Is the Pentagon spending all it can to stay competitive?

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The National Defense Strategy stresses the possibility of what planners call high intensity warfare with peer nations, presumably Russia or China. But do the Defense Department’s spending priorities reflect the need to modernize its forces such that it could defeat those nations? That’s what data analysts at Govini sought to find out. Govini CEO Tara Murphy Dougherty joined Federal Drive with Tom Temin to share what they discovered.

Interview transcript:

Tom Temin: Ms. Dougherty, good to have you back.

Tara Murphy Dougherty: Thank you, Tom. It’s great to be back.

Tom Temin: Now these detailed scorecards, it runs quite a number of pages. Give us the top line of what it was you were discovering and what you did find.

Tara Murphy Dougherty: Absolutely. So Govini’s 2020 federal scorecard is our assessment of the President’s Budget Request for the most recent year, fiscal year ’21. And as you mentioned, we took a particular look this year at whether the Department of Defense is investing in modernization priorities and the accounts, technologies and activities that support and position the United States to successfully execute a high intensity war should it need to. What we found overall is that moves this year in the fiscal year ’21 budget are very strong. The decisions the department is making about financial allocations are exactly what we would want to see for NDS – National Defense Strategy – implementation. The rub comes in the out years. So the way the Department of Defense budgets, as you know, is over a five-year time period called the Future Years Defense Program or FYDP as we talked about, and while we see an initial surge in investments in modernization priorities in fiscal year ’21, we don’t see those investments sustained over that five-year spending plan. That’s concerning in terms of actually following through and delivering on what should be according to Secretary Esper, irreversible implementation of the National Defense Strategy priorities.

Tom Temin: Well, let’s back up for just a moment. What are some of the programs, platforms, troop levels and so forth, that would indicate investment in this strategy, at least in the first year?

Tara Murphy Dougherty: Yeah, so the way that Govini tackles this problem is fairly unique. And I think the reason that we’re able to surface granular insights along the lines of what you’re asking is because we use data science and machine learning, rather than or in addition to qualitative research, in order to really understand across this more than $700 billion budget, where is that money going? So we created a taxonomy of National Defense Strategy modernization priorities that looked specifically at the department’s investment budget for fiscal year ’21. And that investment budget looks at research development. Testing evaluation, the RDT&E account as well as the procurement account. And what we find in terms of where the dollars are going that demonstrate that really positive move in this initial year is investments in things like advanced autonomous systems. In particular, we see that unmanned surface platforms and unmanned ground platforms have significant rises in investment. There’s also more money going toward key emerging technologies like artificial intelligence and hypersonics. Another notable field is the area of nuclear modernization. And there there has been significant increase to $10 billion going toward recapitalisation of the nuclear enterprise this year alone, and that number is going to increase over the next five years. That’s one area where we do see those investments sustained.

Tom Temin: Got it. And if you add up all of those things and, even including the nuclear investment, nevertheless they’re not giant portions of the entire $700-plus billion that is budgeted, are they?

Tara Murphy Dougherty: No, you’re right, Tom. That’s a really good point. And what we see and I think this ties into why the investments in modernization are not sustained through that five-year term is we see continued rises in two key accounts that are not part of the investment budget: Personnel, and operations and maintenance. And as those two accounts continue to rise, it’s going to put increased pressure on DoD to find funding in order to put toward these modernization priorities. So if you have nuclear recapitalisation eating up a significant portion of the overall available budget for modernization, and you have the continuing increases in personnel and O&M accounts, the trade offs become really hard and the overall pool of funding available – shrink significantly.

Tom Temin: We’re speaking with Tara Murphy Dougherty. She’s the CEO of Govini. So then the question becomes, do those things that require so much maintenance and operational budgets to keep them sustained – I’m thinking of, I guess the quintessential one would be aircraft carriers or old bombers and that kind of thing. Would they nevertheless have a role in the so-called high intensity warfare, as DoD envisions it? And therefore, even though they’re big ticket items, and seem to keep old things going, they would still be used in high intensity warfare?

