An Approximate Dynamic Programming Approach for Weapon System Financial Execution Management

Abstract

A fiscal year (FY) starts on 1 October and runs to 30 September of the following year. During this time frame, a Department of Defense (DoD) weapon system program office allocates financial resources to vendors working various projects. As the calendar gets closer to 30 September, program offices undergo a FY closeout review. During this time, considerable energy is invested in assessing cash utilization levels (disbursements) and taking corrective actions related to projects that are not sufficiently spending their allocated funds. Since the DoD operates under a use-or-lose budgetary environment, projects that are behind in meeting their spending goals are at risk of losing a portion, if not all, of their unutilized allocated funding. This financial closeout process is an annual tradition that involves considerable time and resources. The purpose of this research is to assess the viability of using approximate dynamic programming (ADP) to create and manage financial execution plans throughout the FY. The research examines the difficulties of adopting ADP as an execution management tool as well as the potential this methodology has for reducing the total amount of unspent money a program office has on hand during the FY closeout period.