This was no easy task, but the PPBE Commission team pulled together a highly researched, very detailed and incredibly impactful report that provides a menu of options for various stakeholders in the budgeting process to implement reform. We were proud to support their efforts in some small way through our work at MITRE.
The Need for Reform
Many in the defense industry are now familiar with the challenges in the current PPBE process and may themselves experienced the issues it presents in fielding the best military force possible to meet the national security challenges of our time.
If you are not as familiar, it essentially boils down to four key challenges as we documented in a short paper we wrote on budget reform.
As new threats emerge, new operational concepts are generated, and new capabilities are pursued to retain the U.S. military’s advantage, DoD has proven unable to respond at the speed of relevance.
Despite having a structure for translating strategy into capability, DoD fails to reconcile Combatant Command “fight tonight” force and capability needs with the longer-term technology investments needed for future fights.
The PPBE process is not sufficiently responsive or optimized to take advantage of today's nonlinear, risk-taking approach to technology innovation, which requires agility, creativity, and speed.
The PPBE process contains barriers that limit insight into and influence on budget developments for fear of pre-decisional information being released or scrutiny on proposed adjustments.
The PPBE Commission Final Report does an admirable job of addressing all of these issues in its series of recommendations.
The 35 recommendations are encapsulated in five primary categories:
Improve the Alignment of Budgets to Strategy
Foster Innovation and Adaptability
Strengthen Relationships Between DoD and Congress
Modernize Business Systems and Data Analytics
Strengthen the Capability of the Resourcing Workforce
Our assessment provides a rating on perceived Impact (High, Medium, Low) and Implementation Ease (Relatively Easy, Moderately Challenging or Very Challenging) with a placement of how each recommendation should be prioritized (based on the current recommendation). In some cases, if the recommendation was updated, we would place it higher in our order of prioritization.
We believe that serious progress can be made near-term and recommend a Top 10 list of areas that DoD should pursue first. Others still deserve to be implemented in some fashion but with less urgency (Next Implementation List).
Implementation Team
Recommendation #28 is to form an implementation team to oversee the incorporation of recommendations into the active processes and policies of the Department. This has to be the very first action undertaken since a diffused ownership approach is likely to result in sub-par implementation. The Deputy Secretary should consider keeping this a top of list DMAG action and get regular reviews.
Top 10 List (Immediate Action)
Next Implementation List (Near-Term Action)
For Possible Future Implementation
We do not disagree with actions on this list but for purposes of the implementation team and their capacity, we would place this as a lower priority. We very much agree with Recommendation #12 but believe this out of the purview of the implementation team and requires separate action from senior DoD leadership as part of a broader challenge. We would elevate some of the recommendations in this list with some adjustments to who the Office of Primary Responsibility is and the extent of their power over the process. Others like DMA could be helpful but would take energy away from other more important changes.
We include the general plan for DoD’s implementation approach for some of the recommendations (included as a separate section under our summary)…only a few of which DoD perceives as a key recommendation.
It’s quite possible that without Eric, this commission would never have been formed. He was an early champion of PPBE reform before it was fashionable. He studied the history of the PPBE process and illuminated to many that it not only didn’t have to be the way it was - but it actually was different for most of our country’s history. I like to call Eric the godfather of budget reform and I think it’s the appropriate title. If you have a deeper interest in this subject matter, I highly encourage you to read some of his papers on PPBE reform.
The Commission proposes creating a PPBE replacement system, the Defense Resourcing System (DRS), that strengthens the connection between strategy and resource allocation while creating a more flexible and agile execution process. The proposed DRS would be comprised of a Strategy, Resource Allocation, and Execution phase, supported by continuous analysis and evaluation. This proposal is the core of the Commission’s recommendations.
The Commission’s Vision
The Commission established a vision for the DRS, drawing from the original set of six principles that guided creation of the original PPBS:
Improve the Alignment of Budgets to Strategy
Recommendation #1: Replace the PPBE Process with a New Defense Resourcing System
Proposes process changes to the structure of the DRS to strengthen the connection between strategy and resource allocation while creating a more flexible and agile execution process.
Provide earlier strategic guidance to the Services and Components to better inform their budget development.
Adopt a Guidance, Build and Decision framework with simplified outputs and greater transparency through the process.
Guidance: Defense Resourcing Guidance (DRG)
Build: Resource Allocation Submissions (RASs)
This combines the POM and BES submissions.
Decision: Resource Allocation Decisions (RADs)
Move to a single resourcing database for use by all stakeholders.
Include performance measures as part of the Resource Allocation Decision documentation to inform justification material language on metrics and provide benchmarks for examining the effects of RADs in subsequent years.
Our Take: We agree with the Commission’s assessment that these recommendations will drive some efficiencies. A consolidated, authoritative source of data combined with calendar-driven and simplified outputs will likely reduce confusion, improve coordination, avoid duplication, and streamline development of budget materials. Moving the resource guidance earlier in the process is likely to help improve the Services incorporate strategic intent from Department leadership.
Where this recommendation falls short is expecting that the least transparent organizations in DoD will effectively implement and maintain a process whereby their decisions are communicated in an open manner and where they invite collaboration throughout the new DRS process. This is incredibly unlikely. This proposed approach may work fine for the Guidance and Build phases but is likely to fall flat in the Decision phase. The Commission even notes that the Joint Staff and CAPE’s Joint Data Support System (which they interestingly note as being separate from the DRS process), will remain distinct from the consolidated budget system so that CAPE can “maintain control over specific systems required for their analytic work, as well as their analytic models.” For those not experienced with PPBE deliberations, CAPE is notorious for sucking information in like a vacuum cleaner and then “black boxing” their conclusions. Comptroller is hardly better with movements of funding being known only to a tight-knit group of money managers until final decisions are revealed. Don’t expect the Services to find this new process overly intriguing nor the Combatant Commands feel more included. The Commission notes in its Assessments & Findings that it found “the CAPE staff provides strong support to OSD leadership and to DoD” but seems to ignore the fact its recommendations have led to the military we have - so it’s curious that the recommendation is to double down on a process that has given DoD a military with limited capacity, delayed capability and a fragile industrial base.
Impact Assessment: We consider this Low as it really is not likely to move the needle considerably given the organizations entrusted with the responsibility to shift how the process is executed today. We recognize there is no easy answer given how DoD is organized but we still support the creation of a small body of experts at the DEPSECDEF-level (like the Innovation Steering Group) who can ingest the different recommendations and work more collaboratively with the Services and others without the cultural challenges of CAPE and Comptroller.
Implementation Ease: It is rather Relatively Easy to implement since it requires only modest changes from the current process. A consolidated budgeting system may be more complex depending on if a current system is scaled or a new system is adopted (addressed in more detail in future recommendations).
Recommendation #2: Strengthen the Defense Resourcing Guidance
Proposes improvements to the timeliness and content of guidance documents through the creation of the DRG.
Creates a Senior Leadership Council (SLC) chaired by the SECDEF to close out the previous budget year and initiate planning for the next cycle.
Relies more heavily on the recently established Analysis Working Group (AWG) co-chaired by the Joint Staff, the USD(P), CAPE, and the Chief Data and Artificial Intelligence Office (CDAO).
DMAGs become more tactically focused decision meetings that assess and approve options on “force sizing and structure, posture, capability investment priorities, readiness and operating tempo, and supporting topics ranging from quality-of-life programs, business system modernization, and major expenses.”
The DMAG will approve the annual Defense Resourcing Guidance that is developed by the AWG that reflects decisions and direction from the SLC.
