If It Ain’t Broke, Don’t Fix It.

I just finished reading this article concerning the Air Force waiting for things to break in their shore if-it-aint-brokeinfrastructure  instead of doing preventative maintenance.  My first thought was, “I sure hope that doesn’t include nukes!!!”  From what I can tell from the article, maybe yes, maybe no.  So that has me a little worried.  But there were several other  things about that article that worried me.

First, it said that the Services only submitted about 80% of what they needed for facilities maintenance because they wanted to put priority on training and operations instead of maintaining their buildings.  I believe the idea was to fix things as they fail.  Who wants to be in a building that might “fail”?  Not me.  I’m puzzled as to why they wouldn’t ask for everything  needed since the money for such things comes from different appropriations than training and operations.  By the way, they got all that they asked for which leaves me wondering what would have happened if they asked for what they really needed.

Second, what makes them think there’s going to be any more money in the out-years to make things right?  If we are deferring maintenance, then it stands to reason that it’s only going to cost more to fix next year.  We already know that money is not going to be there.  Personally, I’m not so sure about jumping on an elevator in an Air Force building knowing that it hasn’t been maintained and the threshold for them to do any maintenance on it is me getting stuck between floors.  I’d also be careful about walking around on an AFB if I were you. You never know when something above might “fail.”

By the way, this is not just an Air Force problem.  Here is a similar article about Navy facilities and infrastructure.  Stunningly, it says that of the 13 barracks at NAS Oceana, 10 of them are rated substandard.  What happened to taking care of our number one asset….our Sailors.  And we only asked for 80% of the money to fix them??

Thirdly, one Commander in the article is worried that money for repair is so short, that even when things break there will not be enough money to fix them.  Little wonder, since they only asked of 80% of what they needed.  I suppose they are hoping for some sort of natural disaster so they can go in for supplemental funding to fix everything.

Waiting for OCO
Waiting for OCO

Once something happens, there will be a feeding frenzy at the supplemental trough to fix not only what was damaged by said disaster, but also stuff that was damaged by neglect.  What a world!

Finally, it says that the Air Force is not planning on returning to “full spectrum readiness” (whatever that means) until 2023.  That must mean they have a plan….but since when has any service been able to stick to a plan more than a couple of years????  Heck, in the Navy, we change the 30 Year Shipbuilding plan just about every year!

As for the using maintenance dollars to buy readiness, I thought that is what the Overseas Contingency money was supposed to do.  Remember the almost $60 Billion in OCO for 2016?  So even as a former practitioner of the mystical and black art of Defense budgeting, I just can’t figure out why we didn’t  ask for all the money we needed to maintain our infrastructure in “war fighting condition.” carriergolf After all, especially in the Air Force, their bases are where they fight wars from…It’s analogous to the Navy’s ships.  I guess the old saying that the Air Force only builds runways after the O”Club, golf course, pool, commissary and exchange are built isn’t true anymore.  I guess now is should be, “If it ain’t broke, don’t fix it.  If its broke, good luck getting it fixed!”

I recall reading an article not long after the Berlin Wall fell which said the conditions  in East German bases were puzzling.  The barracks the soldiers were living in were barbaric…..but just across the street, the tanks, personnel carriers, trucks, artillery and lots of other weapons were sitting in pristine condition in air conditioned splendor.  This is what happens when we value things over people.  Hey, recruiting is at an all time high.  We could probably stand a few people jumping ship anyway.  Why not skimp on their facilities so that we can continue to pay for the cost overruns of the JSF and other out-of-control acquisition programs?

On the other hand, I suppose you could say that this problem is yet another symptom of the need for another round of BRAC.  Good luck with that!

Oh, by the way, no facilities were damaged in the writing of this article.

 

   Send article as PDF   

Doggone Dogfight!

a-10picjsf_pic

 

So I have raised the hackles of my esteemed Warthog (A-10) brothers and sisters  and Army and Marine
ground pounders before in an article entitled “The A-10 and Reality.”  In that article I took the position that the A-10, even though it was a good airplane for its time (first flown in 1972), should be retired.  I still believe that its time has come.  You can read the details by going to the link, but my opinion is still that while it would be nice to have if the Air Force had unlimited amounts of money, it doesn’t.  The A-10 is expensive to fly and maintain, it takes lots of logistics and people support and I question its survivability at low altitudes, given the proliferation and availability of hand-held SAMs.  As I recall, there are usually altitude restrictions put into place in most combat situations to keep the aircraft out of  threat envelopes, and I would submit these restrictions negate many of the advantages of an A-10 in a close air support role (CAS).

So why am I messing with this still festering wound?  I just read about the impending (if you can define 3 years as impending)fly-off between the JSF and the A-10 to see which jet will win the CAS Crown.  It’s been amusing to sit on the sidelines and see how this fandango developed.  First, the Pentagon’s Test and Evaluation gurus, bowing to the extreme pressure from the Hill to keep the A-10, announced that sometime in 2017 or 2018 they would evaluate the JSF’s ability to be an effective CAS platform…Don’t you think it’s a little late to be thinking about that?   I am just stunned that we would get this far without already knowing the answer to that question.  Never mind that no matter what the outcome, we will still buy all the JSFs our increasingly limited defense dollars will buy (to the detriment of all other weapons systems, I might add).  And because of all the other pressures, we will most likely have to retire the A-10 anyway.  And this will be even more true three years from now when we finally get around to doing the tests.

Given all the problems we have in DoD acquisition, I think we could be putting our limited dollars and unlimited talents towards just getting the JSF delivered with some sort of combat capability, or figure out how to recapitalize the nuclear deterrence force, or figure out how to prevent some rag-tag bunch of cyber terrorists from obtaining every bit of personal/private information that I put on my security clearance application.  Or figuring out how to actually win the PR war against ISIS…After all, isn’t this the land of Mad Men, Cyber-superiority and endless imagination?  I just can’t figure out how those ISIS characters continue to scoop the US in the world of social media.  A cynic might think we should hire ISIS to do the recruiting ads for us…(that’s just a joke for you NSA guys monitoring my web site!!)

The point is it is stunning to me that we have only decided to look at JSF CAS capabilities decades into its development and well past the point of no return.  We will spend Tens of Millions of dollars to find out the answer to a question to which we already know the answer.  I guess that I’m not surprised since given the copious quality of cash flowing through the JSF coffers, a few Tens of Millions of dollars probably don’t even break the event horizon.

