WASHINGTON — The U.S. Army has recently seen a dramatic increase in its budget, allowing the service to work toward fixing readiness issues as well as apply funds toward modernization goals to prepare troops for the future battlefield.
Extra money historically doesn’t translate to a motivation to reform financial practices, but the Army has made it a priority to launch reforms across the board, from how it acquires systems to how it manages contracts and supply chains.
Army comptroller Lt. Gen. Thomas Horlander established a program to help the service better manage its money. That program is nearly two years old.
Defense News sat down with the general just ahead of the Association of the U.S. Army’s annual conference to discuss how the Army is managing its budget and maximizing its purchasing power as it begins to fund major modernization efforts while preserving readiness.
What are you doing to be good stewards of taxpayer dollars?
The Army has a stewardship program we put in place two years ago called the Command Accountability and Execution Review Program, or CAER. I would say that has been a very successful program and it has really helped the Army to optimize its purchasing power.
This was all about minimizing the loss of purchasing power or optimizing our purchasing power. When I compare what happened last year to historic averages, we have improved; or let me put it this way: We’ve reduced the loss of our purchasing power by 68 percent. We feel pretty good about that. But why is that? At the end of the day, there’s one reason: It is leadership, and it is leadership that started with Secretary [Mark] Esper and Gen. [Mark] Milley and trickled down from there.
They were always there at the meetings, they led the meetings. I mean, they physically led the meetings in the room. You don’t see four-star generals and secretaries of services sit there and take briefings on de-obligations, but that is exactly what they did.
What has the CAER Program fixed?
I think a year from now we’re going to see even more benefits to what we’ve done. We had some fundamental problems and some problems that kind of made us uncomfortable, about how we budgeted and funded transportation, people and equipment, our supply chain, how we managed contracts, all those are components of the CAER Program.
And for the transportation piece, we have almost eliminated that problem, and it wasn’t just because of having the involvement of the leadership. These are big corporate enterprise issues. [For transportation], we did not budget well. So there was some training. I don’t think our accounting systems were set up properly and we had late billing.
How did you improve supply chain discipline and contracting?
If you understand the life cycle of a supply request, once it gets requested, it goes into the system and it gets filled, or it doesn’t get filled. And if it doesn’t get filled, what’s important is that it just doesn’t sit there in a latent stage. Somebody looks at it and is saying: “Why isn’t it filled? Will it get filled? And if it won’t get filled, then let’s not sit there and let that money that is applied to that supplier request expire.” So watching that and watching that on a consistent basis, so that you’re not sitting there going into the next fiscal year with a whole bunch of open requisitions. So we measure that. In fact, we call that the key performance indicator No. 1, and anything, any supplier requisition, that is greater than 60 days old, we track it. We don’t just track it — we actually have the commanders report on it.So having that visibility at the command level, that is invaluable.
So the other one is supply contracts. So there’s a couple dynamics here, one thing is not having too much of your supply activity all being actioned at the same time. What you want is a more equal spread of contracting activity across the entirety of the fiscal year. So we watch that. One of the things we’re trying to do is to have all the commands have a more equilateral spread of their contracting activities. The second thing is every command conducts a quarterly contract review board. It’s putting a lens on how the money’s getting spent. It’s not just [whether] we spend all our money — it’s how well we spend our money.
Did the Army experience funding issues when the Trump administration shifted money to fund the U.S.-Mexico border wall among other efforts? How did that affect readiness, operations and maintenance?
So you have general transfer authority and you have special transfer authority. Remember, this budget is over $700 billion across all of the Department of Defense. So the authority allows us to move $4 billion in the base and $2 billion in special transfer authority, or the overseas contingency operations account. So when you do reprogramming and you consume general transfer authority, it becomes quite a puzzle. You’ve got the Office of the Secretary of Defense’s comptroller trying to satisfy everybody’s reprogramming requirements across the entirety of the DoD. It gets pretty complicated, and if you have more reprogramming requirements than you traditionally do, then you really are having to pay really close attention to what you reprogram and don’t reprogram.
We went through quite an extensive reprogramming effort here in fiscal 2019, but you know what? We got everything we needed. I will tell you it made things a bit more complicated, but we were pretty successful in our reprogramming. I was pretty happy to see how we ended up there in September once all the committees had taken all of their actions.
Jen Judson is the land warfare reporter for Defense News. She has covered defense in the Washington area for 10 years. She was previously a reporter at Politico and Inside Defense. She won the National Press Club's best analytical reporting award in 2014 and was named the Defense Media Awards' best young defense journalist in 2018.