Please join me in a special Mason GovCon webinar event on the future of budget reform on Wednesday, Aug. 19 at 2:30pm EST. Why the budget? Because it is intimately tied up with the rate of DoD progress in developing new technologies and CONOPS. It will feature three amazing panelists:
Bob Daigle (Former Director of Cost Assessment & Program Evaluation)
Bill Greenwalt (Former Deputy Undersecretary of Defense for Industrial Policy)
Here’s the description: The budget process is the “master controller” of virtually everything that is done in the Department of Defense, yet it hasn’t seen real reform since 1961. The current “waterfall” process from the industrial era requires prediction and control of programs from two years out, and then locks them in for five or more years into the future. Defense acquisition studies have repeatedly asserted the need to move away from program-centric stovepipes and toward portfolio-centric management. Yet half of all Research, Development, Test & Evaluation programs proposed for FY2021 are less than $29 million, with limited flexibility to take advantage of new opportunities. Join us for a conversation about a constructive proposal for addressing the next frontier of acquisition reform: the budget process.
And some updates on the budget scene more generally:
(1) The HAC-D cut $506M (~50%) from the Next-Gen Air Dominance program, and increased F-35 procurement by $1.2B. Part of a larger 4% cut ($1.4B) from Air Force RDT&E as punishment for the 2019-2020 border wall reprogramming. HAC-D denied USAF shifting $955M into portfolio-centric prototyping program elements (PEs).
(2) What’s going on with the border wall reprogramming?
– $2.5B transferred from DoD in 2019 and $3.8B on Feb 13, 2020.
– Debate on legality:
(a) DoD is allowed to reprogram between PEs within an appropriation so long as it is under the threshold per PE: for RDT&E that’s $10M or 20%, whichever is less. Anything greater requires prior congressional approval.
(b) Any reprogram that crosses appropriations is called a transfer. All transfers require prior congressional approval.
(c) The DoD transferred funds to the border wall without prior congressional approval. It argues congressional prior approval is not legally binding (though OMB approval is binding).
(d) Back in 1975, the GAO found that language in a conference report is not legally binding. The issue: Congress required $20M of Navy funds go to the winner of the YF-16 vs YF-17 competition to create a joint service program. Navy did not find the YF-16 suitable, and selected a derivative of the YF-17 instead. GAO found that the Navy going against Congressional language not in Law was not a legal or moral problem. This is why we have the F-18 and not another joint aircraft like F-111 or F-35.
(e) The DoD stayed within the General Transfer Authority ($4.0B) and Specific Transfer Authority ($2.0B) limits which is legally binding (written into Approps Act).
(3) In May 2020, the Space Force said it’s “most important” recommendation was to consolidate budget line items to enable portfolio management. Currently, program funds are planned 2+ years in advance, which then takes 2 years to obligate and up to 5 more years to fully spend. Consolidation of PEs to enable tradeoffs in the year of execution is perhaps the most important thing the DoD can do to accelerate defense innovation and bridge the valley of death. The Space Force immediately retracted the report due to controversy, and is now in coordination with OMB on what it will present Congress.
(4) While the FY2021 SASC NDAA report “encouraged the DoD to expand its use of mission-based budgeting”, the HAC-D report went the other direction. It said: “The Committee finds that one effect of this consolidation would be the increased ability of the Department of Defense to realign funding among different activities without seeking prior congressional approval. The granting of additional budget flexibility to the Department is based on the presumption that a state of trust and comity exists between the legislative and executive branches regarding the proper use of appropriated funds. This presumption presently is false.”
You can also find some helpful videos on defense budgeting below:
Leave a Reply