But I digress….To continue the JSF/A-10 CAS saga, after the OSD poobahs announced the “fly-off”, Air Force Chief of Staff, General Mark Welsh says, “I think is would be a silly exercise.”  YA THINK???? Of course, after he made those remarks, I’m sure he had a little one-on-one counseling over at the Pentagon.  Hence, a few days later it was announced that the Air Force leadership is “fully on-board with the planned test schedule.”  Sigh, you can’t make this stuff up!

I guess you are wondering which jet I think will win.  The Warthog, of course.  The A-10 was designed with a single purpose in mind…CAS.  You know what? my guess is that if they did a fly-off between the JSF and the A-6 Intruder for gunsight bombing, the A-6 would reign supreme!

This whole episode reminds me of a quote by Emerson,”A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.” I’m all for protecting our brave troops on the ground,but I think that there will be plenty of 21st Century weapons system available to do that without the A-10.

   Send article as PDF   

Where is, repeat, where is Task Force Thirty Four?

That WW II message was sent by Admiral Nimitz to Admiral Halsey in support of Admiral Thomas C. Kinkaid, Commander of landing forces seizing the island of Leyte in the Pacific.  Admiral Halsey had fallen for the Japanesse ruse, diverting most of his carriers and battleships 200px-Nimitz_and_Halsey_1943supporting the invasion to chase the Japanese decoy Northern Force, leaving Admiral Kincaid’s forces in the lurch.  Famously, however, when the message was delivered to Halsey, the phrase “the world wonders” was added by mistake.  Halsey took it to be an insult,  creating bad blood between the two. There are some pretty funny accounts about “Bull” Halsey blowing his top when he read the message. Here is the actual message:

msg3

I just returned from the annual American Society of Military Comptrollers (ASMC) Professional Development Institute (PDI) in New Orleans.  It was an outstanding opportunity to learn about the state of the art in the DoD budget and accounting.  Well done to Executive Director Al Runnels and his staff!!!  This year I reckon there was north of 2000 folks from throughout the DoD Financial Management profession….Army, Air Force, Office of the Secretary of Defense, Defense Agencies and even the US Coast Guard.  Leadership and rank-and-file throughout DoD, from the Honorable Mike McCord, the Undersecretary of Defense (Comptroller) on down, gathered to consult, confer and otherwise hobnob with their fellow budget wizards.  In fact, I dare say that most of the senior Financial Management leadership from the services and defense agencies was there. There was only one thing missing: the Navy.

Yep, that’s right. The Navy chose not to participate.  Given that every other service, defense agency, and the OSD staff decided it was important to send their people, I can only assume that either the Navy thought that its people (personnel in DoD speak) didn’t need the training offered at the PDI or that despite the need for training, barring their attendance was the safer or smarter move.  So the Navy and USMC financial managers sat on the sidelines while the remainder of their counterparts in DoD heard for Mr. McCord; the Honorable Jamie Morin, Director of CAPE; Mark Reger, the Deputy Comptroller of the United States and numerous other senior officials. They attended required FM certification training, attended workshops, participated in a whole day of service-specific training and  conducted community service projects. In the interest of accuracy, there were a handful of Navy folks there, but only if they were actually presenting a workshop or receiving a national-level award.

Why did the Navy choose not to participate?  Well, it is true that in recent years “conventions” and other large-scale events have come under scrutiny because of some very bad decisions made by some not-so-good leaders.   But checks and balances were put into place to ensure legitimacy and need before approving such meetings.  All organizations in DoD went through the same process of evaluation.   The PDI was not given “blanket approval” by DoD and thus the leadership in each organization had to make the call on whether or not to send its people to this valuable training.  Obviously, Navy leadership uniquely decided this PDI was not in accordance with applicable rules and regulations and thus elected not to send its people.  Now those of you who are not familiar with the world of financial management might wonder why a PDI is needed. Here’s the scoop:

Most DoD financial managers are required to receive about 40 hours of continuing professional education annually.  Those who have achieved the coveted Certified Defense Financial Manager (your humble author among them) are required to take 40 hours annually to retain their certification.  In addition, the DoD recently introduced a financial certification program aimed at increasing the professionalism of the FM workforce.  It’s a tiered program with each level requiring specific courses delivered by qualified personnel.  Once a certain level of qualification is reached,  there is a continuing education requirement similar to those above.  The highly specialized training required for the various certification levels is offered at the PDI, along with a variety of accredited courses that count toward annual training requirement.  I’m not quite sure how many hours it would be possible to knock out at the  PDI, but it’s somewhere in the neighborhood of 20.  That’s half the annual requirement!

To make sure people actually attend the training, they are individually scanned in and out of training sessions and only given credit if they attend the entire session.  Each day begins at 07:00AM with breakfast and training sessions go on throughout the day until 4:40 PM.  Believe me, that’s a long day and I have yet to figure out a way to “beat the system” so I have to sit through the classes all day to get credit.  It’s not exactly a cake walk.  You can be sure people are actually getting the training.

Enough of that.  And now for the gorilla in the room:  Yes, it’s in New Orleans, but there’s no escaping the fact that PDI attendees are sequestered (I just had to use that word) for a good nine hours a day….No zooming up and down Bourbon Street, no clowns wandering around, no $26 cupcakes…it’s all business during extended working hours.  (This shouldn’t be surprising since it’s basically run by accountants, for accountants).  By the way, what’s the difference between an introverted accountant and an extroverted accountant?  The extroverted accountant looks at your shoes when he talks to you….Badda-Booom!

