The myth of program funding stability

So why is this so hard? For years, the acquisition community has been saying program and funding stability are essential to acquisition reform. To that end, the Department of Defense leadership has consistently directed and encouraged acquisition practitioners to ensure program and funding stability. And yet, after all the repeated emphasis, the acquisition community has not been able to meet this goal.

 

… The current Planning, Programming, Budgeting and Execution (PPBE) process seems to compound funding instability even more. Under current guidelines for Program Objective Memorandum (POM) development, Total Obligation Authority (TOA) controls are provided by the Office of the Secretary of Defense (OSD) to the military departments. As a POM is developed by the military departments, programs are prioritized and funded such that available TOA at that control number is allocated to programs. As that is done for each year in the Future Years Defense Plan (FYDP), the completed POM contains programs that consume all available TOA for all FYDP years. That POM is then forwarded to OSD for the joint Cost Assessment and Program Evaluation /Comptroller program and budget reviews. These reviews result in OSD generated Resource Management Decisions (RMD) that promulgate senior OSD-level decisions to adjust the FYDP input accordingly in a zero sum construct. In other words, if additional program funding is added to one program in an RMD, then an associated offset is applied to other programs. At the end of the OSD/OMB reviews, decisions and associated funding levels in the FYDP are rolled into the President’s Budget (PB). Hence, the PB FYDP reflects programs that consume the total available TOA for each FYDP year.

 

But wait, was the appropriation amount the number needed to execute the program? Did we not mention program adjustments were potentially made at all levels between the program office and the appropriation (Program Executive Office [PEO], Service Headquarters, OSD/ OMB, two authorization committees and one authorization conference committee, two appropriation committees and the Appropriation Conference Committee, and maybe a major subordinate command included for good measure)? The result of all these adjustments could be the addition or deletion of funds to programs. So the resultant funding available for obligation may be significantly different than what was requested months before at the start of the budget process. These funding levels may force a technical adjustment and/or a restructure. Each one of the individual increases or decreases to a program budget request resulted in the program office responding with appeals and program “what if” drills. At the end of the day, decisions are made at all levels to provide the most “bang for the buck” and to balance the books; many, many programs are impacted, some positively and some negatively. So what happened to program stability?

That was an excellent article in the ARJ from Robert Morig, “Acquisition Program Funding Stability – A Myth.” Another problem of this process is that the uncertainty may lead program managers to justify as high a budget as feasible to compensate for probable decrements.