For years, I’ve been arguing that the budget process is the single most important problem of acquisition reform. We still have in place what is essentially the same Soviet-style 5-year planning process installed by Robert McNamara in 1961.
Currently, funds are locked into programs devised 2 or 3 years earlier by unaccountable persons. We must move away from funding specific programs or technologies and toward funding organizations or missions. This allows funding to be flexibly redirected to alternative projects as information grows. The conclusion is based on deep historical and economic research. (By the way, my other reform interest areas are cost/pricing and workforce).
I have started a wireframe compilation of quotes and resources for thinking about budget reform. It is a standalone page on this website. Currently, there are four sections:
- Quotes from those advocating innovation funds or technology transition accounts where dollars can be quickly redirected to promising new programs and companies without requiring a 2+ year POM cycle.
- Example: Eric Fanning. Former Secretary of the Army. Speaking to Congress on February 5, 2020.”We should also look for ways that returning to Congress doesn’t needlessly slow down development. Oversight is critical, but technology moves faster than our budget process. For example, program managers and PEOs might be given wider flexibility for program spending in the early phases when they are still defining costs.”
- Quotes from those advocating for a broader budget reform, not limited to that transition period. Rather this section finds advocates for organizational or mission-funded budget accounts. For example, a Program Executive Office, which usually represents a mission, may have a single account. It can then manage its portfolio of programs real-time by diverting funds based on updated information.
- Example: Pierre Sprey. Testimony to Congress in 1971: “If it is possible to arrange funding in such a way that you work under fixed pots, as I call them, for each service or perhaps even better for each mission that the Congress and the administration wishes to see accomplished, then I think you have created the atmosphere in which a service can properly judge the extent to which they want to trade simplicity and low cost versus complexity and small numbers.”
- Quotes about the difficulties of the program budget process, or the Planning, Programming, Budgeting, Execution (PPBE) process. These quotes do not make recommendations listed above. But they point to the challenges that exist.
- Example: Trae Stephens: Founders Fund and Anduril board. Said at a Defense News roundtable: “If you can’t figure out this out of cycle funding for companies, then you’re just going to get stuck in this multiyear budgeting process that, due to it’s very nature is biased toward the integrators that have been playing the game long term.”
- Articles and posts — mostly that I have written — advocating budget reform. I plan to create a different “Reading List” page which will include books and resources on budget reform, but also a slew of other topics.
If you come across good references that should be added to my list, please send them my way! Also, any comments or constructive criticism is welcome.
For years, acquisition reform has focused on the requirements process (e.g., JUONs), milestone review process (e.g., middle-tier), and contracting process (e.g., Other Transactions). Besides changes to annual vs. biennial budgeting, and zero-based budgeting, budget reform has skated by since 1961 without change. Let’s make 2020 the year of budget reform!
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