Fixing the Pentagon's Broken Budget

Defense budget reform is not only possible—it's necessary.

Utter the word “reform” inside the Pentagon and many will roll their eyes or laugh. Initiating change to government processes and procedures invites skepticism or outright rejection, particularly within the Department of Defense. It is no surprise, then, that the Pentagon’s Planning, Programming, Budgeting, and Execution (PPBE) process has witnessed few significant changes since its creation in 1962. Defense secretaries often focus their attention on the many external crises that dominate the headlines, and shun internal reform efforts or delegate them downward. But the Pentagon’s current leadership team is determined to change that perception. With Secretary Ashton Carter at the helm and Robert Work as his deputy, now is the time to give PPBE the attention it deserves. Now is the time to enact meaningful reform.

Designed to align ends (“what”), ways (“how”) and means (“with what”), PPBE is a crucial process that builds the future military force. But despite its underpinning of the department’s subsequent activities and operations, the process has three key problems: its timeline, its analytic system to model scenarios and its supplemental funding mechanism as reflected in the Overseas Contingency Operations (OCO) account.

  1. The timeline: Each of PPBE’s four stages is designed to progress sequentially, so that the department examines the future security environment (planning), proposes programs for investment (programming), develops a detailed budget according to fiscal guidance (budgeting) and ensures compliance throughout (execution). However, not only are these sections blending together, they are also disrupted by the untimely release of civilian planning guidance to the services. Although this year is an exception (and a sign of improvement), in previous years the department’s guidance has been delayed by months, allowing the services to prioritize their own programs at the expense of the broader military.
  2. The analytic system: Modeling scenarios to design and test the force necessitates a common baseline among the department’s analysis community, and a robust forum in which the various actors can debate their assumptions, constraints and objectives. In practice, however, neither one exists. Although there is agreement among the department’s agencies and components on these elements at the strategic level, when one delves deeper into the details, that shared understanding disintegrates. Likewise, the individual services maintain analytic capabilities that are much larger and more extensive than those available to a central forum such as the Joint Staff.
  3. OCO: Once upon a time, OCO provided additional resources to the department to fund unforeseen crises or wars. It was used in a responsible manner as a supplement to the base budget, particularly during the height of the wars in Afghanistan and Iraq. Over the past few years, however, OCO is funding programs well beyond its intended parameters. It is largely described as a “gimmick” and now incorporates items that would customarily have been included in the base budget, including operations and maintenance funding, as well as overseas bases that will remain in service following the conclusion of the wars in Afghanistan and Iraq.

With deep discrepancies between PPBE’s theory and practice, it is natural to ask why these problems exist. There are three explanations: the current fiscal environment, bureaucratic interests and peripheral authority.

Pages