Tag: budget

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Was the QDR Written by a Presbyterian?

I commented last week on my expectations concerning the QDR and I wasn’t disappointed 2014 QDRwhen I got around to reading it yesterday.  After reading it through a couple of times (available here), I was still pretty much confused about what it was trying to say.  And it didn’t look much like a strategy document to me…mostly filled with budget numbers and reasons why we couldn’t do this or that because of it.  In the end, it’s definitely a document very much “informed” by the realities of the budget.  I came away with the impression that it was less about strategy and more about money, especially given the frequent references to budget woes.  I stand by my comments in the recent Q•D•Arrggghh  article about the difference between “constrained” and “informed.  I can’t tell the difference, nor apparently, can the authors of this tome.  It was pretty much more of the same from the last QDR…….nothing jumped out at me.

For fun, I wrote down a few of “Pentagonisms” from the Executive Summary which I thought I would share along with a short definition in normal-speak:

  • 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

Well, I grow weary of writing them down.  I’ll say one thing for the document….It’s a Presbyterian minister’s dream.  Presbyterians are well know for their penchant for ORDER, ORDER, ORDER!!!!  Sermons are typically organized into three points with two or more sub-points and a healthy dose of references to Bonhoeffer and Kierkegaard.  My favorite Kierkegaard quote is “People demand freedom of speech as a compensation for freedom of thought, which they seldom use.”  As I read through it, I was trying to capture the taxonomy of thought.  Let’s see, we have 3 Strategic Pillars, 4 Core National Interests, 4 Strategic Imperatives, 3 Areas of Risk, etc.   And they are all interrelated and interdependent!  I can’t keep it all straight.

Anyway, the QDR is out and we can all tune back into Duck Dynasty, The Voice, or whatever other twisted view of reality you may retreat into every night.  And why is all this Energy stuff in there? Since when is the DoD the EPA?  (Sorry for the random comment but I just had to get it of my chest!) Perhaps the best part of the whole schmegegge is the Chairman’s Assessment at the end.  At least he puts out a list to which I can relate.  In the end what does it all mean and what are our real priorities?  According  to the plain language of General Dempsey:

  1. The survival of the Nation
  2. The prevention of catastrophic attack against U.S. territory
  3. The security of the global economic system
  4. The security, confidence, and reliability of our allies
  5. The protection of American citizens abroad
  6. The preservation and extension of universal values.

AMEN

(Why didn’t we say that in the beginning and omit the other 63 pages?)

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Meatball, Lineup & Angle of Attack

The House Intelligence Committee is looking into the apparently surprising Russian response to the crisis in the Ukraine.  I’m only a junior assistant policy wonk (one tour on Joint Staff as a policy guy) but as I heard this news on the radio this morning, a few random thoughts popped into my head which I thought I would share.

The first thought that came to mind is the similarly between intelligence analysts and meteorologists.  In the end their forecasts are just a guess…albeit an educated one.  It seems as though regardless of the accuracy of their reports, they seem to get a pass because, after all, “It’s just a guess.”  I grew up on a farm and I remember my father hanging on every word the weather guy on TV had to say because he had to make  some big decisions based on their forecast. If the weatherman said it was going to happen, my father believed him.  If it turned out he was wrong, my dad shrugged his shoulders and said “You can’t control the weather.” As a Battle Group Commander at sea, the first thing I wanted to hear in my morning briefing was the weather forecast so I could keep my ships and crews out of harm’s way and still accomplish the mission we were assigned.  I think the same thing is true in the intelligence world.  We can only make educated guesses into what may or may not happen, because in the end, we just don’t know. Given that we spend lots more money on intelligence (probably over $80 Billion a year) than on meteorology (NOAA’s FY 14 budget request was around $4 Billion), I would expect a higher degree of accuracy and more “education” (and coherence)  in the intelligence community’s guesses.  I expected my weather guesser to begin his briefing each morning with what he predicted yesterday and to give himself a grade on how he did.  Guess what?  The quality of his forecasts improved.  I would expect the Intelligence Oversight  Committees to do the same thing.  Otherwise the intelligence community is an “out of control” system with no accountability.  To be fair, Intel community leaders say they provided lots of information on the situation to the leadership, albeit conflicting in some cases.  I don’t know what I would have done if I had two meteorologists giving me conflicting information.  It’s gonna rain!….No, it’s gonna be sunny!    NO, it might be a hurricane!   Isn’t that part of the problem though?….Too many people with too much information, presenting confusing and often conflicting analysis?    My one take-away is that given the amount of money we spend on intel, it seems that we have more surprises than we should:  9/11,  Arab Spring, Russian intervention in Ukraine, etc.

