Government Executive - Authors - M. Thomas Davis

It's Time to Try Two-year budgets

M. Thomas Davis — Wed, 01 Aug 2001 00:00:00 -0400

Many review panels, including the prominent Packard Commission in 1986, have strongly recommended biennial budgeting. Since the Pentagon's 1988 and 1989 budgets were submitted simultaneously, Defense officials have tried to move in this direction. But mainly due to a lack of support in Congress, biennial budgeting never has been fully implemented.

Ample precedent has been set for two-year budgets. More than 20 states use bien- nial processes. As the former governor of Texas, President George W. Bush is familiar with the cadence and tempo of a two-year approach. During his presidential campaign, Bush strongly advocated a shift to a Texas-style biennial budget cycle. "If the discord in Washington never seems to end, it's because the budget process never seems to end," he said, adding that the current process results in, "too much polling and not enough decision-making."

Last year, Senate Budget Committee Chairman Pete Domenici, R-N.M., introduced the biennial Budget Appropriations Act, noting that Congress spends nearly half of its time on the budget process. The bill won bipartisan support, but the measure faltered due to opposition from the appropriations committees.

A two-year process allows state legislators more time to consider non-budgetary issues, to more carefully weigh new initiatives, to conduct better legislative oversight and to shorten legislative sessions. The biennial process allows officials to monitor spending under the current budget while drafting objectives for the next one.

Under the annual process, an enormous amount of work is crammed into a legislative session that runs from February (when the President submits his budget) to Oct. 1 (when the new fiscal year begins). In addition to enacting the regular budget, Congress spends time reviewing current supplemental and emergency budget requirements while conducting hearings on the next year's budget.

The Defense Department needs longer-term planning. The time and money needed to develop and field new weapons systems almost always exceed planners' expectations, in part because the annual funding cycle creates tremendous uncertainty in the long-term outlook of Defense programs. Through biennial budgeting, Defense officials and contractors could manage programs more efficiently by doing longer-term planning and working out more favorable agreements with suppliers. Also, Defense planners and budgeters would have time to conduct the analyses and evaluations necessary to improve the link between projected spending and strategy.

Traditionally, most opposition to biennial budgeting has come from the appropriations committees because the annual process gives them enormous influence and leverage. But we have already witnessed something akin to a biennial process with the Bush administration's fiscal 2002 Defense budget. The Bush administration didn't submit its Defense request until the end of June-nearly five months late, leaving Congress with little time to deliberate. And although the budget submission did reflect additional funding for several existing programs, it essentially built on the Clinton administration's defense budget for 2002 while deferring major changes until 2003.

Essentially, this means that the Pentagon has been operating under a de facto biennial budget for 2001 and 2002, albeit one that lacks the stability that would accompany a true biennial process. A useful approach in the near term would be to build on the work already done by Defense Secretary Donald Rumsfeld's budget planners and submit a biennial budget for fiscal 2003 and fiscal 2004 next February. Since the Defense planning process projects programs five years in advance, the data for fiscal 2004 already reside in the Pentagon's database. Congress could greatly enhance program stability if next year it authorized and appropriated Defense funds for fiscal 2003 and 2004. Changes for unforeseen events, which Rumsfeld hopes to minimize, could be dealt with in supplemental, emergency funding legislation. The administration would submit the next full budget in 2004 for spending through 2006, thus allowing the next administration time for review and appraisal after taking office Jan. 20, 2005.

Shifting to such a schedule would be difficult, requiring careful management and political concessions in Congress and the executive branch. But it would be a good start toward a more orderly and thoughtful budget process.

Retired Army Col. M. Thomas Davis is a senior defense analyst at the Northrop Grumman Analysis Center. He conducts the defense budget analysis for the annual Government Electronics and Information Technology Association conference and is principal author of a recent report on the Defense Department's strategic planning process. The views expressed here are his own. ]]>

A Strong Military Needs a Strong Vision

M. Thomas Davis — Thu, 01 Feb 2001 00:00:00 -0500

Certainly there were significant differences between the two candidates' approach to the appropriate use of military force, but the imperative for military reform crossed party lines. And now President Bush faces a number of major defense challenges in such areas as national security strategy, budget, programs, personnel and defense management.

Strategy

The Defense Department is required by law to release a new National Security Strategy by early June. This document will provide policy guidance and priorities to executive branch agencies responsible for foreign affairs. But should the strategy zero in on major regional wars or on smaller-scale contingencies? Perhaps a combination of both? In what regions? These issues drive both the size and composition of our military forces.

If the military services are to be able to rapidly deploy and sustain forces worldwide, major changes must follow. Change of this magnitude must be guided by the National Security Strategy and the subsequent Quadrennial Defense Review. As Bush defense adviser Richard Armitage has said, "militaries should not be in charge of their own transformations." This is a tacit acknowledgement of the need for strategic guidance.

Budget

Fielding a force consistent with strategic demands will cost money. Spending on operations and maintenance has reached an all-time high, squeezing efforts to fund robust modernization. Personnel costs are also on the rise as benefits are improved to attract and keep well-qualified workers. At a minimum, steps must be taken to reduce growth in operations and maintenance spending. Such steps will be painful and will reopen the debate about the defense infrastructure. Nonetheless, increased spending on personnel and operations and maintenance is not feasible without a substantial budget increase.

If the new National Security Strategy endorses transforming the services into more rapidly deployable forces, more funds will be needed to maintain readiness, evaluate new approaches and buy new equipment. President Bush advocates increasing defense spending over the coming decade by $45 billion, while the military services and others have suggested annual increases of up to $60 billion, or 12 times more. This is a significant difference in need of resolution.

Programs and Personnel

The Bush administration faces strategic and budgetary decisions about programs and personnel.

National Missile Defense. Republicans have routinely advocated an aggressive National Missile Defense program. According to the Congressional Budget Office, a system covering all 50 states would cost at least $60 billion over the next decade. This is not allocated, however, in either Defense funding or military force structure.

Testing of the current "hit-to-kill" interceptor has been disappointing. Pursuing a completely new technological approach, however, such as the sea- or space-based system suggested by Bush and some of his advisers, would be expensive and time-consuming. If a missile defense were deemed necessary, it would have to be funded quickly in order to be in place by 2005, as some proponents have urged.
Personnel. The Bush administration supports steps to make military pay more competitive with the private sector. Military medical care and housing also are competing for scarce dollars. But the major issue is whether, in these prosperous times, the military services can attract and retain enough high-quality personnel. An October study by Leonard Wong at the U.S. Army War College Strategic Studies Institute suggested this would be increasingly difficult. In "Generations Apart: Xers and Boomers in the Officer Corps," Wong attributes high rates of junior officer attrition to a general disconnect between senior military leaders and younger officers.

