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For anyone in Washington wanting to understand something in the Defense Department budget, Todd Harrison has been a go-to analyst. Now, after seven years at the Center for Strategic and International Studies, he’s leaving to join a defense company. The Federal Drive with Tom Temin spoke with him about the move.

Interview transcript:

Tom Temin: Todd, good to have you on.

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Todd Harrison: Hi, thanks for having me.

Tom Temin: Let’s begin with what prompts you to leave that third party, honest broker, analyst kind of perch to go to one of the companies.

Todd Harrison: It really is the opportunity at Meta Aerospace, it presented itself and the great team that they’ve assembled there, that I’ll be able to be part of, you know, the real attractive part is I’m going to be able to stand up a new research and analysis entity within the company to keep doing the same kind of research I had been doing, but doing it from a different perch, and quite frankly, at a location where we’re going to have skin in the game, that you know, if my analysis says, hey, this is a really exciting market that you know, we need to be getting into, I better be right.

Tom Temin: So you won’t be running around at Sea-Air-Space, trying to set up appointments for demonstrations and that kind of thing.

Todd Harrison: Oh, no, I’m not going to do the sales dive.

Tom Temin: OK, good. Well, I wanted to get your perspective. First of all, you have been watching the development of the budget, which in some rough way should tie to what the military feels it has to do and what Congress feels it has to do. And what’s your general sense of how I don’t know, efficient? Or how accurate or how efficacious budgeting in DoD is relative to what the nation faces? I mean, what’s your overall impression after these years?

Todd Harrison: I’ve been in the think tank world for 13 years now. So it CSBA before CSIS, and throughout that whole time, you know, the defense budget has really been at the core of my research portfolio and in space and air power as well. But really, a lot of my work has been focused on aspects of the Defense budget. And I’ll tell you, my opinion is that the budgeting process is broken. It is broken within the department, the planning, programming, budgeting and execution system is an industrial age system. And it is not what we need to compete now and in the future, and the digital age and the congressional budget process itself. I mean, that kind of goes without saying, it is pretty broken when it is becoming common that we go six months into the fiscal year without a budget enacted, just operating on continuing resolutions. So I don’t think the current way of doing business is going to work for that much longer. And if we’re serious about competing with China, if we’re serious about being able to out innovate our adversaries and potential adversaries, we can’t do that effectively by continuing business as usua.

Tom Temin: And competing and out innovating are all great, but ultimately, the military has to win wars. And isn’t that really the objective that should be part of this? And is that in doubt with the way things are going budget wise and planning wise?

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Todd Harrison: Well, you know, I would go a step further. It’s not just that you want to be able to win a war, you want to be able to do more than that. You want to be able to deter a war. And so you’ve got to have a credible, capable force so that an adversary does not even want to get into a fight with you. And yeah, I think that we are at risk of losing that. I think we have seen our competitive advantage gradually erode over the years. And I think deterrence in several areas around the world and in several domains, has started to become more and more questionable.

Tom Temin: We’re speaking with Todd Harrison, until last week, was an analyst at the Center for Strategic and International Studies, having now just joined Meta Aerospace. And getting back to that PPBE. I mean, at one time, it was PPB. And somewhere along maybe around the Nixon administration, they added the E part, the budget execution part. But in general, it’s been impervious to reform. And there’s been lots of gyrations on how to make it work better, but it’s basically the same old instrument. And there’s a commission now that’s about to be formed to look at it, who knows how long that’ll take, why so impervious to reform for something so crucial, do you think?

Todd Harrison: You know, ultimately, I think that the process that DoD uses is driven by the process Congress uses, right, and so they try to create a process that will fit with what Congress is doing. So I’m of the opinion that change actually has to start on the congressional side. And what I would start looking at, you know, if I was advising the PPBE commission, and I know several of the members of maybe they’re listening, I would tell them start on the congressional side, and in particular, looking at how money is appropriated, and the antiquated titles of the budget that we use where we divide money up and we restrict how you can spend it and the rate at which you can spend it based on whether it’s, you know, research and development, or procurement or operation and maintenance, etc. That just increasingly does not work anymore.

