PPBE Reform Commission

‘Wake up call’: Panel identifies 5 ‘key’ ways Pentagon can reform budget process now

Breaking Defense article by Michael Marrow, 15 August 2023

The Pentagon should institute five “key” reforms “now,” ranging from mid-year budget briefings to consolidating some spending line items, to begin to fix its cumbersome budget process, according to a new report from a congressionally-mandated bipartisan commission.

The Commission on Planning, Programming, Budgeting and Execution (PPBE) Reform’s 200-page interim report [PDF] recommends a total of 13 immediate reforms, as well as 10 that will need more feedback from stakeholders before the group releases its final report in March 2024. Some of those reforms needing greater input include potentially bigger ticket items, like the possibility of altering reprogramming policies or enabling some funds to carry over into a second fiscal year rather than the current “use it or lose it” policy.

In addition to the mid-year budget briefings and spending line consolidation, the committee recommends three other key actions: speeding up the consolidation of data systems used by the Pentagon’s comptroller and Cost Assessment and Program Evaluation (CAPE) office; establishing classified and unclassified “enclaves” that can more easily facilitate electronic information sharing on the budget between Congress and the Pentagon; and boosting recruiting and retention of PPBE personnel.

“I think sometimes people get confused that the PPBE commission is all about acquisition,” commission Vice Chair Ellen Lord, who previously served as the Pentagon’s top official for acquisition and sustainment, told reporters in a briefing this morning hosted by the Defense Writers Group. “That’s certainly a portion of it, the execution side, but what we’re really talking about is flowing down from the National Security Strategy, to the National Defense Strategy, to the Defense Planning Guidance. And then how do you translate that into actionable guidance, so that we really are linking our budgets to strategy.”

Criticized for years by officials for its sometimes sluggish bureaucracy and inflexible authorities, the PPBE process — a multiyear effort that forms the president’s Pentagon spending request submitted annually to Congress — is under scrutiny after lawmakers ordered the creation of the commission as part of the fiscal 2022 National Defense Authorization Act. 

Commission members are seeking ways to address years-old internal complaints and counter new external threats, such as the rise of China, where the Pentagon’s response could be stymied due to problems like difficulties in quickly fielding newer technologies. Members of the commission include former top DoD officials and industry representatives who so far have held hundreds of interviews, combed through troves of data and compared budget processes of other countries to gain insights.  

“I think that there’s a demand signal for change given what we’ve seen in Ukraine — that was a wake up call that the world’s changing around us. And then obviously, everyone has eyes on China,” Lord said. 

A critical element in the PPBE process, according to the commission, is the CAPE office — which House Republican authorizers want to abolish altogether, though that move isn’t reflected by their counterparts in the Senate.

Asked how axing CAPE might impact the budget process, Commission Chair Bob Hale, a former Pentagon comptroller, said it would be a “disaster” if CAPE were abolished absent its functions being replicated by another entity. (House authorizers’ proposed legislation directs CAPE’s responsibilities to be picked up elsewhere in the DoD.)

“We decided specifically as a commission not to take a stand on the difference between the House and the Senate on the future of CAPE. But I think the commission also agrees that the functions that CAPE provides are essential to making PPBE work,” he said.

And despite widespread appetite for reform, Hale cautioned it would likely take some time before real change takes place. 

“There’s so much going on, and some of our proposals are sufficiently far-reaching, [that] I just don’t expect we’re going to see real quick action. What I would like to see is good questions from them related to this interim report. And then hopefully, we can take those into account and provide… actionable and potentially acceptable changes to improve PPBE,” he said.

Still, there is at least verbal support from DoD leadership. Late Tuesday, Deputy Secretary of Defense Kathleen Hicks released a statement praising the work from the commission, and pledging action.

“I am directing the Department to adopt all actions that can be implemented now, as recommended by the Commission and within its purview,” Hicks said. “We look forward to working with Congress on all other proposed recommendations included in this interim report.”