The DRG is much more detailed including information such as prioritized capabilities; force structure; quantitative and output-oriented performance measures; risk and divestment areas; measures for meeting strategic goals; relevant inputs from the Joint Staff and DoD Components; end-of-FYDP joint force capabilities assessments; and requests for solutions to certain challenges.
Our Take: We applaud making the DRG (previously the DPG) a more complete and useful strategic planning tool. We think the suggestion to include prioritized capabilities and performance measures is the right step.
Where we do not align on these recommendations is pushing more solutioning to the highest levels of the Department. This modified approach is likely to push even more decisions through the DMAG, which is the equivalent of pushing clay through a soda straw. It will not result in more dynamic decision-making but rather a slower and more hierarchical approach. The myriad of documents and analyses mentioned in this recommendation will take months (if not years) to generate added to the months it will take to get leaders in the DMAG to make all the decisions required (Joint Staff already labors through a similar process).
Overall, the approach proposed here is very divergent from our recommendation that DoD should set clear priorities and articulate operational joint challenges that the Services must solve collaboratively…and have an OSD-level organization (such as the smaller board we propose above) serve as monitors of the process. In the DRS construct, it seems clear that the AWG will serve as much more than a monitor - it’s going to tell the Services what to do and it will be very surprising if there is any real collaboration with the Services or CCMDs in that process.
Impact Assessment: We consider this Low as it really is not likely to move the needle given the shift more towards the top that is likely to relegate the ability of lower-level organizations to innovate and leverage their expertise. It’s also hard to see how the Decision phase will be timelier given all the analytics required and the historical lack of collaboration that the organizations with control here have demonstrated.
Implementation Ease: It is Moderately Challenging to implement since (if implemented as suggested) it will require articulating a lot more detail in the DRG (DPG) and generating significant analysis to support those inputs. Some organizations in DoD may be running to implement this recommendation as it increases their span of control but will also be expanding the demands put upon them.
Recommendation #3: Establish Continuous Planning and Analysis
Proposes increasing rigorous analysis to understand and respond to the threat environment is necessary to make resource-informed decisions and ensure defense investments accomplish strategic objectives.
Expand CAPE’s analytic capability and create a program of continuous analysis.
Leverage joint warfighting assessments to generate improved analyses that are iterative, rapid, and joint and use wargaming, modeling, and simulation for concept development, decision support, and warfighting assessments.
Assess execution phase reviews beyond financial metrics, such as strategic goals and objectives, progress of past technology investments, operational performance, and other current-year emerging issues to inform budget decisions.
Modernize DoD IT systems to support modern analytic, wargaming, and modeling and simulation capabilities and continue improvements in access to analytic products across the Department.
Our Take: We wholeheartedly support a program of continuous analysis since the operational and technology spaces are highly dynamic and any annual assessment is likely to expire shortly after submission if not before. We love the idea of folding in joint warfighting assessments. The Department has held numerous exercises and there are no doubt numerous findings and lessons that would be relevant for budget deliberations. Making various analytics (such as trends for congressional marks or reprogrammings) available to budgeteers will help inform adjustments to the budget where tough calls need to be made. Improving IT systems to enable better sharing can only be positive if all parties are willing to contribute useful (unfiltered) data.
Some things that were not mentioned in this continuous analysis campaign is the ability to manage shifting operational concepts (deviations from current OPLANs), maintain awareness of the latest technology trends and how IT systems will track satisfaction of key mission threads (at varying levels of classification) that comprise DoD’s toughest challenges. The fact that mission engineering wasn’t specifically mentioned is disappointing, but this may be encompassed in some of the other systems and processes mentioned (given CAPE and CDAO both do work in that area). Overall, it’s still not clear how insights from the Services and commercial innovation shops feed into this process. Insight is one piece of the puzzle but the ability to inject into the analysis (if everything is being controlled at the top) is also key.
Impact Assessment: We consider this Medium since improved incorporation of data from experimentation (and CCMD inputs) should result in more informed decisions being made - if the experimentation captured the data correctly and depending on how that data is used in the AWG assessments.
Implementation Ease: It is Moderately Challenging to implement since it requires incorporating data that is not readily available, is not compiled in a useable format and does not have common data owners. There will be a lot of herding sheep to collect all of this information, make it usable and have it maintained.
Recommendation #4: Transform the Budget Structure
Proposes significant transformation of the structure of DoD appropriations, reorganizing appropriation, account, program, and lifecycle (colors of money) levels.
Create new categories for organizing the structure of the budget.
Present, authorize and appropriate funds using Major Capability Activity Areas (MCAAs) - to be defined by the different Services/Components later.
Change the first level of funding breakdown by Service/DoD Component rather than by Procurement, MILPERS, O&M, RDT&E, and MILCON.
Align different levels of budget flexibility according to the category (or depth).
Our Take: This is ingenious. This proposed modification flips the whole concept of color of money by demoting the importance of whether an effort is in development or production and making it more about what capability is being provided. By allowing internal realignment below the program level, it removes the barrier that exists today when trying to plan when procurement funds need to be programmed even though say testing hasn’t begun or manufacturing readiness been affirmed (a major valley of death challenge). It would now permit that to occur in the year of execution.
Large reallocations across programs would still require a congressionally-approved reprogramming but would be easier in the sense of not having to find the exact appropriation (like RDT&E) as a source but would instead allow any funds allocated to the program to be used. Developing J-Books (the budget docs that go to the Hill) would make more sense since they would include all of the funds (across all appropriations) for that program in one budget line item. The most exciting part of this change for us is the potential to (over time) shift the ability to conduct more internal realignments at Level 2 (MCAA) which would be a much easier way to transition to consolidated BLIs and capability portfolio funding than under the current system. It also has the added benefit of making O&M funds much more useful since it would negate the need to argue whether a proposed change to hardware is an investment or expense (another valley of death killer).
There are definitely some details to work out on this proposal with the Hill. In many ways, the Hill would be giving up control over when DoD can enter into production (that’s controlled by the allocation of procurement funds) today. This also gives a lot more flexibility on the development side regarding when to move from prototyping to more formal development and test. The J-Books are going to have to be reworked and the reprogramming process overhauled. The Commission makes a key point here that for the MCAAs, a one-size-fits-all approach is unlikely to be sufficient; and the current MFPs and joint capability areas are also unworkable - we appreciate the Commission making this explicit point since these categories are unhelpful today but refuse to go away.
Impact Assessment: We consider this High since it provides an important step towards capability portfolios and would provide immediate benefit to programs (and the operational community) today.
Implementation Ease: It is Moderately Challenging to implement since it requires significant buy-in from the appropriators and some major changes to procedures across the FM community. The switchover will lead to a lot of questions and will not be painless but once it happens, it will quickly become seamless.
Proposes consolidation of RDT&E Budget Activities from eight separate categories into four broader ones.
Our Take: This recommendation could be impactful but is highly dependent on how the 6.4 category is managed. The primary challenge in RDT&E is the move from prototyping to development, which plagues programs that have to manage both accounts and especially challenges prototyping efforts that are looking for a home (acquisition program). The recommendation leaves that issue unresolved. This proposal is likely to be unnecessary if Recommendation 4 is implemented as the new paradigm.
Impact Assessment: We consider this Low since it seems like it could help select programs but is unlikely to solve the core problems with moving between RDT&E phases. If implemented with a lot of flexibility for the 6.4 account (possibly moving it fully into system development) then it would be significantly more impactful. It seems likely that the Commission avoided proposing this wholesale change given it would limit congressional ability to manage what becomes an official program but that is precisely the flexibility that is needed.
