Breaking the Cycle of Incremental Acquisition Reform

F-35 Production Line

In 1960, Army Chief of Staff Gen. Maxwell Taylor testified before Congress and lamented that, “In spite of the fact that modern war is no longer fought in terms of a separate Army, Navy, and Air Force, nonetheless we still budget vertically in these service terms. Yet, if we are called upon to fight, we will not be interested in the services as such.” Taylor concluded “we do not keep our budget in these terms. Hence it is not an exaggeration to say that we do not know what kind and how much defense we are buying with any specific budget.” This sentiment remains equally true today. 

Taylor’s testimony helped to radically transform how the Defense Department allocates and manages resources through what would become the Planning-Programming-Budgeting System. Sixty years later, the effort to reform these processes continues. In 2022, Congress funded the Planning, Programming, Budgeting, and Execution Reform Commission, to “examine the effectiveness of the planning, programming, budgeting, and execution process and adjacent practices . . . with respect to facilitating defense modernization.” Planning, Programming, Budgeting, and Execution is an integral component of the broader defense acquisition system, and a renewed congressional focus on it is encouraging. The Defense Department uses this process to plan for and translate mission-driven needs into a budget to secure the resources it requires to provide for the nation’s defense. The commission is the first effort in close to 20 years to re-examine how Congress and the department allocate resources through this process. 

The U.S. military has wrestled with its dysfunctional acquisition system for decades. Despite dozens of attempts to reform a process in which weapon systems take too long and cost too much to develop and operate, little substantive progress has been achieved. Band-Aid fixes and incremental, whack-a-mole acquisition reform approaches no longer suffice in today’s environment, where both technologies and threats continue to advance at an accelerating pace. Congress mandates the commission to “make legislative and policy recommendations to improve … processes and practices in order to field the operational capabilities necessary to outpace near-peer competitors.” Russia’s aggression in Europe and China’s increasingly aggressive behavior in the Indo-Pacific suggest that the United States has a limited window to modernize the force to deter — or if necessary, win — a future conflict against these near-peers.

 

 

Many have written that the defense acquisition process is too slow and linear or that the system should be faster and nimbler. These criticisms are generally warranted. However, they are also neither new nor contentious. To successfully reform defense acquisition where most attempts have failed, the commission must view the Planning, Programming, Budgeting, and Execution process as an integral part of the Defense Department’s larger and intertwined acquisition ecosystem, a broader reform scope enabled by the commission’s charter. Tackling the systemic issues hampering defense acquisition and the ongoing effort to modernize the force to keep pace with new near-peer threats requires a holistic approach. As Taylor presciently observed, not only does the U.S. military need to “know what kind and how much defense we are buying,” it needs to do a better job of why it needs it and how it gets it. 

“Big A” Versus “Little a” Acquisition 

The Planning, Programming, Budgeting, and Execution process is one of three gears in what is sometimes referred to as “big acquisition” (or “big A acquisition”). Two of these interlocking gears include: (1) the front-end requirements process (currently the Joint Capabilities Integration Development System), the process by which the Defense Department decides what capabilities it needs; and (2) the Defense Acquisition System, guided by statutory authorities, policies, directives, and management processes that specify how military services oversee the purchase of everything from pencils to quantum entanglement research. Together, these two processes comprise what is sometimes referred to as “little a acquisition.” These are largely internal departmental processes. The administration and Congress play a more active role in the third gear of the system: Planning, Programming, Budgeting, and Execution, which is the process by which the Defense Department’s priorities and financial requirements are approved.

Today, there is real concern that neither the “big A” acquisition system nor its constituent “little a” components can deliver the needed capabilities to compete in today’s threat environment. The United States no longer enjoys near-total supremacy in the sky, on the ground, or at sea. Newer domains, including space and the cyber realm, remain hotly contested. The Heritage Foundation publishes an annual index on U.S. military strength relative to global adversaries. This year, for the first time since the index’s inception in 2014, the U.S. armed forces received an aggregate “weak” rating. The index rated the Air Force as “very weak” and the Navy and Space Force both received “weak” marks. Near-peers are becoming peers. 