So I mentioned earlier that maybe the reason the Navy leaders chose not to send Navy and Marine Corps people to this training is that they don’t need it.   Well, you would be wrong if you made that assumption. I attended a session where the current numbers of people certified by service was presented and the Navy was just a sliver in the pie chart while all other services were big, fat pie slices just like your grandmother would serve.  So the Navy needs the training above all and they are obviously not getting it elsewhere.  In fact, given the workload of Financial Managers these days, it is really hard to find the time to take on-line courses.  Oh sure, there are on-line courses….and they are good for filling some portion of the requirement, but no matter what you say, nothing beats real-time, classroom training to allow for substantial interchange between students and instructors.  Would you rather have your dentist fulfill his annual professional training staring at the PC at home while drinking a martini or attending a gathering of dental professionals with an opportunity to talk to pioneers of the latest in the dental art and exchange views and techniques with his/her peers? When he/she says “Good thing I saw how to put in this implant on You Tube”, how would you feel??  or how about this:  “Oh yeah…..since you have to put in a 10 hour day at the office, just do that training in your spare time”……Right! Here’s an idea:  Why not do your training the next time we furlough you?  What’s the big deal?  We have posted classroom material in all the heads…..do some training while you do your business!!!  It’s all about being efficient!” Seriously folks, I do remember aircraft checklists being posted above the urinals and on the backs of the stall doors in the squadron head in order to make use of “spare time”!!!

cv67_022
Hey, Where did everybody go?

I know I don’t have the right to criticize and I apparently don’t have all the facts, so I recommend the reader of this tome (It’s longer than I wanted) consider these thoughts to be from an unqualified, uninformed source.  And if you were the decision maker, please don’t get all spun up.  The decision was yours to make and I respect your decision.  I just hope your staff did you the courtesy of making sure you had all the facts before you decided.  (You only know what they want you to know.)  I am confident that the Navy leadership can give you a much better reason for why they stayed away.  That not withstanding,  I  hope the Navy decides to participate next year so they can be a part of the team.  I know I was embarrassed that so few from my beloved Navy were there.   And just because the rest of the Services, OSD, Coast Guard, and Defense Agencies took just a little risk and sent their people to PDI,  doesn’t mean the Navy had to send its people to PDI(sigh, I can see my Mother saying that right now).  Maybe they didn’t have the money to send their people (even though everyone else did).  Maybe it wasn’t that important.   Maybe there was another budget drill going on.  Maybe they elected to spend the money on local training for the hundreds (if not thousands) of Navy FMers around the world.  I just don’t know.  But this I do know: when next year’s PDI rolls around I sure hope we don’t have to again ask, “Where is TASK FORCE THIRTY FOUR the FM world wonders?”

   Send article as PDF   

Whoa Nellie!

So I guess you have to be an old guy like me to remember Keith Jackson, long-time ABC Sportscaster,  shouting “Whoa Nellie”KeithJackson1 but that’s what came to mind as I read the latest on the US Marine Corps audit saga.  Apparently GAO has forced the DoD Inspector General to retract the Marine Corp’s clean audit opinion because of problems in the suspense accounts.  Here’s a link to an article in Defense News with  the details. I have opined on DoD audits on several occasions….first shouting with joy at the accomplishment, then wondering if it really mattered and finally pointing a limp finger towards the Defense Finance and Accounting Service for using “plugs” to fix differences with the Treasury.

So for the record……I told you so!  It’s hard for me to believe that the underlying problem has existed for so long without apparent remedy.  Here’s a link to a 2005 GAO Report in which GAO finds:

Until DOD complies with existing laws and enforces its own guidance for reconciling, reporting, and resolving amounts in suspense and check differences on a regular basis, the buildup of current balances will likely continue, the department’s appropriation accounts will remain unreliable, and another costly write-off process may eventually be required.

 That was almost 10 years ago folks!  This has been a continuing report topic for the GAO with various status updates being published throughout the years.  Here’s an excerpt from the Summary of a more recent GAO report from December 2011:

Neither the Navy nor the Marine Corps have implemented effective processes for reconciling their FBWT[Funds Balance With Treasury].

Huh?  Navy and Marine Corps have been preparing for audit for years and yet it doesn’t appear that they were able to make any progress in fixing a problem identified by GAO way back in 2005 as a key impediment to a clean audit opinion.

So what are the “Suspense Accounts” that are causing such a problem?  Technically GAO defines them as “Combined receipt and expenditure accounts established to temporarily hold funds that are later refunded or paid into another government fund when an administrative or final determination as to the proper disposition is made. “ Translation: The place where a transaction is put when the documentation is incomplete so that it can not be assigned to a specific appropriation before it’s written off.  To get an idea of scale, in 2005 GAO reports it was an absolute value of $35 Billion.  Who knows what it is now? But I point out that it’s just about the amount of the DoD Sequestration hit.  Perhaps if they fixed this problem, sequestration wouldn’t have such a bad effect?  It seems to be to be awfully hard to go the the Hill and say that $35 Billion in spending cuts would kill the Department, when they are not exactly sure about $35 Billion already sitting around.  Those on  the defensive will say that the differences are eventually reconciled, but I am skeptical…and since they are already written off, does it really matter?  My guess is the money goes straight into the US Treasury Black Hole that all checks drafted to the US Treasury go…you know…that big ever increasing dense ball of greenbacks sitting in the Treasury Department basement.

This problem is precisely why DoD needs to get on with the audit….so they can be sure they know where the money is and provide accurate estimates of the impact of budget cuts.  If my kids came to me and said” We need more allowance”, and when asked what did they did with allowance I already gave them they reply, “We don’t know, but we need more!”, I would be highly skeptical of their requirement.

As it stands now, the Army, Navy, Air Force and Marines will spend around $45 Million this year for audits they already know will fail because of the DFAS Suspense Account issues.   Why not spend the money to fix that problem before plodding ahead for a pre-ordained result? To be sure it’s a tough problem…after all we have her unable to fix it for 10 years.

Who’s to blame, you ask?  Well, there’s enough to go around….DFAS for not fixing it, but also the Services for not taking actions to fix the paperwork before it gets to DFAS.  Ultimately, the fault probably rests on the shoulders of all those folks in DoD who improperly enter information at the command level.  I would also guess that given the kludge of IT systems required to record transactions, that errors are also introduced between systems, hand-jammed data is incorrectly transferred, and  by improperly trained people entering data.  This is what is referred to as a “Wicked Problem,” in management parlance. A “Wicked Problem” is defined as ” a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. The use of term “wicked” here has come to denote resistance to resolution, rather than evil. Moreover, because of complexity, the effort to solve one aspect of a wicked problem may reveal or create other problems. For more info on “Wicked Problems” you can download the original paper written by C. West Churchman for $30 here.

