Making Defense Reform Sane Again: Planning, Programming, Budgeting, and Execution
Defense Secretary Ashton Carter has repeatedly called for reforms to the Pentagon’s ineffective acquisition system, and rightly so. Yet the troubled acquisition process is only one aspect of a larger departmental failure to align strategy with resources. To truly reform the Pentagon, Secretary Carter should take steps to narrow the gap between the theory and practice of the process designed to develop the future force: the Planning, Programming, Budgeting, and Execution (PPBE) system. At stake is more than efficient budgeting — the future of national security depends on a fundamental change to PPBE.
The PPBE process suffers from three discrepancies between how it functions in theory and in practice: an unrealistic timeline, a stove-piped analytic system, and a reliance on Overseas Contingency Operations (OCO) funding.
Timeline
On paper, PPBE is presented as four distinct stages that progress sequentially: planning outlines the future security environment, programming proposes programs for investment, budgeting develops a detailed budget according to fiscal guidance, and execution ensures compliance throughout the process. Yet, in practice, all of these ostensibly distinct stages overlap. For example, guidance provided by civilian policymakers to the military services, linking the planning and programming phases, is often delayed. These delays stem primarily from uncertainty about budget levels, a particularly acute problem in recent years. The result, therefore, is largely irrelevant guidance. Without sufficient time to align the service programming documents with planning guidance, each service is left to prioritize its own programs in the absence of overarching direction. This undermines civilian control of the military — not through malign intent, but by simple bureaucratic inefficiency.
Analytics
To map out the future security environment and determine which roles and missions should be prioritized, the Pentagon requires scenarios and modeling. Yet instead of maintaining a common baseline and robust joint analytic community, the relevant actors within the Pentagon lack a shared grasp of necessary assumptions, constraints, and objectives. At present, each actor defines a future security environment that suits its particular interests. The military services are particularly guilty of this myopia, maintaining independent analysis centers that are much larger and better equipped than those of the Joint Staff. This bureaucratic arrangement undermines the central oversight necessary for scenario development.
Overseas Contingency Operations
Instead of reserving OCO funds for unforeseen crises, the services rely on supplementary appropriations for programs far beyond those stipulated by Congress in support of the wars in Afghanistan and Iraq. For example, the Army and Marine Corps recently financed pay and benefits to non-deployed troops through OCO funds instead of the base budget. Similarly, OCO now funds programs such as the European Reassurance Initiative, designed to fortify American force posture in Europe. Recent years have also seen an uptick in Army and Air Force operations and maintenance funding migrating to the OCO account from its traditional place in the base budget.
Fixing PPBE
Five steps can fix these problems and bring resources back in line with strategy. First, to reduce the workload demanded by the current annual PPBE timeline, the department should receive appropriations and authorizations for two-year periods instead of the current annual arrangement. Two-year budgets could undergo a second round of amendments after the first year to assuage congressional concerns about allocating an additional year of funding. Congress could thereby maintain a reassuring level of control over the process while enabling the flexibility the Pentagon requires.
Second, to encourage prioritization of the planning guidance, the secretary of defense should label roles and missions for the military as critical, high-risk, low-risk, or optional. In a time of fiscal austerity, prioritizing is a particularly important initiative in making the best use of scarce time and resources.
Third, to address the lack of analytical centralization and coordination, the next administration should appoint and empower a director of Cost Assessment and Program Evaluation (CAPE) with a strong vision of the organization’s role. This would ensure that CAPE maintains the resources and staff necessary to help the services integrate their activities. Moreover, the director of CAPE should work more closely with the Joint Staff’s Force Structure, Resource, and Assessment directorate to prioritize joint scenario development.
Fourth, the Pentagon must lessen its reliance on OCO funding. Current incentives preclude the services from doing so because programs and operations can all too easily be labeled as “war-time funding,” bypassing the closer scrutiny of normal budgetary channels. Likewise, this reliance on OCO allows the services to offset some budget cuts from sequestration. Without a stable topline in the long run, however, OCO denies the services the budgetary stability needed for effective operations and procurement. The secretary of defense should thus take steps now to prevent this future problem by limiting the amount of OCO funding each service may request as a percentage of its total budget. To avoid setting an arbitrary number, senior civilian defense officials should review each service budget carefully and tailor a particular figure that aligns with the future security environment outlined in the planning guidance. Placing such limits on OCO can not only prompt the services to prioritize programs, but also ensure congressional leaders are held accountable in fulfilling their responsibilities to pass substantive and timely budgets.