 

 

The Department of Defense’s technological advantage is eroding because it is no longer the primary source of the technologies that will likely underpin military superiority. The acquisition system that grew out of World War II expected that the department would need to develop its own capabilities — jet engines and supersonic aircraft, nuclear weaponry, radar, rockets, computers, software, semiconductors, guidance systems, and beyond. For a while, it did. However, by the 1990s, this assumption was outdated. The Defense Department’s importance to the semiconductor industry dissolved in the late 1980s, its role in computational technology waned in the 1990s, and its role in communications technology (especially mobile communications) disappeared by the 2000s. Dual-use technologies with applications in both the private and public sectors diffused into the much larger and more competitive civilian economy, as did dual-use research and development. Ford and General Motors now embed more radars in their automobiles than the Department of Defense does in their ships and planes. 

As the rate of technological advancements continues to accelerate and sources of innovation proliferate outside the department, the Planning, Programming, Budgeting, and Execution system remains rooted in the 1960s industrial-era processes from which it was born. For the last 60 years, the U.S. national defense strategy rested on the expectation that superior technological capabilities and industrial might would deliver the force multiplier needed to deter, counter, or defeat both peer and near-peer adversaries. From the Cold War to the Gulf War to the most recent conflict in Ukraine, the U.S. military has relied on superior technology to maintain its fighting edge. However, for the first time in the Department of Defense’s history, the capability advancements needed to sustain the military’s technological superiority come largely from the private sector. This means that U.S. adversaries will have access to the same technologies. The Defense Department must integrate these technologies faster and at scale in order to maintain a competitive advantage. 

The Defense Department is still the largest single-actor investor in U.S. research and development. However, its $800+ billion defense budget pales in comparison to a U.S. gross domestic product of more than $26 trillion. In today’s environment, defense research and development should first baseline commercial technologies and development wherever possible, then focus government research and development on unique performance requirements or high-risk, pre-commercial research. The technology sourcing for Department of Defense systems should be 80 percent commercial and 20 percent military development, but the current “big A” acquisition ecosystem effectively functions in the reverse. Planning, Programming, Budgeting, and Execution and its adjacent acquisition processes must be able to synchronize with and operate at the speed of private sector investment cycles. Policies and procedures that function as if the defense acquisition system is somehow separate from the larger U.S. (and allied) industrial base are antiquated, costly, and dangerous. 

The role of the civilian economy in national defense affects all three gears that make “big A” acquisition function. While reforming the Planning, Programming, Budgeting, and Execution system represents a significant opportunity, implementing meaningful change will be a challenge because it also affects the administration and Congress in their civilian oversight roles. Improving how the Defense Department executes this process will have limited impact if the executive and legislative branches do not also implement reforms that span all three components of the “big A” acquisition system.

The department has launched several efforts over the past decade to improve “little a” acquisition pathways in an effort to lure private sector innovation and investment. These efforts, however, represent only a small fraction of the department’s budget and most are managed through waivers from the traditional acquisition process. There remain systemic, cross-cutting issues — addressing these would not only better lubricate each of these three acquisition gears, but also present opportunities to reimagine how the acquisition engine works. Three are presented for consideration.

1. Requirements Management Has a Knowledge-Management Problem

The requirements management process defines and validates defense capability needs. Those needs are determined in the context of identifying potential gaps where current capabilities may not satisfy future mission requirements or performance objectives. The process guides how new technologies, architectures, or concepts can be developed to meet these evolving mission-driven demands. While the process is designed to foster joint-force coordination during the development of new capabilities to ensure interoperability among different branches of the military (and now increasingly with the armed forces of U.S. allies), coordination across the military is hampered by parochialism, stove-piped fiefdoms, and “my-mission-first” attitudes. If one were to ask a requirements or program manager to scan defense-wide research and development initiatives that might benefit a potential capability gap, the response would likely be confusion. There is no “common operational picture” of ongoing or planned technology development efforts across that department that managers can readily access and collaborate on to match future needs with potential solutions.