Implementation Ease: It is Relatively Easy to implement since it requires few changes to current processes. It will drive changes to the FMR.
—Foster Innovation and Adaptability—
The Commission identified six major root causes relating to PPBE’s problems in promoting innovation and adaptability.
Time-Consuming Programming and Budgeting Processes
Inflexibility of the Budget Structure
Hierarchical Programming and Budgeting Process Results in a Lack of Delegation of Authority
Bias Toward Existing and Traditional Programs and Approaches
Lack of Awareness of Innovative New Authorities and Practices
Inflexibility in the Year of Execution
Recommendation #6: Increase Availability of Operating Funds
Proposes allowing a small portion (5%) of O&M funds to be carried over for obligation in a second year of availability, a type of flexibility that is already available to some non-DoD federal agencies. This change is expected to reduce the high levels of year-end spending that hamper effective execution of funds, especially after a CR, as well as prevent the funding of lower-priority programs just to avoid losing the money. Provides availability of a small reserve to address late-breaking bills, unanticipated expenses, and avoid ADA violations without risking the loss of the money.
Our Take: We concur with the Commission that this change, while small, could have some important effects such as reducing late year spend against lower priorities. While this is less of an issue in acquisition accounts, it is a major concern across the broader force and drives an unnecessary amount of churn. The challenge here would be management of this 5% as it’s possible the same behaviors will occur at lower levels but just earlier in the year to avoid headquarters claiming unused funds.
Impact Assessment: We consider this Medium since it has potential to be very helpful and prevent churn at the end of each fiscal year.
Implementation Ease: It is Relatively Easy to implement since it only requires minor changes to current processes.
Recommendation #7: Modify Internal DoD Reprogramming Requirements
Proposes delegating a share of General Transfer Authority (GTA) to the Military Departments on an annual basis to increase the ease of reprogramming by removing an echelon from the decision-making process. GTA for those less familiar is the congressional limit on how much can be transferred from say Procurement to RDT&E each year.
The Commission found that from FY 2011 to FY 2021, DoD did not maximize the use of its GTA 10 of the 11 years. Sometimes, it was as low as 35%.
Our Take: We concur with the Commission that this is a positive change. The Services should have more control over their ability to offer sources on an ATR package and defend that with Congress. Today, the OSD Comptroller acts as a filter (and not usually a transparent one) for any Above Threshold Reprogramming packages which essentially negates Service involvement in the final stages.
Impact Assessment: We consider this Medium since it has potential to help maximize the use of flexibilities that are not being fully exploited. Appropriators who resist change have been able to throw this fact back in DoD’s face when they ask for more flexibility - and DoD should strive to avoid that going forward.
Implementation Ease: It is Relatively Easy to implement since it just requires OSD Comptroller give up some portion of its control.
Recommendation #8a: Update Thresholds for Below Threshold Reprogrammings (BTR)
Proposes to adjust BTR thresholds to $25M for RDT&E, $40M for Procurement, $30M for O&M, and $15M for MILPERS.
As demonstrated below (graph from the Section 809 Panel), inflation has been eating away at below threshold reprogramming authority (meaning funds that DoD can move without congressional approval) for many years. It’s only worse today.
Our Take: We 100% concur with the Commission on this recommendation. Even the SAC-D (not known as budget reform champions) acknowledged in this year’s draft Senate report that an increase was warranted.
Impact Assessment: We consider this High since it has the immediate potential to create positive impacts since it will allow programs to share excess funds in a more meaningful way and allow acquisition executives the ability to reallocate funds to new priorities.
Implementation Ease: It is Relatively Easy to implement since it just requires the congressional appropriators to approve this increase in this year’s Appropriations Act. Given the budget churn, we probably shouldn’t expect it this cycle but certainly the next one.
Recommendation #8b: Allow Reprogramming of a Small Percentage of an Entire Appropriations Account with Regular Congressional Briefings and Oversight
Proposes replacing existing BTR thresholds for individual movements of funds at the BLI level with an approach that will allow the Department to move a small percentage of the funds within an appropriation account in the year of execution with a quarterly report to the congressional defense committees.
Based on historical data, the Commission proposes 0.5% of O&M accounts, 1.5% of RDT&E accounts, and 1.5% of Procurement accounts.
Our Take: We generally concur with the Commission on this recommendation as the existence of so many small budget lines limits DoD’s reprogramming potential (see graph below). However, the proposed values here are way too low - they should be closer to 7% to maximize authorized flexibilities. With the implementation of portfolios, this approach makes more sense too as there would be mechanisms in place looking across programs to identify where value could be maximized. Under a portfolio construct, a portion of this could also be allocated directly to PEOs. The reality of the implementation of this proposal now is that the Service HQs would use it as an easy source for Above Threshold Reprogramming actions and the program offices would be unlikely to see any of it. We would also not propose to increase congressional reporting beyond the current 1414 reporting process.
Impact Assessment: We consider this Low as the proposed percentage is way too small andif implemented in isolation since the odds are low that it would result in major cash flow to PEOs.
Implementation Ease: It is relatively easy to implement since it just requires the congressional appropriators to include supporting language in the next Appropriations Act. We think it is very unlikely to happen in the next cycle.
Recommendation #8c: Simplify New Start Notifications by Increasing the Notification Threshold
Proposes raising the threshold for congressional new start notifications to match BTR increases (see Recommendation 8a) and by standardizing guidance for the writing and interpretation of J-Books to minimize the number of new start notifications required.
Today, congressional new start letter notifications can be used for any effort that is expected to be less than $10M over its lifecycle (or for some higher valued safety efforts).
Our Take: We generally concur with the Commission on this recommendation. We certainly support increasing the threshold on new start letter notifications and standardizing guidance to improve DoD interpretations…since DoD needs more flexibility in this area. We do wish the Commission had addressed the limitation that new start notifications are only allowed if the $10M (or updated value) represents the completion of the entire effort. This is a hard bar to reach for most technology projects and it would have been helpful to quantify it i.e. not expected to exceed $10M over the FYDP (five-year period for instance). We also think the recommendation could have included language for DoD to streamline the letter notification process, so it wasn’t so burdensome and time-consuming by proposing delegation to the Services and requiring Financial Management shops to improve the workflow to avoid excessive reviews.
Impact Assessment: We consider this Medium as an increase to $25M for RDT&E and $40M for Procurement could allow for some small but important efforts to provide capability to warfighters. It would have been rated High if there was a time constraint on the project estimate and DoD was required to investigate its own processing delays.
Implementation Ease: It is Relatively Easy to implement since it just requires the congressional appropriators to include supporting language in the next Appropriations Act. We hope this change can happen in conjunction with the BTR increase. The Comptroller and OGC can work on standardizing language immediately.
Recommendation #9: Mitigate Problems Caused by CRs
Proposes to allow new starts to begin and allows an increase in development and production rates under CR if approved by both House and Senate in their draft bills.
Today, special language is required in a CR approving specific new start efforts to begin and rates for programs is based on the previous year’s budget which is highly limiting in cases where a program is ramping up.
Our Take: We 100% concur with the Commission on this recommendation. Given the regularity of CRs, this type of language and approval is desperately needed. If both the House and Senate approve an effort, then there is very little risk of it falling out in congressional conference deliberations.
Impact Assessment: We consider this High especially as DoD embarks on a modernization campaign which will have numerous programs starting and ramping up either development or production.
Implementation Ease: It is Relatively Easy to implement since it just requires the congressional appropriators to include supporting language in the next Appropriations Act. The FMR will have to be updated with new language.
