Here is a Air Force head of contracting authority Maj. Gen. Cameron Holt discussing an interesting new proposal:
[Line of Effort] 3 is called “owning the high ground,” optimizing the acquisition enterprise. And this is where we’ve got a lot of cosmic ideas that some of your folks might be interested in. They’re really hard. They’re not just contracting. This 1961 PPBS process — and then the limitation of flexibility that we have in execution here to move money around — it’s crazy! We’re never going to beat China using that kind of oversight. So we’ve come up with a pilot program called free cash flow that we need congressional support for.
Instead of a CEO or a CFO signing out cash flow guidance like it would happen in a corporation, and then incentivizing all the managers to save money and contribute to free cash flow so they can reinvest it in the value of a firm, we would do the exact same thing in the Air Force. But we would ask the four oversight committees of congress to sign that cash flow out at the beginning of each congress. And then we would incentivize PEOs and wing commanders to save money put that money in a free cash flow account and immediately, without any prior approval from congress, we would give them 50% of that money immediately as an incentive in any color money they needed it and they can execute it. The other 50% would go up to the corporate structure and reinvest rapidly either to fill gaps in acquisition programs that we didn’t know would happen, or to seize opportunities in technology through partnering with innovators in industry with money we didn’t know we had before that execution year or avoiding threats but moving that money rapidly and buying more combat capability in a single future year’s defense plan than we ever thought could be possible at the speed of relevance.
Instead of the current oversight mechanisms of stodgy omnibus reprogramming bills or above threshold reprogramming that take 90 days or 120 days or a year — instead of that we would brief congress every quarter, and be completely open kimono, and still allow them to yank a nod at us if they disagreed with what we’re doing. But they’ve got to let go of the control that micromanagement where they put the program name on every single account, and instead go portfolio wide with the funding so a PEO can move money rapidly.
In addition to that, the current system you might as well put the company name on it. So we give up our monopsonistic advantage from the very beginning. Frankly I think that’s part of the point. But we’ve got to do better than that and frankly, I know I get in trouble for saying this, but the way we fund national security is actually more centrally planned than the Chinese communist party distributes money for their national security. We’ve got to be sober about this. We can no longer use those cold war processes in the same way, but we don’t need to depart from strong congressional oversight either. We’ve got to find new ways forward. That’s one of them.
It’s not that Holt is saying DoD needs less oversight to move fast and compete with China. It’s that DoD has the exact wrong kind of oversight that stifles innovation and actually obscures responsibility/accountability. When Holt says “open kimono” in terms of transparency, that actually scares many defense officials. Would Congress move from once-in-a-year direction of DoD with its authorization and appropriations process to providing program direction every quarter, month, week, or day?
Congress is not the executive branch, and yet its direct power over thousands of programs through budget line items actually means it has crept from “power of the purse” to “micromanagement.” Congress did not have sweeping power over the minutiae of DoD programs until the 1960s — so it’s not like relaxing some of this stranglehold is threatening American democracy. Democracy did just fine for more than 150 years. And in any case, would anyone actually trust Congress to make wise decisions on the future of complex technological and military programs when only 14% of the House served in the military and just 10% have any STEM experience at all (and nearly half of those are medical doctors)?
Better that they hold DoD accountable for what it has already done. Insight and investigate. But today, Congress seems to only care about where the money will go in the future rather than whether value was achieved for how the money was spent in the past. That’s problematic because Congress is now complicit in all program outcomes, entangled in responsibility, and therefore cannot be a neutral arbiter of accountability.
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