Pentagon planners are not forecasting growth in personnel expenses over the next decade, but they don't plan to cut military strength either. This isn't realistic given the rising employment cost index, the increase in college attendance rates and the decrease in young people attracted to military service. Quality fighters demand competitive wages. In short, the Pentagon will have to choose between raising its pay or reducing its rolls.
Army transformation. Of all the services, the Army has made the most daring initial steps toward transformation. Not only is the service contemplating a new structure for its medium brigade, it also envisions new equipment significantly different from its current inventory. But the new brigade structure has prompted questions: Is it meant to provide a flexible unit capable of rapid deployment for contingency operations, or is it intended for quick deployment against conventional attacks? Either way, making major, additional investments in the less strategically mobile heavy forces organized around the traditional tank will be a hard sale.
Air Force structural balance. Although its Expeditionary Aerospace Force is a significant change, the Air Force is maintaining its current strategies and equipment. Despite aspirations of providing "global power, global reach," the Air Force structure is heavily skewed toward short-range fighters, even as distance becomes more and more important.

The mix of long- and short-range aircraft and the inventory of "low density-high demand" systems must be addressed. Also, the introduction of unmanned systems in both reconnaissance and strike roles is critical. Senate Armed Services Committee Chairman John Warner, R-Va., has already urged the rapid introduction of more unmanned systems.

As distance becomes a bigger factor and the absence of U.S. bases and enemy anti-access strategies become more evident, the currently planned Air Force structure is increasingly open to question. Production of more F-22 fighters and the need for a manned Joint Strike Fighter and a longer-range bomber force all need review. In addition, if the Army is fully transformed into a rapid deployment force, all the services' rapid air transport capabilities will come under scrutiny.
The Navy's future fleet. Too few ships are being built to maintain a big enough fleet. To maintain the status quo, eight to 10 ships would have to be launched each year. The Navy must build more ships that are less expensive, scale back its deployed battle groups or curtail its international presence.

The need for international visibility is a matter of policy, but structure and composition are military matters. To match platforms with requirements, the Navy should reconsider its discarded "arsenal ship" or the more radical "Corsair" concept, proposed by Vice Adm. Arthur Cebrowski, president of the Naval War College, which would distribute aviation assets to numerous smaller ships instead of a few large aircraft carriers. Both approaches would conceptually expand fighting power while cutting personnel and costs.

Like the Air Force, the Navy is becoming dependent on short-range strike aircraft. To achieve a greater long-range strike capacity, the Navy must consider an expanded inventory of missiles or unmanned aircraft.
Marine aviation. To make its plans for "operational maneuver from the sea" a reality, the Marines need both the Joint Strike Fighter and the MV-22 Osprey, the controversial tilt-rotor aircraft that takes off and lands like a helicopter and flies like a plane. Both programs are troubled. In addition to its limited range and the decreasing likelihood of close air support provided by aircraft flying across the forward lines, the Joint Strike Fighter continues to suffer from growing cost projections. And the dent-prone MV-22, which Vice President Dick Cheney attempted to eliminate in 1991 when he was Secretary of Defense, has yet to prove that it's technologically sound. Marine Commandant Gen. James Jones remains firmly behind both programs.

Defense Management

Three issues are being debated about defense management. The first is the continuing need for procurement reform. So far, the savings in acquisition have overwhelmingly come from procurement reductions rather than procurement reforms. Progress has been made, but numerous reports from the Defense Science Board indicate that program instability and inaccurate costing continue to plague weapons programs.

Second is the management of the defense industrial base. The fundamental issue is how much of a defense base does the United States need to stay first in technology, produce superior ships, aircraft and weapons, and be industrially efficient? The "winner take all" concept in the Joint Strike Fighter effort demands early attention from the Bush administration. As planned, either Boeing or Lockheed Martin would win the entire contract to build the Joint Strike Fighter. The loser is likely to be forced from the aircraft production business. This kind of business deal hinders the competition and innovation needed build a superior military force.

Finally, the Pentagon's internal strategic planning process needs to be reformed. Too often, program guidance is muddled and the services' planning efforts are not well integrated. As a result, decision-making suffers along with program stability. During the election campaign, there was frequent talk about the mismatch between strategic aspirations and budgetary constraints. Questions were raised about pay, the pace of military operations, the aging of military equipment, the readiness for battle-and more. Now is the time to come up with the answers that will determine U.S. military capability over the next quarter century.

Retired Army Col. M. Thomas Davis is a senior defense analyst at Northrop Grumman Corp. He conducts the defense budget analysis for the annual Government Electronics and Information Technology Association conference and is principal author of a recent report on the Defense Department's strategic planning process. The views expressed here are his own. ]]>

A Decade's Bills Are Coming Due

M. Thomas Davis — Fri, 01 Sep 2000 00:00:00 -0400

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he latest federal budget estimates are both encouraging and impressive. In June, the Office of Management and Budget released its latest 10-year forecast, predicting the overall federal budget surplus between 2001 and 2010 to be $4.2 trillion, up from the $2.9 trillion OMB estimated in February. A few days later, the Congressional Budget Office offered an even rosier forecast, predicting the surplus would be closer to $4.5 trillion.

The vibrant economy has completely changed the budget outlook that existed two years ago. While budget policy and the budget process itself were built on the presumption of troublesome deficits far into the future, we now face the much happier situation of surpluses. But unless a new political dynamic surfaces shortly, the Defense Department will not claim much of this newfound federal wealth.

During the past decade, Defense paid a major portion of the bill that helped bring the budget into balance and, ultimately, surplus. While force structure was cut by more than one-third, the defense budget itself was slashed nearly 40 percent. Weapons procurement was cut more than 70 percent, delaying modernization programs while the nation worked to get its fiscal house in order. Despite these reductions and a historic increase in the rate of deployments, the military succeeded in keeping readiness relatively high and the seeds of modernization planted in fertile soil. At some point, however, it became clear that there would be a price for maintaining a volunteer force of 1.4 million service members in an increasingly tight labor market and for operating aging equipment.