Recommendation #10: Review and Consolidate Budget Line Items (BLI)
Proposes that DoD should continue to systematically review BLIs and work with the congressional defense committees to rationalize and consolidate BLIs where appropriate.
Today, there thousands of very small BLIs, as indicated by the chart below for FY23. The Commission notes that USSOCOM and the Army has had success consolidating BLIs and encourages other DoD agencies to adopt a similar approach.
Our Take: We concur with the Commission on this recommendation and recognize that this effort requires intense coordination with congressional defense committees since any consolidation is viewed as removing some levers of congressional control. However, we do not agree that this should happen “on a rolling basis over a five- to ten-year cycle.” There needs to be a sense of urgency here and that is too long of a timespan. There are some logical portfolios that should be formalized immediately and over a few years consolidated into more in coordination with the congressional defense committees. Taking more time is not likely to improve consensus given the turnover in DoD and Congress. Let’s strike while the iron is hot and while we have reform advocates in key committees.
Impact Assessment: We consider this High especially as it is one of the most impactful changes that can be implemented. It also is about more than just pushing budgets together, it’s also about shifting the culture to one of empowerment and accountability since acquisition executives and program managers will have more control over their ability to effect change.
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. Fully implementing this in one fell swoop would be nearly impossible but immediate progress can be made and should start with pilot portfolios from the Navy and Army. We are encouraged by the aggressive timeline laid out by the Department but VERY disappointed that it plans to start with the 61 to 6.3 accounts (where it will least impact fielding activities).
DoD Implementation Plan
(Systematically review and consolidate BLIs)
Key Actions & Activities:
Assemble a cross-functional team of key DoD stakeholders.
Assess the PPBE Commission’s recommendations to consolidate BLIs:
Address cases in which programs or systems have been subdivided into multiple BLIs that make them more difficult to manage;
Identify cases in which multiple programs or systems intended to provide a common capability could be combined into a single BLI;
Identify cases in which the consolidation of BLIs could result in improved performance; and
Take into consider the United States Special Operations Command’s best practices for BLI consolidation, as recommended by the commission.
Solicit feedback from internal and external stakeholders.
Develop options for consolidating and reducing the number of BLIs while maintaining sound funds control and preserving transparency for the congressional oversight committee staff.
Coordinate proposed plan across stakeholders.
Timeline:
Spring 2024: Kickoff meeting will be held with DoD stakeholders to begin the Department’s assessment of the Commission’s recommendation for the consolidation of BLIs.
Spring - Fall 2024: Establish a Cross-Functional Working Group (CFWG) with members from key DoD stakeholders. Finalize the scope of the review, and target areas for BLI consolidation in consultation with OMB.
Spring - Fall 2024: Solicit feedback from the Department, OMB, and congressional defense committees on the current budget structure across all appropriations. PB 2026’s review will focus on science & technology funding across the 6.1, 6.2, and 6.3 budget activities.
Develop options for incremental solutions to rationalize the BLI structure in consultation with responsible acquisition and affected leaders.
Brief potential options to all stakeholders and collect feedback.
Modify recommended action plan, if needed, and socialize with key stakeholders prior to any changes to the BLI structure.
Recommendation #11a: Allow Procurement, RDT&E, or O&M to be Used for the Full Cycle of Software Development, Acquisition, and Sustainment
Proposes that DoD and Congress should change the budgeting rules to allow a program (or organization) to use its primary appropriation (whether RDT&E, Procurement or O&M) to continuously deliver software.
Today, a program office must accurately budget for each appropriation that is needed to support its efforts ~2 years in advance of need. This often leads to misalignment as software needs are too dynamic to predict that far in advance and limits flexibility.
Our Take: We concur with the Commission on this recommendation and support any progress in this area. One of us helped run the BA-8 pilots and saw how much it helped programs to be able to use a more flexible appropriation. We do however have two primary issues with this recommendation as currently written:
It will be challenging for many programs to designate one primary appropriation for their software development as they often receive funding from different sources that don’t always have access to the same appropriation. One example is a program might receive some funds from HQ (likely RDT&E) but also from a Combatant Command (O&M). This approach could limit the ability of a program to accept say O&M funds for a specific effort if they have already had RDT&E funds appropriated for the larger program.
The Commission does not address term of availability which essentially means that if a program has O&M as its primary appropriation, then it would preclude it from accepting RDT&E and thereby losing its ability to carry over funds (since RDT&E is 2-year funding). It could inadvertently reduce a program’s flexibility.
Impact Assessment: We consider this High even though we see it presenting some challenges in execution. The ability for a program to develop software for any type of requirement and to procure licenses regardless of severability terms is incredibly impactful.
Implementation Ease: It is Very Challenging to implement since there are forces in Congress that resisted the scaling of BA-8 and will likely view this with similar distaste - and Comptroller will not be able to implement this recommendation without modified language in the next appropriations bill. In practice, this approach will also make oversight more challenging since budget documents for O&M are very different than RDT&E - leaving inconsistencies in how programs are budgeted for in the J-Books.
Recommendation #11B: Use O&M for Hardware Continuing Improvements
Proposes to allow O&M to be used for what historically would be considered investments given the difficulty in distinguishing between what is increased capability (which requires RDT&E and Procurement funding) and form/fit/function hardware updates to maintain a capability (which can be done with O&M funding).
The Financial Management Regulation today (based on annual Appropriation Act language) limits the use of O&M funding for an investment end item to $350K.
Our Take: We 100% support this recommendation. Program offices and depots need the ability to conduct the necessary upgrades with the funding that is available. Having to use Procurement funding for upgrades often requires a formal modification program and is more complicated than it needs to be if we are operating under the paradigm that we want hardware to evolve faster to keep pace with the threats. This will also provide the flexibility to conduct Diminishing Manufacturing Sources (DMS) mitigations in conjunction with capability upgrades.
Impact Assessment: We consider this High. Given DoD’s predilection to keep hardware systems operational for as long as possible, the positive downstream effects of this change are hard to overstate.
Implementation Ease: It is Moderately Challenging to implement since there are forces in Congress that have a vested interest in keeping close track/control over modification efforts and may resist this change. There is however a strong case and it’s possible the objections can be addressed in different ways (reporting for instance).
Recommendation #11C: Align Program and Program Office Funding to the Predominant Activity of the Program
Proposes to allow the predominant appropriation being used in the program office to fund all operating expenses and personnel rather than have to parse support costs across multiple appropriations.
Our Take: We definitely support this recommendation. It’s an easy efficiency gain that removes on more burden off the backs of program and financial managers.
Impact Assessment: We consider this Low. It is helpful for program offices but not likely to result in any noticeable shift in improving military capabilities.
Implementation Ease: It is Relatively Easy to implement since there shouldn’t be too much resistance from Congress and it can be rolled into the (hopefully) numerous other updates that will be made to the FMR as part of implementing the Commission’s recommendations.
Recommendation #12: Review and Update PPBE-Related Guidance Documents
Proposes a systematic revision and update of the FMR, DoDD 7045.14, “The Planning, Programming, Budgeting, and Execution (PPBE) Process, and other applicable documents to provide clear, consistent, and current guidance. The Commission recommends an update cycle at least every three years starting in CY 2024 employing a dedicated cross-functional team.
Our Take: We definitely support this recommendation. The FMR is currently updated on an ad-hoc basis, usually to add more language to the ever-growing tome (currently at 7,383 pages). The principles that guide the reviews should be focused on simplifying guidance wherever possible, enhancing flexibility that DoD has discretion to provide and providing use case examples so that legal offices have a basis for advising programs on fiscal law matters.