If you are developing a software intensive program that may have some hardware, but the bulk of the work is actually in software, where is the difference between development, production and maintenance of that code? You’re really doing all of it at the same time. So the idea of bucketing the money this way, and these categories, and then putting restrictions on it, and restrictions on how you can move money around in the budget, and how quickly you have to spend the money. It just leads to bad behavior, suboptimal performance, and it also locks us into this industrial base, where DoD is constantly in the mindset of, well, you know, if we want a new capability, we need to go hire a contractor, pay them on a cost plus contract to develop it, and then we’ll come back and we’ll pay them again to produce it, and then we’ll come back and we’ll pay them again to help us maintain it, right. And if you want to innovate, you can’t operate that way anymore. Especially when requesting all that funding, you need about a two year lead time between when you try to work it into your palm your draft budget, and then submit it to Congress and wait for Congress to enact on it appropriate the money, and then come back and actually be able to obligate the money, right? You can’t do it with that type of a system anymore, we’ve got to look more and more about where can you just go to industry and say, I want to buy a capability, I want to buy it off the shelf, sometimes I’m gonna buy it as a product, sometimes I’m gonna buy it as a service. And we need a budgeting in a congressional appropriations system that is more flexible and able to adapt to these types of new acquisition environments.

Tom Temin: Of course, if you eliminate the colors of money or reduce them, then it’s incumbent on DoD to make sure they really get results and don’t spend whatever colorless money they have, but nothing to show for it. And that hasn’t always been the case, either.

Todd Harrison: Right. I mean, it is always a balancing act of you know, you want Congress to give enough flexibility to the department so they can use the money effectively and not make bad decisions or rushed decisions or inefficient decisions. You also want to give Congress enough insight to conduct effective oversight to make sure the money is being used wisely. So it is a balancing act. And you know, I’m hopeful the commission will really look at this hard and try to figure out how do we strike a new balance that actually works in today’s technological environment.

Tom Temin: And what we have you, you mentioned you’ll be doing research and analysis and budgetary types of work for Meta, what does Meta do?

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Todd Harrison: Well, Meta is a pretty diversified—

Tom Temin: We should say Meta Aerospace. Because there’s another company called Meta, we don’t want to be confused with them.

Todd Harrison: Yeah, yeah. It’s not Facebook, no relationship. No, Meta Aerospace does a lot of different things. And, you know, the core business is basically providing effects as a service for defense. And, you know, that’s in a lot of different areas. I mean, one example is airborne ISR, you know, delivering that as a service. So you buy it by the hour, or aerial refueling as a service, they’re already doing that today, you know, with their own fleet of tankers that they operate, maintain themselves, and then can just deliver that by the hour, by the pound of fuel to the customer, as required. Also got business units, you know, in a lot of different areas, looking at simulation, AI, lots of things. So it’s a pretty diversified company. And that’s, that’s what makes it exciting to me to be coming in where, you know, there are a lot of potential avenues that my research can end up going.

Tom Temin: Just make sure I understood you. The company owns aircraft that can refuel military airplanes?

Todd Harrison: Yes.

Tom Temin: Why doesn’t the Air Force buy those? Whatever they are?

Todd Harrison: That is a good question. The Navy already buys the service. It’s a very good question. Why hasn’t the Air Force started doing what the Navy has been doing for quite a while in using aerial refueling as a service to supplement their own organic capabilities?

Tom Temin: And if you refuel a really big plane, do you get a set of cocktail glasses?

Todd Harrison: You know, that I don’t know. But I still want to try to finagle a ride on one of the planes and sit back there with the boom operator.

Tom Temin: All right, well send us pictures if you do. Defense analyst Todd Harrison is now senior vice president of Meta Aerospace. Thanks so much for joining me.

Todd Harrison: Thank you and hope to be in touch.

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