Desperately needed: 21st Century DOD budget process

In the recently passed FY22 Pentagon budget, Congress has ordered a review of how the U.S. Defense Department (DOD) asks for and gets its yearly money. A reasonable question as, by dollar expense, it is the largest military in the world and half of the discretionary budget of the entire federal government.

The Congressionally appointed group is to be called the “Commission on Planning, Programming, Budgeting, and Execution (PPBE) Reform.” It’s a dull name for a crucial process.

The commission has been tasked to make recommendations to modernize DOD yearly funding. Congress has asked for a special emphasis on methods to make better sense of the creation of this huge budget and also to speed acquisitions for the warfighters — in other words, to keep up with a rapidly expanding Chinese military.

I am very sympathetic. For 15 years, I have lectured military executives about the current PPBE process — built by Defense Secretary Robert McNamara in 1961. It takes me up to 40 hours to cover the basics, and — despite best intentions (and I hope good teaching) — the complexity of the system leaves bright and intelligent DOD managers confused and frustrated. Congress is right: Something needs to be done. But what?

Prepare this year; wait for two more

It’s hard for DOD managers to deal with the timing of the current process. Every year, the Pentagon’s top-level bureaucrats use the PPBE process to decide what goes forward to the president to create their part of his yearly budget request to Congress. It is meant to support his ideas contained in the President’s National Security Strategy.

So, for the DOD manager, a year-long exercise takes place in which individual submissions from the smallest levels of the organizations are presented up through multiple layers of bureaucracy. This results in the unified final budget submission by the Defense Secretary to another level — the president’s “green eye shade” budget guys, the Office of Management and Budget.

For the DOD managers on the “coal face” of programs and budget, it means decisions about their futures are made by people at higher levels who often have only minimal knowledge of the specifics of the programs.

And, most frustratingly, the current process means the average manager in the Pentagon has several years to wait between submission and spending. A budget they prepared in 2021, submitted to Congress in January of 2022, is not received (if lucky) until the fiscal new year: 1 October 2022 — to be spent mostly in 2023. And that assumes everything works on the Hill and Congress can pass funding bills. 

A year on the Hill, maybe

In the past several years, a deeply divided Congress — with painful regularity — has been unable to produce Constitutionally required appropriations bills in a timely fashion. These are the true money bills. They create the budget authority the DOD managers can spend. 

While the Armed Services Committee overseers have been consistent about passing authorization bill guidance, DOD managers can’t act without budget authority, and they have been bogged down with so-called continuing resolutions (CR).

These CR’s severely limit all DOD program efforts with no “new” spending allowed and current spending maintained at the previous year’s levels.

Beside cramping DOD manager’s plans, it leaves the Defense Industrial Base of 100,000-plus companies supporting DOD programs in a foggy limbo — what resources must they have available to act on a new contract and when? What about existing contracts? Kept, cut, or modified?

Not exactly conducive to long-term program development and complex acquisitions.

What would Wal-Mart do?

The PPBE Commission faces a daunting task of fixing the plane while trying to fly it.

Internal changes to the Pentagon should be based on best practices in the private sector. America’s largest firms, such as Walmart, Amazon, and Apple deal yearly with a similar mix of long-term, major purchases, dealing with hundreds of thousands of subcontractors, and with short-term obligations such as paying millions of personnel. 

Since the late 2010s, America’s biggest companies have been engaged in a concerted effort to modernize their tracking software, shortening “feedback loops” for budget guidance from above and submission from managers in response from below. And, of course, private-sector acquisition rules have far fewer bureaucratic restrictions — time is viewed as of the essence to adapt and survive.

Based on my personal experience, the DOD has got to get better training to its managers involved in the budget process. It is not enough to be a good program manager alone: You have to understand your budget and your place in the process. The current level of misunderstanding and lack of knowledge is disruptive and harmful to both programs and managers.

Congress not likely to heal itself

We cannot discuss true budget reform without discussing Congress. The Armed Services Committees that created this commission are, by and large, a responsible group, supportive of DOD efforts; however, I sincerely doubt Congress will change its budget system of one-year cycles.

Multi-year budgets from the Hill for our Defense Department have been tried in the past — but Congress can’t help itself when it comes to reviewing the budget each year. So, sadly, I am afraid there is little hope for change on the legislative side of the PPBE.

A tough row to hoe

Given Executive Branch complexities and Legislative recalcitrance, I doubt the PPBE Commission is likely to have an easy time of it. At best, it can take private sector best practices and recommend changes to the internal Pentagon system to speed acquisition and to provide a better feedback loop to DOD managers. And, I hope a better and more system-wide budget training process.

Whatever the commission can improve would be appreciated and needed by DOD managers.

Adherence to mid-20^th Century budget and program processes will not propel the U.S. military to where needs to be to face the challenges to our nation’s defense in the 21^st century.

Ronald Marks served as Senate liaison for five CIA Directors and intelligence counsel to two Senate Majority Leaders. He currently is a non-resident senior fellow at the Scowcroft Center at The Atlantic Council and visiting professor at the Schar School of Policy and Government at George Mason University.