Budget Uncertainty and Business Management Reform in the Department of Defense: Some Considerations for Acquisition Management

Abstract

Business management reform efforts have been part of the US Defense Department agenda for decades. Current reform efforts have explicitly established the goal of generating, harvesting, and reinvesting savings from business management reform to buy more capital items; that is, they have focused on a measurable reallocation from operating and support costs to investment within a given budget top-line. While this would seem to be good news for the acquisition community, recent increases in the defense top-line, largely related to the war on terrorism, have not necessarily resulted in greater allocations for acquisition. An examination of the factors affecting the top-line suggests that near-term budget uncertainty is likely. An examination of current and past defense management reforms suggests that efficiency-seeking business management reforms are not likely to generate sufficient resources to cover a budget decline or finance significant capital reinvestment. Instead, management reform, including on-going reform of acquisition management, should be sustained for reasons of stewardship and accountability.