Jerry McGinn and I provide three recommendations for the congressional commission on PPBE reform in a Defense News article:
- Be bold in vision. The DoD’s industrial-age approach is different from almost any organization in the world. The commission must look to the history of defense management, international ministries and large commercial enterprises. Organizational and portfolio budgeting are not new ideas, and today’s corporate best practices show how to spur innovation in large organizations.
- Be focused in approach. The commission should be careful to not boil the ocean. The Section 809 Panel on defense acquisition reform is a cautionary tale. Even though the individual findings had merit, the three volumes of the final report were just too much to digest. Perhaps focus this commission on three lines of effort: (1) portfolio management; (2) reporting and transparency; and (3) budget build process.
- Be pragmatic in implementation. Finally, the commission needs to make recommendations that can be rolled out incrementally. It may be useful to set up pilot portfolios across the DoD to test out new approaches. Focus first on high-interest and software-intensive program offices across the services and immediately move for FY23 pilot portfolios, creating opportunities for learning, adjustment and expansion over time.
The defense budget is defense policy, and that policy determines what kinds of weapon systems the military will have today and in 10 years. This is important for the nation and the world. Whoever the commissioners selected to lead PPBE reform are, hopefully they will recognize that this is much bigger than the “valley of death” problem. It is about selecting an economic system for the entire Department of Defense.
Without too much exaggeration, the question faced by commissioners on PPBE reform is similar to that faced by Deng Xiaoping and Mikhail Gorbachev — do they have the foresight and will to release their institutions from Soviet-style planning? And provided they do, will they make the change in an agile and sustainable way (like special economic zones) or will they make the change abruptly and ahead of the culture (like perestroika)?
Certainly, DoD cannot be served in the same way consumers are served in private markets. But that doesn’t mean that DoD cannot use the principles inherent to coordination of decentralized knowledge without the aid of price signals, as philosopher of science Michael Polanyi recognized:
I would call it the principle of mutual control. It consists, in the present case, of the simple fact that scientists keep watch over each other. Each scientists is both subject to criticism by all others and encouraged by their appreciation of him. This is how scientific opinion is formed, which enforces scientific standards and regulates the distribution of professional opportunities. It is clear that only fellow scientists working in closely related fields are competent to exercise direct authority over each other; but their personal fields will form chains of overlapping neighborhoods extending over the entire range of science…
All that I have said here about the workings of mutual adjustment and mutual authority… suggests a way by which resources can be rationally distributed between any rival purposes that cannot be valued in terms of money. All cases of public expenditure service collective interests are of this kind. This is, I believe, how the claims of a thousand government departments can be fairly rationally adjudicated, although no single person can know closely more than a tiny fraction of them. [Emphasis Added]
We need a vision for defense acquisition that aligns with American values and business practices.
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