So the big question on the Hill relates to the previous paragraph: How is it that given our vast intelligence resources, we are still surprised?  Despite the unpredictability of world events, I think it comes down to what we would refer to in the aviation community as a “breakdown in the scan pattern.”  The week I reported to my initial training in the A-6 Intruder at Oceana Naval Air Station in 1975 an A-6 crashed right next to the airfield in an area now known as Lynnhaven Mall.  It seems that they ran out of gas while trying to get their landing gear UP!   The gear worked fine in the “down-and-locked” position and they could have landed anytime. But they ran out of gas, orbiting 2000 feet overhead the field and all the while taking to the Skipper, OPs Officer and the Safety Officer.  How did that happen?  The crew, both airborne and in the Ready Room, were so focused on the gear problem, they forgot to check the gas….despite warning lights and alarms… and they flamed out.  I would suggest that the Intelligence Community also had just  a bit of a “breakdown in scan.”  We have become so focused on al Qaeda and the strategic “Swing to the Asia-Pacific” that we lost focus on other potential hot spots. Intelligence is all about expecting the unexpected…….the expected information comes from open sources.  I would hope that we use this latest surprise as an opportunity to re-examine our intelligence scan to make sure we don’t focus excessively on any one area.  Ask any carrier-based Naval Aviator and they will say a successful carrier landing is all about scan: “Meatball, line-up and angle of attack!” (and a little luck doesn’t hurt).

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$40 Billion: One Million at a Time?

As I was reading the morning news, I saw a piece in The Hill about SECNAV Mabus’ comments regarding the savings associated with “scrubbing” the $ 40 Billion or so the Navy spends on service contracts.  Service contracts can be just about anything from feeding Sailors in the chow hall to fixing the leaky toilets at the 4 Star’s headquarters building.  SECNAV says “We know we can save significant amounts of money just by setting up things like contract courts, which require … contracting officers to come in every year and justify the contracts.”  I don’t know about you, but I don’t think “scrubbing” every service contract, every year sounds like a way to save money.  Given the thousands of service contracts the Navy has, it would take an army (should I say Navy?) of contracting officers to  review and reissue these contracts.  I suppose I should say we already have a fair number of contracting officers so we would need more than the army we already have.  Each contract soaks up hundreds of man-hours to prepare, vet and issue on the government side, and just as many hours to prepare proposals in response from the contractor’s side.  That doesn’t sound like a very efficient way to administer service contracts…..one year at a time, one contract at a time?  I don’t think so.  Reissuing contracts year-to-year is a sure way to increase costs and increase the workload on an already overworked acquisition force.  Why would SECNAV say that?  It’s because the evil “Contractors” are easy targets and it’s a great way to deflect scrutiny away from the real issues, like the shipbuilding plan or the cost of maintaining 11 carriers, etc.  Here’s a plan: Focus less on individual contracts and focus more on how to administer them more efficiently and how to get the requirements generation process fixed.