Is the problem of unresolved transactions so complex that it defies correction?  Perhaps given the current architecture within DoD it is, and that alone is reason for the new DCMO to tackle it.  A fresh look is needed and the DCMO might be just the person to do it.  Right now DoD has an acting DCMO, and given the current political environment, I am not too sure the current nominee, Peter Levine will get confirmed….But for now Mr. Dave Tillotson has the dot.  Can someone in an “acting” position draw enough water to tackle this problem?  Don’t know, but why not give it a whirl. If and when Mr. Levine gets in the chair, it would be a great legacy to fix this problem once and for all.  Given his reputation, I have no doubt that he could fix it.

 

   Send article as PDF   

PP-BEGone

I guess it’s that time of year when one must talk about all things budget.  And since I am only a small gnu within the herd, I too will opine on the obvious.  Several thoughts came to mind as I was reading some of the commentary on the budget.  It’s always fun to read the DoD press releases and to see the latest spin.  How well-educated and experienced people can say some of this stuff with a straight face is a mystery to me.  Take the DoD article on its press site today, “Budget Request Balances Today’s Needs Against Tomorrow’s Threats.” The article is a summary of a press conference held by DoD Comptroller, Mike McCord.  I love his characterization of the budget:  “although planners were aware of financial constraints, the budget is a strategy-driven construct.” Translation–we ignored the budget caps.  As an aside, you all know how I hate the way the Pentagon takes common words and complicates them…like “construct“.  Don’t they mean plan?   I confess that I used to be as bad as the next Pentagonian in inflating words to add an air of sophistication and deep-thoughtedness to them.   The “construct” word stands out in my mind because I used it one day while briefing the Chairman of the  House Armed Services Committee, Ike Skelton.  He stopped me and asked, “What the heck does that mean…construct’?  I replied, ” Well, you know…the product of the assimilation of a multitude of facts and non-facts into a non-coherent stream of pseudo-strategy designed to defend an un-defendable position.”  Mr. Skelton replied,” Just say plan. Don’t make it so complicated with strange words.”  AMEN…..And after that, I tried to avoid Pentagonisms like the plague.

Once again this budget side-steps many of the large issues, like the runaway Joint Strike Fighter budget and  focuses in on the marginal stuff…TRICARE rate hikes, cutting Commissary hours, as well as proposing the impossible…base closure, A-10 retirement and the like.

But that’s not the subject of today’s blog, so I will move on from that unpleasantness…….Today’s topic is about HOW the Pentagon arrives at its budget.  Of course, it’s fairly common knowledge to this audience that it uses the Planning, Programming Budgeting and Execution (PPBE) system.

Theoretical PPBE
Theoretical PPBE

A very regimented (or so it used to be) process with a clearly and elegantly articulated set of roles, rules, responsibilities, and schedules.  Here is a link to a very well written Army War College paper by LTC Thomas T. Frazier on the history of PPBE system (originally PPBS). Here’s the Cliff Notes version.  PPBS was instituted by Secretary of Defense Robert McNamara in the early 60’s because his opinion what that there was no clear process of deciding what to fund and how much to fund. Here is a link to my presentation on how the PPBE system works.     Over the last few years the process has morphed from the nice neat process because of Continuing Resolutions, shutdowns, furloughs, war and all manner other issue.  Anyway, Secretary McNamara felt that the Pentagon budget process was really one of Incrementalism…just adding more money each year with little thought of where it was going.  Interestingly, the things which drove the change came down to six flaws in 1961:

  • Budget decisions were largely independent of plans
  • Duplication of effort among the Services
  • Service budgets prepared largely independent of one another with little balancing across Services
  • Services felt they were entitled to a fixed share of the budget, regardless of contribution to overall defense needs
  • The budget process focused on next year, with little regard for future impacts
  • Little analysis behind the numbers

Sound familiar?  I submit that all of these factors  exist today to some degree or another, perhaps for different reasons than in 1961, but they exist nonetheless.  That’s why I think it’s time for a serious discussion about changing the process.  Over the past half-century we have fallen back into some very bad habits.  They were good reasons for change then, and equally good for change now.

The Reality
The Reality

Many would say today’s budgets are very independent of plans.  Despite the efforts of the 24,000 or so Pentagon workers, in the end the budgets are determined in large measure by political decisions.  I note that the elegant planning process in the Pentagon has recommended decommissioning the A-10, laying up Aegis Cruisers, another round of BRAC, and on and on.  These proposals were developed by thousands of planners chewing up millions of man hours, yet the analysis is ignored by the Congress.  As the Navy’s N8 I came to the conclusion that at any given moment probably 90% of the people in the Pentagon are working on some part of the budget.  But to what ends?  At the end of the day, the budget never changes more than about 1% -1.5%, despite the hundreds of thousands of man hours devoted to changing it?  Why bother?  Given there is so little change, why not stop all the madness of millions  of minor budget data base changes which in the end have less than a 1% impact?  We could get by with half the people in the Pentagon and let them do something more constructive.

There’s no doubt that we have still to tackle the duplication of effort issue.  We still have an unexplainable excess of tactical aircraft in the Air Force, Navy and Marine Corps because no one is willing to give the mission up.  Look how much money that one is costing us in the guise of the JSF.

With regard to independent budget development by the Services, that’s still a problem too.  How often do you think Air Force budgeteers sit down with the Navy guys to go over their current budget plans…Answer: never…It’s not until OSD gets the budgets that the Services find out what each is really up to.  Heck, the Marines don’t share much of their budget with the Navy until end-game, and they are in the same Department!

The one-third rule ( every Service is entitled to roughly a third of the DoD budget)  is still alive and well in the Pentagon. But because of the growth of the Fourth Estate (DoD agencies and combatant commands according to SECDEF nominee Ash Carter) the pie has been further divided.  It’s almost the one-fourth rule now. What’s up with that?  The process will never work if one assumes equal shares for all.Screen Shot 2015-02-03 at 3.38.19 PM

As far as budgets being focused on one year, despite the best efforts of DoD to lay in a 5 year plan, it is essentially redone every year.  I used to submit the Navy’s 30 Year Shipbuilding plan almost every year with major changes.  What kind of long-range plan is that? The truth is that with the way we fight the budget wars from year to year, coupled with the inability of the Congress to regularly and reliably pass funding and authorization legislation, DoD has no choice but to focus on one year.  It has become so challenging to execute the budget and build several (the base budget, the sequester budget, the President’s budget, Overseas Contingency Ops budget) that it is impossible to focus on later years.