In 1998, the military service chiefs successfully argued for a $112 billion increase across their five-year budget plan. But even as this increase was provided, other studies surfaced suggesting that many military accounts, particularly procurement, were significantly underfunded. Although procurement increased and reached the long-sought $60 billion goal with the submission of the 2001 budget, one prominent public policy group declared this to be only half the level required. Others, taking their cue from the military services, suggested $90 billion might be more appropriate. Despite disagreement on the precise level, there was growing consensus that something had to be done to boost modernization.

The projected budget surplus makes this an appropriate time to address several defense budget concerns. Regrettably, this does not seem likely. Although a few members of Congress have called for greater defense spending, there is little pressure for an increase. The public does not perceive a major threat to national security, and despite readiness concerns, the military continues to meet its numerous missions. Opinion polls rarely uncover any concern about defense. A Gallup Poll conducted in May showed that two-thirds of Americans feel defense spending is either "about right" or "too much."

The most recent OMB forecast reflects this attitude. Although between 2001 and 2010 it projects a $1.9 trillion "on-budget surplus"-that portion of the total surplus that is not committed to the Social Security Trust fund-it does not allocate any additional funds for Defense in its projected surplus allocation. Moreover, it proposes taking $403 billion needed for Medicare "off-budget," thereby reducing the surplus by 22 percent.

This is unfortunate. Serious issues must be addressed soon if we are to maintain the current force and begin transforming to the future force many believe is necessary. Consider three conditions existing in the defense budget:

First, current Pentagon projections, in constant dollars, assume no real growth in the military personnel appropriation. Essentially, the present projection assumes that personnel expenses will remain at $76 billion for the next 10 years. This is unrealistic unless the Pentagon plans to reduce its manpower levels-which it does not. If only the active-duty pay portion of the military personnel account experiences 2 percent real growth to 2005 followed by 1.5 percent real growth to 2010-both of which represent lower growth than recent pay raises-the personnel account grows to $85 billion. This equals a compound annual growth rate of 1.3 percent. Since this approach does not include corresponding pay raises for the reserves, nor any other expense covered by military personnel, it is almost certainly understated.

Second, no one in either the Defense Department or Congress seems to have a plan for controlling operations and maintenance (O&M) spending. As a percentage of the Defense budget, O&M currently is at a historic high and growing. As older equipment is kept in the inventory longer-the Air Force plans to continue operating B-52 bombers for eighty years, according to current plans-maintenance becomes more expensive. This is compounded by the increased rate of operations, which places additional stress on already complex systems. Furthermore, there are growing expenses in non-operational functions that are funded with O&M dollars. The $17 billion Defense Health Program, for example, is experiencing cost growth similar to that of civilian medical service programs and is currently funded below annual requirements by at least $1 billion. Other initiatives in defense health, such as expanding benefits for retirees and those over age 65, will add significant additional costs. Trends suggest that without major force structure and infrastructure changes, over the next 10 years O&M will have to grow in real terms by at least $15 billion, or 1.3 percent, annually.

Finally, there is procurement, which for fiscal year 2001 is budgeted at $60.3 billion. The budget projection shows procurement growing in constant dollars to $65 billion by 2005. But in 2006, several major modernization programs either enter production or reach peak production. If procurement increases by a modest 0.5 percent real growth between 2005 and 2010, which is below expected requirements, it will reach $68 billion in constant dollars. That figure reflects annual growth of 1.3 percent.

Holding the reminder of the defense budget constant-assuming no growth in military construction and base housing, among other important spending areas-means that in real terms, spending for active-duty pay, O&M and procurement will require the annual defense budget to increase in real terms from $293 billion in 2001 to $325 billion in 2010. The cumulative yearly increases during this ten-year period will total $217 billion above what is currently projected, an amount equal to 11 percent of OMB's projected surplus, or 14 percent if Medicare were moved "off-budget." It equals 10 percent of the CBO surplus estimate.

To date, neither presidential candidate has endorsed increases in defense spending of this magnitude. Vice President Al Gore declared during the primaries that he believed an increased investment in defense was needed, but he has not suggested a specific level. Governor George W. Bush, while favoring certain programs, has not suggested increasing the defense budget top line. But the math is compelling. No matter who wins in November, there is a defense bill to be paid.

Can the bill for increased defense spending be avoided? Only if the pace of operations is reduced, reflecting a less ambitious foreign policy, or if manpower or infrastructure are cut. None of those seem likely.

It has been said, "to govern is to choose." Funding the defense budget during the next decade is certainly going to require major choices.

M. Thomas Davis is a retired Army colonel. He is conducting a federal budget analysis for the annual Government Electronics and Information Technology Association conference in October.

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The Campaign That Nobody Discusses

M. Thomas Davis — Sat, 01 Apr 2000 00:00:00 -0500

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or those concerned about national defense, its virtual absence as an issue in the presidential campaign is troubling. During the primary races, Democratic hopefuls Vice President Al Gore and Sen. Bill Bradley declared their support for current defense spending levels and the need to modernize the force, but they provided few specifics. On the Republican side, there was a more detailed proposal from Texas Gov. George W. Bush on shortfalls in pay and modernization, but few particulars on how this would be funded. Sen. John McCain favored better pay and more modernization but focused considerably more attention on congressional pork than on defense muscle. Given that defense is a critical federal function accounting for nearly half of all discretionary spending, we can hope that the would-be commanders in chief will offer more details as we approach the November election.

Without a serious discussion, it is likely that the most serious challenge facing the defense program of the next administration will go unnoticed. The problems associated with equipment modernization and force readiness are certainly pressing and have received some visibility, but they are secondary to the primary challenge that the next administration must address: How will we attract a sufficient number of volunteers to fill the ranks? This issue will require considerable attention from the next president, and the contenders should begin articulating their approaches sooner rather than later.

The nexus of the problem is simple. To borrow a phrase from the 1992 presidential campaign, "It's the economy, stupid!" As Federal Reserve Chairman Alan Greenspan has been emphasizing for months, we are currently experiencing a very tight labor market. The statistics of the Federal Reserve, showing record lows in the unemployment rate and growing labor demand, have been reinforced by market observations. Even the Salvation Army reported difficulty in finding people to ring the bells at its charity kettles last December. Given such conditions, it should be no surprise that our all-volunteer armed forces have experienced escalating recruiting difficulties. Despite an expansion of bonuses and an increase in recruiters, the problem is simply that unemployment rates for service-age men and women have never been this low since the all-volunteer force began in January 1973. We are truly in uncharted unemployment waters.