The requirements process for service-related contracts doesn’t have to be that hard.  When the decision was made to “privatize” many of the mundane and non-warfighting related service tasks, the die was cast. The powers that be have decided that the people who stepped in to do those jobs (contractors) are one of the reason the Services can’t get their budget house in order.  Not so, I contend.  Service contractors are now an integral part of the military, performing those tasks that are  seen as part of the “tail” in the tooth-to-tail debate former SECDEF Rumsfeld initiated.  If you are not tooth, you are a candidate for a service contract.  I don’t think the average Joe in middle America has an appreciation for all the things these contractors do……Feeding Midshipmen at the Naval Academy, providing medical care for dependents, servicing and maintaining aircraft in the training commands, sailing our Military Sea Lift Command ships (yep, they are contractors), fixing leaky faucets, and building our warships!  They are all contractors.  And as mentioned by SECNAV, they cut the grass too!  But despite the intuitive feeling that it doesn’t have to be hard to know what the requirements are, it can be very hard to actually determine requirements.  Take for instance the maintenance of our bases…..mowing the grass, landscaping the entrance at the front gate, emptying the dumpsters, etc.  I recall that the Navy had a great system for determining how much “base maintenance” was needed.  It was an elaborate system of service levels, with each level being defined in minute detail….in the case of base maintenance, Level 4 might be mowing the grass once a week, emptying the dumpsters twice a week and fixing up the entrance at the front gate a couple of times a year.  Level 2, on the other hand, might be mowing the grass once a month, emptying the dumpsters when they were overflowing and never sprucing up the commissary parking lot.  Each level had a cost associated with it.  I recall during a budget session one year that the decision was made to go with Level 2.  Sound good?  We all thought so until the CNO make his first base visit of the year………Guess what?  When he got back there was a big dust up because the grass hadn’t been mowed in weeks, the dumpsters were full and the Commissary parking lot looked like the back lot of a disaster movie.  Lesson learned.   While it’s easy to talk about reductions in services, especially those related to quality of life, in practice it is difficult to live with the consequences.  So rather than get wrapped around the axle of rethinking the requirements every year, going through the machinations of issuing yearly Requests for Proposals, requiring vendors to produce proposals in response and spend lots and lots of money on both sides in the process, why don’t we figure out a way to get the requirements correct once and for all, issue efficient, multi-year contracts and put precious executive attention on the things that really matter, like how many ships the Navy needs, and how to pay for them.  That’s where the Secretary adds value, not in determining how often to mow the grass.

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Stealth works in the Budget Too!

First thing: Yesterday’s blog on Shared Services fell flat on the website with only a handful of hits.  I take it the world of Shared Services is not so hot on the list of “interesting” topics.  But there’s still a lot of money to be saved there.  In fact, I would contend that there’s a lot of money floating around in areas that most people don’t find so interesting.  It’s the uninteresting that ironically is the most interesting in terms of budget cutting.  They escape scrutiny during the year-to-year  budget battles, floundering in cash. The big programs which matter, act like a Black Hole, sucking up more and more money with less and less light escaping.  On the other side of the coin, the programs with marginal dollars become the darling of the Pentagon budget cutters.  It’s ooh  so easy to cut a Billion or so from the commissary subsidy program, but try and take $10 Million from the JSF and the fan starts getting hit with “not-so-nice stuff.”  With leaders unwilling to take on the issues that really matter and foolishly focusing instead on the margins, I would suggest that they take a look at the “stealth” portions of the budget, those areas with relatively large dollars, but never targeted for cuts.  Forcing agencies into a shared service environment is one of those areas. (There, I said it and I promise never to write another word on Shared Services!).  When looking at these stealthy programs, there’s virtually no risk of offending a large defense corporation, a Congressman or Senator, or even another Service because they have no constituency.  When I did the budget for the Navy I used to think that out of the $130 Billion or so under my control, every Million had a evangelist waiting in the wings to mount the pulpit and extoll the value of their million over the remaining 129,999 million.

How about the family of Defense Working Capital Funds (WCF) and Revolving Funds?  These funds exist  in the shadows, out of public scrutiny, but with lots of dollars associated with them.  For those of you not familiar with working capital funds I suppose you could relate them to petty cash, or “Walking Around” money.  It’s the corpus of operating cash the Department uses to pay  bills day-to-day.  Here’s a link to short list of many of the DoD funds and what’s in them.  In simple terms, when  Organization A provides a service or item to Organization B, it uses the WCF funds to pay their costs and they bill Organization B, using rates set at the beginning of the year.  A takes money from the WCF and B pays it back (at least in theory).  How much money is in these accounts you ask?  North of $100 Billion…..Yep, that’s correct…$100 Billion!!  That’s roughly 20 per cent of the budget.  One of the reasons there’s so much money in these funds is the requirement to carry 7-10 days of cash on-hand.  In this age of electronic accounting, ERPs and near-perfect connectivity I can’t for the life of me figure out why it has to be so much.  Most of these WCFs have their own accounting systems (Darn! I said I wasn’t going to mention Shared Services again).  To be fair, these funds are as close to being run like a commercial business as anything in DoD, and individually they are generally well managed.  But there’s not a lot of cross-talk, the rates don’t generally reflect the real costs of good and services and they are sometimes used as a cash cow to buy just about anything.