Perhaps the bright spot is the improvement in the department’s analytical capabilities.  We certainly have a world class capability, which produces fantastic analysis.  The problem is that it is sometimes ignored by those that matter..either in the Pentagon or on the Hill.  To be fair, I should say the analysis is selectively ignored. If the analysis supports your program, it’s cited again and again.  If it doesn’t, then one has to play the “experience” or “uncertainty” card.  You have all heard that argument: “It’s an uncertain and dangerous world and the analysis does not adequately take that into account.  We must rely on our experience and intuition.”

Of course, the PPBE is only one way in which the DoD manages its money.  A few years back I gave a presentation on “How DoD Manages Money” in which I cited the following techniques:

  • Management by topline
  • Management using the “More Money” rule
  • Management by appropriation
  • Management by Service
  • Management by rice bowls
  • Management using the 1/3 Rule
  • Management by congressional district
  • Management by PPBE

It’s too complicated to explain here, but check out the presentation.  Even though it was done in 2009, I think it’s relevant today.

So that’s my rail of the day.  We need to change the PPBE.  I don’t know how.  I am not that smart.  Maybe some smart combination of the above management systems… I do know that the same reasons we decided to re-twicker the DoD budget process in 1961 exist today.  We should convene a group of smart folks (and not just old fogies like me who got us into this mess in the first place) to consider how to develop a process which eliminates the 1961 reasons.  It’s time for some new and innovative thinking, done by all interested parties (Congress, DoD, Administration) on how to fix the problem.

 

 

   Send article as PDF   

The Name Game

Those of you who have read some of my previous musings know that I have a bee in my bonnet about Pentagon “Double Speak.”  You know… the overly complicated buzzwords and phrases for simple things.  Here’s a link to one of my articles that has some examples. A few of my favorites include:

  • New Presence Paradigm: Overseas Bases
  • Hybrid Contingencies: Kludges
  • Proxy Groups: Terrorists
  • Dynamic Environment: The Real World
  • Asymmetric Approaches: More with less
  • Rebalance Tooth-to-Tail: Cut contractors
  • Win Decisively: Win
  • Rebalance: Cut
  • “Opportunity, Growth, and Security” Initiative: Slush Fund
  • Innovation:  Not in DoD dictionary
  • Multi-lateral Security Architecture: Treaty
  • Force Planning Construct: Size
  • Efficiencies: Negative Budget Wedges

As I was reading the news this morning, I found this article on the name change of the “Air Sea Battle” concept in DoD Buzz.  So forget about Air-Sea Battle and let me introduce you to Joint Concept for Access and Maneuver in the Global Commons! True to form, the Joint Staff has managed to take a relatively simple name and complicate it to the point of non understanding. Of course what would  a new concept be without its accompanying acronym, JAM-GC?  I suppose the pronunciation will be JAM-Jic or something like that.   I can here the conversation in the Pentagon Food Court now, “What are you working on now?”….”Oh, I’m now the JAM-Jic lead and believe you me there’s lots of jamming and jickin to be done now that this Air-Sea thing has vaporized.”

So, I was never a fan of the Air-Sea Battle thing.  IMHO, it was just a budget ploy by the Air Force ( and a somewhat reluctant Navy) to show relevance in an era where it’s relevance was waning.  It’s not the first time the Air Force, after becoming alarmed by increasing dependence on  and relevance of naval forces, began to seek ways to move into Navy mission territory.   This always puzzled me, because in my mind it’s always be a air-sea-land battle.  Especially as the perceived budget pressures have forced all the Services to cut force structure.  In any serious and protracted campaign, the Navy needs  Air Force tanking and command and control capabilities.  And the Air Force relies on the assets from the Navy with little or no support requirements to beef up the Joint Force.  It was never clear to me why Air Force and Navy needed to invent a “new concept”  for something that has always existed….except for the issue of the Joint Strike Fighter.  This $160 Billion over-budget, 7 year-late program is costing the King’s treasure and consuming all other aspects of the budgets of both services. Why not influence operational concepts as well?  The story line?  Air Force and Navy are inextricably linked by the Air-Sea Battle Concept and we must have the JSF to make it work.  To the Hawks on the Hill, this can be a very compelling argument.  One wonders what was going through the minds of the Army folks while they watched this little menage a deux develop.

Well, I guess the Army dusted things up enough to cause a name change, albeit no less threatening to their budget.  As they say in the Patriot’s locker room, “All’s fair in love and war!” So to appease the Army, it appears we now have a new concept.  And the name is a doozy…..Joint Concept for Access and Maneuver in the Global Commons.  320px-Shipping_routes_red_blackAccess is there to appease the Air Force and Navy, while Maneuver is there to keep the Army below the horizon of the doctrinal landscape.

I have to comment that the new name doesn’t do much for me…..especially the Global Commons piece.  To this dinosaur, Global Commons is just a hoity-toity  pretentious way for the Pentagon illuminati to show how deep their thoughts are.  What is/are the Global Commons?  Here’s what Wikipedia says:

a term typically used to describe international, supranational, and global resource domains in which common-pool resources are found. Global commons include the earth’s shared natural resources, such as the deep oceans, the atmosphere, outer space and the Northern and Southern polar regions, the Antarctic in particular. Cyberspace may also meet the definition of a global commons.

I am assuming that in the context of the Pentagon’s understanding, global commons to us unenlightened means “the places we want to be, that others don’t want us to be.”  My suggestion for the name of the concept would be the “Enter, Conquer,Stay, Operate” Concept, ECSO  or EkSo.  It’s sooooo much nicer than Jam-Jic, Don’t you think?

Anyway, as we face serious and deadly threats from everywhere and everything, Syria, Afghanistan, ISIS/L,Budgets, cyber, meteorites, ebola, global warming, etc., it’s good to know we still have thinkers working on US access and maneuver in the Global Commons.

   Send article as PDF   

Premade Decisions: Why Bother?

