Please use this identifier to cite or link to this item:
Title: Reform of Budgeting for Acquisition: Lessons from Private Sector Capital Budgeting for the Department of Defense
Authors: Jerry McCaffery
Larry Jones
Keywords: Capital Assets
Corporate Methods of Budgeting
Issue Date: 1-Apr-2006
Publisher: Acquisition Research Program
Citation: Published--Unlimited Distribution
Series/Report no.: Capital Budgeting
Abstract: The ongoing replacement of Department of Defense (DoD) capital assets, as well as other much needed capital investments, will likely take place during a time of decreasing, or at least slowly growing financial resources over the long term. Some of this is due to the growth of entitlements, some to the size of the predicted deficit. Still another pressure is the long-term cost of military activity in Afghanistan and Iraq, predicted by CBO to be $450 billion over the next ten years. In addition, the Department of Defense is in the midst of an era of transformation under Secretary of Defense (SECDEF) Donald Rumsfeld that calls for the modernization of DoD warfighting doctrine, capital goods and business systems. The budgeting system has already been modified during Rumsfeld's tenure (McCaffery & Jones, 2004, p. 403-435). Occasionally, it has been argued that the federal government and other public agencies should adopt corporate methods of budgeting to include the use of separate capital and operating budgets that are prevalent in the private sector. In the past, this argument has not made much progress, but the current trends enumerated above move us to consider that this argument should be revisited. It is clear that significant changes would have to occur in the present system if private budgeting methods were adopted by the DoD and other public organizations, but there are examples of public organizations that have made this leap, as the governments of New Zealand and Australia, as well as most of the states in the US have at least adopted some private budgeting methods with varying degrees of success.
Description: Financial Management / NPS Faculty Research
Appears in Collections:Annual Acquisition Research Symposium Proceedings & Presentations

Files in This Item:
File SizeFormat 
NPS-FM-06-072.pdf547.89 kBAdobe PDFView/Open

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.