So the next time you hear the DoD poobahs whining about the cost of  benefits, people, etc.,  why not ask them about the Working Capital Funds and what they are doing to trim them back.  I’ll bet you they will have to take that question for the record!  Not in their scan because it’s stealthy money, they don’t understand how it works and would rather slash the margins because of their inability to slash the big ticket items.

 

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Blaming the innocent and rewarding the guilty!

When I was a young, steely-eyed Naval Flight Officer attending the U.S. Naval Test Pilot School with no apparent fear of death, one of the classes I took was in project management.  I have always remembered the day we talked about the phases of any project:

  1. Elation—“This is gonna be fun!”
  2. Concern—“This is turning out to be harder than I thought”
  3. Confusion–“I have no idea what I’m supposed to be doing”
  4. Terror–” If I don’t get this done, my career is over!”
  5. Laying Low –“Someone is gonna be blamed for this” (sometimes known as Search for the Guilty)
  6. Relief–“Too bad they blamed Joe…He was the only bright spot on the project.  At least it’s not me.” (Blaming of the innocent)
  7. Dismay–“I can’t believe Fred got promoted as a result of this lousy project.” (Promotion of the uninvolved)

This little parable was triggered by a commercial I heard on the radio this morning.  It was one of those commercials one only hears in DC, always during commute hours.  You know them….It’s always one of the big defense hardware manufacturers extolling the virtues of their system.  It’s especially prevalent right now since the budget is being rolled out.  I don’t know about you, but do you think anyone who is in a position to make a decision really listens to that pablum?  The big boys and girls that matter in the decision chain are all driven to work and are sitting in the back seat of the big black Town Car or Navigator trying to finish up all the paperwork they took home last night, but didn’t get to.  The same thing is true on the Metro. Do you think any of them are riding the Metro?   The closer you get to the Pentagon, the more you see all those very expensive posters about some plane, ship, tank, bomb, missile, …you name it!  I just can’t figure out why they spend all that money on that stuff.  My advice to clients is that if you hear one of those commercials or see one of those posters, the subject  is likely in trouble either within DoD or on the Hill.

So take the example of Boeing advertising the F/A-18 and P-8 aircraft.  Their claim is that they are both being delivered under budget and on-time.  That may or may not be true, but in my opinion they are both among the best managed and best value weapons systems ever delivered to the DoD.  One thing’s for sure, you don’t hear that claim for the JSF.  Remember, that’s the program that is 6 years behind and $163 Billion over budget.  Who was the big winner in the DoD budget for 2015?  The JSF, of course.  And who was the big loser? The F/A-18.  Talk about rewarding the guilty and punishing the innocent!

So my recommendation to Boeing is change the commercial, stressing how much money the F/A-18 costs and how woefully behind schedule it is.  Then people will take note and pour money into the program.  There’s an old saying in my house: “The sick get sicker, and the healthy usually wind up catching whatever it is the sick have and get sick too!”

