Podcast: PPBE Reform Panel 1 — Key Recommendations

For the first time in more than 50 years, a serious discussion is emerging on the foundations of defense budgeting and oversight.  The “valley of death” issue has drawn people’s attention to the budget at the highest level, but the problems run much deeper. No longer will business as usual — comprised of industrial era methods and multi-year timelines — suffice in an era of great power competition.

I was excited to host a panel representing three key perspectives on the Planning, Programming, Budgeting, Execution (PPBE) process and the future of defense resourcing. They are Courtney Barno (NSCAI), Matt MacGregor (MITRE), and Dan Patt (Hudson). Each has contributed to a recent report addressing PPBE, and all three circle around the old concept of portfolio management. A short video describing the reports is here. The full video of our discussion is on YouTube here, and the audio has been published on the Acquisition Talk podcast.

The three reports we discuss are here:

And for more information, see my resource page on budget reform.

Budget Structure

The core idea of the PPBE is that budget line items align with weapons programs (e.g., F-35, Columbia-class submarine, Abrams tanks). This works great for a predictable world where the smartest people clearly foresee future CONOPS and technology efforts work as planned. However, when uncertainty reins, it can lead to wasted resources and inferior weapons.

An obvious solution is to provide funding not to specific waterfall-planned programs, but to a portfolio of efforts that provides a manager optionality to make tradeoffs without the consensus of DoD, OMB, and Congress. If portfolios make sense, then under what logic should program elements be consolidated? Here’s Dan Patt:

Those are what I would call capability portfolios. You take similar things and you put them in together in portfolios and you allow an organization to reallocate between those similar things. I do want to point out that whatever basic building block structure you have, you will always end up with seams and those seams will be points of aggravation.

 

For example  I still have, if I have capability portfolios around aircraft, and around other systems, I still care about electronic warfare, right? Should electronic warfare be its own thing? Should it be split up across those? There’s no obvious answer. And because of that, I actually think that you want a couple of different mechanisms that might be able to overlap.

The MITRE team, represented by Matt MacGregor, made pretty specific recommendations around the structure of capability portfolios and how they align with major organizations like program executive offices. While this is a logical structure, Dan correctly points out that no matter how you structure the budget (and align organizational authority), program responsibilities will always be overlapping. Frederick Mosher identified the problem in his splendid 1954 book, Program Budgeting:

Inevitably the definition and classification of programs and subprograms will differ from the structure of the organizational hierarchy… there is no way one can design complex organizations without overlaps, competing perspectives, and interdependence.

Interoperability

With the PPBE, programs are often analyzed independently. Each weapon system is designed to meet some set of requirements and solutions are literally suboptimized. There was a debate in the 1950s whether through a systems analysis you could theoretically optimize the entire weapons program. The answer was a resounding “no,” but you could suboptimize smaller problems. The systems analysts assumed that the sum total of those suboptimizations would be a big improvement over the use of “judgment” and “experience.”

Well, 50 years on the Department finds itself in a crisis of interoperability. In one sense, weapons systems can’t communicate with one another very easily, such as to send and receive battlespace awareness or targeting data. In another sense, the weapons are built without the use of common infrastructure and tooling. Clearly, these two problems are related. Systems today are designed and built in their own program bubbles.

Courtney Barno describes how AI/ML is one of those capabilities that hits at the seams of the current structures:

I think how we approach this from the commissions perspective is that AI will be a ubiquitous and cross-cutting technology… And I think what we’ve seen in that each of these reports highlights is that the program centric nature of the budget as it is today presents a real obstacle for funding, in getting resources to those cross-cutting technologies.

 

In our final report, what we make clear is that we think the program centric nature of the budget really causes costly and redundant full-stack development. We want to get away from that. As an enterprise, as I said, it prevents that funding of cross cutting enablers like AI, like the building blocks of AI, like platform services, cloud compute, data storage infrastructure. We think that jointness, and in particular, I think the seamless flow of data between systems and platforms and composability, is really going to be critical in maintaining the advantage in AI warfare.

The PPBE, it would seem, was never designed to help create a joint force out of the “parochial” services. Instead, it was designed to make sure the services never had duplicating or overlapping programs. That was the symbol of efficiency, not whether systems could communicate with one another. Perhaps interoperability at that time was largely a human consideration, tackled in training and operations. Here’s Dan again:

Am I able to pull together the ISR picture that gives me indications and warning? This is a question that has to do with AI and it has to do with data fusion and it has to do with conductivity and it has to do with networks. And whose problem is that today? It’s nobody’s problem. It’s everyone’s problem. And it’s no one’s problem.

I think portfolios help solve this when they are matrixed and overlap is built in. In the past, you had the bureau of construction and repair, engineering, ordnance, and aeronautics all contributing to an aircraft carrier. Organizations contributing to programs are regularly talking and working together. One of the chief concerns at the time was the use of common components. Sure, coordination problems occurred, but at least the problems quickly become apparent rather than being able to persist.

Today, there is a similar matrixing that exists in the program executive offices. For example, in the Air Force you have PEO Weapons, PEO Digital, and PEO Fighters. If their focus can be raised from executing preplanned Programs of Record and utilize portfolio management, then they can better coordinate on enterprise tools and standards.

Oversight

This gets right to the heart of oversight. No longer can execution to a program plan be the ultimate mark of success, especially since the average MDAP is over 14 years old. Commercial technology has more money in it and is moving faster than defense, so the options available to weapons developers is changing. So are the threats — need I say Great Power Competition. The program plan, often emanating from officials who will have zero responsibility for actually making the thing work, cannot be assumed optimal simply because it made it through the Pentagon gauntlet. Here’s Matt MacGregor:

And I think that’s one of the things that we have not done a great job with these APBs, we’re focusing so much on these baselines and cost estimates and all this kind of bureaucracy behind the scenes that we often lose sight of how much was actually delivered to the warfighter.

If DoD isn’t fixated on program baselines and cost estimates, that doesn’t mean there is no plan and everything happens haphazardly. Matt continues:

I think you have to have a plan. We do not intend to think that you should start a program with, just pull stuff together and slap it together. That is, there needs to be disciplined rigor in this process. And I think if you do engineering right you’re going to have that rigor.

 

But I think the way that we do programs today is that we pretend as if requirements are the value that the user needs when that platform is delivered. And that is just not a static thing, there is change happening all the time, so it’s dynamic.

 

And so what value might be one year might not be the next, because the threat changes significantly and it’s Oh, that aircraft was great for that mission or for that threat. The Chinese just invented a brand new radar, a brand new, something, and now we need something else to counter that.

The ability to be adaptive will be critical on the 21st century battlefield. The back-and-forth going on in World War II technology was really astounding, and we can expect that to accelerate in the future. An acquisition system created for set-piece plays and multi-year processes before even deciding to act is no longer acceptable against an innovating adversary. The problem is gathering the political will to tackle the hardest problem in defense before a crisis with a peer adversary occurs. I’ll leave you with a quote from Courtney:

We face a competitor in China, that’s organized, they’re committed and their resource to challenge us on the global stage and potentially upset our military technical superiority. And I think where that puts us is there’s an imperative to move fast here.

Partnership between the department and Congress is going to be essential here. Both are going to need to give a little and come to the table. That means, I think first and foremost, defining better metrics that get to that, get to value. And they’re not going to be perfect, but the thing is we need to start now and we need to deliberately measure.

Full-Text Transcripts

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