But low unemployment rates are just the most prominent among several factors challenging recruiters. First, the actual pool of potential enlistees is surprisingly small and possibly shrinking. There are about 14 million young Americans between the ages of 17 and 21, the prime recruiting market. While their numbers have slightly increased in the past few years, for recruiters the pool is actually shrinking. College attendance has been rising rapidly among high school graduates and according to some studies is now approaching 80 percent. Those who go to college generally do not join the armed forces. Subtracting those who attend college, those not physically or medically fit, those with serious police records, and those scoring in the bottom half of the armed forces standardized test, the services are competing for a labor pool of fewer than 800,000.

Second, the armed services' demand is relatively large. Last year all four services had a combined recruiting goal for both active and reserve components of nearly 280,000. In other words, to meet their objectives the services have to attract nearly one in three of those in the dwindling pool of potential recruits.

Third, several societal factors have combined to lower the propensity of young people to enter the armed forces. Throughout the last decade, while today's service age youth were developing their ideas of future career opportunities, the military services were reducing their numbers. A lingering image was created across America as recruiting stations closed that the armed forces were no longer hiring. The same perspective has been observed by the Selective Service System, which has experienced a steady decline in 18- to 25-year-old males registering for the draft.

In addition to the perception that military careers are no longer as attractive, the services lost significant ground in an area where they had developed a clear competitive advantage-college assistance. The Army College Fund, a modern-day successor to the G.I. Bill currently offering up to $50,000 in college assistance, brought many young high school graduates concerned about college tuition costs to the recruiting station. Today, however, there is a large and growing number of college assistance programs that lessen the appeal of this benefit. All but three states now offer some sort of tuition assistance, and the federal government provides a suite of programs from Pell Grants to the more recent Education IRAs and tax credits. As more potential recruits take advantage of these programs, the armed forces see enlistments drop.

As we enter the second generation of young men and women who have never known anything other than a volunteer American military, the presence in the household of a parent with military experience continues to decline. The same can be said of high school teachers and counselors, another group that influences the career choices of young men and women.

So what are the options that the candidates might consider? Clearly, a solution must address both supply and demand factors. On the supply side, a more concerted effort must be made to recruit those in college, certainly those who have dropped out, and perhaps those who dropped out of high school but score well on the standardized test. In addition, one can move up the supply curve by significantly increasing pay and other benefits.

This past year, Congress passed the largest military pay raise in years. However, if the 4.8 percent increase and other targeted bonuses do not fill the ranks (and many feel they will not), this is just a down payment. With military personnel now accounting for 28 percent of the defense budget, and with operations and maintenance another 37 percent, these two "operations" accounts absorb a greater percentage of the defense budget than any time in the past 50 years. Procurement and research, the "capital" accounts struggling to escape historic lows as equipment ages, will pay the bill for higher military wages unless overall defense spending significantly increases.

Which is why demand must also be addressed by the services to mitigate the practice of robbing Peter (modernization) to pay Paul (manpower and operations). The services need to privatize as many military positions as possible and take other steps to compress their force structures. Units need to be smaller and more modular, allowing them to undertake a plethora of missions without being significantly augmented or reinforced. Finally, all services, particularly the more capital-intensive, need to pursue strategies that substitute emerging technology for military manpower.

The most immediate area of interest should be in lightly manned and unmanned systems. Recent conflicts have shown that commanders are rapidly becoming comfortable with cruise missiles and unmanned reconnaissance aircraft. Technologies that are quickly maturing will allow for precise attacks by unmanned systems combining the cruise missile's reliability with the gravity bomb's low cost. Moreover, if senior leaders are increasingly sensitive to casualties, unmanned and low-manned systems are an obvious solution. As crew sizes are reduced and unmanned systems proliferate, training costs will drop. But transitioning to such a point requires that research and procurement funds be protected.

When it issued its Quadrennial Defense Review in 1997, the Pentagon proclaimed that it was embracing a "revolution in military affairs" and beginning a major transformation to new ways of fighting future wars. Many have been disappointed with the results to date. It is increasingly clear that the Defense Department will have to accelerate its transformation efforts. If it does not, it will find that the costs of manning the current force will rapidly consume the capital needed for equipping the future force. Certainly, no commander-in-chief can allow that to happen. It is, therefore, time for those contending for the job to explain how they plan to prevent it.

M. Thomas Davis is a retired Army colonel. The author of Managing Defense After the Cold War, he is directing a study of the defense planning and budgeting process for Business Executives for National Security.

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Separate Definitions Hobble 'Joint' Forces

M. Thomas Davis — Tue, 01 Feb 2000 00:00:00 -0500

t a recent policy seminar in Washington, Sen. Joseph Lieberman, D-Conn., la-mented the military services' lack of progress in improving their ability to operate as a synergistic whole. Lieberman, one of the most respected members of the Senate Armed Services Committee, said he did not see "a real joint process that does trade-off analysis and makes decisions among major service weapons that perform identical or overlapping combat functions." The committee of senior military officers created to perform this function, the Joint Requirements Oversight Council, is simply "not doing the job," he added.

How can such a perception exist when senior military officers and other defense officials routinely say that joint forces will fight all future wars? Perhaps senior members of Congress and their counterparts at the Pentagon are working from different definitions of the term "joint."

Joint operations and joint forces are nothing new, but the need to squeeze more combat power from better integrated forces and get more leverage from an increasingly strained Defense budget have led senior military leaders and members of Congress to focus more on the promise of "jointness." The Pentagon recently renamed the Atlantic Command in Norfolk, Va., the Joint Forces Command and gave it responsibility for writing doctrine, developing requirements and conducting experiments for joint operations. This follows earlier steps increasing the size of the Joint Staff and its scope of responsibility to include program and budget matters that had been the domain of the military services. But true progress toward providing the nation with integrated capabilities has been modest at best.

The reason may be the Pentagon's own definition of "joint." In its publication defining military terms, the Pentagon describes "joint" as connoting "activities, operations, organizations, etc., in which elements of more than one service of the same nation participate." Accordingly, joint forces contain elements of two or more services operating under a single commander, and joint doctrine establishes principles that guide two or more services coordinating operations toward a common objective. While Lieberman clearly believes "joint" to include efforts to design and integrate the basic structure of the military services, the services define "joint" more narrowly as efforts that merely facilitate the coordination of forces.

The services have statutory responsibilities for raising, training, maintaining and administering their own forces. They broadly interpret this to mean they have the principal voice in defining the forces necessary for executing the national military strategy. Although national security and military strategy inform the services about how many Army divisions, Navy carrier battle groups and Air Force fighter wings they will have, the services determine how these formations are structured, equipped, trained and manned.

