Combatant Commands as Customers?
From Elon Musk to Sen. Bernie Sanders, there is widespread agreement that the Department of Defense is way too slow in how it develops, acquires, deploys, maintains, and upgrades technology. However, the analysis behind this agreement often stops at point solutions and fails to wrestle with the systemic disconnect between a centrally-planned Defense Department and a decentralized free market. And until recently, the conversation has largely failed to recognize one of the most important voices in the defense ecosystem — the joint warfighter, as embodied in the combatant commands.
If the Department of Defense were its own economy, with a (perhaps soon) $1 trillion budget and 3.4 million in the workforce, economists would advise against trying to centrally plan and manage such a large, complex systems of systems. Unfortunately, the defense system in the U.S. functions more like a centrally-planned command economy than like the free market that is driving American prosperity. To better deliver capabilities to warfighters rapidly and affordably, the Pentagon should decentralize and accelerate decision-making.
One key aspect of that change is empowering the customers — the combatant commands. Combatant commands are how the U.S. military organizes its forces, either by specific regions of the world or by special functions. In the economy that is the Defense Department, the military services (Army, Navy, etc.) generate and provide the forces that the combatant commands employ and consume. These commands have the responsibility for protecting America’s interests in a given area in peacetime, conflict, or war.
This operational responsibility focuses the attention of the commands on capabilities that work today and in the near future. They need new technology, but don’t have time to wait for empty promises, whether they come from Silicon Valley or traditional defense companies. Ultimately, if a capability doesn’t work, the command will suffer the consequences.
Policymakers should expand the ability of combatant commands to behave like the customers they are — choosing to put their resources against capabilities that best meet their needs.
If combatant commands are fully enfranchised in delivering results, this would create precisely the engine of progress policymakers should champion, transforming commands into powerful market forces, driven by one imperative alone: Find the provider — service, agency, or company — that guarantees mission success now. As an executive at Metrea, a defense company, I have an interest in contracting outcomes. However, in this role, and in prior roles in the Pentagon and on Capitol Hill, I have seen time again that good incentives are the lifeblood of successful systems.
While there are big systemic changes to consider, there are also some simple and relatively easy changes that the Pentagon and Congress can make in the Fiscal Year 2026 budget to empower the joint warfighter.
The Challenge (Failure?) of Central Planning
At a high level, the White House, the Pentagon, and Congress are all seeking the same strategic goal when it comes to equipping the military: get the right amount of the right amounts and types of forces, with the best training and technology, consistently over time. This resource allocation and future prediction challenge is a classic economic problem. For example, at a national level, how does the government ensure that American citizens get the right amount of the right things (food, housing, work, etc.) consistently over time? Spoiler alert — the government doesn’t do this. Instead, it trusts the free market to solve these things. While far from perfect, the decentralized supply and demand of the U.S. free market has produced a $29 trillion economy that is dynamic, innovative, and leads the world.
The goals are the same for the military — dynamic, innovative, and world-leading. Unfortunately, the defense resource allocation system has evolved into something that is functionally the world’s largest centrally-planned economy. In fact, at approaching $1 trillion, the U.S. defense ecosystem is larger than all of the world’s remaining command economies combined. In the Pentagon, committees of well-intentioned people are trying to predict the future and manage both supply and demand. This central planning system takes almost 2.5 years on average to approve that something is a required joint capability, and then another three years to resource it via the budget process. If the Pentagon’s command economy is left to itself, it can take up to six years to start responding to a problem or opportunity.
As noted, there is widespread agreement that the current system does not deliver what warfighters need. Washington has talked about defense acquisition reform for decades, and made many important adjustments such as middle tier acquisition, the growing use of Other Transaction Authorities, and Secretary of Defense Pete Hegseth’s recent software acquisition pathway memo. While these efforts have created new and ideally faster acquisition pathways, they have not fundamentally changed the centrally planned system that is the Department of Defense.
At the national economic level, the problems with central planning are not new. In fact, many communist and totalitarian regimes, such as China in 1978, have recognized that centrally-planned economies struggle, and have evolved toward a more free market system. It’s time that the U.S. defense ecosystem does the same.
