Budget Reform Can’t Succeed Without Congress
The Department of Defense’s Planning, Programming, Budgeting and Execution program has been variously called “a relic of the past,” a “root cause of … bloat” and “the primary factor behind the decline in U.S. defense productivity and innovation.” As a result, there are a variety of proposals for reforming this much-maligned process, and a growing consensus that reform is necessary to ensure success in a strategic competition with China. This consensus is best embodied by the creation of a new Commission on Planning, Programming, Budgeting and Execution in the FY2022 National Defense Authorization Act that was signed into law last year.
The Department of Defense can — and should — seek to reform the budget process. But many of its most serious problems can only be fixed with congressional buy-in and, in some cases, congressional reform. As such, the commission should work to ensure that internal reform is aligned with congressional requirements and expectations. This should include offering to create more transparency around in-year spending decisions and to establish formalized processes for keeping Congress informed about programmatic progress outside of simple oversight hearings. Indeed, in order to fully succeed, it is likely that congressional reform will be as crucial as what goes on within the Department of Defense.
Working Better with Congress
Currently, the Planning, Programming, Budgeting and Execution process is an inheritance from Robert S. McNamara, the famed Secretary of Defense under Presidents Kennedy and Johnson. Functionally, it entails planning for a given fiscal year’s budget request more than two years prior to the fiscal year. As an example, planning for FY2025 is currently underway. This will generate a set of development priorities and guidelines that will then go into programming — the development of the Program Objective that will guide the future year’s defense program in the budget request. These will be converted into a budget request during the budgeting phase, which then leads to execution wherein funding is appropriated by Congress. This broad structure has been in place for decades and drives much of the investment decisions of the Defense Department.
This process, which has evolved over its 60-plus years of execution but remains largely an exercise in top-down planning, is not appropriate to the current technology and business environment. This is why Congress asked the new commission to examine the effectiveness of the existing process (particularly as it relates to defense modernization) and consider potential alternatives and improvements.
However, the bulk of the scoping section makes clear that the focus is on reform of the department’s processes with little attention paid to Congress’ own role in these problems. The commission is not a vehicle for congressional reform, but the commission should still attempt to anticipate the burdens Congress puts on the defense budgeting process. Otherwise it risks enacting major changes that fail to improve outcomes, as the actual power of the purse remains Congress’ prerogative. More broadly, individuals and organizations interested in an improved national security budget process should push for congressional reform, as key objectives will remain elusive absent changes to the budgeting and appropriations process.
There are several ways in which Congress is a major impediment to an improved defense investment process. First, congressional committees are loath to shed their ability to direct spending at a fairly granular level in the investment accounts (procurement and research, development, testing, and evaluation). Second, for better or worse, Congress does not always trust the Department of Defense to make good decisions and frequently rolls back attempts by the Pentagon to lean forward with new technologies and new procurement processes. Lastly, Congress continues to fail to execute its basic responsibility of funding the government on time (see below chart), leading to increasingly lengthy continuing resolutions that create major obstacles for the effective distribution of funds. The first two issues can and should be accounted for in contriving the Planning, Programming, Budgeting and Execution Commission’s reforms, but the last can only be addressed through congressional reform. Those who care about national security budgeting can and should push to ensure that all three are addressed in the coming years.
In order to accommodate Congress’ role in the problems of defense budgeting, reformers should grapple with these issues directly. While it is unlikely that appropriators will suddenly hand discretionary spending to bureaucrats, there appears to be an increasing willingness to route funding through Small Business Innovation Research or Other Transaction Authority structures to provide greater flexibility. The commission should consider giving appropriators more transparency and better communication around programs in these funding structures. This could create a virtuous cycle of increased congressional engagement leading to an easier transition from small-dollar investment vehicles to fully funded programs. As an example, the Department of Defense could report to Congress on significant Phase III Small Business Innovation Research awards and on a regular basis ask to update the budget request with items that they believe should migrate from these contract vehicles into a formal program of record. This could be a way to create more flexibility in the process. Ideally it could even happen automatically absent a congressional objection, rather than requiring positive congressional action.
Similarly, Congress is rightfully skeptical about the Pentagon’s approach to spending given the large number of programs that have seen costs spiral or failed to deliver the required number of platforms in the past few decades. The F-22, the Comanche, the Littoral Combat Ship, the DDG-1000 program, and many others all saw spiraling costs mixed with limited performance and capability. While many of these programs have eventually delivered useful platforms to the warfighter, it’s not hard to understand why Congress is hesitant to give the Department of Defense carte blanche to pursue major investments in cutting-edge technology without significant oversight. This reticence was undoubtedly furthered during the Trump administration, which flatly abused its existing discretionary capability to transfer billions of dollars of appropriated funding toward border-wall construction. Defense leadership needs to better engage Congress to communicate why particular programs are necessary and what safeguards are in place to avoid major overruns or Nunn-McCurdy breaches, and to create trust that any discretionary spending authority Congress does provide will not be abused. The department should have regular proactive communication with the relevant committees that offers an unvarnished look at major defense acquisition programs. Another easy way to be more transparent would be to resume publishing Selected Acquisition Reports, instead of summary documentation.
However, the issue of more and more dysfunction in the congressional budgeting process cannot be avoided. Unfortunately, this problem stems from the entities tasked with overseeing the Defense Department and are even more difficult to grapple with than the budget process. Congress is increasingly unable to pass laws, with a clear multi-decades trend towards inertia and stagnation. This has come to encompass the annual appropriations bills needed to fund the government, which have seen the average delay in adoption grow steadily since 2000 (see chart). Even worse for the department, since the Budget Control Act of 2011 linked defense and non-defense discretionary spending, defense appropriations have been caught up in this dysfunction.
Author’s research based on Congressional Research Service data
There are many reasons for these problems. Sarah Binder at the Brookings Institution has argued convincingly that much of the blame for the growing dysfunction lies with increasing party polarization and a widening gap between the two parties’ priorities. Paul Kane and Derek Willis in The Washington Post offer another narrative focused on how Congress itself has become a place “in which debate is curtailed, party leaders dictate the agenda, most elected representatives rarely get a say and government shutdowns are a regular threat because of chronic failures to agree on budgets.”
Unfortunately, there is no easy solution to any of the above problems. However, there is growing recognition within Congress that changes need to be made. The creation of the Select Committee on the Modernization of Congress in 2019 represented a major breakthrough in pushing forward congressional reform. While many of its recommendations have not yet been implemented, it laid out a useful set of goals around which reformers can coalesce, many of which are oriented around budget reform.
Overall, the case for planning and budget reform is extremely strong — the existing process simply takes too long to move from planning to spending, particularly in a dynamic technology environment where software and capabilities are making significant jumps forward each year. However, in order to truly see the advantages of reform, Congress has to be part of the discussion. Reformers on the Planning, Programming, Budgeting and Execution Commission should work to make sure that appropriators’ need for involvement is addressed and concerns over past failures are mitigated. At the same time, advocates must continue to push for congressional reform to rescue the legislative branch from its current dysfunction. Failing to address these issues will result in a process that may be slightly improved but will still ultimately be inadequate for the current technology and national security environment.
Matt Vallone is a principal at Nextfed, where he is responsible for U.S. defense data analytics and broader analytics as a service work. Prior to working at Nextfed he served as Director of Forecasts and Budgets at Janes. Before working in the private sector, he worked as the legislative director for Congresswoman Carol Shea-Porter in the House of Representatives.
Image: Lisa Ferdinando, DOD