Calls to improve information sharing across the Defense Department are not new. The Joint Requirements Oversight Council, along with myriad coordinate cells and task forces, are meant to ensure collaboration across the different branches and agencies, but the current information-sharing regime was not designed with continuous inter-service cooperation and interaction in mind. Some may point to classification concerns, which can be addressed. Others may point to the information repositories and the already too-onerous oversight requirements in place, but these data collection and reporting activities do not support real-time inter-service collaboration. Neither the acquisition process infrastructure nor the bureaucratic culture facilitates cross-organization and inter-service cooperation.

The department’s requirements management process also lacks adequate mechanisms to keep abreast of civilian dual-use technologies that could benefit new defense systems or upgrade existing ones. While industry consortia and rapid capabilities offices deliver success stories, these are generally limited to either prototypes or “urgent operational needs.” Potential solutions to these problems exist, but the will to address them may not. On the organizational level, the service labs and the Defense Advanced Research Projects Agency could formally establish a coordinated commercial dual-use discovery and evaluation network to identify companies active in technologies of interest to the department. These could be organized on thematic or geographic bases. On the procedural level, a “dual-use technology evaluation” could become a regular step in the milestone process. Cloud-based knowledge management could extend the reach of overtaxed requirements and program managers, pairing them with colleagues seeking similar answers across the department. However, this would all require that the culture embrace cross-organizational cooperation.  

2. Programming for Change

The development of annual Department of Defense budget requests is a decentralized but highly choreographed, synchronized two-year dance. When the department submits its budget request to the administration and Congress, it also sends an annually updated Future Year Defense Plan, which outlines expectations for funding priorities for the next five years. This locks in funding and associated requirements for most programs even as new technologies, needs, and threats emerge. Anachronistic budgetary processes and regulatory artifacts limit Congress and the Defense Department’s program planning and flexibility regarding resource allocation. 

One such anachronism is the proverbial “color” of money. Five appropriations categories define what funding can be used for and the timeline in which it can be spent. In today’s world of spiral development, tranche procurements, and lifecycle improvements, the boundaries between Research, Development, Testing, and Evaluation (RDT&E), Procurement, and Operations and Maintenance (or upgrades) are increasingly fuzzy. Where do operational prototypes fall? Should the Space Development Agency “tranches” be research and development or procurement? Why have the distinction at all? This linear process and its sequentially phased milestones present antiquated, inflexible boundary lines between the three accounts that prevent the ability to effectively adapt and respond to evolving needs or new technologies. 

Congress and the department should consider expanding programming and budgetary flexibility. Specifically, the department needs to develop a process for efficiently integrating research, procurement, and sustainment funds across common or interrelated programs. This will allow for greater budgetary dynamism and the agility to respond to unforeseen challenges. A bolder set of reform could even include discretionary funds, where service-level chiefs or department heads could obligate funds across programs or even accounts. 

Congress and the department should also consider reforming the “Programs of Record” construct. The program-driven, platform-centric reality reflects an era when ships, planes, and tanks were the primary instruments of war. Today, software development and modular mission payloads are changing that calculus. While iron-and-steel, platform-driven programs will remain critically important to U.S. warfighting capacity, Congress and the department need to make real structural changes to implement the strategies and guidance acknowledging this fundamental paradigm shift. A capability-driven management approach that employs a broader portfolio construct to manage resources across major force program areas or mission-related program families would allow for greater management flexibility and faster technology integration. Research labs organize around technology areas that are often program-agnostic. Adopting a program portfolio management construct and flexible funding mechanisms would be able to better bridge the divide between technology development and program integration.   