It should be no surprise, then, that military leaders are less than enthusiastic about pursuing joint solutions that may come at the expense of their own services. There is no guarantee they will scrutinize how their forces coordinate and fit with those of others services, the degree of overlap, or how changes in one force might yield an overall increase in effectiveness. Adm. William Owens, former vice chairman of the Joint Chiefs of Staff, commented that when he was in charge of developing the overall Navy program he did so with virtually no knowledge of Army and Air Force systems that might have changed the Navy's operational concepts and investment priorities.

When it codified the function of the Joint Requirements Oversight Council, known at the Pentagon as the JROC, Congress expected it to examine the balance and mix of forces across the services, to analyze which mixes provided the best capability for meeting established missions, and to suggest to the chairman of the Joint Chiefs "alternative programs and budgets." Such an undertaking would have inserted the chairman, the JROC and the Joint Chiefs into the unfamiliar terrain of program development, where the services have long roamed unchallenged.

But as Lieberman has noted, the definition of "joint" remains narrow. Instead of an effort to examine how the services should be structured and how they might best work together, "joint" has remained largely limited to studying the divisions among them. Although there have been efforts to determine whether the performance parameters of certain weapons systems can be redefined to allow them to operate together effectively, the current focus of jointness remains principally on systems providing communications, intelligence, logistics or medical support. Such capabilities are clearly important, but they lie far from the heart of any service's identity or core warfighting capability.

Those in the Pentagon who work on joint issues believe the current process is a vast improvement over past practices. And they are correct. Though the record is modest to date, the joint requirements and program oversight process has been useful in strengthening the connections between the services and enhancing understanding among them.

Nevertheless, redundancies remain because current efforts at jointness do not focus on them. The danger for the Pentagon is that congressional leaders clearly have a larger definition of "joint" in mind. If Pentagon leaders continue to avoid the larger joint issues by clinging to their limited definition of the term, they run the risk of having it redefined for them.

Col. M. Thomas Davis retired as the Army Chief of Staff's chief of program development in 1997. He is the author of Managing Defense After the Cold War (Center for Strategic and Budgetary Assessments, 1997) and is directing a study of PPBS for Business Executives for National Security.

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Size Military to Strategy, Not Vice Versa

M. Thomas Davis — Wed, 01 Dec 1999 00:00:00 -0500

ecent comments by public officials and leaked drafts have created ambiguity about what our national military strategy actually is. In some instances involving foreign policy and military options, ambiguity has great merit, but it has considerably less to recommend it as an approach for internal planning. When it comes to the difficult and demanding practice of crafting guidance for developing necessary military capabilities and forces, clarity of purpose is critical.

The issue at hand is this: Does the United States aspire to be able to fight two major theater wars nearly simultaneously? Most in the defense community thought the two-war strategy concept to be the defining concept around which force structure justification, readiness standards and investment plans revolved. Now some senior officials are im-
plying we have never had such a policy, while others have suggested that if we did, we soon won't. This is an important issue deserving resolution. Why? Because the answer drives everything in the Defense Department from operational plans, to modernization strategy, to annual budgeting. This most fundamental piece of national security guidance determines whether our forces are too large, too small or appropriately designed.

Why does so much depend on this single issue? As an old adage warns, "If you don't know where you are going, any road will take you there." Building a technologically advanced and operationally capable military force requires guidance from national leaders on how they view the strategic environment and how they plan to respond to its demands. A national security strategy, from which a military strategy is theoretically derived, should serve two functions. First, it should articulate policy. The strategy signals to possible adversaries that we are focused on the challenges they pose. Second, it provides guidance to the numerous government agencies with national security roles. Cabinet officers and their staffs benefit from having a general idea of how they should orient their efforts. The very process of crafting a strategy forces interagency coordination and potentially provides a device for allocating responsibilities.

The current status of both the process and its products suggest that these rather modest objectives are not being well served.

Planning or Afterthought?

To force national leaders to address such issues, the 1986 Goldwater-Nichols Defense Reorganization Act required the President to annually submit to Congress a national security strategy report. The idea was first proposed in the report of President Ronald Reagan's Commission on Defense Management, chaired by former Deputy Defense Secretary David Packard.

The Packard Commission recommended the National Security Council provide guidance for the Defense Secretary that included a statement of national security objectives, a statement of priorities among these objectives, and a statement of major Defense policies. The intent was that the Defense Secretary would use this guidance to prepare a fiscally constrained national military strategy that the President would approve as his Defense program and budget.

Executing this logical concept has been a challenge. With the end of the Cold War focus on the Soviet threat, articulating a global national security design has become more difficult. The Bush administration left the task to its successor. But the Clinton administration began reducing the Defense program without first developing either a national security strategy or a national military strategy.

To its credit, the Clinton administration did later articulate a reasonably solid national security concept. The 1993 Bottom-Up Review (BUR) conducted by Defense Secretary Les Aspin recognized numerous challenges in the post-Cold War world. Having just emerged from Desert Storm, the Middle East remained a major security concern, as did North Korea in Asia. The BUR concluded, "it is prudent for the United States to maintain sufficient military power to be able to win two major regional conflicts that occur nearly simultaneously." Iraq and Korea were used as notional scenarios for determining the size and composition of the forces required for this approach, which became known as the "2 MRC strategy." The concern was that the military strategy of the BUR was not based on any announced national security concept. It was another nine months before one was published.

The 1994 Commission on Roles and Missions criticized this sequence and recommended that each new administration conduct a Quadrennial Strategy Review (QSR), described as an interagency "comprehensive strategy and force review" directed by the NSC. The second Clinton administration, encouraged by Congress, conducted a Quadrennial Defense Review (QDR) but not the broader strategy review. Seemingly as an afterthought, the National Security Council published a new National Security Strategy on May 16, 1997, just three days before the QDR was released. The release dates suggested that the two documents were produced simultaneously rather than sequentially.

Curiously, the 2 MRC strategy from the BUR was reworded in the QDR. The new document declared, "As a global power with worldwide interests, it is imperative that the United States now and for the foreseeable future be able to deter and defeat large-scale, cross-border aggression in two distant theaters in overlapping time frames, preferably in concert with regional allies." The new National Security Strategy used nearly identical words. Based on recent experience in Haiti and Bosnia, the QDR added the need for American forces to be able "to conduct successfully multiple smaller-scale contingency operations worldwide, and
. . . then deploy to a major theater war in accordance with required timelines." Again, the NSS closely followed this wording, saying, "U.S. forces will remain multi-mission capable and will be trained and managed with multiple missions in mind."