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David and Goliath

Over the past few weeks there has been a lot in the press about the larger defense contractors worries about “shrinking” (see DoD Budget Cuts: Less of More) defense budgets and the effects on their profitability.  Bloomberg News had a piece today about deals dropping for Pentagon contractors.  While it doesn’t appear any of the big guys will be going out of business any time soon, they are indeed under pressure to deliver the goods to their shareholders.  I would guess that most everyone who has a 401(k) has some amount of money invested in the large  defense-related corporations, although they may not realize it.  We all want them to grow and prosper, but sometimes fail to realize that their “growing and prospering” all too often means ever increasing defense spending.  But what about the small and medium-sized businesses that are in the defense industrial complex?  How have they been affected by a slowdown in defense spending?  To answer that question, consider how companies  control their profits.  In this non-MBA’s mind, there are two ways to ensure that profitability stays rosy: 1. Make more revenue and if that’s not possible then, 2.Cut overhead and costs.  Alternative One doesn’t seem so probable if spending is down, so Number Two seems to be in vogue right now.  The large companies generally have fairly large cash reserves and can weather the downturns in spending without having to do much of Number Two (Maybe slash an executive or two’s compensation by few million).  They have the ability to spin off unprofitable business units, refocus defense units onto other areas and lay people off.  The options are more limited for the small and medium-sized businesses.  They tend to have much less in cash reserves and less flexibility to spin off unprofitable units (in fact, they probably don’t have but one business unit).  So the smaller guys have to rely on reducing overhead by letting people go, cutting operating costs (generally seen in people-related programs).  I liken it to flying an airplane.  You can maintain altitude (profit) as you slow down by increasing your angle of attack (reducing costs).  But you can only pull the nose back so far, and then you stall-often with very bad consequences.  I think many small businesses are getting to that point.  Over the last several years they have been cutting corners, letting their more expensive employees go and cutting back on people-related programs to the point that they have now where to go but down.  They have no margin for error and when there are spending freezes (like during the government shutdown) they can’t recover.   And when spending finally increases, they don’t have enough people to generate needed revenue.  It’s a vicious circle for sure.  The big guys muddle through, eat into reserves a little and go right on producing profits.

So what, you say?  Just that I think that too often the press focuses on large defense contractors and their troubles to the detriment of those who are impacted the most: small and medium-sized businesses.  They tend to be either veteran-owned or have large numbers of veterans employed in the aggregate.  It seems to me that the Administration and Congress should be spending more time taking care of those problems than worrying so much about “the industrial base” (meaning big corporations).  I just don’t see it coming out of DoD, the VA or the SBA.  What’s up with that?

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Too Big To Fail

If you saw the Sixty Minutes piece on the JSF last night, you probably not a happy camper.  The opening salvo was pretty staggering: The program is costing $400B for 2400 airplanes, or about twice as much as the US spent to put men on the moon!  So how did we get here?  When I was a squadron Commanding Officer in the 1991 timeframe I witnessed a rare occurrence at the Pentagon, The cancellation of the A-12 Avenger program by then Secretary of Defense Cheney.  The A-12,intended to be the next generation aircraft for the US military, was scheduled for a buy of about 850 jets.  But it was 18 months behind and already $1 Billion over budget, so SECDEF axed it! The JSF didn’t just wind up 7 years behind and $163 Billion over budget overnight, so one wonders why subsequent SECDEFs let it get this far.  I think we got here in much the same way that the DoD ethics problem evolved……just a little at a time.  Despite all the warning signs and poor performance,  leadership allowed it to continue with the “hope” that with the proper amount of money and leadership, the problems would go away.  They didn’t.  All successful military officers and corporate executives know one fundamental tenet of leadership: Hope is not a good strategy.  Yet it appears that was the main strategy at work with the JSF.  I am reminded of the classic The Screwtape Letters, by C.S. Lewis in which a senior executive devil, Screwtape, provides advice to his nephew, Wormwood, an apprentice devil.  When asked by Wormwood what big event he should use to cause his assigned mortal to turn to the dark side, Screwtape replies, “Indeed the safest road to Hell is the gradual one–the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts,…” Sound familiar?

Now the program has a gun to our heads.  It’s the only TACAIR replacement on the books, not withstanding the excellent and under-rated F-18E/F, which, by the way, is a perfectly acceptable alternative well into the 21st century.  It’s ironic that in order to pay for the ever increasing JSF price tag, DoD wound up taking money highly successful programs, like the F/A-18 .  We now must resort to a strategy of hope to deliver the JSF.  There’s a lot of similarity here with ERPs, don’t you think?

