Pentagon’s ponderous budget process is next target for Congressional reform

After having spent several years tinkering with the Defense Department’s acquisition rules, Congress is turning its attention to one of the other main factors that bogs down the DoD procurement system: The byzantine apparatus the Pentagon and lawmakers use to actually fund each military program.

In the crosshairs is what’s known as the Planning, Programming, Budgeting and Execution (PPBE) process, an early Cold War-era construct that, translated to the modern era, means Defense officials usually wait at least two years after they realize they need a new technology before money arrives to start solving the problem.

The 2022 Defense authorization bill President Joe Biden signed this week contains two separate provisions aimed at tackling the PPBE predicament. One sets up an expert commission to take the current process apart and come up with alternatives. A second orders DoD itself to create a plan to consolidate all of the IT systems it uses to plan and execute its budget.

The current stringent, timeline-focused process has its roots in the late 1950s and early 1960s, when Defense reformers, including former Secretary Robert McNamara, were centralizing the Pentagon’s control over the military services and applying then-modern management techniques to run the world’s biggest bureaucracy.

“And one of the relics of those days gone by is the current DoD budget process,” Sen. Jack Reed, the chairman of the Senate Armed Services Committee said at a hearing earlier this year. “It was a product of McNamara, the Whiz Kids, and I can assure you those Whiz Kids are not kids anymore. It is 70 years.”

Under the new law, the new commission will start to take shape in February, and will have until September 2023 to deliver a final report to Congress and the Defense secretary. Its 14 members will be chosen by Defense Secretary Lloyd Austin, top House and Senate leaders, and the chairmen and ranking members of each of the congressional defense committees.

The long time horizon may have something to do with the fact that the commission’s task is massive. Its members, each of whom must be experts on budgeting or management, are being told to examine DoD’s current budgeting processes from top to bottom, and then compare them against other federal agencies, private sector companies, and other countries.

And it’s not just the process of drawing up budgets the commission will concern itself with. After all, that’s only the “B” in PPBE. It’ll also be tasked with scrutinizing the scrupulous, bureaucratic steps that start long before each year’s budget proposal, including the defense planning guidance and program objective memoranda (POMs) that eventually work their way into dollar figures for DoD planners and lawmakers to make decisions about how much to spend on each program.

Defense experts both in and outside of the Pentagon tend to believe the rule-intensive complexity involved in planning and requesting funding for DoD programs is one of the biggest impediments to speedy procurements, perhaps even more than the government’s acquisition rules themselves.

“Let’s say you find a great prototype someplace and you want to buy it. Well, did you have the foresight two years ago to plan it into your POM? If you didn’t, guess what? You have no authority to buy it,” Heidi Shyu, the undersecretary of Defense for Research and Engineering said in a recent interview with Federal News Network. “And let’s say you’re going to plan it into your POM. Well, in two years time, maybe you’ll get the money, but the technology is already several years old. The PPBE process is too sequential, too linear, too old-fashioned. It works really well if you’re moving at a very slow, very methodical, very risk-averse pace. But in today’s world, when competition against your adversaries is key, it’s got to change.”

And by some estimates, getting a new technology or product funded under the current system within two years is actually pretty optimistic.

In a February research paper, co-authors Bill Greenwalt and Dan Patt concluded the “best case” scenario under the PPBE process is actually more like seven years. That “best case” assumes DoD is using new, faster acquisition techniques like other transaction authority or middle-tier acquisition, getting money on contract almost as soon as it receives it, and getting Congressional appropriations on time instead of operating under a continuing resolution.

Under those circumstances, PPBE processes — not acquisition rules — are actually the “pacing element(s)” in DoD technology development, they wrote.

“The PPBE and accompanying appropriations process is the glue that holds the other elements of the process triad together and must be a priority for reevaluation,” according to the paper, published by the Hudson Institute. “These elements require that the DoD document any planned new capabilities, forecast milestones, and system performance years in advance. U.S. innovation time is lengthening in large part because of delays before production starts: In conceptualization, requirements, planning, and acquisition processes, and are driven in large part by the structure of the U.S. resource allocation process. Understanding these processes provides the motivation for reform.”

Officially, the new panel will be called the Commission on Planning, Programming, Budgeting, and Execution but it’s customary to name Congressionally-chartered expert groups after the section of the NDAA that created them, which would make this one the “Section 1004 Panel.”

A similarly-structured commission, the Section 809 Panel, which Congress created in 2015 to examine DoD’s acquisition regulations, also concluded that lawmakers wouldn’t achieve the streamlining they were looking for until they reformed the PPBE process. They reached that conclusion even after making 98 recommendations to Congress that focused mainly on procurement policies, dozens of which have been implemented.

One of the panel’s key diagnoses was that the three pieces of what’s often called the “Big A” acquisition system, meaning DoD’s requirements process, its budgeting mechanisms and its procurement bureaucracy, are actually three separate systems with completely different chains of command.

“Vague lines of authority and accountability result in a lack of transparency and access to accurate data. Stovepiped objectives fragment the system. Strategic objectives and investment decisions are misaligned, with execution driven by impractical timelines, strained personnel resources, and inadequate time for planning and debate,” the commission wrote in the second volume of its 2,000-page report to Congress. “To achieve its tactical and strategic goals, DoD needs to get the PPBE system right.”

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