Despite the changed wording from "2 MRC" to "2 MTW," and the substitution of "overlapping time frames" for "nearly simultaneously," senior officials strongly suggested there was no change in the fundamental approach. But was there?

Two Wars at Once

At a Senate hearing on April 29, 1999, during the air campaign against Kosovo, Sen. Robert Byrd, D-W.Va., asked Deputy Defense Secretary John Hamre, "I've heard it said that we have the resources to fight two wars simultaneously. Do you believe that? And does it make any difference where those wars are fought, and with what countries?" Hamre replied, "we have never said we can fight two wars simultaneously." The surprised Byrd spoke for many when he responded, "I've been under that impression for a long, long time."

A few weeks later, a draft of the NSC's new National Security Strategy appeared in the media. The draft suggested that the two wars envisioned would not occur simultaneously, allowing time for U.S forces engaged in the first conflict to "swing" to the second. This concept sounded much like the "win-hold-win" approach to fighting the two conflicts initially proposed during the BUR, but later rejected in favor of the "nearly simultaneously" approach. It seemed to embrace the approach advocated by the Air Force, and seen by many as a rationale for reducing active Army force structure under the assumption that air power alone could halt an invading force.

A few weeks later, however, everything had come full circle. In the Joint Statement on the Kosovo After Action Review, Defense Secretary William Cohen and Joint Chiefs of Staff Chairman Gen. Hugh Shelton said, "it is imperative that the United States, in concert with its allies, be able to deter and defeat large-scale cross-border aggression in two distant theaters in overlapping time frames. In short, we must be able to fight and win two major theater wars nearly simultaneously."

Force Fit

What is going on here? Although some remain uncomfortable with such a scenario-based approach towards force sizing and structure, the basic criticism was that the Clinton administration had not fielded a force large enough or agile enough to meet the demands placed on it. One authority suggested that the administration's strategy was too big for its force and that the force was too big for its budget. In short, there was a serious disconnection between ends and means largely because the force was created and sized before the strategy was announced, and the two never have been fully reconciled. Indeed, the 1997 National Security Strategy and QDR increased the demands on the force by adding small-scale contingency and multi-mission requirements, while further decreasing the services' size. And by avoiding any significant restructuring, the stress on units increased markedly. Accordingly, senior leaders increasingly described the two-war strategy as "high risk."

These recent efforts to reduce the size of the strategy by changing the assumptions behind it are defensive. Principally, they are intended to protect the force structure from further reductions should one of the possible scenarios disappear, most likely Korea. Although the BUR clearly articulated that Iraq and Korea were illustrative, many began to assume they were definitive and that if the North Korean threat disappeared, so would half the force structure. Dropping the "nearly simultaneously" wording, and implicitly reducing the strategy, would seemingly make the existing force structure more consistent with declared intentions and presumably more politically defensible to those wanting to reduce it because it was too large for one war or increase it because it was too small for two.

The United States should retain a two-war strategy and size and design forces to implement it with moderate-to-low risk. The administration and Pentagon need to emphasize that American interests continue to be worldwide, and many are
under increasing pressure. If Saddam Hussein's regime collapses in Iraq, and Kim Jung-Il falls in Korea, they will easily be replaced by major strategic challenges in Iran, China and elsewhere. There is no shortage of stressful "illustrative scenarios." Retaining a capability for strong military responses in distant places will serve as an important deterrent.

Public's Reluctance

At the same time, the United States must avoid deterring itself. Many forget that the vote in the Senate to authorize the use of force against Iraq in January 1991 was 51-47. Given the clarity of the challenge, this was an extraordinarily close outcome reflecting the general reluctance of the American people to resort to arms. Would the vote have been different if Senators were also concerned that a major effort in Iraq would leave us incapable of responding elsewhere? Could that additional concern have changed three votes, and ceded the territory and wealth of Kuwait to Iraq?

Our forces need to be significantly transformed, and our operational concepts reconsidered, if we are going to have the capability to meet such a demanding strategy within projected Defense budgets. The Packard Commission and others have advocated developing a security strategy from which the military strategy can be developed. This requires a logical, sequential process. To date, we have demonstrated limited ability for getting the horse in front of the cart.

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Budgeting Should Not Be an Emergency

M. Thomas Davis — Thu, 01 Jul 1999 00:00:00 -0400

dding funds to the Defense budget under the guise of emergency appropriations is increasingly in vogue, for several reasons. First has been the heavy drain placed on military forces by unexpected contingencies in Iraq and the Balkans. Second has been the use of military forces in responding to a series of devastating natural disasters such as Hurricane Mitch, which ravaged Central America in 1998. Finally, as many have argued for some time, the military as it is currently funded does not have the resources to meet its ambitious strategic mission, to recapitalize its aging equipment inventory, and to attract and retain personnel in an increasingly competitive economy.

Providing emergency funds to pay for unplanned military operations and disasters is necessary. But providing emergency funds to meet ongoing requirements could create as many problems as it solves.

The Defense budget must be seen for what it is: a one-year snapshot of a five-year program that reflects a 10- to 15-year strategic plan. The Pentagon bureaucracy invests enormous effort and energy in crafting a Defense budget that relates near-term spending requirements to longer-term investment needs and strategic demands. Officials use an elaborate process that was launched in 1961 by Defense Secretary Robert McNamara known as the Planning, Programming and Budgeting System (PPBS). The purpose of PPBS was to:

Examine future security needs.
Determine the missions the Defense Department would be required to perform.
Establish a set of objectives that must be achieved to meet those missions.
Prioritize the objectives in accordance with funding levels approved by the administration over a five-year period.
Present that information to Congress on a recurring basis as the annual budget.

Although PPBS is a tedious and ponderous process, its continuation over seven administrations suggests that it has been successful not only in balancing the numerous demands of a complex organization, but also in producing a timely budget in sufficient detail for Congress to fund national defense requirements.

Nonetheless, since the end of the Cold War, and the loss of what had been a clear mission focus, the ability of PPBS to connect strategies to budgets has become increasingly tenuous.

Planning for the future is a major challenge for any organization, but for the Pentagon the absence of competitors, the diversity and dynamism of its market, and the absence of commonly understood performance metrics create a particularly daunting task. Since the ability of the Pentagon to change course rapidly is limited, issues of strategy, needed capabilities (today and in the future), force structure, weapons systems and personnel policy have to be identified, discussed and decided with a degree of certainty.

