Pentagon needs a six-pillar foundation

The defense budgeting system is more reflective of Soviet-era bureaucratic structures than the vibrant U.S. capitalist model. As illuminated in multiple studies and papers, this antiquated budget system has produced a Joint Force that is rapidly losing its military advantage to advanced peer rivals like China and Russia. More specifically, the current Planning, Programming, Budgeting, and Execution (PPBE) system isn’t timely, strategically aligned, responsive, or transparent.

Currently, it takes up to three years for DOD to generate the annual defense budget and for Congress to review and appropriate funding. This prevents DOD from focusing investments on new priorities, countering emerging threats, or taking advantage of innovative technologies.

The current PPBE system attempts to reconcile Combatant Command “fight tonight” needs with strategic, longer-term investments — but more often fails at both. Defense budgets are often misaligned with strategy, with readiness and capacity being prioritized over much needed modernization. 

The system constrains DOD’s ability to maximize resources and prevent the “valley of death” syndrome by requiring baselined acquisition programs, over-prescribing discrete efforts, using regimented research budget activities, employing multiple appropriations, and applying numerous procurement restrictions.

And finally, it incentivizes budgetary processes that are overly opaque, such as unnecessarily classifying information necessary for decision-making. And DOD communicates with Congress using heavily scripted testimony, responses, and briefings — often to the great frustration of congressional staffs.

The good news is the FY22 National Defense Authorization Act authorized the establishment of a PPBE Commission. This independent body will assess the current challenges and develop budget process recommendations that will better deliver the “operational capabilities necessary to outpace near-peer competitors … and support an integrated budget that is aligned with strategic defense objectives.”

We recommend the commission develop recommendations for a modern defense budget with the following six pillars as the foundation:

Pillar #1 – Be strategy-focused

DOD will soon release an updated National Defense Strategy. It’s imperative that the budget align investments with this strategy. Budget deliberations should avoid fixating on minutiae and instead focus on collective investments that provide enduring military advantage to the Joint Force — and create dilemmas for our adversaries.

Pillar #2 – Embrace early collaboration

Just as the commercial sector has learned to embrace collaboration as an effective business-building strategy, senior Joint Service leaders must end the prevailing zero-sum thinking. Doing this requires building continuous dialogue into the process before finalizing budgets.

Pillar #3 – Strive for balanced transparency and action

The intricate level of detail in budget submissions imposes significant time burdens on defense and congressional reviewers, leaving them with poor insight into the issues. Congress has already called for modernizing the process. The modern budget must improve transparency and provide more useful, succinct, and timely information.

Pillar #4 – Shift to value-focused oversight

For decades, a risk-averse culture has dominated defense acquisition. DOD’s byzantine systems demand compliance with cost, schedule and performance baselines. These predictive metrics offer a tempting way to gauge progress and maintain a sense of control. However, despite years of employing this system, acquisition outcomes have not markedly improved. Therefore, oversight must shift from emphasizing conformance to focusing on achieved value. While value will be measured differently for different goods, the focus should be on mission impact relative to investment.

Pillar #5 – View flexibility as a virtue

It’s worth remembering that debates about the level of budget flexibility granted to the Executive Branch date back to the Founding Fathers. Prior to 1962, only defense procurement numbers required congressional authorization. But over the last decade, both authorization and appropriation bills have tripled in size. With the appropriate level of transparency and insight, decision-makers should view flexibility as a virtue to enable more efficient allocation of resources, ease the adoption of new technologies, and respond more rapidly and effectively to new threats.

Pillar #6 – Empower accountability

The modern budget system must promote interactions with acquisition officials closest to the execution level. It must hold these officials accountable while also empowering them with a more public voice. This approach also will provide decision-makers with the most current and nuanced information available.

The United States is currently losing the military-technical competition with China and Russia. The Pentagon needs a major budgeting renovation including bold reforms if we’re to provide the Joint Force the military advantage it needs to deter, and if necessary, defeat our nation’s adversaries.

Matt MacGregor is a subject matter expert on acquisition within MITRE’s Center for Acquisition and Management Sciences and a space operations engineer in the Air Force Reserves. For 21 years, he has been a military and civil service program manager, including the F-35 deputy program manager. His last five years in government before joining MITRE were at the Pentagon, where he served as a division chief in multiple headquarters’ acquisition roles.

Pete Modigliani is MITRE’s software acquisition lead for the Office of the Undersecretary of Defense for Acquisition and Sustainment. For 24 years, he has been championing strategic acquisition reforms and digital transformations across the Department of Defense and the Intelligence Community. He is a former Air Force program manager and a former assistant vice president at Alion Science.

Greg Grant is a senior principal for MITRE’s National Security Sector and an adjunct senior fellow at the Center for a New American Security. Previously, he was senior director of strategy at Defense Innovation Unit, and he also served as special assistant to Deputy Secretary of Defense Robert Work, helping him develop the department’s “Third Offset Strategy.”