Pathways to Defense Budget Reform

Abstract

The Planning-Programming-Budgeting-Execution (PPBE) process is the most powerful system of incentives affecting acquisition management in the Department of Defense. It is the conduit to money. A key feature of PPBE is the program of record concept that relies on a multi-year planning process. Not only does the program of record hamper technology adoption through adherence to baselines, it creates barriers to interoperability by stovepiping program decisions. Many researchers have detailed the inadequacies of PPBE and the need for embracing a portfolio management approach that aligns with best practices found in commercial and international organizations. This paper dives deeper into the history of how the legislative and executive branches managed defense budget portfolios in the 1960s and before, as well as how PPBE upended those traditional processes. First, it traces the reduction in execution flexibility over time by documenting the budget structure and thresholds for reprogramming. Second, it examines criteria for effective oversight in the PPBE and portfolio settings. The paper concludes that execution flexibility in the form of portfolio budgeting is not only consistent with economic efficiency, it is consistent with United States traditions of congressional control.