Impact Assessment: We consider this High. There is a lot of inconsistency in interpretations across Services and Agencies…and even across program offices in the same Service. Any improvements in this area (hopefully while larger reforms are being implemented) would be of great help to maximizing use of available funds.
Implementation Ease: It is Already Planned and included in DoD’s implementation plan but as the Commission notes the initial major rewrite will likely require outside resources to assist. The updates planned for CY24 should be focused on the highest impact areas i.e. not pick easier ones to start and delay real reform.
DoD Implementation Plan (Rec #6 in Interim Report)
(Review and Update of PPBE-related guidance documents.)
Key Actions & Activities:
Identify FMR chapters that require revisions and assign a revision category, action officer, and publication due date.
Update and reissue the DoDD 7045.14 with a focus on incorporating recent reforms to the program review process and a review of assigned responsibilities for the PPBE process.
Timeline
2Q CY24: Start the process of assessing and categorizing FMR chapters for revision, and assign a revision category, action officer, and publication due date.
End of CY24: Update and publish 20 percent of chapters identified for revision.
End of CY25: Update and publish 40 percent of chapters identified for revision.
End of CY26: update and publish the remaining 40 percent of chapters identified for revision.
Recommendation #13: Improve Awareness of Technology Resourcing Authorities
Proposes the development of a handbook on available innovation and adaptability funds and authorities that is electronically posted and distributed to the entire DoD financial management and acquisition workforces. Improved awareness could help further bridge the valley of death by ensuring that all personnel have complete and up-to-date information on resourcing mechanisms.
Our Take: We definitely support this recommendation. We had made a similar recommendation in our PPBE paper and think that improved awareness on when submissions are due, illumination of the criteria for selection and request input for improving the process would certainly be beneficial.
Impact Assessment: We consider this Low. While we think this is beneficial, the fact is that there are few innovation funds reserved for the larger workforce. RDER proposals are largely crafted by R&E and APFIT funds have fairly broad awareness (given the numbers of submissions). DIU hedge dollars are likely to be driven by the CCMDs. If DoD was able to bring more significant dollars back into RIF/RISE or get movement on the DMA fund (see recommendation #16) then the impact on this could be more significant.
Implementation Ease: It is Relatively Easy to implement since it really just requires compiling and publishing currently available information.
Recommendation #14: Establish Special Transfer Authority for Programs Around Milestone Decisions
Proposes the creation of a new special transfer authority, to be executed in the same manner and subject to the same dollar limitations as a BTR, to move money between RDT&E and Procurement accounts within a single program to address the unpredictability inherent in the transition from the development to production phase.
Our Take: We definitely support this recommendation. This authority could be especially helpful when it comes to Middle Tier of Acquisition programs which are actively prototyping and need to make faster decisions to transition to production. This is an excellent near-term flexibility that could potentially be expanded upon over time. If we have one fault with the recommendation, it is limiting it to BTR threshold levels. A program that completes development earlier and wants to accelerate into production could be highly constrained by BTR limits. A production program requires a basic ordering level so if one system costs $41M, then this authority would be unhelpful (even with the changes in recommendation 8a). Given the funds being used in this proposal are for the same system, it would have been more beneficial to not impose a dollar limit but maybe have a congressional notification process.
Impact Assessment: We consider this Medium. This could definitely be helpful and would be rated High absent the BTR limit.
Implementation Ease: It is Moderately Challenging to implement given the likely resistance to allowing a program to go into production without specific congressional approval. In terms of execution, it merely requires some general language in the next appropriations bill so if the resistance can be addressed than this becomes a lot easier.
Recommendation #15: Rebaseline OSD Obligation and Expenditure Benchmarks
Proposes the reassessing the baseline obligation and expenditure benchmarks using recent historical execution at the budget line-item level for all appropriations and establish new benchmarks that reflect more realistic program expectations under current circumstances. There is a considerable impact to obligations and expenditures as a result of continuing resolutions. The AIRC found a distinct correlation between a CR and how funds were obligated once a full appropriation act was passed. It found that obligations spiked in the third month after budget enactment even if the spike varied between BAs for RDT&E.
Our Take: We definitely support this recommendation. The rates used to assess program execution should reflect reality to the maximum extent possible. At the same time, obligation and execution rates are an increasingly irrelevant measure and it probably would have been best if the Commission recommended retiring them. The fact is that internal to DoD, they are just one means of determining whether to rephase a program’s planned funding. Congressional appropriations staff does not feel constrained about imposing an execution mark on a program that is fully meeting obligation/expenditure rates. Hopefully with the advent of better IT systems, obligations and expenditures can be viewed through a broader lens that reduces the myopic focus on meeting standardized rates. For instance, a program that is doing detailed planning earlier in the year but then embarking on an 18-month experimentation campaign with users should not have their funding cut just because a major activity started later in the year.
This does raise a different question of whether DoD should have an investment arm that can generate revenue from funds that are not being actively used similar to a commercial entity. That would avoid the “money at rest” challenge that brings so much focus to obligation/expenditure rates.
Impact Assessment: We consider this Low. Sadly, this change is likely to have little effect on military outcomes. It may give some programs (especially under a CR) a little more breathing room that maybe helps them make better decisions but that remains to be seen.
Implementation Ease: It is Relatively Easy to implement given the authority exists in the Comptroller office to adjust rates. This probably should be done in consultation with Congress since they are the recipients of some of that reporting even if they often don’t honor it.
Recommendation #16: Encourage Use of the Defense Modernization Account
Proposes that DoD fully utilize the Defense Modernization Account (DMA), authorized in Title 10, U.S.C. §3136, to remove barriers to execution and allow the transfer of any expiring funds, available due to efficiencies and other savings, into the account up to $1B.
DMA is an account that DoD hypothetically can use to move expiring funds and be allowed to continue to make use of them for specific purposes.
Our Take: We definitely support this recommendation. One of the authors of this blog served on a team to revitalize use of the DMA back in 2016 and there were a number of complexities that caused disagreement among the group and stymied any continued progress. There are remaining questions regarding how the Services contribute to the fund, how funds are allocated (equally), the governance structure, the reporting mechanisms and the availability of funds (how their original period is converted). Some of these issues may have been resolved but it still is not being used so at least some challenges remain. Hopefully, the Commissions’ prodding will drive DoD to take another serious attempt at making this viable and will encourage Congress to provide additional clarifying guidance.
Impact Assessment: We consider this Medium. This fund could make a real difference in maximizing all available funds but is likely to always be somewhat challenged in execution so expectations should be reasonably set.
Implementation Ease: It is Very Challenging to implement given the various issues identified and the inability of DoD to make it operational to date.
—Strengthen Relationships Between DoD and Congress—
Congressional defense committee professional staff members (PSM) told the Commission that Congress receives a great deal of information about the defense budget during the annual PB submission; however, following that initial activity, information is received occasionally and primarily when specifically requested, thereby reducing Congress’s ability to track and follow the larger picture or react to changing programmatic and budgetary needs.
The Commission was also told that responses to congressional RFIs can sometimes take months to coordinate, often due to the internal staffing process.
The PSMs from the congressional defense committees also specifically expressed concerns about the quality and timeliness of information they receive in the DoD’s formal justification books or J-books—the primary source of information provided to Congress regarding DoD’s rationale for funding specific programs.
The challenges that congressional defense committees face has led to an increase in reporting requirements to attempt to force DoD to be more transparent which has subsequently led to DoD officials being burdened with more official responses that have to be compiled and staffed with information that sometimes was already provided in different response.