I have written about the Navy’s Littoral Combat Ship kerfuffle before.  The recent “non-decision” by outgoing SECDEF Hagel concerning the fate of the LCS fleet has prompted me to write again on the subject.  For those you you who haven’t followed this “crisis of our own making,” my previous musing, Rethinking LCS, provides some background which I will not repeat here. But I know it’s a hassle to click on the link, so here’s the Cliff Notes version:

  • LCS concept was for affordable, brown water vessel with modular capabilities to fulfill the presence mission in key locations around the globe.
  • LCS modular concept meant that not all missions could be done at once, keeping costs lower and enhancing adaptability for new missions.
  • LCS was not designed as a front-line warship, bristling with armament, but was configured to protect itself in most likely operating areas.
  • Navy bought two designs, hoping to down-select, but alas, since the only decisions that are generally (or admirably, if you prefer in this case) made in the Pentagon are pre-decided, the decision was made to not decide and buy both forever.
  • Elements in DoD leadership decided LCS didn’t have enough firepower and was vulnerable and directed the Navy to explore alternatives.
  • Navy commissioned a big study to scratch the OSD itch.
  • All breathlessly awaited the Uber-SECRET study results, knowing the Unter-SECRET answer: Navy can’t afford anything else…….(shhhhhhhh don’t tell anyone!!!!!!)

Screen-Shot-2014-12-11-at-4.08.53-PMScreen-Shot-2014-12-11-at-4.09.39-PM

I found these slides in an article by the US Naval Institute and they are attributed to the US Navy, however I couldn’t find them on the Navy website.

So that brings us to the big pre-made decision by SECDEF, after consulting, conferring and otherwise hobnobbing with the Pentagon cognoscenti.  (Who are the cognoscenti you ask?  Read SECDEF’s statement and find out.)   And the decision was:

Drum Roll Please

……stay with two LCS designs, bump them up a bit (maybe $53 or $61 Mil or so) and move on.  I think the only one surprised by the answer may have been SECDEF himself!  Otherwise, why bother?  I shudder to think about the amount of money and time spent on this study which had only one answer.  I haven’t seen the actual study, but from what I’ve read about it, no stone was left unturned (apparently 192 stones to be exact).  Option after option considered, analyzed, pondered, etc……..by those who already knew there was only one answer……we can’t afford anything else, nor can we afford the time required to start the acquisition process all over again.  The answer was pre-decided. My guess is most of the changes announced would have been made anyway.

These pre-decided decisions are common in the Pentagon, but all too often staffs are forced to do the kabuki dancekabukidance to give an air of legitimacy to them.  Those in disagreement get to say their peace and then dismissed as “having an input”, even though no one was really listening. I recall this vividly while working on budget end-game around the 2006 timeframe.  The Service programmers (three star resource folks) would be herded down to OSD about an hour before SECDEF was to receive a decision briefing on an issue, shown the slides prepared for him and then dismissed.  I barely had enough time to run back to the Vice Chief to brief him on what I had seen, let alone provide him with any analysis of what OSD had pre-decided.  Of course, if the Vice Chief were to raise an objection during the SECDEF briefing, the OSD Poobahs would announce,” Your folks have seen this and nothing was said.”

The point of this little tirade is that we waste money on these types of exercises all the time.  I think about all the good we could have done for our wounded warriors with the money we wasted on this study.  I think about all the time consumed by some very smart people who could have been working on something really important…how to deal with sequestration, how to keep the technological edge, how to fix our broken nuclear infrastructure…and any number of other problems.

Why does the Pentagon continue to do this?  I suggest it’s because they have an endless supply of people and money.  No one pays for people, they just have them.  No one has to justify the cost of doing such a study because cost is not an issue.  If I had done that in my civilian P&L life, I would have been shown the door.  I had to spend my money and time on things that mattered and contributed to the bottom line. Since there’s no bottom line at DoD, everything tends to become equally important.  Once on the Joint Staff I remember a staff briefing one day when the two topics discussed were the reduction of the nuclear arsenal by 50% and the Joint Staff savings bond campaign.  We spent the same amount of time on each…in the end it was decided we should brief the Deputy Director daily on the savings bond campaign and as needed for the nuclear issue.

I think we need a study on studies.

   Send article as PDF   

One for the Price of Three!

Only in the DoD acquisition world would this sound like a good deal!  But before we cast too many arrows at the acquisition community, I must admit the idea is mine.  I developed this idea over the course of years of working in the Bizarro World of DoD ship financing.   You remember Bizarro? Bizarro It’s the world where everything is backwards….the name of the bizarro world planet is Htrae (so clever!) and the world is square.  As I recall, it was featured occasionally in Superman comics in the 1960’s. One of the mottos in Bizarro World was ” Us do opposite of all earthly things.”  Bizarro bonds were a hot item on Htrae because they were “guaranteed to lose money.”  So I don’t think it’s a huge stretch to make the analogy here.

As I learned during my time as Chief Resources and Requirements Officer for the Navy, the normal things you learned about economics don’t necessarily hold true when it comes to buying ships.  My initial experience was during my first year on the job.  We were working on balancing the budget and were about $400 Million off.  The staff proposed that we slide the purchase of a ship we were buying for the Army called the LMSR (contrary to popular belief, the Army moves primarily by sea, not air).  The price tag was about $400 Million and the staff had determined that we could stand to slide it a year.  “Sounds good to me!” I answered, happy at the prospect of putting a bow on the $130 Billion Navy budget and delivering it to OSD just in time for Thanksgiving.  By the way, that’s how you make sure that you don’t get rejected right away…..Submit something just prior to a big holiday so no one is around to grade your work.  This rule works in a variety of scenarios:

  • DoD generally drops significant RFPs just before holidays to force contractors to work feverishly at the expense of their families to get the proposal complete by some arbitrary deadline (which generally gets extended anyway).
  • The Congress always passes bills at the eleventh hour before big holidays, in hopes that the particulars will escape the media.  What’s more interesting? The details of the CR passed the day before Thanksgiving or the press conference where the President pardons the turkey?  Or maybe the 3 minute spot on the evening news which shows the neighbor’s Christmas lights display of 100,000 watts, synchronized to “All About That Bass.” I vote for the turkey pardon and the light show!!!!!(and sadly, so do most)
  • Controversial changes to Federal Register seem to always drop the day before a holiday in hopes that no one will notice.
  • My favorite, RFP’s released with 5 days to respond…(a favorite way to make sure the desired contractor wins)