Tara Murphy Dougherty: Yes, absolutely. And we’re seeing continued investment in platforms like the F-35, which is a great example of a manned platform primarily that is also a next generation capability. And there are multiple variants that will have a broad swath of missions, and will play an important role in a high intensity warfare. There are a number of legacy platforms where the department is moving funding away from the forces of old. And that’s exactly where they are freeing up money to put into new efforts. We also see the department taking steps to think about warfare entirely differently. And a great example of this that really manifests for the first time in the fiscal year ’21 budget is Space Force. So there’s relatively modest funding put towards Space Force this year. I think it’s just a 1% increase from last year to this year in the budget, appears in the Air Force’s account, of course, but the planned increases over the five-year period start to ramp up significantly, and peak at almost $13 billion in fiscal year 2024. So you can see that the department’s thinking not just about what are the weapon systems and planning forms that we need to execute this war, but what are the domains that we need to be fighting in? And what does that mean for other types of investments in capabilities?

Tom Temin: So primarily, the far future of warfare looks to be in the funding standpoint as what they often say that it is, and not massed troop battles of millions of people on the field, but more projected force autonomously and intelligently?

Tara Murphy Dougherty: Yes, that’s true. And you see this, the Army, for example, obviously, provides the ground forces for the department and they took an overall decrease in their top line budget this year. And that too, is a shift or a demonstration of the shift in the way that DoD is thinking about war and what war with great power competitors such as China and Russia, as you mentioned earlier, will look like. I think one of the things that DoD will have to do in order to make these really hard trade offs and think about whether they want to invest in ground forces versus other capabilities. And even within modernized capabilities, where money goes toward maybe quantum but not hypersonics. These are the kind of decisions that God is going to have to grapple with, as it’s likely that the department will not see a continually increasing overall top line and in fact, could in the near future face significant budget cuts, they’re going to have to take a really hard look at the budget in this data driven way. And not just think about the world through the lens of one particular program as a budgetary silo, or a broad qualitative analysis of trends.

Tom Temin: And if you expand this to the larger picture, Govini has access to the data budget documents that pretty much anyone that wants to take home, thousands of pages of spreadsheets, I guess, can do. And therefore, you know, so can China, so can Russia – who knows they might have even taken your algorithms for all, you know, can? Can you do this? Can anyone do this on the Chinese military budget or the Russian or Indian? Or, you know, there’s lots of countries that have lots of capabilities are such that we know as much about their detail as they know, presumably about ours.

Tara Murphy Dougherty: Absolutely. This is the crux of the American values around transparency, and they are important and core to who we are as a country that there is accountability of the federal government through the distribution and publication of information such as not just this year’s budget, but what we plan to spend money on in the future. Now, of course, there is a classified budget, but we know that overall that’s a relatively modest portion of the Federal total federal spending. And in fact, the data is available, what’s difficult about the data and you hit on exactly it by referencing the thousand pages of spreadsheets except it’s not even that good. They’re not all in spreadsheets. And so I think getting meaning out of this information is possible, but not straightforward. And it’s a great snapshot or example of the overall data challenge that the Department of Defense, but also many large enterprises face, which is the data is not necessarily in a format that lends itself toward analysis of data at scale. So that information, some of it’s in Excel spreadsheets, some of it is in more machine readable formats, such as XML, but some of it is just text – unstructured text in PDF documents. And it’s really the use of machine learning capabilities such as natural language processing that allow you to parse that information at scale and make meaning of it. I think we are doing a better job of this overall as defense sector. Certainly, I believe, given he’s leading the charge there. And we can definitely use that kind of technology to understand what our allies and partners are doing as well as our adversaries, it comes down to a question of how much information they are sharing, and what we can get our hands on to analyze.

Tom Temin: And we should mention that former Deputy Secretary Bob Work is now the chairman of Govini. And he must come in and see what you do and say to himself, “Gosh, how do we ever run this place – the Defense Department – with the level of data scattered all over the place like it was or is?”

Tara Murphy Dougherty: I think he’d be very much in agreement with the way that you just summarized his views. And yes, I’m absolutely thrilled about the news and thrilled to have Bob as our chairman now. You know, Secretary Work has been a phenomenal leader in this field from his past military career to his role as Undersecretary of the Navy to, of course, Deputy Secretary of Defense, and we’re thrilled to have him play a larger role in our organization. He, I think, sees the taxonomy approach in particular that Govini’s been able to develop through our application of data science as something that fills a particular need within the department that he felt in a serious way, particularly as deputy where he was charged with looking across the entire defense enterprise and really grappling with those investment questions.

Tom Temin: Tara Murphy Doherty is the CEO of Govini. As always, thanks so much for joining me.

Tara Murphy Dougherty:  Thank you, Tom.

Tom Temin: We’ll post this interview along with a link to the latest scorecard at Hear the Federal Drive on demand. Subscribe at Apple Podcasts or Podcastone.

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