Proposes DoD be proactive in reaching out to Congress to help build better relationships with their congressional counterparts by providing information at key intervals to ensure Congress remains engaged and up to date on things such as major acquisition programs, training exercises, and fielding of new capabilities.
To implement this recommendation, the Commission recommends that DoD should establish a working group with the goal of enhanced, institutionalized transparency. The group should identify areas in which DoD can routinely engage during the year of execution and prior to markup to provide analysis of the impacts of congressional adds and cuts to the proposed budget request, as well as any effects on other programs, impacts on the industrial base, or additional resourcing requirements.
Our Take: We 100% support this recommendation. It is our experience that improved DoD communication with the Hill usually results in positive outcomes as it allows both parties to explain their reasoning in more depth, communicate nances and most importantly build a relationship with trust. Generally, congressional committees respond positively to being included in decision making and from visits by senior leaders (outside of formal hearings). Program managers and others in influential acquisition positions should also have some level of open communications with those that have a specific interest in their program.
Impact Assessment: We consider this High. In our estimation, this type of open communication cannot happen enough.
Implementation Ease: A portion of the recommendation is Already Planned and included in DoD’s Implementation Plan. There can be other immediate actions undertaken by senior leaders who really just have to make the time to have these types of engagements. This should also extend to lower-level acquisition professionals (like PMs) who should have a connection to key PSMs when questions arise.
DoD Implementation Plan (Rec #1 in Interim Report)
(Mid-year update briefing to defense committees)
Key Actions & Activities: Assemble a cross-functional team to develop the criteria, process, and delivery method.
Timeline
April - June 2024: Assemble a DoD cross-functional team to develop the criteria, process, and delivery method; in conjunction with the finalization of the Omnibus, and to ready the mid-year update.
July 2024: Conduct a mid-year discussion focused on the Omnibus reprogramming and execution.
August – September 2024: Solicit feedback from defense committees and DoD Components to incorporate lessons learned in preparation for the FY 2025 update.
Spring 2025: Work with the DoD cross-functional team, OMB, and the defense committees, as necessary, to develop the criteria for the expanded mid-year to include programmatic, budget, emerging technology, and geopolitical updates.
July 2025: Conduct expanded mid-year briefing.
August 2025: Solicit feedback from defense committees and the Department to incorporate lessons learned in prep for the FY 2026 update.
Recommendation #18: Restructure the Justification Books
Proposes modifying the J-Books (the budget exhibits submitted to the Hill each year) based on detailed feedback from over a dozen congressional PSMs. Changes include how information is being provided, establishing more common formats and content, eliminating exhibits that are no longer needed or of value and providing more depth on cross-cutting programs and activities. There was a definite demand signal for more understanding of how O&M funds contribute to defense acquisition programs.
Our Take: We definitely support this recommendation. The current J-Books are kind of a mess in terms of the varying levels of detail from one program to the next. In many cases, they just sloppily repeat the same generic information year to year. A lot of information is confusing and sometimes seems deliberately vague. The major challenge however is the fact that they are often drafted many months before release to the Hill so there is a built-in disincentive to be too specific - for fear of things changing. For J-Book modifications to be useful, they will have to be accompanied by other changes such as having an accessible database with updates and also the improved communication recommendation. The J-Books will never by themselves satisfy all the details that Congress wants to have.
The Commission recommends that DoD and Congress establish a joint working group with representatives from OSD, Services and the congressional defense committees. The working group should debate and strive to agree on content and format for the J-books; the DoD should implement all agreed-to changes.
Impact Assessment: We consider this Medium. While improvements to the J-Books are unlikely to significantly change congressional marks that Congress makes or negate the need for further communication, it does demonstrate that DoD is taking steps to address congressional concerns and may be a good negotiation chip to provide more details in return for some additional flexibilities.
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. The timeline is roughly one year but there is no detail on when this would actually be incorporated into a formal budget submission.
Assemble a cross-functional working group comprised of FM experts with a representative from each Military Service and Defense Agency.
Assess the PPBE Reform Commission’s recommendation to restructure justification books.
Develop a questionnaire to facilitate feedback from the DoD enterprise as well as the congressional defense oversight committees.
Engage with the congressional defense oversight committees to solicit feedback on the current justification book structure across all appropriations.
Timeline:
Spring 2024:
Hold a workshop with all DoD stakeholders to begin the Department’s assessment of the Commission’s recommendation to restructure the justification books.
Assemble a cross-functional group with representatives from each Military Service and Defense Agency. The group will begin engaging with DoD stakeholders and the congressional defense oversight committees to solicit feedback on the current justification book structure across all appropriations.
Late 2025: The working group will complete its work in about one year after its establishment.
Recommendation #19: Establish Classified and Unclassified Communication Enclaves
Proposes expediting the delivery of a classified and unclassified enclave to share appropriate information with Congress and for Congress to share information with DoD. Data to be shared in the initial capability includes:
Annual PB and budget justification materials (J-books);
Reprogramming actions (Below and Above Threshold);
Financial execution data (obligations and expenditures);
Expanded acquisition program data (significant events, execution, and mandatory acquisition reports) • Congressional reporting requirements;
Congressional communications with DoD (RFIs; Advanced Policy Questions (APQ); Questions for the Record (QFR); and constituent requests).
Our Take: We definitely support this recommendation. There needs to be mechanisms for easier sharing of up-to-date information than the current approach of e-mailing large files or worse lugging over pallets full of paper documents. The Commission makes a very cogent recommendation by proposing a pilot for the delivery of the FY 2026 PB and J-books that would provide an opportunity for experiential learning and to develop a repeatable process for iterating on the initial capability with the right set of congressional users.
Impact Assessment: We consider this High. This could be a game changer in how information is shared and lead to more fruitful discussions between key leaders in DoD and Congress.
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. DoD has an aggressive schedule planned but is likely to face quite a few challenges along the way.
(Establish classified and unclassified enclaves for DoD-Congress-DoD information sharing.)
Key Actions & Activities:
Application 1 for delivery of the annual PB request and budget justification materials.
Application 2 for congressional delivery of data to DoD.
Application 3 for reprogramming actions and execution reports.
Timeline: Delivery is estimated to be 12 months from minimum viable product (MVP) through initial operating capability (IOC) to full operating capability (FOC). Once funding is identified for these applications, delivery will begin.
—Modernize Business Systems and Data Analytics—
The complex and interconnected nature of systems and data environments makes attempting to change only a subset of systems, which rely on the data and standards of systems adjacent to the defense resourcing process, extremely challenging. This is th3 reason why recommendations are included from enterprise transformation to financial management system-specific changes, since they all are critical to delivering a contemporary underlying architecture for the defense resourcing process.
Recommendation #20: Create a Common Analytics Platform
Proposes the development of a common platform to provide enterprise-wide and streamlined access to best of breed analytic capabilities and authoritative data across functional sectors, to include but not limited to finance, logistics, contracting, installation management, human resource management, training, and readiness.
The Commission perceives enterprise use of best of breed capabilities and authoritative data as enabling a more informed and integrated strategy, resource allocation, and execution processes. It would have the potential to integrate prior year execution and operational test data, as well as forecast inflation costs and other price adjustments, to model resource allocation scenarios and conduct tradeoff analysis.
Our Take: We support this recommendation. Any transparency that can be brought to the decision-making processes that details the budget will be a major step forward. It will be a challenge to coalesce all of the necessary data and build the analytics engine that will be needed to make sense of the many different scenarios but if it can be used to make more informed tradeoffs, then that will be a major win.