Anyway, I’m sure you have your own sea story that would make mine look minor.  But back to the LMSR caper……

USNS Bob HopeA few days after the decision was made, the staff came back and noted that since we slid the ship a year, it’s going to cost more…..I don’t remember how much, but it was around $100 Million or so.  “Really?” I commented.  ‘Oh, yes,” came the reply, ” money will cost more the next year, we have shipyard loading issues that we will have to pay for, the cost of steel is going up, blah, blah blah.”  So I began to understand that the economics of shipbuilding were different.  I formulated The Shipbuilding Entropy Rule: “Nothing ever costs less.  NO matter what you do, it will always cost more.”  You buy less, they cost more.  You cancel the buy, you still have to pay the overhead.  You remove capability, it costs more to redo drawings.  Its all very counter-intuitive.  This became very clear to me during the following year’s budget build when the staff came back and said “We made a mistake.  We have to move the LMSR back to the original purchase year.”  “Fine,” I replied, “No harm, no foul.”  Sensing it wasn’t “Fine“, based on the furtive glances between the staffers (an admiral sees a lot of those looks in the Pentagon) I asked “What’s wrong?”  Turns out, if we moved the ship back into the original purchase year, it added another $100 Million to the cost!  Whadakknow?  We essentially did nothing and paid $200 Million not to do it!  That, my friends, is Bizarro accounting!

Anyway I could go on and on about this, but I want to get to the reason I chose the title of this article, One for the Price of Three.

The DDG-1000 (AKA CG(X), Arsenal Ship, Zumwalt Destroyer, DD21, DD(X), etc) was originally intended to have a buy of around 32 ships or so.  USS ZumwaltThey became so expensive and the requirements bounced around so much, we began advertising it as a fire support ship vital to the survival of the Marines during amphibious assaults.  As such, we only needed about 10-12, just enough to support the number of amphibious ready groups (ARGS) we had at the time.  The Marines were happy about that, even though they preferred to have 2 per ARG.  I even went over to the Hill with my Marine counterpart extolling the virtues of the DDG-21 as the perfect fire support ship for the Marines.  But once the Marines realized that the cost of the ship was so high that it would probably limit the amount of other stuff they could buy, they dropped it like a hot potato…..they would much rather have the 360 V-22’s than 24 DD(X)’s.  So in the space of about a month we changed our tune from”vital” to “not so vital.”  Now that they are $3 Billion a copy, we are only building 3 of them and I’m not sure there’s a real requirement out there.  As my Grandmother said when she got her first taste of champagne in one of those dinky champagne flutes at my son’s baptism, “That’s not enough to wet my whistle.”  So it is with DDG-1000 IMHO.  The real requirement as far as I can tell is to have something for Bath Iron Works to build ( they will build all three) so they can stay in business in order to address industrial base concerns.  Hence the title of the article.

I propose instead of spending $9 Billion for 3 ships we don’t need, why not pay the shipyard to build it, take it apart and then build it again?  It keeps them busy. The Navy doesn’t have to shoulder the Operations and Maintenance costs necessary to support a ship class of 3 ships, and we don’t have rustle up the personnel and training facilities which must be specially developed on this one-of-a-kind weapons systems.  Heck, we will save money by doing that!  Of course, this idea only works on Bizarro World.

That, by the way, is how Bizarro JosBanks works too.  You pick out one suit and pay for three!

What a world, what a world!

 

   Send article as PDF   

Reforming Acquisition Reform

There has been a lot of static on the net lately concerning acquisition reform.  Two notable recent arrivals on the scene have been all the buzz around the Beltway:  First, the release of Better Buying Power (BBP) 3.0, Under Secretary of Defense (AT&L) Frank Kendall’s reincarnation of BBP 1.0 (originally issued by Ash Carter when AT&L, and later BBP 2.0 by Mr.Kendall). DoD CartSecond was the publishing of a report by the Senate Permanent Subcommittee on Investigations, Chaired by Senator Levin, with Senator McCain as the Ranking Member.  The report, entitled “Defense Acquisition Reform: Where Do We Go From Here?, is a collection of essays by 30 experts in the Defense acquisition world about how to improve or reform defense acquisition of things (and to a small degree, services).

Better Buying Power 3.0

One of the things I like most about the concept of the Better Buying Series is the iterative process in improving its focus.  After letting BBP 1.0 run for a while, corrections were needed as the result of some unintended consequences (like an irrational focus on lowest price, technically acceptable contracts) and need for clarification of some of the elements.  BBP 2.0 did just that, directing that more care must be given in defining what is “technically acceptable” for example.  Now, BBP 3.0 has come out to further tweak the elements of BBP.  A couple of previous elements were eliminated because they were considered complete:

  • Institute a system to measure the cost performance of programs and institutions and to assess the effectiveness of acquisition policies
  • Assign senior managers for acquisition of services

There were some carry overs as well, mostly with refined language.  I won’t list them all here, but the ones that I think represent the most significant change are:

  • A recognition that capability must be considered in evaluating cost by changing the focus from “Control Costs Throughout the Product Lifecycle” to “Achieve Dominant Capabilities while Controlling Lifecycle Costs”
  • Expanding focus on incentivizing productivity and innovation by breaking out into separate areas with following additions:
    • Increase prototyping and experimentation
    • Emphasize tech insertion and refresh in program planning
    • Use of modular, open architecture systems
    • Provide tech requirements to industry early
  • Increasing ability of acquisition leaders to understand and mitigate technical risk.
  • Increased support for Science, Technology, Engineering and Mathematics (STEM) education

Here’s a link to the BBP 3.0 overview.  All in all I think it represents a good step forward in the BBP series and will certainly help in trying to understand all the things going on in the world of acquisition reform……..BUT,

Many of the themes that emerged in the second recent arrival, the Senate study (Complete study can be found here) were not really addressed in the BBP 3.0 document.  To be fair, the report had yet to be released prior to putting BBP 3.0 on the street, but I would have hoped for more overlap.

