The incredible decline of DoD execution flexibility has created the so-called “valley of death”

Here are some excerpts from our recent report at Mason GovCon, Execution Flexibility and Bridging the Valley of Death. Caution: Just how much the purse strings have been tightened may be shocking:

Through the 1960s, defense officials enjoyed execution flexibility that would make their modern counterparts’ eyes water. Funds could be characterized as lump-sum, no-year, and reprogrammable. For example, the Army requested no new funding for “Major Procurement and Production” for FY 1956 because it had over $5 billion in unexpended balances from the Korean War. The appropriation only had 11 program line items including $713 million for “Support Vehicles” and $2.1 billion in “Ammunition.” Not only could funding be moved between projects within a line item, the Department could also quickly reprogram funds between line items. The Legislative and Executive branches maintained trust by:

1. Coordinating program plans through extra-budgetary means such as legislation, task forces, and administrative actions
2. Performing rigorous oversight on program outcomes instead of documentation inputs

Here’s a timeline of events. You’ll notice that a few of restrictions occurred because DoD did something Congress didn’t like, and so they made sure it would never happen again. This occurred, despite the fact Congress often agreed with the actual outcome, but just didn’t like the fact that DoD didn’t tell them multiple years in advance.

• 1951, Colors of Money. National Security Act Amendment of 1949 creates modern appropriations, moves away from organizational structure that did “cradle to the grave” ownership of systems and increases multiple funding of a program by crossing RDT&E, Procurement, and O&M.
• 1959, Reprogramming. All DoD reprogramming actions greater than $1 million in RDT&E and O&M, $5 million in Procurement, require prompt notification to Congress who could reject within 15 days.
• 1963, Program Elements. First fiscal year of Planning Programming Budgeting System. Though President’s Budget keeps traditional format, additional program structure adds detail to planning and budgeting.
• 1965, RDT&E Budget Activities. Linear budget activities added to distinguish RDT&E phases from basic research through test & evaluation. Leads to multiple funding of programs, longer planning lead times, and restricts execution.
• 1971, Expiration of Funds. RDT&E and Procurement titles had been “no year” funding until it was discovered the Navy reprogrammed large amounts of leftover funds from Polaris submarines. Appropriations could no longer be used for new obligations after defined number of years.
• 1972, Detail Added to President’s Budget. Program elements added to President’s Budget, resulting in a reduction of execution flexibility within budget accounts. For example, the Army’s RDT&E justification grew from 8 program and 10 object line items in FY1971 to 173 program elements in FY 1972. Congress rejected an attempt to consolidate line items down to 85 the next year.
• 1973, Innovation Fund Eliminated. The ”Emergency Fund” used to exploit S&T breakthroughs and averaged roughly TY$150 million a year was eliminated, citing the sufficiency of reprogramming for the task.
• 1993, Merged Surpluses and “M” Accounts Closed. Congress discovered $1 billion of expired funds used for B-1B modification and GAO reports revealed more than $40 billion of balances. Congress subsequently cancelled use of merged surplus and M accounts, reducing DoD’s ability to maximize budget authority and make tradeoffs.
• 2000, Expansion of Prior Approval. Financial Management Regulation expands prior approval of four congressional committees over thresholds that had previously only required Secretary of Defense approval and congressional notification. Increases time and effort to approve each reprogramming.

A couple things not shown above on reprogramming include:

(1) In 1961, the Navy reprogrammed funds to create 5 new starts on the Fleet Ballistic Missile submarine without congressional prior approval. That is basically unimaginable today. In part, it shows that DoD didn’t really have a “valley of death” problem before PPBE. Decisions were delegated, and the services moved quickly to field cutting edge systems. Of course, that is no longer possible. Leaders of the FBM program said that they could never have succeeded building a nuclear submarine that could launch an IRBM under the PPB McNamara regime.

(2) In the early 1970s, Congress required the Air Force and Navy to pursue a joint aircraft for the Lightweight Fighter Competition. The Air Force selected the F-16, which was totally unsuitable for carrier operations without extensive redesign. So the Navy went ahead and selected the YF-17, which became today’s F-18. But in a committee report the funds were fenced off for the Navy, they had to select the Air Force variant. Luckily they didn’t. But it was a challenge to Congressional authority, because reprogramming isn’t a law or statute. Language in conference reports is not binding. But a breach of trust can lead to Congressional backlash in future appropriations and law. Again, the decision to force a joint service aircraft was 100% misguided, and Congress agreed with the Navy’s position. They just didn’t like the way the Navy went about it.