Impact Assessment: We consider this Medium. This will take some time to become a widely used enterprise resource and given the parochialism, it may never be adopted in the way that is envisioned.
Implementation Ease: A portion of the recommendation is Already Planned and included in DoD’s Implementation Plan.
Leverage Advana during execution reviews to enhance the Department’s ability to assess program performance.
Maximize NGRMS and Advana integration for application across the full range of PPBE activities and expand automated analytics capabilities.
Further develop Advana’s tools for the Programming and Budgeting processes within the PPBE cycle.
Timeline: FY24 through FY26
Recommendation #21: Strengthen Governance for DoD Business Systems
Proposes the establishment of a Deputy CIO for Business Systems to develop a charter and outline a DoD Business Systems governance process who in conjunction with other stakeholders should develop and lead the execution of an Enterprise Business Systems Roadmap with all associated details, performance measures and timelines, and ensure compliance by leveraging their budget certification authority.
The Commission made this recommendation after several months of interviews and discussions to identify the current state of DoD business systems, which was clearly a more complicated task than it should have been.
Our Take: We definitely agree with the facts asserted that DoD has a poor handle on business systems (and possibly wastes billions each year). We also agree with the creation of an Enterprise Business Systems Roadmap which would be helpful in planning the investments needed to progress towards a leadership-supported vision. We do differ with the Commission on who should take lead on this effort. The CIO has had a clear defense business system rationalization role for many years and has made little effort (either ineptness or lack of prioritization). Handing this important to the same organization is a recipe for disaster. If the Deputy Secretary believes this is a priority, then she should form a working group under the DMAG chaired by an expert in business systems (along with CDAO) who has no organizational equity. The WG chair should assess the current requirements, the current systems and explore what efficiencies are possible.
Impact Assessment: We consider this High. DoD needs more leadership attention on this problem and the implementation of this recommendation could be highly impactful if executed correctly.
Implementation Ease: It is Moderately Challenging to implement given all the various stakeholders who are resistant to change. However, Deputy Secretary attention (and an empowered working group) could go a long way to brining some much-needed change in this area. This is included in DoD’s Implementation Plan but does not go nearly as far as the updated Commission recommendation and is more centered on providing a report.
(Provide annual report to Congress and briefing on DoD’s strategy for consolidating, rationalizing, integrating, and modernizing DoD PPBE business systems and all related tools to support the PPBE process.)
Key Actions & Activities:
Validate accuracy and completeness of PPBE system scope within the Enterprise FM IT Roadmap, adding/removing systems as appropriate.
Implement and execute a recurring process that leverages the DoD Business Architecture, the Financial Systems Database, DoD Information Technology Portfolio Repository, and other authoritative sources to validate the accuracy and completeness of PPBE systems inventory.
Assess current system rationalization and prioritization criteria to determine if additional criteria or assessment processes should be designed and implemented.
Develop IT Portfolio Management dashboards, tools, and reporting mechanisms.
Update instruction on business systems requirements and acquisition (DoDI 5000.7512), including stakeholder responsibilities.
Timeline: FY24.
Recommendation #22: Accelerate Progress Towards Auditable Financial Statements
Proposes that Comptroller (in conjunction with various other OSD organizations) develop and approve policy changes to financial systems needed to support the financial statement audit.
Our Take: We support this recommendation. While we believe auditability is overall an unhelpful diversion from the real issues, DoD continues to get beat over the head for not being auditable - so it needs to be addressed and put to bed.
Impact Assessment: We consider this Low. Practically speaking, this impacts very little.
Implementation Ease: It is Very Challenging to implement given the many years that have already been dedicated to the effort.
Recommendation #23: Continue Rationalization of the OSD Resourcing Systems
Proposes accelerating efforts to consolidate and streamline OSD programming and budgeting systems and processes as well as analytic capabilities, including providing appropriate enterprise access to PDMs and PBDs (or Resource Allocation Documents under the new DRS) and other similar guidance documents.
The Commission believes that a single authoritative, integrated, analytic, digital environment for OSD will enable increased efficiencies during the new DRS Resource Allocation Decision (RAD) process, reduce duplication of effort and inaccuracies of reporting data, support better capability tradeoff analysis, and provide clarity for final Department-wide RADs.
Our Take: We definitely support this recommendation. This is a logical step and could be useful in making better decisions. This recommendation does seem somewhat duplicative with recommendation #20 but is more focused on specific budgeting systems.
Impact Assessment: We consider this Medium. This could definitely be helpful in bringing together disparate capabilities to inform more collective budget tradeoff decisions…depending on the modified business process that are adopted in conjunction with the application (that’s where the real change will happen).
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. There will be a lot of broken glass in implementing this and it will require senior leadership advocacy to see it through completion.
(Continue, and if possible, accelerate consolidation of the OSD programming and budgeting systems.)
Key Actions & Activities: Expand incrementally providing the flexibility and standardization needed to support a streamlined and centralized PPBE process. As new lessons are learned, continue to expand efforts to modernize the PPBE process.
Timeline: FY24 through FY26
Recommendation #24: Modernize the Tracking of Congressionally Directed Actions
Proposes that DoD should modernize the process and platform by which the DoD tasks and tracks congressionally directed actions to support automated ingestion, identification, and tasking of congressional reporting requirements from bill and report text, to include creating an unclassified tracking mechanism for all classified requirements.
DoD currently uses the application CHARRTS to track and task DoD personnel with congressionally directed actions. At any given time, CHARRTS is tracking more than 1,600 reporting requirements and is essential to ensuring the DoD knows the status of responses to statutory tasks, but by all accounts, DoD has made few major changes despite multiple congressional directives requiring it.
Our Take: We definitely support this recommendation. The ability to easily track congressional actions and provide timely responses through the system would be very helpful in defending against congressional marks and ensuring that congressional stakeholders get rapid answers to questions that could influence the congressional budget deliberations in a more positive direction.
Impact Assessment: We consider this Medium. This could definitely be impactful and start to build more trust between DoD and key congressional stakeholders.
Implementation Ease: It is Relatively Easy to implement given the target system already exists and merely requires some upgrades to allow for some fairly basic functionality (file sharing).
—Strengthen the Capability of the Resourcing Workforce—
Recommendation #25: Continue the Focus on Recruiting and Retention
Proposes strengthening avenues for improving recruiting for CAPE and Comptroller positions.
Our Take: We definitely need more talented people in DoD but the last thing we want to see is the CAPE and Comptroller shops become larger empires. Once again, we don’t understand why the Commission thinks so highly of shops that got us into the position we are in and expects (overoptimistically) that they will change their posture.
Impact Assessment: We consider this Low. We view this as incredibly unhelpful to the goals we envisioned for a modern budgeting system (DRS).
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. DoD is initiating a pilot program.
(Continue the focus on improving recruiting and retention.)
Key Actions & Activities: Design, Stand-Up, and Execute pilot plan.
Timeline: 12 months that includes one month research/design, two months stand-up, and nine months to execute pilot and provide final report.
Recommendation #26: Streamline Processes and Improve Analytic Capabilities
Proposes delegating the final approval signatory on many financial-related documents to senior SES personnel rather than requiring the Comptroller to sign directly; making greater use a single resourcing system to record changes made during the programming and budgeting phases of PPBE; and more and better use of data analytics and business tools to reduce workload on data calls to find information.
Our Take: We support this recommendation. If this could accelerate the processing of reprogramming packages and other financial decision documents that impact acquisition programs, then this should be implemented immediately.
