The Pentagon and North Korea are the last bastions of Soviet-style central planning left in the world. The Planning, Programming, and Budget System (PPBS) system was brought to DOD in 1961 courtesy of the “best and the brightest” of the Kennedy administration…
This environment made it easier to adopt central planning practices, but business also had a role to play. In the 1950s, industry was adopting systems analysis and experimenting with management approaches that would allow central office bureaucrats to micromanage an organization and its programs to theoretically greater levels of efficiency and output. From Ford Motor Company, Secretary McNamara would bring to the Pentagon the “best business practices” of the day and a mindset that would bankrupt the auto industry less than two decades later. Program budgeting, once adopted at DOD, would then languish unchanged for 60 years except to replace the “S” in PPBS with an “E” for execution in 2003.
That was the excellent Bill Greenwalt writing at the American Enterprise Institute’s blog. He’s following up on the GMU budget reform panel event from August 19 and associated white paper. I’m glad Bill puts the situation in such stark terms because it is true when looking at it from the historical and economic perspective.
While in my mind, the PPBS and systems analysis approach from McNamara’s whiz kids came more from RAND than the private sector like automotive companies, I think the waterfall planning processes were a general fetish at the time and contributed to the demise of American competitiveness in the manufacturing sector just a few years later. Japanese models of lean manufacturing were a complete contrast to “scientific management” approaches. Luckily, PPBS-style control processes dominant in government and large corporations didn’t stop United States startups from using agile and lean methodologies to create new sectors like computers and software where most of American growth has come from.
Here’s a bit more from Bill:
Hopefully, GMU’s paper will start a dialogue about our current defense budget process and how it hampers the acquisition process by negatively impacting development time, innovation, and the consideration of new ideas and concepts. It couldn’t be a moment too soon as future DOD programs are now approaching an eight-year morass to move through the requirements, planning, and program budgeting processes to go from good idea to first obligation of funds in the form of a signed contract. China delivers tangible capability to its forces in five-seven years while we are still moving paper. It doesn’t take a rocket scientist to figure out who is going to win that kind of competition.
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