Fix the Pentagon's Budgeting Process

One of the wisest decisions former Secretary of Defense Robert Gates made while in office was to calculate the cost of routine overhead demands.  Specifically, as part of his efficiency initiatives of 2010, Gates noted the rising demand for reports and studies from both Congress and OSD, directing the entire department to immediately start calculating the actual cost to produce each report and publishing the amount in the front of each document. Putting a dollar amount on non-essential work was an important step in taking control of unwieldy overhead costs. This decision was clearly keeping with the time-tested management axiom: you can’t manage what you don’t measure.

The Trump Administration is filling key positions in the Pentagon with senior executives from industry.  If they are worth their salt, they will soon realize that a private firm would go bankrupt if they were to use this unwieldy approach to acquiring money to operate. Insiders will argue that the government is not a business; therefore, good management practices that have worked in the private sector do not apply here. This is an area where the incoming Deputy Chief Management Officer, John Gibson and Chairman of the House Armed Services Committee, Congress Max Thornberry must work together to drive unnecessary cost out of this complex but often overlooked, system.

The first step to fixing this problem must be to follow Gates’ lead and determine the total cost to submit a budget each year.  From there, a targeted reduction amount could be used to simplify the budget submission; a mandated 20 percent or even 50 percent cost reduction certainly would force the current approach to change. The Pentagon and the Hill could work together to eliminate requirements while maintaining effective oversight.  Further, the fiscal pressure may result in an entirely new way of doing business at the Pentagon that makes it more effective.

If Gibson and Thornberry are successful, they will not only eliminate waste, but they can resolve some longstanding problems that make it difficult for the Pentagon to do its job. The entire Planning, Programming, Budgeting and Execution (PPBE) System, the cardiovascular system for defense management, is a holdover from the McNamara-era that is no longer appropriate for today’s dynamic security environment.

Over a decade ago, the National Defense University released a report that observed the PPBE process was only suitable the stable environment of the Cold War, was plagued by redundancy and was an industrial-age management tool. The report concludes, “The PPBE is widely recognized as a barrier to transformation.” Former Secretary of the Navy Richard Danzig expressed similar concerns while writing for the Center for New American Security. Danzig noted that decision-making in the private sector might take months or years, while the same function may take decades at the Pentagon, due to its complex processes. One analyst recently went so far as to conclude, “Unless the Pentagon invests time and attention to reform PPBE, the greatest threats to the American military will stem from within.”

The Pentagon is engaged in two important missions: to innovate by rapidly fielding new military capabilities and reducing waste by reforming management practices. There is a single process, the Planning Programming, Budgeting, and Execution System, that is making each mission more difficult, but most feel it is too hard to change.  With the new private sector business expertise leading the Pentagon’s key management positions, and with some encouragement from Congress, reforming this complex, outdated process may be possible.  Secretary Gates’ example provides an important tenet for defense reform – measure what you are trying to manage.  Congressman Thornberry and Mr. Gibson should learn from this approach and use it to fix this longstanding problem.

Mr. Robert Kozloski is Civil Servant in the Department of the Navy.  The views expressed here are his alone.