Before making specific policy suggestions, one significant critique should be addressed. The U.S. military itself is not a free market. There is a commander-in-chief and a chain of command, and Congress has the power of the purse. But just as the U.S. military empowers lower-level officers and enlisted leaders to understand the mission and make tactical decisions at the edge (mission command), the military should similarly trust its people to understand guidance and intent from above and make more acquisition and resource decisions at the edge. The priorities and strategy should be set at the top, but the system should decentralize authority and responsibility for execution and then hold people accountable for their successes and failures.
Bring Back the Free Market
The Defense Department processes for requirements, resourcing, acquisition, and allocation of forces are a complicated mess that can’t be fixed easily or quickly. But Congress and the Pentagon can and should seek to add more free market forces. This will generally increase the speed and effectiveness of decision-making in this complex system of systems.
One of the most important elements of a free market is that consumers have agency. They evaluate how to spend their time and money to achieve objectives, and their choices become important signals to the producers. These decisions and signals are dynamic — if the price of gas goes up, some people will drive less, some will buy electric cars, and some will take public transportation. And the producers are both seeking to prepare for future opportunities and react to current changes. A sudden increase in demand for electric cars may mean that prices go up in the near term. But that increased price will likely drive more companies to enter the electric car market in the future. The key is that resource allocation decisions are decentralized and dynamic. While far from perfect, free market systems are more efficient and effective than command economies at resource allocation in large complex systems.
In the Department of Defense, the combatant commands are the consumers — the demand side — and the military services and various defense agencies are the producers — the supply side. The commands have the responsibility of defending American interests in a particular region (e.g., Indo-Pacific Command) or domain (e.g., Space Command) by integrating all the capabilities provided by the military services into a joint force. But currently the commands have little timely input into what tools they have to protect America in daily competition or in conflict. Instead they rely on the slow processes of Global Force Management and the Joint Capabilities Integration Development System. And although the commands participate in the development of the Defense Department’s budget (via the budget process), the Pentagon historically has not given them much of a voice, or valued their inputs, forcing commands to rely on unfunded priority lists and help from Congress. In summary, the combatant commands have the responsibility for protecting America’s interests. They have valuable insights and signals to send to the system, and have an interest in making trades (a Patriot battalion or an Aegis destroyer?) to best meet their missions. However, the interaction between these consumers and the providers is not a dynamic market, but a bureaucratic multi-year process requiring thousands of people and millions of manhours annually.
Instead, combatant commands should be empowered. The President and the Secretary of Defense already set priorities and strategy for the commands. They should also give the commands more authority to truly function as customers. With real agency commands would be able to choose between various “products” offered by military services, while also being able to buy products and services from other agencies (such as the Defense Innovation Unit or the General Services Administration) or from the commercial sector. Over time this should incentivize all producers to offer products that are more joint, such as the Air Force buying anti-ship weapons. And it should incentivize commands to be better stewards of the resources they are provided.
What Should Change?
Changing a complex system is not easy and it involves both the executive branch and Congress. Together they should seek to merge the various processes that govern requirements, budgeting and force management. They should give combatant commands more budgetary authority. And they should move combatant command budgets into the defense-wide accounts.
Merge These Three Processes
Currently, the Department has three largely independent processes, one for allocating military forces (Global Force Management), one for allocating budget (Planning, Programming, Budgeting, and Execution), and a third for determining joint requirements (Joint Capabilities Integration Development System). In a free market, these are not independent stovepipes, but all producers are trying to determine what customers want and need, both now and in the future, and are competing to meet those needs. Moving the Defense Department in this direction will take some time, but here are some potential initial steps.
First, Congress should direct the Pentagon to report on how the full lifecycle cost of force deployment is considered in Global Force Management. For example, when multiple force elements (e.g., an Aegis destroyer and a Patriot battery) could meet the same combatant command need, how are the full lifecycle costs of that decision evaluated and highlighted for senior leaders? Or how much does it really cost to keep a carrier strike group in the Red Sea longer than initially planned? This assessment should not just count the cost of fuel, pay, and munitions, but also include the full costs of deferred maintenance and percentage of service life used.
Second, the Pentagon should make the Global Force Management process more market-based. Combatant commands should bid for forces, with a total campaigning budget that is allocated to each command by the secretary of defense. Bidding allows commands that are given more resources by the Secretary to “pay” more for specific high-demand assets, while commands with less to “spend” can bid for lower-demand assets. In addition to allocating the forces, the bidding process provides a powerful, tangible signal to the force providers on what commands really value.
