It seems like every year there is another commission, task force or board that studies the defense acquisition system. Fiscal 2022 continues the pattern with the rather bureaucratic-sounding Commission on Planning, Programming, Budgeting, and Execution reform. This time, however, there is good reason to sit up and take notice. While defense innovation initiatives over the past three administrations have made progress, the Department of Defense cannot gain ground on strategic competitors until the rigid and linear PPBE process is addressed. This commission presents a golden opportunity for the DoD to break out of its industrial-age shackles.
Congress and the DoD have worked hand in hand in recent years to spur innovation. From the establishment of the Defense Innovation Unit and organizations such as Army Futures Command and AFWERX as well as contracting innovations such as the expanded use of other transactions, commercial solutions openings and Small Business Innovation Research programs, there has been a steady stream of initiatives for increasing how the DoD attracts new entrants into the defense-industrial base.
These efforts have struggled to gain scale because they do not fit how the DoD builds its budget via the program objective memorandum. This central component of the PPBE system is like an old, comfortable shirt to most stakeholders. Generations of planners, programmers, analysts, congressional staff members and lobbyists are intimately familiar with the current system. Clear processes, oversight mechanisms, levers, etc. guide this deliberate process that Secretary Robert McNamara brought to the Pentagon from Ford Motor Co. in the 1960s.
This top-down process relies heavily on advance planning and detailed cost estimates of projects and technologies spanning years into the future. Commercial industry, meanwhile, long ago moved on from centralized planning and instead focuses on portfolio management, which enables the flexibility to meet today’s challenges.
This comfortable PPBE shirt does not fit many of today’s national security challenges. Getting from demonstrations and other transaction prototypes to production when there is no program of record in the pipeline, for example, has been a continuing problem. The DoD has established a series of acquisition pathways, including a pilot appropriation for software, but none address the timeliness of funding or the ability to make trade-offs. Programs execute to plans devised many years before without sufficient ability to adapt to changing technologies, threats and operating concepts.
Today’s challenges, such as Joint All-Domain Command and Control, need a budgeting process that supports modularity, iteration and speed. Chris O’Donnell, the acting assistant secretary of defense for acquisition, noted late last year that the DoD needs to rethink the “Big ‘A’ acquisition process in the department. It’s not just what we are doing in the acquisition system, [it’s] how do we reform the requirements process and the PPBE. Until the three of those are lined up, well, we can’t pull things through the system quickly.”
Interestingly, there is strong recognition across the defense community of the challenges of the current framework. Leaders such as Senate Armed Services Committee Chairman Jack Reed, former Deputy Secretary Bob Work and even former Google Chairman Eric Schmidt have publicly called for PPBE reform.
PPBE commissioners can build off the success of the recent National Security Commission on Artificial Intelligence and the Cyberspace Solarium Commission — which have been well received and quite impactful — by taking a three-pronged approach:
- Be bold in vision. The DoD’s industrial-age approach is different from almost any organization in the world. The commission must look to the history of defense management, international ministries and large commercial enterprises. Organizational and portfolio budgeting are not new ideas, and today’s corporate best practices show how to spur innovation in large organizations.
- Be focused in approach. The commission should be careful to not boil the ocean. The Section 809 Panel on defense acquisition reform is a cautionary tale. Even though the individual findings had merit, the three volumes of the final report were just too much to digest. Perhaps focus this commission on three lines of effort: (1) portfolio management; (2) reporting and transparency; and (3) budget build process.
- Be pragmatic in implementation. Finally, the commission needs to make recommendations that can be rolled out incrementally. It may be useful to set up pilot portfolios across the DoD to test out new approaches. Focus first on high-interest and software-intensive program offices across the services and immediately move for FY23 pilot portfolios, creating opportunities for learning, adjustment and expansion over time.
The United States simply cannot meet the national security challenges it faces over the next decade if the resource allocation process is not brought into the 21st century. The commission on PPBE reform can help bring adaptability and flexibility to how the DoD delivers capabilities to that multifaceted battlefield. It should look for models of success, focus on what matters and move quickly to pilot efforts.
Jerry McGinn is the executive director of the Center for Government Contracting in George Mason University’s School of Business. He is a former senior U.S. Defense Department acquisition official. Eric Lofgren is a senior fellow at the Center for Government Contracting. He has written extensively on PPBE reform for the center and his Acquisition Talk blog.