DoD’s budget challenges will take years to fix, but reform commission says now’s the time to start

Federal News Network Article by Jared Serbu, 17 August 2023

The expert panel Congress assembled to find fixes to the Pentagon’s archaic planning and budgeting process won’t deliver its final prescription for reform until next spring. But its members say there are at least some steps the Defense Department and Congress should start taking right now, particularly in light of the fact that fixing what’s wrong is certain to be a years-long effort.

The Commission on Planning, Programming, Budgeting and Execution (PPBE) Reform published an interim report this week, previewing 10 of the possible recommendations it might make in its final edition next March, and urging lawmakers and DoD to start taking at least some specific steps toward improving the budget system right away.

For instance, one key area of the report focuses on streamlining the structure of the DoD budget itself. Over the past six decades, the annual submission to Congress has sprawled to thousands of individual, often relatively small line items, each explained in detail and with funding amounts more-or-less locked in once lawmakers enact an annual appropriation.

Commissioners echoed the views of outside experts in saying it’s time to consolidate at least some of those program elements into broader, more flexible portfolios. But since finding agreement between DoD and Congress on exactly which line items are acceptable to bundle together, the time to start those discussions is now.

“In the [research and development] accounts alone, there are about 1,000 of these little guys, and you’ve got to wonder whether that is so many that is difficult for DoD to manage, let alone perhaps too many for Congress to execute oversight,” Robert Hale, a former DoD chief financial officer and chairman of the commission told reporters at a gathering organized by the Defense Writers Group this week. “This has been tried before, but not successfully, because managers in DoD and certainly people in Congress want to be able to manage at the detail level — they want to see that information. So the question is whether you can restructure it to be a little more flexible for the department, but still maintain oversight.”

Commissioners believe the answer is likely yes — as long as DoD also modernizes the methods it uses to send its spending proposals to Congress.

As of now, those plans arrive on Capitol Hill once per year each February or March along with the rest of the president’s budget (though sometimes later), in thousands of pages worth of PDF files: justification books, or J-Books, in DoD budget parlance. The information in those static documents is often stale because of the numerous levels of DoD and Office of Management and Budget review the budget goes through each year before it lands on Capitol Hill, and the data Congress gets after the budget package has dropped is “episodic, sometimes late, and not always consistent with other information provided by DoD personnel,” according to the report.

To maintain congressional appropriators’ comfort level with their oversight responsibilities, commissioners said DoD should start preparing mid-year updates on its budget proposal, and also make real-time data available to lawmakers and their staffs via new “enclaves” for both classified and unclassified budget information.

“That would let DoD provide the budget electronically, but also give updates throughout the year,” said Ellen Lord, the PPBE commission’s vice chair. “I think we have a great analogy in the public sector with publicly-traded companies. They have secure enclaves to be able to transmit the most sensitive data between the company and their board of directors … there is no reason that we cannot do electronic transmission of J-books and then provide updates on a regular basis. I believe if the Hill saw that execution data — both in terms of where the budget is and the degree of completion as to the key requirements — you could really have this flexibility. You could be funding the programs that are moving along, and perhaps stopping the ones that aren’t. You’d make more time-relevant decisions and also build trust between the two groups.”

The commission believes that sort of real-time data sharing has only become feasible within the last several years, largely because of IT modernization efforts the department itself has already undertaken.

For example, Advana, the business-focused big data analytics platform Congress first mandated in 2018 is now up and running, and seen as largely successful. DoD has also made progress in consolidating and updating the IT systems used by its Cost Assessment and Program Evaluation (CAPE) organization and its comptroller’s office — the two main organizations in charge of the programming and budgeting phases of the PPBE process. This week’s report urged the department to continue — and accelerate, if at all possible — that modernization work.

Also in the near-term, the department needs to start putting more attention toward building the workforce that builds and plans its budgets each year, the commission found.

As of now, about 18% of CAPE’s positions are vacant. The Pentagon’s programming and budgeting (P/B) staff has a vacancy rate of about 12%, and loses about 16% of its workforce thorough turnover in any given year.

“These figures suggest a P/B staff that is stressed because of a heavy workload; commissioners were told that many P/B staff, especially Senior Executive Service staff, work extensive overtime, and year-round tasks leave little time for training, leave and a reasonable work-life balance,” according to this week’s report. “The commission may recommend PPBE improvements that will take effort to implement, and CAPE and P/B will have key roles in those implementation efforts, likely further exacerbating these challenges.”

Indeed, if the panel ends up recommending significant changes to the PPBE process, it’s very likely that the types of work DoD’s programming and budgeting staff are doing today will change fairly dramatically, and new training will be needed, Lord said.

“One of the biggest challenges both within the building and on the Hill is a lack of understanding about the overall budget and what we are capable of doing and not doing. That’s not surprising, because it’s huge when you’re talking about an $800 billion budget,” she said. “However, the actions and the potential recommendations that we are talking about get at a more rapid communication of the critical information that will inform decisions, perhaps without so much administrivia and work taken up on non-value added items. The changes we’re talking about, in the long run, will inform much better data analysis. And billets that were basically data entry people will be able to do more value-added tasks.”

But the weaknesses of the current PPBE system are not exactly a secret within the existing workforce. There’s strong evidence that the employees who work within the system every day have long known that change is badly needed.

A survey by the Association of Military Comptrollers, conducted in late 2022, found that 64% of the department’s financial management professionals think the J-Book process moves so slowly that budget information is out of date by the time Congress sees it, and 71% think the PPBE process keeps DoD from changing its spending priorities quickly enough to adopt new technologies that would meet its mission needs.

“When you’re actually in the trenches and you see clear opportunities to optimize your organization’s spending, but you’re powerless do to it because of the degree of micromanagement at the appropriation level, that’s not surprising,” said Cameron Holt, a retired Air Force major general who formerly led that service’s contracting operations and now serves on an ASMC task force that’s also examining the PPBE process. “If a program executive officer is trying to negotiate between two different weapons, shouldn’t they be able to optimize the money to buy the best-value result in real time, without an act of Congress? I think that’s why you’re seeing a groundswell of practitioners saying we’ve got to change. They’re watching technology walk out the door, and they can’t do anything about it.”