Impact Assessment: We consider this Medium. This could be helpful depending on the implementation specifically whether the political appointee level still wants to review products (even if not serving as signatory).
Implementation Ease: It is It is Already Planned and included in DoD’s Implementation Plan. The plan sounds like a reasonable level of progress can be made this year, but the real functionality will not be online until next year. DoD does not directly address delegation of signatory authority.
(Streamline processes and improve analytic capabilities to reduce workload.)
Key Actions & Activities:
Enhance budgetary and execution trend analysis with Advana.
Embed performance management executive analytics in Pulse.
Improve general ledger nomenclature alignment.
Streamline and automate data ingestion processes.
Enhance Advana’s financial management segment’s data management.
Optimize NGRMS data integration.
Invest in a change management program.
Timeline:
Beginning in 2024:
Enhance budgetary and execution trend analysis with Advana.
Invest in a change management program.
Embed performance management executive analytics in Pulse.
FY25
Streamline and automate data ingestion processes during new data and system onboarding.
Optimize NGRMS data integration.
Enhance Advana’s financial management segment’s data management.
FY26
Improve general ledger nomenclature alignment.
Recommendation #27a: Improve Training for Preparation of Justification Materials
Proposes that better training on a number of topics be required for resource management and acquisition personnel, as well as for those who execute and support the PPBE process from strategy through execution.
Our Take: We definitely support this recommendation. There is no standard training and education system for how to work through the various processes in the Pentagon and Service Headquarter shops. Rather, each Service puts together its own ad-hoc version of how the process works that invariably misses key pieces of the process at other levels of OSD and especially as it relates to other Services.
Impact Assessment: We consider this Low. This could definitely be helpful in improving overall processes and may help to accelerate the execution of some aspects of PPBE (or DRS).
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. However, the pure focus on the FM community misses the point that J-Books are mostly populated by non-FM program office staff who best understand the program plan, so the current planned implementation is lacking in the coverage of personnel.
(Improve training for preparation of budget justification materials.)
Key Actions & Activities:
Establish a DoD FM Curriculum Review Committee and approve charter and governance charter.
Complete the three phases of the DoD FM Curriculum Review Process:
Final review by FM Senior Leadership Group (SLG) to approve and incorporate new and revised training classes into the DFMCP.
Timeline:
2Q CY24: establish a DoD FM Curriculum Review Committee
Summer 2024: complete the DoD FM Curriculum Review Process.
Fall 2024: add training classes to DFMCP after FM Senior Leadership Group review and approval.
Recommendation #27B: Improve Training for DoD Liaisons
Proposes improving the onboarding training for new congressional liaisons to include sharing information and best practices across the liaison offices.
Our Take: We support this recommendation. It can only be helpful to have informed liaisons who are working directly with the Hill.
Impact Assessment: We consider this Medium. This could definitely be helpful in improving the communication channels with the Hill. The training needs to contain practices for bringing in the right experts to have a real discussion with members or staffers rather than trying to relay details through less knowledgeable individuals.
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. The plan sounds reasonable.
Identify current DoD Component liaison training and best practices.
Identify required knowledge and skills for liaisons, recognizing existing appropriations guidance.
Align existing training and education to required knowledge and skills and source or develop training for any gaps.
Identify liaison positions and current liaisons within the Department.
Assess knowledge and skills of current and incoming liaisons.
Provide training/education to liaisons.
Maintain records of liaison positions, current and inbound liaisons, and training and education to sustain effort.
Codify requirements in DoD guidance.
Timeline: Beginning in 2Q CY24 and concluding in Winter 2024.
Recommendation #27C: Expand Training on Data Analytics
Proposes shifting the focus for personnel supporting the PPBE process needs to shift from finding and reconciling data to analysis of the available authoritative information by expanding opportunities to receive training on the applications, data sources, and capabilities of and within the Advana platform.
Feedback from different users of the PPBE process such as CAPE, the Joint Staff, and the OUSD(C) mentioned concerns about their ability to use and access data via Advana.
Our Take: We definitely support this recommendation. This can only be helpful for personnel working key actions to have easier access to critical information and be able to access analytics - if it helps speed up the process.
Impact Assessment: We consider this Low. This could be helpful but seems unlikely to have a significant impact.
Implementation Ease: It is Relatively Easy to implement since the information needed should be able to be compiled by the developers of the Advana system.
Recommendation #27d: Improve Understanding of Private Sector Practices
Proposes that PPBE personnel should be better informed about private sector firms and their incentive structures to increase understanding about how PPBE decisions impact private firms and make better decisions during the budgeting process.
Familiarization information should include, but not be limited to profit and loss considerations, market analyses that private enterprises use to make decisions about DoD projects, short timelines faced by some small businesses, and differences in the overall culture between private firms and DoD.
Our Take: We definitely support this recommendation. Much of DoD needs this type of information to do their job better. An alternate proposal would be for DIU, OSC and the DoD Office of Small Business Programs to compile a training with these elements for all acquisition personnel and offer it as an initial pilot to those involved in the PPBE process.
Impact Assessment: We consider this High. This could be immensely helpful since few decisions on DoD currently use these considerations in their process. The impact could range from budget programmers better understanding how funding needs to be laid in over a certain period to cybersecurity authorizers better balancing the burdens imposed on small businesses to field an application.
Implementation Ease: It is Already Planned and included in DoD’s Implementation Plan. The action plan is overly generic though and doesn’t appear that serious given there are no set periods for review or any formal training or specific products that are planned to be generated. This needs to be flushed out with more details.
(Improve understanding of private sector practices)
Key Actions & Activities:
Establish a cadence for regular site visits and meetings with private sector entities, including financial partners such as venture capital and private equity firms, to understand business operating models, financial structures and incentives, and differences in operating timelines.
Regular engagements with industry informed by subject matter expert research and analysis.
Conduct recurring analysis of the state of the industrial base, with in-depth assessments of company financial data, capabilities, portfolio, capital structure, alignment to defense priorities, opportunities, and challenges.
Increase the use of data and analytics, including researching publicly available information (financials, market data, and capabilities) and internal DoD data (such as Program Executive Office assessments).
Ensure that industry engagement in support of the National Defense Industrial Strategy aligns to and informs the PBBE process and provides long-term plans and guidance for investment in the industrial base.
Adopt a proactive, analytical approach to engaging industry that reflects National Defense Strategy and National Defense Industrial Strategy priorities.
Timeline: No set timeline.
Recommendation #28: Establish an Implementation Team for Commission Recommendations
Proposes the creation of a cross-functional implementation team for a three-to-five-year timeframe that reports directly to the Deputy Secretary of Defense to oversee and implement recommendations.
Our Take: We 100% support this recommendation. This is the most critical aspect of the entire suite of recommendations since it is easy for DoD to make promises of reform but then slow roll implementation. The good news is that DoD is already working to stand up teams to support recommendations from the interim report that the Commission issued.
Impact Assessment: We consider this High. Full and correct implementation of even a fraction of the recommendations would be incredibly impactful for DoD and national security writ large.
Implementation Ease: It is Very Challenging to manage given the many stakeholders that are involved and the various rice bowls that will have to be disrupted. The implementation team will need the full cooperation of numerous DoD organizations and will need to have open communication with key staffers on the Hill to effectively implement these changes.
**We ask you the reader to stay engaged on the high-priority recommendations in this report. Highlight the proposals to those in your network, advocate where you can and help if you have the opportunity. Change to the archaic PPBE process will be beneficial for everyone in the national security space**
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