The Senate report pulled out four overarching themes from the musings of the 30 experts contributing to the report:

  • A cultural change is needed in the acquisition workforce, including more effective incentives
  • Training and recruiting of the acquisition workforce must be improved
  • Realistic requirements definition are critical
  • Accountability and leadership throughout product life-cycle needs improvement

The report also makes two observations which I will quote here:

“First, among all those factors that have been identified as contributing to dysfunction in the defense acquisition system, cultural change is among both the most important and the least amenable to legislation and policy changes. It is, rather, a function of leadership throughout the chain-of-command and an incentive structure that threads through both the government contracting and acquisition workforce and industry that assigns a premium to cost-control and the timely delivery of needed capability.

Second, continued “sequestration” of the DOD’s budgets will undermine any savings that could be achieved through even the most successful acquisition reform.”

Well, to me that says, 1.  It’s more of a DoD problem than a legislative problem and 2. sequestration will nullify ( or at least severely impact) all acquisition reform efforts.   The last thing we need is even more regulation in the acquisition process.  I would offer that in my opinion sequestration is not necessarily the enemy here.  I still think we have too much waste in DoD, too many pork barrel projects, too many pet projects and too many cooks in the kitchen.  What is the enemy is the uncertainty in the budget process over the last several years….Continuing Resolutions, multiple budgets, Overseas Contingency Funds abuse and a foolish focus on equity in Service budgets have all undermined our ability to reform how we buy things.  In the end, it is a indeed a legislative problem….The failure to pass budgets on time, regardless of  the funding levels.  Life would be so much easier and efficient in DoD acquisition with regular and predictable budgets, passed in a timely fashion and accurately executed.

One final observation:  I would like to see the Senate produce a similar document on acquisition reform, but using 30 PRACTITIONERS of acquisition at the grass roots level: Project Managers, PEOs, and Contracting Officers.  A view from the top is always useful, but without a view from the bottom we will never really fix what is wrong with acquisition culture. They are the ones that make up the culture, not the poobahs at the top.  A little more focus on them would be helpful…I’m not sure that after a contacting officer reads BBP 3.0 they will do anything different.

   Send article as PDF   

Plugging the DFAS Dam

I saw a reprint of an article done by Reuters the other day entitled “Special Report: The Pentagon’s doctored ledgers conceal epic waste” and even though it’s almost a year old, I think it still applies.  DFAS Leak height= In just a few days, all the big accounting firms that do business with DoD will be submitting proposals to conduct audits of the the Army, Navy and Air Force Statements of Budgetary Activity (SBA)……that’s a high level balance sheet that has little applicability to the actual management of anything.  Experience in auditing the Marine Corps proved that trying to do anything else was futile.  One just has to read the Reuters article on “Plugs” to see just how daunting a task auditing any of the services really is.  Inventing phantom ledger entries or “plugs” to explain away imbalances in the “goes-intas” and the “goes-outtas” is apparently the norm at the Defense Finance and Accounting Service.  What’s a little disturbing about this whole audit thing, is that many of these sins will go unexamined because they do not necessarily impact the SBA. See my article “DoD Audit:  Is the cure worse than the disease?” for the details about just what the SBA is all about.

In fairness, I think the article’s title is misleading in that I doubt if the motivation behind plugging in numbers is a desire to conceal waste, but rather it’s the normal way of balancing the books in order to satisfy the Treasury Department.  The real motivation is to keep the heat off oneself ……does that sound familiar?  Think about recent VA scandal…..I doubt if the real motivation was to  make sure deserving veterans didn’t get appointments, but it was done to keep the front office happy.  Never mind that the green eye shades at Treasury are apparently more interested in balancing the numbers as opposed to the reliability of the numbers used to balance (a la VA!).  It’s been going on for years, so that’s a good indication that nobody cares.  Unlike the VA however, the DFAS guys were caught and still nobody cares!

But we do care these days about getting the DoD auditable.  And the Pentagon’s efforts to get to auditability have been extensive and expensive, with some modest results.  Take a look at the USMC……their SBA has passed audit scrutiny for two years running now.  Some months ago I wrote an article on the USMC audit, “Hall of Heroes and Auditors“, which is worth reviewing for context for what follows.

I support the efforts of DoD to get auditable, but only in so far as those efforts are done for the right reasons….not to keep the front office happy, but to make sure DoD is properly accounting for dollars….When they say “We don’t have money for pay raises”, or “Retiree health care is costing us too much,” or “We have to furlough employees,” are they using data from the system that “plugs” in nonexistent dollars to satisfy the front office?  Who knows if the numbers they are quoting are accurate, given the evidence that the numbers are inherently inaccurate!  My point is DoD audits are only interesting science projects for green eyeshades if we are only auditing things that don’t matter.  SBA audits are interesting, but not compelling. We must follow on and audit all the other aspects of DoD financial accounting and property, plant and equipment inventories. That’s the plan (I think), but after DoD has spent collectively over $200 Million just to get to SBA audit, will they have the fortitude to go further into the things that really matter? Will Congress let them? Will the operational pressures in an very unstable, terrorist filled world trump mundane administrative exercises like audits? Roulette height=Stay tuned, but I think with sequestration about to raise its head once again, the President under pressure to mount military responses to multiple spots around the globe, and political stalemate in the Congress, betting on continued funding for DoD audits is at best like wagering on red or black at the roulette wheel at Trump Towers in Atlantic City (ooppppsss, it’s out of business, so how about The Nugget in Las Vegas?).

So don’t get too worked up and break out the champagne  if it turns out the the service SBA’s pass audit ( they are likely to do so because of the limited scope and usefulness).  Instead remember:

  1. It’s only the SBA, a very limited look into DoD finances.
  2. No one uses the SBA to manage anything.
  3. It only looks at one year…Past sins are ignored.
  4. DFAS is still using plugs to balance the books.
  5. It may be done by the cheapest bidder (As a stockholder, would you want the firm you have your life savings in to use the cheapest auditor?).
  6. Because all the audits are being done at the same time, chances are all the firms will be battling for manpower and may not be hiring the most competent auditors (assuming they hire auditors).  We may even have to open up an auditor refugee camp to handle the influx of auditors to the Beltway.

So to sum it all up, I wholeheartedly support ensuring the DoD manages it funds effectively, efficiently and accurately.  I’m not sure an audit of the SBA does any of those things. Victory is not a clean opinion on the SBA, it’s a clean opinion on the whole enchilada.

PS: Please do not reverse the order of this article’s title, no matter how applicable it may seem 😉

 

 

   Send article as PDF