Ripple Effect

Emergencies such as regional conflicts and natural disasters cannot be predicted. When military forces are used to address them, the funds needed are diverted from other planned activities, normally in training, operations and base support. For operations and maintenance, such diversions create backlogs. Emergency funding is, therefore, a necessary response to prevent a ripple effect across numerous operations and maintenance activities.

There are somewhat different implications, however, in using emergency funding to deal with longer-term Defense program requirements. Funding programs that have clear "outyear tails" in one year, without providing for the subsequent years, can be nearly as disruptive as shifting resources from one account to another in addressing an unexpected shortfall. Consider what has happened, and may happen, for this year's budget. When the 1999 Defense budget was passed last October, it contained $8.3 billion in spending added by the Congress. Some of this spending was intended for military operations in Iraq, while other provisions dealt with intelligence, readiness, national missile defense, terrorism and the Y2K problem. With the exception of the Y2K funding and possibly Iraq (although after 10 years one would expect military operations in the Arabian Gulf to be routinely funded), these policy items have future costs.

Were they paid? Not completely, it seems. When the administration submitted its fiscal 2000 budget in February 1999, it supposedly included increased Defense funding of $112 billion from 2000 to 2005-$84 billion in new funding and $28 billion in additional buying power based on revised inflation figures and fuel expenses. But there was a catch. The administration calculated the $84 billion from its fiscal 1999 submission, which did not include $8.3 billion added later by Congress.

According to the Congressional Budget Office, had the administration used the final appropriation as the baseline and inflated that figure through 2005, it would have discovered that its increase for 2000 was actually an $8 billion decrease, and the total increase of $1 billion through 2005 was relatively insignificant. This suggests that the outyears of the Defense program are not being systematically reviewed with congressional actions taken into consideration.

'Policy Muddle'

Military pay is the most glaring and the most important issue. In its current submission, the administration requested a pay increase of 4.4 percent for uniformed personnel to address recent recruiting problems by making military compensation more competitive. By its calculations, the Pentagon added $33.5 billion of the $84 billion increase for 2000 to 2005 to its military personnel accounts. But by the CBO's calculation, the increase is a mere $3 billion. The CBO analysis shows that had the Pentagon merely extended its 1999 funding for personnel to 2005 it would have arrived at the same funding level. This suggests that the administration's pay raise is based upon assumptions about lowered end strength or pay grades that may not be achievable.

In May, Congress passed yet another supplemental appropriation for 1999 providing an additional $11 billion to the Defense budget for the Kosovo operation. Following the lead set by earlier legislation in the Senate, this emergency package contains an additional $1.8 billion for personnel pay that seemingly matches the administration's pay increase for fiscal 2000 and provides a significant down payment for a major revision of the military retirement system.

The retirement change will mean that all personnel will be eligible to retire with half their base pay after 20 years of service. Currently, only those who enlisted before 1986 retire with 50 percent of their pay. The motivation is to reverse a steadily deteriorating recruiting effort with stronger incentives than those proposed by the administration.

Funding pay and retirement changes in this manner creates something of a policy muddle. Although funded in an emergency supplemental for fiscal 1999, the pay increase is intended for fiscal 2000.While the $1.8 billion approved seems to match the administration's request for its 2000-2005 plan, by some measures it may require $8 billion of additional spending out to 2005. Furthermore, if separate legislation on military pay, passed earlier by the Senate but not yet by the House, is enacted there will be a still more expensive 4.8 percent pay raise and a yearly inflation adjustment that is 1 percent more generous than current policy. Paying for this change means the administration would either have to break the existing budget caps or take funds from other programs. In the absence of more funding by the administration in its next program formulation this fall, the congressional pay increase may become an unfunded mandate.

Without additional funding, the Pentagon would have to deal with this shortfall internally. The most likely source of funding would be its procurement accounts. Procurement essentially represents the Defense Department's discretionary spending. Since procurement is now 70 percent below what it was 10 years ago, increasing spending on new equipment has been a top priority. It would be ironic, and somewhat self-defeating, if steps taken to attract new recruits are offset by retention problems attributable in part to soldier frustration at having to operate increasingly tired and aging equipment, much of it older than the recruits themselves.

Similarly, the Defense Department also might be forced to cut base operations and other "quality of life" programs for military personnel and families-the very programs service leaders have been pushing to attract and keep personnel. Therein lies the potential dilemma of short-term fixes to long-term problems.

Putting non-emergency funds in an emergency funding bill is shortsighted at best. To solve one problem in the near term, it creates a potentially devastating problem for the long term. When it comes to funding Defense, the stakes are too high.

Col. M. Thomas Davis retired as the Army Chief of Staff's chief of program development in 1997. He is the author of Managing Defense After the Cold War, (Center for Strategic and Budgetary Assessments, 1997) and is now directing a study of PPBS for Business Executives for National Security.

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Defense Beat

M. Thomas Davis — Thu, 01 Apr 1999 00:00:00 -0500

ince its introduction in 1961, the Pentagon's Planning, Programming and Budgeting System (PPBS) has been a target of constant criticism. For many, the process is too complex, too centrally directed and too bureaucratically contentious. In the 1998 Defense authorization bill, Congress directed the Pentagon to study ways the system might be changed to better support procurement and acquisition reform, suggesting that lawmakers view PPBS as an obstacle in making procurement decisions.

Despite its general unpopularity, PPBS has endured as the Pentagon's fundamental management process for nearly 40 years. Why? Because it is a logical, structured process by which the Defense Department justifies its annual budget submission to Congress. PPBS isn't a fundamentally flawed system, but many of its essential structures-most notably the Future Years Defense Program (FYDP), the process for projecting defense costs five years into the future-are not well-managed.

The widely held perception that PPBS is a failure reflects the controversial legacy of Defense Secretary Robert S. McNamara, who brought the planning concept to the Pentagon. Judgments about McNamara's efforts to produce a better-integrated Defense budget reflecting detailed objectives drawn from a national military strategy became inextricably commingled with criticism about his management of the Vietnam War. The success of McNamara's PPBS in managing the budget was overwhelmed by his failure in managing the war.

It is a lingering confusion. In The Rise and Fall of Strategic Planning (The Free Press, 1994), Harvard Professor Henry Mintzberg concludes that PPBS "proved to be an impediment to effective strategic thinking and action, whether one favored hawkish military strategies or dovish political ones." McNamara's staff tried to apply (and often misapplied) operations research techniques to certain operations of the Vietnam conflict, frequently using them to supplant military judgment from the field, but this hardly means PPBS lost the war.

