How can the military become more fiscally responsible?

Lots of good observations here, but it all boils down to one three-headed problem. War fighters chase ultimate capabilities. Defense industry chases ultimate profits. Members of Congress chase votes. In our capitalistic society we are never going to change that. What we can do is chose top level leaders in the department of defense who chase the optimum, not the ultimate.

The people in the Puzzle palace, fueled by CONgresspeople bought by lobbyists, keep buying bad acquisition programs that the military doesn't want or need, and good programs are shredded. So we have the F22 and the LCS, but only 3 Elmo Zumwalt Destroyers (oh and the Elmo's were designed to protect the LCS which are limited in self defense capabilities...)

Then there are the corrupt contracting officers such as what happened in the Pacific, and horribly inefficient Defense Contractors and Shipyards that have huge delays and cost over-runs on most of their programs. The DOD pays for the overages, instead of charging the contractors penalties. Of course a lot of that comes from constant change orders and redesigns on the part of DOD...

I'm not a contracting officer or an Engineering Duty Officer, and I don't have a Wharton MBA, but I can see all this - why can't DOD and CONgress?

Make contractors EAT the overruns that are NOT directly caused by changes to specifications provided by the military.

In my consulting world, that's the standard for us. If SCOPE OF WORK (SOW) is changed by the client, then we get more (or less) money in the budget. If no change in SOW, we better get the work done on budget, or we EAT the loss. I can guarantee that the Ford-Class would NOT cost $13 billion each if the shipyards were eating the overruns.

Simple... on paper... impossible with lobbyists and - as LCDR Rabbi Jaron Matlow stated - CONgress.

But ANY step in that direction would be an improvement.