Fifth, to promote a greater understanding of the process, defense leaders across the Pentagon should increase educational opportunities related to PPBE at the working level. To help defense personnel think more strategically and serve as better stewards of taxpayer dollars, the secretary of defense should make a PPBE familiarization course mandatory for all headquarters personnel. Doing so would help to introduce more individuals to this critical discussion and spur a new conversation regarding the disconnect between defense priorities and resources.
These significant discrepancies between the theory and practice of PPBE affect not just our governmental finances, but our national security. Unless the Pentagon invests time and attention to reform PPBE, the greatest threats to the American military will stem from within.
Michelle Shevin-Coetzee is a Joseph S. Nye, Jr. Research Intern with the Center for a New American Security (CNAS). Prior to joining CNAS, she served as a policy intern in the Office of the Secretary of Defense for four years.
Photo credit: Secretary of Defense
Robert Warner 
H.H. GAFFNEY 
Jon Czarnecki 
John King 
SGWilson 
Excellent analysis. Excellent recommendations.
My having watched PPBE since 1962, first in OSD and then closely in CN A, all this doesn’t make any sense to me. PPBE is not just about acquistion. It’s about the sustainment of the forces as well — their personnel, their existing equipment, their facilities, and their O&M (operations and maintenance). They try to keep all this in balance in their POMs, and so the process is highly incremental, especially since it leads to the annual budgets (two years wouldn’t help). Acquisition is about replacement, of course, and leads to more exotic and costlier stuff — all the scenarios for the future involve invented, not real numbers. “Strategy” and “scenarios” for the future are just words and guesses. The program is the strategy, and the strategy is about the balanced program.
First, some credentials: I worked the PPBS (as it was then called) for some 10 years in the Pentagon at the departmental level and I taught program budgeting at the graduate level for almost four years with the Defense Resources Management Institute.
Now, this is a fine senior thesis with some interesting points, but as a document in a well-respected blog and as a policy recommendation it is extraordinarily naive and just plain wrong.
PPBE/PPBS/PPBES all began as an attempt to bring about an integrated resource effort within DoD, and as such to provide a significant increase in power to the Secretary of Defense in defining the priorities and direction of DoD and actually being able to achieve those priorities and direction. It was never only or primarily about acquisition, although certainly acquisition was a major component. Force structure was equally important, as was O&M and Personnel accounts. Remember that PPBE is supposed to be a comprehensive resource management system.
The era in which SECDEF McNamara introduced PPBS was based on the desire to implement rational decision-making, and PPBS was supposed to be the vehicle by which DOD could achieve such rationality. It never worked as planned or envisioned (read some Mintzberg or Wildavsky for very poignant and entertaining critiques).
However, what happened was that PPBS evolved from a rational resource management system to a social conflict resolution system. The processes associated with PPBS (et. al.) served DoD bureaucratic politics exceptionally well, allowing services, other agencies, and OSD to effectively deal with internal problems and crises associated with the distribution/redistribution of scarce resources (e.g. money, equipment, manpower, force structure…) This is the major reason the system has endured all these decades.
So, the recommendations in this piece are quite misplaced, and reflect a superficial understanding of the system. Incidentally, I critiqued SECDEF Carter along much the same lines as this reply in Foreign Affairs.