Congress should also consider establishing two- or even three-year authorizations and appropriations for all programs of record. Under a portfolio management construct, program cohorts would undergo detailed hearings on those receiving two- or three-year allocations, and department reviews during their pre-approved years. This would be a major departure for the administration and Congress, but this is how most European defense ministries operate. 

3. Acquisition Pathways Need Institutional Onramps, Not More Highway Fast Lanes

The Defense Acquisition System management processes, policies, and regulations have been stitched together through multiple reforms over as many decades. Each “improvement” generated its own procedural outgrowth, accumulating like barnacles on a ship’s hull. These well-intended reforms generally sought to reduce acquisition risk but, paradoxically, they have collectively generated a new risk: a regulatory regime so contrived and a bureaucracy so entrenched that the military struggles to deliver capabilities that keep pace with technological change and global threats. 

Even with new “adaptive acquisition” pathways available to circumnavigate some of the institutional mess, once a project becomes a program of record, requirements are frozen and there is limited incentive to seek better solutions. The current acquisition architecture supports a predestined, linear path where requirements and technical specifications are locked in relatively early in the process — and changes disrupt this natural order. Change must become the natural order. Deliberate technology-insertion lanes across program portfolios need to be available so that new technologies can be integrated throughout a program’s lifecycle. 

In its 2022 National Defense Strategy, the Defense Department outlines a “fast-follower” strategy to better integrate commercially available technologies. If the department wants to improve commercial technology adoption, technology insertion should be continuous — not episodic. Despite the recognized need to buy and integrate commercial technology faster, the budgeting, acquisition, and procurement processes remain linear, sequential, and almost exclusively platform-centric. For example, the challenges associated with realizing the potential embodied in Joint All-Domain Command and Control are more bureaucratic in nature and less technological. Connecting disparate sensors across platforms and mission domains to enable faster decision-making is possible — the technologies exist. Institutionalizing continuous, cross-program technology insertion onramps would help the military to move away from a platform-centric and program-driven buying paradigm to instead reflect a new reality where technologies are increasingly platform- or program-agnostic. 

The Way Ahead

Under the current acquisition regime, technology investments made today will take years to mature into operationally fielded capabilities. Those technologies will then shape the military for decades to come. The reality of today’s operational environment is that while physical platforms may last for decades, the core technologies inside them will advance at an accelerating pace — measured in weeks and months, not years. An acquisition system that assumes multiyear development timelines and internal development of technology is going to require both the “big A” and “little a” to work together much differently than they do today. 

Nearly 10 years ago, I had the opportunity to speak with retired Gen. Michael Hayden about modernizing the military. I asked him whether he was worried that the U.S. military would soon draw more from private sector innovation than the department and if that would level the playing field with our adversaries. “No, our democracy and open way of life give us a competitive advantage our adversaries cannot replicate,” he offered. I still agree. The issues outlined above can be addressed, in part, through process, policy, and law. However, defense acquisition is a composite of local interests (“my soldiers need this, my voters need that, my company wants this”). Aligning those interests — the sacred and the profane — is at the heart of the issue. None of this will work without committed leadership from Congress, the administration, and the Department of Defense. The Planning, Programming, Budgeting, and Execution Reform Commission is in an unprecedented position to drive bold and urgently needed change that just might stick. 

 

 

Eric Chase is a managing director at CSP Associates, an aerospace and defense advisory firm, and a Lt. Col.-select in the U.S. Marine Corps Reserves. He has supported the national security and defense acquisition community in the private and public sectors for over 15 years, serving in multiple roles in the Marine Corps including intelligence officer, defense attaché, and infantry commander. He is currently assigned to the Marine Innovation Unit. The views expressed are those of the author and do not reflect the official guidance or position of the U.S. government, the Department of Defense, or the U.S. Marine Corps. 

Image: Department of Defense

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