The top-line budget agreement Congress worked out last weekend doesn’t mean the work is done. Members still have to work out the agency-by-agency allocations and whatever policy riders each side can stomach. David Berteau, president and CEO of the Professional Services Council, joined the Federal Drive with Tom Temin to give the industry view.

Interview transcript:

Tom Temin: And this is really going much further than the NDAA with its Title 800 procurement reforms year after year. This is kind of a big, important bill, isn’t it, David?

David Berteau: It’s a big step, Tom. And of course, Sen. Wicker, when he introduced the bill in December, was the ranking member of the Senate Armed Services Committee. But now in January, he’s the chairman in the 119th Congress. And so his words will have a lot to do with what gets into the bill when they start marking up later this year. And this is a big acquisition reform bill. Any time you open up a bill with 144 pages, you say to yourself, ‘OK, there must be something in here or else it wouldn’t take this long to write.’ And it’s a key starting point. Obviously, the bill itself was introduced in December. It died with the end of the 118th Congress. So it has to be reintroduced. But we’re taking his proposal very, very seriously.

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Tom Temin: Yes, because there have been no shortage of proposals from congressionally chartered commissions. Right on my desk, I’ve got a big, heavy March 2024 report now, Commission on Planning, Programming, Budgeting, and Execution Reform. And I don’t think there’s been a whole lot of action after that one. There was the Section 809 Commission, this one, that one. But nothing seems to really get pushed very far. So maybe this bill could start the ball rolling?

David Berteau: Well, Tom, I’ve spent most of my career in Washington in the middle of acquisition reform, and you could ask yourself, ‘If we’ve done that much reform, why do we still have so many problems?’ And the reality is that there is a lot of change that is implemented, but it’s rare that it’s a comprehensive package. And I think what Sen. Wicker has attempted to do in his proposed legislation and it has a report, a document going with it that explains it, is to take a more comprehensive look. And I think there’s three elements of what he’s proposing here that merit very serious consideration. One, and you’ve seen this a lot on your show over the past few years, is this focus on outside innovation that is startup companies that bring something that potentially is valuable to the government into international security in particular, that don’t go through the normal process of the existing industries and the hardware manufacturing process. There’s a lot of promise in a lot of these. There’s a lot of venture capital money has gone into it. It’s a lot of private equity money has gone into it. And the real question is, can you buy stuff fast enough? Your PPBE Commission report that you just referred to there at its core talks about it takes so long for the federal government to decide it wants something, put the money in the budget, get Congress to appropriate it, get OMB to apportion it out so you’ve got the money and then compete a contract and evaluate the proposals and award. That’s a three-year cycle done fast. Right. And the cycle time of innovation is much shorter than that. So that’s a big part of Sen. Wicker’s bill that really merits consideration.

Tom Temin: And if I’m reading the bill correctly and it is a long bill, there are dozens and dozens of Title 10 provisions now in law that would be repealed right away.

David Berteau: That’s the most striking element. The 35 pages of things to get rid of. Some of them go back, Tom, to 1975, which is even before I came to Washington. Now, the analyst in me says, ‘Before I agree to all those, I really have to look at the details of what each one does and how it’s being implemented.’ For example, there’s a proposal in there to sunset all requirements for congressional reports after five years unless Congress acts to continue those reports. I know from my time in the Pentagon that many of those reports serve two purposes. One is they help Congress stay informed. The other is they actually help the secretary of defense be aware of and manage what’s going on in the department because without the congressional reporting requirement, oftentimes, you don’t get the data at all. And so that congressional reporting requirement serve both the executive branch and the legislative branch. That needs to be looked at carefully before those are gotten rid of.

Tom Temin: We’re speaking with David Berteau, president and CEO of the Professional Services Council. And what’s your sense of how much bite this bill would have in Congress? I mean, if everyone was looking at one of the things it would repeal, you’d need 400 people to just each read one provision and say, ‘Here’s what this all means.’

David Berteau: Well, luckily, we do have time. It’s early January and we won’t have markup at the Senate Armed Services Committee for the FY 26 National Defense Authorization Act until probably April, maybe even a little bit later than that. So there is time to do the work carefully and well. Sen. Wicker is obviously in the right position to do it. I suspect that a good recommendation will have broad bipartisan support, and we look forward to working with the committee and the staff as they finalize this and work it into the bill.

Tom Temin: All right. And as this bill might get reintroduced and we’re going to have a new administration in just a few short days, the government itself is not really got its act together on the budget front. We’re still in a continuing resolution and we don’t really understand the status of 2026 development.

David Berteau: Boy, you’ve hit the nail on the head there. I mentioned that Sen. Wicker and the Armed Services Committee will be marking up the FY 26 National Defense Authorization Act. But the biggest single question about that is to what number? What top line number for defense, right. We have an agreement. It was part of the Fiscal Responsibility Act that was passed back in June of 2023. That was our last debt limit fight, by the way. That deal put caps in place, but only for FY 24 and FY 25. It was noteworthy that the FY 25 NDAA, which passed right before Christmas and was signed by the president, stuck with those caps. The CRs are basically sticking with those caps because they’re at the 24 level which is covered by the caps. But we don’t have a final FY 25. More importantly, you can’t expect the executive branch to propose an FY 26 budget until they know where they are in 25. And that’ll be March 14th at the earliest. That’s when the CR ends. The incoming Trump administration inherited a 26 budget that was put together by the outgoing Biden administration. But I don’t know to what number and certainly not to a number that Congress has agreed to. So there’s three layers of uncertainty there. Where do we finish 25? How does that get incorporated into 26? And most importantly, will there be a cap in 26 for defense and non-defense? We don’t know the answer to that. Maybe the first reconciliation bill will have to address that.

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Tom Temin: Well, one thing we do know or we’re seeing in a general way is that the Trump team that is coming in seems to be more thorough and prepared than it was the last time around. And I’ve heard this from several landing team people that spoke on the condition of anonymity. And I’ve heard from some senior executives that are on the receiving end of the landing teams. So I guess we can hope maybe that they’ll have some picture in mind when they do take over the Defense Department of what they want for 2026. And they’ll have some time to maybe shape it.

David Berteau: That level of preparation that you’ve mentioned is a really key point here. Tom, we’re in very rare territory here where a president and his team served for years then are out for four years, then come back. And it’s pretty clear from the statements and the preparation that they spent a lot of that four-year interregnum getting ready to think about what they would do if and when they were to win another term. And I think that’s showing up in all of the comments that they’re making there. That doesn’t necessarily make the path any easier with Congress. But it is important that they have a clear idea. But the most important thing about the Pentagon budget and in fact true for other federal agencies as well, is you can’t put next year’s together until you know what this year is because that’s always your starting point. You’ll go back all the way to President Carter, God rest his soul. He did what was called zero-based budgeting. Let’s ignore last year and start from scratch and build your budget from scratch. It didn’t work. It’s just too hard and complicated.

Tom Temin: No, that’s one of those management concepts that sounds great on paper, but anyone actually working in an ongoing organization knows how kind of silly it is.

David Berteau: Right. We couldn’t even do our household budget by starting from scratch. You’ve got expenses that are cooked down and you have to keep them going. But the real problem is we don’t have enough time. Right. If you go back again to Sen. Wicker’s bill, part of his focus is we need to go faster. We need to get new technology. And we need again, this is true not only in DoD, but across the federal government. You hear it on your show virtually every day, an agency that needs to be able to move faster. Well, you don’t move faster by going slower.

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