We welcome the Congressional initiatives to improve Planning, Programming, Budgeting and Execution (PPBE). We encourage the Committee to invite public participation in its activities. This will provide greater transparency to taxpayers and give all stakeholders the opportunity to contribute ideas for improvement. However, the current initiatives are neither big enough, complete enough, or bold enough to power new mission outcomes.
We propose 5 bold ideas for real innovation in PPBE.
- Start with modern, Fortune 500-tested financial planning processes.
- Eliminate the “color of money”.
- Decentralize Finance/Resource Allocation.
- Shift the focus of PPBE from inputs ($s) to National Defense Strategy outcomes.
- Expand the charter of the expert commission beyond process.
Start with modern, Fortune 500-tested financial planning processes. After 60+ years of tinkering PPBE has become slow, complex, byzantine and rigid. Any effort to reform it will anchor to the current inefficient state, producing only minor change. The core, broken process will remain intact. It was designed for cold war strategy with a static enemy and supported by an industrial age economy. The game is played differently now. We now face asymmetrical threats and whole-of-country competition in an information age economy. That calls for budget approaches that integrate across traditional administrative and funding silos. It calls for the ability to respond to multi-dimensional, global competition and threats that change daily. We need a wholly new process that is standard for the entire DoD and the whole of Federal government. Today’s Fortune 500-tested financial planning processes have a proven track record of allocating resources well against major systemic changes. These software-based processes support multi-dimensional competition. We need a digital POM so let’s get PPBE tuned for software.
Eliminate the “color of money”. When PPBE (PPBS) was created, budgets were dominated by hardware for weapons platforms. It made sense to have different appropriations corresponding to hardware acquisition lifecycle phases – from Research and Development (R&D) through to Operations and Maintenance (O&M). But now the performance of many weapon systems is determined by software. As DepSecDef Hicks has pointed out, delivering a more lethal force requires the ability to evolve faster and be more adaptable than our adversaries. The DoD’s adaptability increasingly relies on software. The ability to securely and rapidly deliver resilient software capability is a competitive advantage that will define future conflicts. Today’s best practices in agile software engineering make those old hardware lifecycle phases irrelevant. Instead, tie money to purpose with agility in how resources are applied, and without artificial barriers. This will eliminate the need for omnibus reprogramming activities at the end of the fiscal year.
Decentralize Finance/Resource Allocation: Just as DeFi is taking over banking, Decentralized Resource Allocation (DeRA) should drive any future PPBE initiatives. While Joint Operators at all levels embrace the concept of “Commander’s Intent” for mission execution, the DoD has failed to embrace the same concept for resource allocation. Moving to a more Decentralized Resource Allocation and Execution process will empower users at the lowest levels to make data-driven, fiscally informed decisions that support Commanders Intent. This will ensure that limited resources are executed both efficiently and effectively. Coupled with improved visibility, DeRA will allow the DoD to finally become more agile and responsive to emerging threats and risk to mission. DeRA will provide a consensus mechanism that performs in real time what the PPBE mechanisms like CEBs and JROCs attempt and budget review processes attempt to do bureaucratically on the POM/budget cycle. This requires technology and integrated software platforms that ensure enterprise-wide alignment of priorities, resources and approvals in real-time.
Shift the focus of PPBE from inputs ($s) to National Defense Strategy outcomes. Today PPBE is focused on the management of inputs, especially budget $s to DoD operations. This is a useful discipline. However, taxpayers care far more about getting results-for-money (ROI). The current PPBE process is ill-equipped to even identify, let alone optimize results. Let’s get accountability front-and-center. It’s time to refocus PPBE on performance management, including prioritizing the outputs and goals of the National Defense Strategy at each step in the process, with evidence-based indicators of effectiveness and other outcomes.
Expand the charter of the expert commission beyond process. Yes, the process needs to be addressed. But real transformation will require changes to people and culture, policy and authorities, partners and IT platforms. Focusing narrowly on process, without these other dimensions, is a sure path to the status quo. We need a comprehensive roadmap for complete transformation of PPBE.
At Definitive Logic we recognize the importance and impact of the committee’s work. The time is ripe to make PPBE a powerful differentiator in the coming decades of great power competition.
Let’s be bold!