Reforming the Department of Defense Strategy, Planning, Programming, Budgeting and Execution System

Modernizing a proven resourcing process to bring the right capabilities to the warfighter at the speed of relevance

One of the most consequential provisions in the FY22 National Defense Authorization Act (NDAA) is Section 1004, which authorizes the establishment of a Commission to recommend reforms to the Strategy, Planning, Programming, Budgeting, and Execution (SPPBE) framework that has ostensibly injected “predictability” into the Department of Defense (DoD) resourcing process for nearly 60 years. The SPPBE System has evolved over time—from a centralized, top-down process under former U.S. Secretary of Defense Robert McNamara, to a more collaborative process where services ultimately created their own budgets with guidance provided by the Office of the Secretary of Defense (OSD).). The utility of the SPPBE System to exploit strategic advantage over “near-peer” adversaries through technological advancement has deteriorated, given the amount of time and funding required to progress through the interconnected DoD Decision Support Systems (SPPBE, the Defense Acquisition System, and the Joint Capabilities Integration and Development System (JCIDS) process). This limits the rapid delivery of tangible weapons system platforms into the hands of the warfighter, where time is of the essence.

Frequently cited rationale for SPPBE reform is that it unduly constrains DoD’s ability to respond quickly to technological advances and changing technology requirements—a sentiment shared by those who are responsible for maintaining cutting edge technological advantage in the warfighting and business environment. Innovators in both the commercial and federal space, like Eric Schmidt from Google, lamented that “[“[DoD’s] outdated, industrial-age budgeting process creates a valley of death for new technology.” While DoD has progressed by advancing Section 804 rapid acquisition initiatives and placing an emphasis on innovation through organizations like Defense Innovation Unit and programs like AFWERX, they could be better leveraged to solve some of DoD’s resourcing challenges.

The legislation passed by Congress and signed into law by President Biden on December 27, 2021, recognizes what many in Congress, the Department of Defense, and defense industry have known for some time. While the “outputs” of the SPPBE System have worked, the need for rapid change to provide military forces with the technologies needed to provide warfighting capability and provide for our nation’s security, require the tools and technologies to resource our forces with the most leading-edge technologies and cost-effective capabilities to defeat our adversaries. This does not require a complete overhaul, but an end-to-end process review to determine where we can introduce new learning, tools, and innovation to respond rapidly.

Additionally, the Commission needs to solicit support across a far-reaching group of stakeholders (including industry, academia, and Federally Funded Research and Development Centers) to support the SPPBE Reform Commission. We believe the following considerations are Critical Success Factors for the Commission to develop and drive meaningful change.

Critical Success Factor 1: Agreement of Current State Will Enable Shift to Value-Added Activities

Before the significant effort of benchmarking best practices of other federal entities and commercial organizations against DoD budgeting practices can occur, the Commission will need to agree on a “current state” to benchmark against. For this to occur quickly, the Commission does not need to painstakingly develop process maps anew, but can instead consolidate DoD and Service-level Data Implementation Strategies, annual SPPBE Guidance, internal control catalogues, Risk and Controls Matrices, IT modernization roadmaps, and Financial Statement Process Narratives thatthat provide step-by-step guidance on how the OSD and Services execute the “Budgeting” and “Execution” Phases of the SPPBE System. These artifacts can be used to quickly establish the reality of the current process. Understanding where and how to quickly acquire these artifacts—as well as formal and informal feedback loops—will enable the Commission to accelerate the development of actionable recommendations.

Critical Success Factor 2: Detailed, Impactful Recommendations Will Be a Catalyst for Action

The Commission’s Interim and Final Report to Congress should provide the highest value recommendations that are well-informed and actionable by the DoD, Congress, and other stakeholders in carrying out the changes required to modernize elements of the SPPBE System to be more agile and aligned to the pace of technological change. In securing the critical “buy-in” needed for implementation, those recommendations that are perceived as either too abstract or not actionable will detract from the recommendations that are needed to modernize SPPBE. For example, recommending that the DoD eliminate the “color of money” for DoD appropriations, as well as eliminating expired and canceled periods for appropriations, would certainly be impactful. But it would likely face stiff opposition from Congress and would also cause the DoD to incur a tremendous bill in implementing such a change. A more impactful recommendation that meets all of the above-mentioned criteria and will have a meaningful effect on driving impactful spending is extending the life of the Operations and Maintenance appropriation, which is the most flexible of DoD appropriations. The success factors for implementation of this recommendation—including the stakeholders required to approve the change, the impact on doctrine, organization, training, materiel, leadership and education, personnel, facilities, and policy considerations, and perhaps most importantly the “why” for implementing this change—can be communicated succinctly and supported with a detailed roadmap that demonstrates the Commission has considered the feasibility of implementation on par with impact to the SPPBE process.

Critical Success Factor 3: Leaning Forward on Technology Insertion Could Help Provide the Clarity Needed to Improve Decision-Making and Address Pervasive Data Issues

The Commission will likely encounter many initiatives for Robotic Process Automation, Automated Intelligence, Machine Learning, and a host of other solutions that can revolutionize the SPPBE process with minimal disruption to the status quo. It will be critical for the Commission to determine which type(s) of investments are needed to ensure that the right data gets to decision makers at the right time. The DoD has already made a significant investment in a big data platform—Advana—and the Commission should strongly consider using established processes and modules in Advana to collect the source data needed to perform the data collection, validation, and analysis that will be critical to support of the Commission’s recommendations. The bottom line is that a business partner with both Advana and financial management expertise can provide the Commission with the right information for decisions at the point of impact.

Conclusion

Our heritage as a financial management and strategy provider to the Department of Defense, coupled with former senior leaders in the DoD Financial Management community, provides Guidehouse with unique insights into the intersection between the JCIDS, SPPBE, and Defense Acquisition processes and the truly immense opportunity to transform a critical resourcing process to secure freedom for future generations. We applaud Congress for recognizing this opportunity and stand ready to support the Commission members as they undertake what is clearly a once-in-a-generation opportunity to make lasting change to the SPPBE process. 

Thank you, Marilyn Thomas and Richard McCarthy, for your contribution to this case study. 

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