There’s a lesson to be learned here.  Be vigilant early in procurement programs. Don’t let the little things get by without correction, lest one finds oneself on “the gentle slope, soft underfoot” of Too Big To Fail.

 

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Q•D•arrrrrrgh!

I saw a nice article in Politico’s Morning Defense this morning about the upcoming DoD Quadrennial Defense Review, commonly referred to as the QDR.  I fondly remember my days in the Pentagon wrestling with the QDR gurus, the best and brightest thinkers of all the Services, getting together to figure out how their Service was going to get more money.  The knives were out as the behind-the-scenes point papers on the vulnerability of aircraft carriers, the shear madness of fleets of supersonic, stealth airplanes, and the end of the need for “Boots on the Ground”  proliferated like rabbits in a viagra factory.  I suppose it was a useful exercise because it is good to sit back and evaluate future threats and the capabilities needed to counter them.  The QDR overseen by Secretary Gates was a bit different in that the QDR was essentially written before the whole process began.  The result was a QDR which didn’t make too much of a wake, maintained the status quo for the most part, and kept most everybody happy.  For those interested in the upcoming QDR issues I recommend  an outstanding report by CSIS on the results of a recent conference on the subject.

I predict this next QDR is likely to be more of the same.  The biggest reason is that while the QDR is not supposed to be constrained by budgets and the taxpayers ability to continue to fund DoD at ever increasing levels, it is impossible to de-link strategy and money.  The cute buzz word which gets around this issue is “informed.”  We say that while the QDR is not budget constrained, it is “informed” by it.  Informed is one of those words or phrases I call Pentagonisms.  They emerge from time to time in an attempt to “be truthful without telling the truth.”  Those of you who have spent anytime in the Pentagon can probably come up with several Pentagonisms.  Some that come to mind are robust, littoral,operationalize, detainees, etc.  There is a nice article by Kate Bateman in USNI Proceedings on this subject that I commend to your reading.

Back to QDR.  The big debate is rather or not to be constrained by budgets.  I’m not quite sure what difference there is between a QDR that “fiscally informed” and one that’s constrained by budgets.  It’s all the same in my book.  DoD should admit that and get on with it.  But in developing a strategy that is either “constrained” or “informed” by  budgetary realities, DoD must be careful to not develop a strategy against an unconstrained future.  By that I mean that there has to be a dose of reality in the vision of the future security environment.  There is a tendency to make the enemy ten feet tall, to give more credit than is due and generally overestimate the threat.  Given the uncertainty of the future, that’s understandable and perhaps even necessary in some cases.  But the Congress and American public should realize that in many cases our strategy is based on the worst case scenario.  That’s good business in some areas, cyber security of instance, but not in all areas.  In order to make the budgetary compromises necessary to adequately defend America there must be some wiggle room.  If everything is important and absolutely critical to national defense how can one make compromises?  So I hope the QDR avoids the  end-fighting and back biting  of past QDRs and focuses on a realistic threat environment with capabilities best suited to meet the threats.  Given the past history however, I can’t help but thinking…… Q•D• arrrgh. I’ll be glad when it’s over!

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Kids and the Grocery Store Checkout Aisle

