:
Officials incorrectly concluded that cost effectiveness was not required for planning Recovery Act energy projects.
It’s easy to understand how it happened: the military, as a state-operated monopoly on the wholesale use of force, has never had to be cost effective. It’s just that in this case – where solar investments were supposed to pay off over the life of the projects funded – that we actually can see the shortfall:
…the Navy and Marine Corps did not have processes for completing life-cycle cost analyses, processes for planning and selecting all energy projects, or energy strategies for achieving legislative goals. As a result, the Department of the Navy will not recover $25.1 million of the $50.8 million invested in PV projects.
Just how does the Navy spend $50 million and mistakenly conclude “that cost effectiveness was not required”? Well, according to the IG, “officials selected projects that were not justified because there was a prevailing belief among Navy and Marine Corps officials that Recovery Act…energy projects did not have to be cost-effective.”
Hmm…there’s also a “prevailing belief” among Navy officials that China poses a dire threat (but not to our nascent fleet of $20 billion – each – super-carriers), that we need a new fleet of ballistic-missile submarines, and that the Air Force is over-rated as a service. The cost-benefit analyses on such investments, unfortunately, are a little tougher to calculate than those for solar-development projects.