Washington Examiner

Big Changes Are Coming for the Pentagon Budget

Secretary of Defense Lloyd Austin holds a joint press conference at the Pentagon on May 20, 2024, in Arlington, Virginia. (Photo by Kevin Dietsch/Getty Images)
An aerial view of the Pentagon in Washington, DC, on May 15, 2023. (US Air Force Staff Sgt. John Wright)

If anyone still thought our defense industrial base wasn’t in serious trouble, the most recent Government Accountability Office report on how we acquire and advance new weapons systems should set people straight.

By looking at the characteristics and performance of 101 of the Pentagon’s costliest weapon programs, the GAO found that more than half of its 26 major defense acquisition programs that have yet to deliver operational capability have reported more delays.

In fact, the word “delay” highlights most of the 261-page report, with the GAO putting the blame squarely on a systemic failure to acquire new systems quickly and to see them through to execution.

The report also found that the average time it takes for major defense acquisition programs to deliver capability has grown from eight years last year to 11 years this year. At a time when China is able to acquire new weapons systems five times faster than the United States, these numbers are unacceptable.

Fortunately, the winds of change will come to the Pentagon if Congress allows them to blow through its budget system.  

In 2022, Congress appointed a blue-ribbon commission to recommend reforms in the Pentagon’s Planning, Programming, Budgeting, and Execution system. That commission issued its final report, which I helped write and edit, in March.

After two years of research, analysis, and discussion and conducting more than 1,100 interviews with industry and defense experts, the commission has done what no one has done in 60 years: It reimagined how the Pentagon should spend the money Congress gives it in order to protect America better and more efficiently.

The current PPBE system was designed in the early 1960s. It reflects an Industrial Age mentality about how to acquire, pay for, and maintain the weapons our military services need.

One of the key recommendations of the commission’s 431-page report has been to replace PPBE altogether with a new Defense Resourcing System. The goal of DRS is to create a more seamless flow of resource allocation so Pentagon spending aligns with current overall strategic goals (e.g. confronting China’s growing naval threat) while also gaining more efficient performance at all levels of the allocation process.

The commission’s list of 28 policy recommendations also includes specific reforms that will allow the Department of Defense to move more at the speed of relevance rather than the tempo set by bureaucratic rules. These include increasing the availability of operating funds by allowing a 5% carryover of funds related to military personnel and operations and maintenance into the next fiscal year. This will allow Defense Department managers to set aside money for unexpected expenses or unexpected opportunities, including late-breaking technical innovations, that increase Pentagon purchasing power and lead to more thoughtful end-of-the-year spending decisions. 

Right now, a manager overseeing a multibillion-dollar submarine program can’t move around $10 million in funding without prior authorization. By increasing funding thresholds, managers and program officers will be able to move key funds to where they know they’re needed in order to speed a program to completion.

Another commission recommendation is consolidating budget line items inside the budget itself. This can become a powerful resource multiplier by allowing the department to bring together several separate budget line items into a coherent whole so that managers can use the combined funding to solve problems and build programs around innovative capabilities instead of around bureaucratic checklists.

One of the biggest headaches the Pentagon faces right now is the efficient acquisition of software, the driving engine of most of our modern arsenal, from Tomahawk missiles and stealth fighters — the F-35 Joint Strike Fighter carries more than 8 million lines of code — to Aegis cruisers and nuclear submarines. The PPBE Reform Commission urges adopting a new budget structure that will allow dollars usually shoved into separate procurement; research, development, test, and evaluation; and/or operation and maintenance boxes, with separate authorization for each, to be spread instead across the entire cycle of software development, acquisition, and sustainment. This, in turn, will give the Pentagon more flexibility to acquire, develop, and upgrade the software that is essential to today’s defense and weapons systems. 

Any set of reforms, no matter how well thought-out or grounded in experience or common sense, is useless without a plan for implementation. Congress has now signed on to the commission’s recommendations in the latest iteration of the fiscal 2025 budget, including taking the all-important step of calling for the appointment of a cross-functional team to oversee their implementation. The White House needs to do the same.

Of course, budgets and resource allocation reforms alone can’t guarantee the success of any Defense Department program in today’s multithreat environment. But without reforms that let our services acquire and grow defense systems faster and more efficiently, our ability to defend ourselves is guaranteed to fall further and further behind.

It’s a dangerous world out there. We don’t need a Pentagon budget system that makes it more dangerous.

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