Next-Generation Defense Budgeting Project
Military Modernization Limited by Industrial Age Budgeting
The United States risks losing its military advantage over rapidly advancing adversaries, in no small part because the Department of Defense (DoD) and the national security community are unable to make effective and timely investment decisions. This issue underlies DoD’s well-known challenges in transitioning emerging science and technology and commercial technologies into warfighting capabilities. At the heart of these challenges are industrial age resource allocation processes, namely the Department’s Planning, Programming, Budgeting, and Execution (PPBE) system, which allocates resources years in advance, establishes categories for use of funds, sets the lens for congressional oversight, and has limited execution-year flexibility. While the PPBE system may be suitable for making long-term capital investments like aircraft carriers, these multi-year budgeting activities represent significant barriers to adopting emerging technology solutions in an era of a digitally-defined battlefield that requires joint operations. Simply said, technologies are evolving quicker than the US government’s decision-making processes will allow the US military to modernize.
The ability to integrate and operationalize new technologies will likely determine success on the future battlefield. While DoD and the U.S. Government remain significant investors in R&D, the US private sector’s investment in R&D has grown to be five times that of the US Government forcing the DoD to become a savvy consumer and adopter of commercial technologies to compete globally. The challenges of bringing new technology providers under contract for operational capability are often discussed, but the current PPBE process is inconsistent with commercial timelines. DoD needs to maintain access to these cutting-edge businesses to ensure that the warfighting capabilities it delivers are relevant and remain relevant.
A prime example of where alternative resource allocation processes will be required is the Joint All Domain Command and Control effort where the Department will need to experiment with many different technologies in a portfolio approach that selects the best solutions then quickly integrates and scales them into a combat C2 capability. Transforming future concepts of operations into actionable decisions and resources may require a new construct that abandons the legacy lifecycle funding model where a technology slowly moves from research, development, test, and evaluation (RDT&E) to procurement, and concludes with operations and maintenance (O&M). The Department may need resource allocation mechanisms that can timely move funds to capture technology solutions and move them quickly from concept to fielded capability. This approach also forces a reevaluation of how DoD conducts oversight and management.
With flexibility must come transparency and accountability. Digital transparency is the key to effective oversight of contemporary commercial resource allocation systems. By contrast, the DoD currently relies on manual data calls with results distributed across multiple enterprise information systems to justify its budget to Congress. These documents do not share common reference points enabling Congress to understand the value being generated by numerous disparate efforts. Congress has indicated their concern with the current approach by including a provision in the last National Defense Authorization Act (NDAA) to require the Department to modernize its systems. Concurrent with this update, DoD needs to explore how it builds leadership accountability into the resourcing process.
Check out our review of literature that explores aspects of resource allocation reform’s vital role in modernizing the U.S. military
The Day One Project conducted a whiteboarding session with 20 PPBE experts. View our list of questions about the financial barriers to DoD’s efforts to modernize the U.S. military.
View the congressional language on a PPBE Reform Commission passed in the FY 2022 National Defense Authorization Act