There was an article in the news this morning that reminded of the days when I would go to the grocery store with the kids ( and now grandkids). It was a Defense News article on the White house pushing for higher DoD budget numbers- about $36 Billion higher than the sequester cap and just about in line with the Murray-Ryan budget deal.  But they are also crafting at least $26 Billion in the “unfunded” wish list (See my previous comments about wish lists).  It’s like getting to the checkout aisle at the grocery store with your kids in tow and they start picking up all the “kid-friendly” stuff strategically displayed there and explaining how they “NEED IT.”  The stores know that you are more likely to give in when you are standing in line, with many other impatient shoppers behind you and have no time to deal with needy kids.  As we know the President’s Budget is now in the checkout aisle, already overdue to Congress, but soon to be released in early March.  And the “kids” are now trying to grab what they can before the groceries are scanned.  What’s really interesting about this budget is that while they were in the shopping aisles, the Services (kids) and their parents (OSD) tried to put some of the stuff back on the shelf (an aircraft carrier battle group for example) but they weren’t allowed to do so by their grandparents (Congress).  By the way, it’s always a bad idea to carry the grandparents along while shopping…We all know the kids get what they want when that happens, even if it’s not so good for them.  A $26 Billion Wish List while standing in the checkout line is a pretty big pill to swallow.  Logically one would assume that if it was really needed the Services would find a way to fund it, not wish for it, especially if they have received substantial relief from sequestration. So why the need for a list? Remember also that the $ 495 Billion budget request will be supplemented by another slug of $30 Billion or so to finance Afghanistan, so it can’t be for costs of war.  It’s hard to imagine a wish list that nearly as large as the Supplemental request.  I salute the DoD for attempting to make what they perceive to be “tough” decisions, but are they really the type of tough decisions that really need to be made?  The article has a great quote from Gordon Adams, “You don’t take the pet rocks or big systems.  It’s just not doable.”  I agree with Gordon, but especially when the grandparents are along.  By the way, when I was in charge of the Navy budget, it became obvious to me that in the end, everything turned out to be someone’s pet rock!  I am not suggesting that the Congress should rubber stamp DoD budgets and blindly accept their funding requirements. One of our Nation’s fundamental founding principles is the civilian oversight of the military.  What I am suggesting is that we need to take a step back and examine the entire process, so that wish lists are not necessary.  Giving DoD a budget cap to deal with is tough enough, but then allowing no flexibility and discretion in where to absorb the cuts  puts DoD in a position where they have to make wish lists in order to compensate for the senseless cuts demanded by sequestration. Take for instance the example of cutting a carrier battle group (CVBG).   A CVBG consisting of roughly a dozen ships and submarines represents a capital investment of well over $50 Billion.  At the end of the day, cutting that CVBG represents a  real savings of maybe $1 Billion a year.  That’s not good business, but given the constraints, it may be the only way for DoD to make up the budget deficit given the current process.  I know this: Time spent developing, vetting and justifying wish lists is better spent focused on making the base budget reflect the real needs of DoD.

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DoD Budget Cuts {n.} 1. Less of more

I saw an article in Defense News this morning that said that the DoD is safe for now from budget cuts.  For those outside the Beltway (and unfortunately many inside as well) that translates into the notion that the Defense Department will skate by again by avoiding the “cuts” threatened by the Budget Control Act of 2011 ( commonly referred to as Sequestration).  But for those in the know, that just means the DoD can look for  more  of an increase in money than currently scheduled.  For all of the hubbub about “cuts”, one must understand that in DoD budget parlance, cuts just means “less of more.”  When I did the Navy budget, if we were expecting a $6 Billion increase in real spending dollars in the next year and we only got $4 Billion increase, we would say the Navy’s budget was “cut” by $2 Billion.  It’s not the way Mr. and Mrs. America think about cuts…It’s simply less of more.

Look at this chart from a 2013 CBO report showing the FY 14 DoD budget.  Notice that even with sequestration cuts in place, the  DoD budget is more in 2014 dollars than it was in 2006.  And that’s not counting Supplemental money intended to lessen the effect of the war in Afghanistan on the base budget.  I think any reasonable person would conclude that there’s plenty of money in the DoD budget….and now there’s even more.  Why  does DoD say they need “more of more?”  There are many reasons; increased costs of procurement, disproportionate growth in operating costs, too much infrastructure, etc.

There are two ways to get more spending power; 1. Get more money (not within DoD control), and 2. Spend what you have more efficiently (within DoD control).  I contend that DoD should focus more on number 2.  The country simply can’t afford giving DoD “more of more!”

Here are just a few examples:

  • Harvest the return on massive investments in ERPs (see DoD IG Report to Congress)
  • Make some hard decisions on expensive weapons programs where costs are out of control (yes, there will be winners and losers)
  • Convince the Congress that another BRAC round is needed
  • Spend more executive time on managing the big budget problems and less micro-managing the little problems
  • Know where every dollar is and what it’s doing (The real reason for auditability).

So beware “Crocodile Tears” of those who opine that DoD needs more money and instead ask them what are they doing to ensure the treasure they already have is being spent wisely.