PPBE reform event: an imperative for winning the great power competition

… in my mind, I equate planning and budgeting and consider the terms almost synonymous, the budget being simply a quantitative expression of operating plans.

That was Robert McNamara in August 1961 testifying to Congress. The weapons program is the analytical framework that connects plans and budgets in the Pentagon’s Planning-Programming-Budgeting-Execution (PPBE) process. Programming the budget makes perfect sense where information is relatively complete about relevant alternatives. It’s simply an engineering problem with known constraints. Here is McNamara’s sophisticated reasoning about technological progress and weapons choice:

Let me give you one hypothetical example to illustrate the point. Suppose we have two tactical fighter aircraft which are identical in every important measure of performance, except one – aircraft A can fly 10 miles per hour faster than aircraft B. However, aircraft A cost $10,000 more per unit than aircraft B. Thus, if we need about 1,000 aircraft, the total additional cost would be $10 million.

Of course, he doesn’t mention the process by which the military value of 10 extra miles per hour is weighed against the $10,000 per unit. But that’s not the point. The problem isn’t a static choice between fully determined systems with known costs. The problem is how new systems and concepts of operations come to be. That is the fundamental long-term problem — not being but becoming.

McNamara’s legacy to the Pentagon — the PPBE — is a failed application of sophomore economics to the hard problems of weapons development. With a new imperative of great power competition, it’s time to reevaluate the industrial-era system. Fortunately, there have been some excellent papers tackling these issues in important ways:

Bill Greenwalt and Dan Patt: Competing in Time: Ensuring Capability Advantage and Mission Success through Adaptable Resource Allocation
Pete Modigliani, Matt MacGregor, and Dan Ward: Five by Five: Five Disciplines and Five Strategic Initiatives for the Pentagon in the Digital Age
National Security Commission on Artificial Intelligence: Final Report

George Mason’s Center for Government Contracting is teaming up with Wharton Aerospace community for a Webinar event on PPBE reform Tuesday, March 23 at 12:00pm EST. I will be hosting the first panel with contributors to the papers above: Dan Patt (Hudson), Matt MacGregor (MITRE), and Courtney Barno (NSCAI). The Center’s executive director Jerry McGinn will follow up with a panel on the feasibility of implementing PPBE reform with former USD(Comptroller) Dov Zakheim and former USD(AT&L) John Young.

REGISTER HERE!

Excerpts from McNamara testimony before Subcommittee on National Policy Machinery of the Committee on Government Operations, U.S> Senate, on 7 August 1961. Hearings, Organizing for National Security: State, Defense, and the National Security Council, Part IX (87^th Congress, 1^st Session; Washington: U.S> Government Printing Office, 1961) pp. 1196-1199, 1221.

Excerpts from McNamara testimony before House Appropriations Committee. Hearings, Department of Defense Appropriations for 1965m Part 4 (88^th Cong., 2^nd Session; Washington: U.S. Government Printing Office, 1964), pp. 3-7, 304-306.

Increasing Speed and Flexibility in DoD Budgeting —

Going from Ideas to Implementation

Webinar
March 23, 2021
12:00 pm – 2:00 pm EST

Budget reform is definitely in the water. There is increasing recognition that the PPBE—Planning, Programming, Budgeting, Execution—the venerable DoD resource allocation process established in the early 1960s is not serving the Department and, most importantly, the warfighter well. As Chairman Senator Jack Reed and former Google CEO Mr. Eric Schmidt noted in a recent Senate Armed Services Committee hearing, the PPBE process is greatly hindering speed and effectively in the defense acquisition system. In the words of Mr. Schmidt, “This is how DoD ends up with a camel rather than a horse.” [Link]

How do we fix this? Starting with a white paper written by our own Senior Fellow Eric Lofgren last year, innovative ideas are being proposed that look very promising. [Link] Getting from ideas to implementation, however, is a very different story. To find a way forward, the Center for Government Contracting is partnering with the Wharton Aerospace Community to discuss (1) the major ideas circulating for budget reform; and (2) practical ways to affect real change.

We have assembled two dynamic panels for this conversation, so come ready with questions. We hope that you can join us!