Direct Budget Authority, But with Guardrails
Combatant commands should be able to behave more like customers, which means having money to buy things. The Global Force Management process mentioned above is for “off the shelf” military capabilities — things that military services already own and operate like DDG 51s and F-35s. Commands also should be able to “buy” things that the services are developing or producing. For example, Indo-Pacific Command may want to increase the rate of missile production and so might contribute some of their budget to the relevant existing program. The commands should also be able to buy from external providers, including other government agencies, allies and partners, or the private sector.
To be clear, while commands should have increased budget authority, they do not need more or special acquisition authorities. The commands can already leverage the acquisition expertise and authority of a wide variety of organizations such as the Defense Innovation Unit, the defense agencies, and the military services. If a command has the budget, they can bring those resources to any of these expert acquisition organizations.
Commands should not resource things that create a sustainment bill for a military service or agency without the endorsement from that sustainer. This means that commands should generally be investing in either existing acquisition programs, consumables (munitions, etc.), or commercially available, technically mature solutions with low to no switching costs. This third category would allow software-as-a-service and other as-a-service models where the government can unsubscribe or switch to a different solution in the future. Commands should be resourced in two windows: inside the Pentagon budget process, and in execution via appropriations from Congress.
First, the Pentagon should give combatant commands a fund to spend inside the Defense Department budget process, whereby they can give some of their funding toward programs that services and agencies are already running. For example, if Indo-Pacific Command had $10 billion to spend inside the budget process, they could allocate it toward any priority munitions programs that the services are underfunding, or toward increasing steaming days for the Navy (which would connect with the Global Force Management discussion above), or any other priority gaps.
Second, Congress should give combatant commands more execution year discretionary budget authority to be put toward consumables or mature commercially available solutions. The funding should be scaled by priority of the combatant command and based on behavior and outcomes of the command over time. And generally, this funding should be flexible but required to be spent quickly (such as operations and maintenance money) so that the commands remain focused on current problems, and do not get drawn into multi-year research and development projects.
Moving These Budgets
Currently combatant command budgets are carried by one of the military services. For example, Indo-Pacific Command’s budget is buried deep inside the Navy’s budget. The Office of the Secretary of Defense sometimes has to step in during the budget review to ensure that commands get the headquarters funding they need. In budget exercises, like the recent 8 percent reprioritization of the FY26 budget, the military services may be tempted to underfund the commands in order to protect their own priorities.
The Department of Defense and Congress should move combatant command budgets out of the services and include them in the defense-wide budget. This simple, budget neutral step will increase the voice of the commands, and improve transparency for Congress. Commands should still rely on their “host” service for life support, but they should have greater budget independence.
What Shouldn’t Change?
While empowering combatant commands will improve the defense ecosystem, there are some things that should not be changed.
First, do not elevate the role of combatant commands in creating policy and strategy. At times commands already play an outsized role in policy. America’s elected leaders and their appointees need to drive policy and strategy. Commands should have an increased role in the capabilities and technology needed to achieve policy ends, not in defining those policy ends.
Second, do not give commands authority to organize, train, and equip. Geographic commands should not develop into mini military services (with the possible exception for functional commands like Special Operations Command and Cyber Command). The commands should not get their own special authorities for acquisition or recruiting. Their jointness and warfighting focus is what makes the commands’ voices important, and that should remain their responsibility.
Conclusion
Large, complex systems of systems — with billions of dollars and millions of people — are hard to centrally plan and control effectively and efficiently. This is well recognized in economics, but the Department of Defense still functions more like a centrally-planned economy than the free market that is driving American prosperity. This must change, and one key aspect of that change is empowering the consumers — the combatant commands. The Department of Defense and Congress should start making incremental changes now that will decentralize and accelerate decision-making. Now is the time.
Justin Johnson spent over a decade working on defense budgets and policy on Capitol Hill and at the Heritage Foundation before spending four years in a variety of senior positions in the Pentagon from 2017 to 2021. He is now head of strategy at Metrea, which delivers effects-as-a-service to national security partners.
Image: U.S. Navy photo by Chief Mass Communication Specialist Shannon M. Smith.
