Does budget reform comply with the 10 rules for good reform?

Here is the insightful Peter Levine providing us 10 rules for reforming the Department of Defense:

I’ve watched as every secretary of defense has sought to streamline and improve management at the Department of Defense. And yet, the consensus is that the Pentagon remains trapped by outdated systems and a culture that make it almost impervious to streamlining and innovation. While some of the reform efforts have been more successful than others, many have failed because they overlooked simple and obvious rules…

 

Rule 1: Nobody gets to start with a clean sheet of paper.

Rule 2: If it sounds easy, it has already been tried.

Rule 3: Never overlook what is working.

Rule 4: There are no “perfect solutions,” only competing priorities.

Rule 5: One-size-fits-all approaches rarely work.

Rule 6: The best-designed reforms take a well-defined subset of problems, identify root causes, and develop focused solutions.

Rule 7: Legislation alone doesn’t solve anything.

Rule 8: Don’t try to take on too much.

Rule 9: Nobody in the Pentagon follows orders.

Rule 10: The most effective reform initiatives build broad support, address organizational alignment and individual incentives, and are driven by continuous engagement of senior officials.

Read the whole thing for commentary and context on each of the rules. I think the set of rules are pretty sound. Let’s see whether movement away from a program budget would meet each rule.

1. New budget appropriations would form around existing organizations (e.g., SYSCOMs and COCOMs) and would target a similar amount of funding that had flowed through the previous program structure. No radical changes in organization or programs would happen immediately.
2. Changing budget appropriations doesn’t sound easy. And it has been tried only in the direction of replacing traditional budgets with program-oriented budgets (in 1949 and 1961), never the other way.
3. Perhaps procurement accounts for major items still require congressional programming. That may be working. But what is working in R&D seems to be more agile processes which is completely thwarted by the budget process.
4. Changing the budget is not a silver bullet. Indeed, Congress and the public will have to hold the DOD accountable using after-the-fact controls, which means rather than focusing on hopes and dreams in future budgets, there will need to be better program cost actuals and test reports. The capability to track what has actually happened to programs will have to be built up in lieu of tracking what the DOD promises from its programs.
5. Currently, the DOD has a one-size-fits-all approach to budgeting. It takes 2 or 3 years to program the budget for not just major platforms, but small software projects too. Incrementally moving toward an organizational budget would allow small rapid projects to be treated rapidly, and large platform procurements to be programmed by Congress.
6. The budget process adversely affects almost all aspects of the defense acquisition process. It is the common thread underlying many problems.
7. Legislation is required to change the categories of budget appropriations. But it will also take a culture change to move toward incremental decisions, rather than planning every detail of a major program that will last 5-10 years up-front. Some programs will need more attention in requirements and stakeholder buy-in. Others benefit from trial-and-error approaches.
8. I wouldn’t advocate doing too much, like changing all appropriations in a single year. Rather, incrementally move that way. For example, the S&T budget activities (BA 6.1 – 6.3) are ripe for moving to a organizational budget, where they can make faster decisions that accompany the growth of knowledge. Then, cautiously expand into certain SYSCOMs for R&D, providing them untrammeled R&D funding, and so forth.
9. It might be that no one in the Pentagon follows orders because they don’t have a say in those orders, which were devised by persons with no responsibility for program success. Program managers would certainly find benefit in an organizational-style budget, but may drag their feet on providing cost actuals and other performance metrics. Rather than relying on singular metrics devised by top management, PMs should actively participate and tailor performance metrics.
10. There is not yet broad support for an organizational budget, perhaps because every person working in the DOD today has grown up under the rigid program budget process (PPBE process). Indeed, we cannot expect broad support from the DOD bureaucracies, whose existence depends on the continuation of unproductive processes. It would imply a reduction in the number of “checkers” and an increase in the “doers,” as Adm. Rickover would say. These “checkers” have built all of their human capital around checking, not doing. You’d have to break a few eggs to make this omelette. Yet… there is broad agreement on the idea that the acquisition process has to go faster, and clearly, the budget is the biggest impediment to speed, learning, and trial-and-error. I would expect, however, that the class of Program Managers and PEOs would provide broad support to an organizational budget — it provides them additional flexibility in decision-making. The hard sell would be Congressmen, who prefer to tell the DOD what they will be doing rather than evaluate the DOD on how they’ve actually performed. Perhaps that has to do with dictating the distribution of funding to districts and states.