Agreeing with the comments so far, this is a naïve article. PPBE is really just a resources tracking system. The “decisions,” whether force structure, acquisition, contingency operations, etc., are driven by the leaders representing each military services/departments and various “constituencies” (strategic, submarines, amphibious warfare, special operations, etc.). These all compete in standard boardroom style meetings with people/financial inputs, commentary and decisions documented in PPBE. Nothing new here. If we want to improve outcomes, we need not just a cultural changes but a structural change. First, all people and resources belong to the boss (SECDEF); not the military departments. Second, “purpleize” all overhead and acquisition functions, including financial management, acquisition and testing, supply, maintenance, etc. Retain only combat and training in the services. Third, establish a separate and independent review panel (composed of “outsiders” and NOT including military, DoD retirees or defense contractors) to review all military “requirements” and technologies. It should be more than just advisory, and any deviation from their decisions must overcome their technical and strategic arguments. Fourth, acknowledge that resourcing often drives the strategy. Having an expansive strategy (be everywhere, all the time, and do everything, without regard to allies and local interests) is a prescription for bankruptcy (as our Founding Fathers acknowledged). In my 30 years in DoD financial management, reviewing hundreds of R&D, procurement, operations and maintenance, construction, housing, contingency operations, and military personnel and work with Simpson/Bowles, the Pentagon always made better decisions when they had LESS money rather than more. Fifth, forget two-year budgeting. Never going to happen under the Constitutional rules and wouldn’t work anyway. Not when the Pentagon annually “churns” its five-year plan. If you want stability, rather than churning 100% of programs, annual reviews should be limited to changes only (maybe 2-3%), after which final decisions are then resourced from lower priorities. Last, solutions come from a deep understanding of program, technical and operational dynamics, none of which is evident in this article.
Well, you have to eat the elephant one bite at a time, and we gotta start somewhere. Senators McCain and Reed’s bipartisan National Defense Authorization Act for FY’16 includes many recommendations. One of those is “Reforming Defense Acquisition”, which includes “Developing Alternative Acquisition Pathways”.
In Senator McCain’s district there is a tried and true example of just such a pathway at the Air National Guard and Air Force Reserve Test Center (AATC) at the Tucson Air National Guard Base.
Each year AATC hosts an Air Reserve Component (ARC) Weapons and Tactics Conference (WEPTAC) to identify and prioritize weapons system and mission area requirements for the following year. Those requirements are racked and stacked according to Critical, Essential, and Desired capabilities by unit weapons and tactics officers (primarily captains and majors) and briefed directly to the ANG and AFRC commanders at week’s end. Those requirements are consolidated into a master requirements document which is distributed to congressional staffers within a month of WEPTAC completion.
Congress then allocates annual funding in the form of the National Guard and Reserve Equipment Appropriation (NGREA). The amount varies from year to year, and must be executed within three fiscal years – 85% in the first year. Since the ARC has a presence in 54 states/territories, Congress has a vested interest.
AATC has conducted ongoing testing, development, and evaluation for over 35 years and has a special relationship with business and industry. The requirements identified at WEPTAC are the result of that relationship and are based on state of the art systems capabilities, rather than “pie in the sky” pipe dreams. As a result, AATC continues to meet (and usually exceed) its stated goal of providing 80% capability to our warriors at 20% cost.
With apologies for all the acronyms, I was privileged to serve as a WEPTAC chairman with that team of professionals 25 years ago, and for another eight years as a civilian following my 34 years as an active duty and ARC combat aviator.
Though I can no longer speak for them, I’m sure the AATC staff would be more than happy to host SecDef Carter and show him their program. It’s the real deal.
You may eat the elephant one bite at a time, but you can’t cross the grand canyon one step at a time. The PPBE is only part of the overall system. This article would require Congress to sign up to a two-year budget — that ain’t gonna happen! It also makes a series of recommendations that would ripple throughout the entire DoD — those ain’t gonna happen! I have solutions — just like a lot of people. It’s actually implementing the solutions that is the hard part — and neither I nor anyone else knows how to do that.
To continue your metaphor, we’re already at the bottom of the canyon – too late for bridge building. Any step we take, north or south, will be a difficult step in the right direction. Or, we can just continue west, downstream, until the river dries up. I merely suggest a possible path that has already been navigated with some success.
SHG makes some good points about a very rationale analysis feeder system. Problem is structural. That $1 billion a year to National Guard and Reserve as a lump sum is required because the Active forces don’t really want the G&R to submit separate budgets, which is what needs to be done. As a gapfiller, I suggest the state governors do it individually to Congress. And those budget requests should include something the current Pentagon budgets don’t — a line for time phased “requirements” above the line for the current budget request. That way, instead of a grab bag shopping list submitted by each service chief after the submission of the “President’s” budget, Congress can evaluate the REAL requirements and add money if they want without being labeled “Pork” projects.