Making such broad assertions ignores
positive outcomes of the PPBS process during McNamara's tenure and those of his 10 successors. PPBS was used to identify options for creating a balanced, cost-effective nuclear retaliatory force, for eliminating duplications among the services' intermediate-range missiles, for retooling the armed forces as they shifted from Eisenhower's massive retaliation strategy to Kennedy's flexible response concept, and for charting Reagan's defense buildup.

Original Vision Lost

This is not to say PPBS is flawless. The use and misuse of the FYDP best illustrates PPBS' shortcomings. Originally intended to provide an alternative method for developing planning and programming objectives and to serve as a basis for analyzing and comparing service programs, the FYDP has become merely a database, more useful to accountants than decision-makers. This deterioration reflects a general drift in PPBS toward a management process more focused on marginal adjustments than substantive policy direction, force structure changes and technological choice. To understand how far the FYDP has drifted from its original purpose, one must understand its role in the initial PPBS concept, its current role and the fundamental steps necessary to return it to the center of defense planning and programming.

Prior to PPBS, the services developed separate budgets with little regard for the joint effort required to execute military missions. The tenuous connection between national security objectives and the Defense budget, and the absence of an accounting system that captured the full range of costs associated with forces and weapons systems, made resource decision-making a dicey undertaking. Accounting categories were not uniform among the services. Research and procurement costs for weapons systems were available, but cost data for operating, manning, maintaining and training on them were not. Nor was there a structure for comparing effectiveness and cost among weapons used by different services to perform the same or similar missions.

The intent of McNamara's Five-Year Defense Program, later renamed the Future Years Defense Program, was to provide a mechanism for identifying key Defense missions and developing goals and objectives within each, while simultaneously capturing cost data for analytical and comparative purposes. The original FYDP structure was built to support 10 major force programs reflecting the military's principal Cold War missions. Within those programs, specific units or systems performing each mission were identified as program elements. Funds required for each program element, such as manpower, construction, operations, development and procurement, were identified and extended five years into the future.

As the services submitted their detailed programs, McNamara's staff analyzed and evaluated them based on which objectives for each mission area were satisfied. Officials also identified duplications, used cost data to compare competing systems and recommended tradeoffs. Alternatives were presented to the Defense Secretary and the FYDP was adjusted accordingly.

By using the FYDP to identify major missions and place every Defense dollar in the context of those missions, McNamara achieved two important goals. First, the process required military planners to determine the missions to be accomplished in executing the national strategy during the coming five years. The FYDP forced planners to translate future requirements into viable, measurable goals and objectives. Traditional budget approaches make marginal adjustments from the existing base. By contrast, program budgeting, as envisioned by PPBS, seeks to establish a clear set of future objectives and assign resources to achieve them. Under PPBS, planning lays out the vision and establishes the objectives that must be achieved both to get there and to measure progress along the way.

Second, the FYDP ensured that planning took place across the services and not just within them. It thus became the key tool for identifying near- and mid-term bjectives, capturing complete budget data, identifying programmatic issues requiring leadership decisions, allocating resources and balancing the program. In this way, the FYDP connected the strategy to the budget while integrating the services' programs. At least, that was the idea.

Fixing the Process

Today, the FYDP performs only one of the functions originally envisioned. According to Defense Department instructions, "The FYDP is the official database that summarizes resources ([dollars], personnel, forces) associated, by fiscal year, with Department of Defense programs, as approved by the Secretary or the Deputy Secretary of Defense." Essentially, the FYDP has become a bookkeeping device rather than an analytical tool for senior Pentagon officials. There are numerous indications of this degeneration, but two are quite revealing.

First, the 10 major force programs that make up the basic structure of the FYDP are essentially unchanged since McNamara first created them in 1961. An 11th program, Special Operations Forces, was added in 1986 as part of the Goldwater-Nichols Act. Based on the original premise that major force programs reflect the major missions implied by the military strategy, it would seem that those managing the FYDP believe there has been no significant change in the strategic environment for 37 years.

Second, the FYDP is not used as the analytical basis of the Defense Secretary's review of service programs. Although this difficult review occurs, its usefulness has greatly diminished. During the fiscal 1999 to fiscal 2003 program review following the 1997 Quadrennial Defense Review (QDR), the total dollar changes directed by the Defense Secretary's staff amounted to a minuscule 0.58 percent of overall program resources. No one discussed whether the objectives of the FYDP major force programs had been satisfied because they were not used to identify major issues for Pentagon leaders regarding force balance and integration across the services.

The major force programs need to be reviewed and redefined so that they more closely reflect the current national security strategy. The QDR retained a strategic direction built around the need to fight two major theater wars nearly simultaneously. It expanded the existing strategy by acknowledging the unique demands of small-scale contingencies. The approach was described as the "shape, respond, prepare" strategy, in which American forces would be used to:

>
Shape the international environment through their presence and engagement around the globe.
Respond to regional crises.
Prepare for the demands of an uncertain future by pursuing a modernization program that captures the tenets of the revolution in military affairs and the operational concepts described in "Joint Vision 2010" by former Chairman of the Joint Chiefs of Staff Gen. John Shalikashvili.

The FYDP needs to be restructured with new major force programs reflecting this strategic approach.

In addition, the Office of the Secretary of Defense needs to be reorganized to create clear staff ownership of individual major force programs. This is particularly true of the Office of Program Analysis and Evaluation (PA&E), the successor to McNamara's Office of Systems Analysis. From its initial small size, PA&E has grown to an office of nearly 150 analysts and administrative personnel supported by numerous contractors. Because PA&E's analytical divisions are not clearly aligned with the FYDP, the major force programs are bureaucratically orphaned. PA&E should be substantially slimmed down and reorganized so that specific divisions are responsible for each major force program. PA&E would become a small organization identifying large issues for senior leaders, rather than a large organization developing small issues that don't merit leaders' interest.

In a harsh critique of the QDR last June, the General Accounting Office said: "The Modernization Panel's stovepipe approach to analyzing the service's procurement plans did not provide an integrated look at how the options or final decisions impact joint-warfighting missions." (NSIAD-98-155)

Were the FYDP being used as intended, it would have cut across the stovepipes. It also would have been program-based rather than budget-based and mission-oriented.

The steps necessary to fix the FYDP are straightforward: Leaders must understand the problem and be willing to enforce a solution.

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