Editor’s note: This article was updated with statements from the deputy secretary of defense and Congressional lawmakers.
The Pentagon needs to replace its entire resourcing process or it risks falling behind its top adversary: China.
This was the assessment of a group Congress mandated to study the Defense Department’s Planning, Programming, Budgeting and Execution system, better known as PPBE.
The process has been in place since the 1960s and guides how the Pentagon requests and spends money. After studying it for two years and conducting more than 400 interviews, the commission found the current system doesn’t meet the Defense Department’s needs.
“Given strategic adversaries, given the posture around the world right now, I’m not sure our current system is able to meet the current threats,” said Ellen Lord, the commission’s vice chair and the Pentagon’s former top acquisition official.
The opinion rests on two pillars.
First is America’s competition with China, which the Pentagon says is moving at a pace it needs to match. In the last 20 years, China has massively built up its military and invested in strategic sectors of its economy, such as drones and artificial intelligence. The Defense Department’s resourcing system can’t move at the speed required by this threat, especially when considering the other ones America faces around the world, the report argues.
The second change is in technology. Specifically, the commission says the defense sector no longer leads innovation; instead, the commercial sector does, especially in fields such as artificial intelligence and robotics. That shift makes it more important to have a resourcing process that can adopt commercial advances, something the commission says PPBE does poorly.
The result, per the report, is a process both antiquated and cumbersome.
“One of the most consistent concerns the commission heard over the past two years is that the current PPBE process lacks agility,” the report reads.
Instead, the commission proposes scrapping the old process in favor of a new one, which they call the Defense Resourcing System. It would have three parts: strategy, resource allocation and execution.
Most changes would occur in how resources are spent, organizing the budget around capability areas — such as tactical aviation — rather than spending categories like research and development. The intent is to create a more nimble system that better matches the Pentagon’s strategy.
The almost 400-page report covers five core areas: better matching budgets and strategy, faster innovation, improving the Pentagon’s relationship with Congress, updating business and data systems and a better workforce.
These areas include a further 28 recommendations, which sit on a spectrum from easy to adopt to aspirational.
On the easier end are changes that sit within the Defense Department’s control, such as improving the department’s plodding data systems that make it difficult to answer questions from Congress, said Lord. Improved data systems overall were one of her top priorities, she said.
On the other are recommendations that would require the approval of all the stakeholders in PPBE, such as changing the process altogether. That reform, even if it gets the necessary support, could take around three years, the commission estimated.
Implementation
“I am a huge advocate of making big changes,” Lord said, speaking at a Wednesday breakfast hosted by the Defense Writers Group.
To do so, she and the panel’s other members are calling for Deputy Secretary of Defense Kathleen Hicks to issue a memo with implementation guidance — outlining what can be accomplished in the short, medium and long terms.
Hicks already issued such a memo last year, covering initial recommendations, after the commission submitted an interim report to Congress. The department released an implementation plan for those early recommendations Wednesday.
To fully implement their recommendations, the panel says Hicks should form a team across the department that reports directly to her and is staffed for the next three to five years.
“The Department looks forward to evaluating the additional recommendations released by the PPBE Reform Commission today, in close cooperation with Congress, the Office of Management and Budget and other stakeholders,” Hicks said in a statement, also calling on lawmakers to pass a full Pentagon budget.
Congress too has already shown signs of support for some of the panel’s work. As an example, said commission aide Rachel Conway, the House and Senate appropriations committees on defense proposed higher thresholds for the Pentagon’s below-the-threshold reprogramming requests, which allow the department to shift around money without approval from Congress. The proposals aren’t yet final, but doing so is among the commission’s recommendations.
“These findings should help the Department develop new technologies in a streamlined, agile manner. We appreciate the Commissioners’ expert, bipartisan work, and we look forward to reviewing their findings,” the chair and ranking member of the Senate Armed Services Committee said in a joint statement Wednesday.
Congress still has yet to pass a defense budget, now six months into the fiscal year. To improve the relationship between the department and Capitol Hill, the report recommends more face-to-face communication between the two and a common set of data reports that both sides can access.
Ultimately, said Lord, the challenge in implementing the report will be that relationship, and the longstanding balance between oversight from Congress and freedom for the Pentagon to make changes.
“We believe we have a substantive document here with 28 very important recommendations,” she said. “That will all be for naught if we do not have implementation guidance from the department as well as language from Congress.”
Noah Robertson is the Pentagon reporter at Defense News. He previously covered national security for the Christian Science Monitor. He holds a bachelor’s degree in English and government from the College of William & Mary in his hometown of Williamsburg, Virginia.
