Establishing Financial Efficiency in the Marine Corps

Abstract

Financial performance in the Department of Defense (DOD) is measured based on achieving planned consumption, referred to as obligation rates. This technique limits the DOD’s ability to accurately measure financial efficiency, leading to wasted financial resources and a less effective fighting force. Measuring performance through the use of consumption rate targets reinforces spending, focusing a commander on exhausting all financial resources instead of attaining anything more meaningful. This thesis contends that financial resources should be measured by the output they generate, shifting leaders’ focus from consumption to efficiency. Output variables will likely vary by program, and this study selected readiness as the output variable for the analysis. Using Marine Corps operating forces’ spending levels, a Monte Carlo simulation applied research-based improvement metrics to showcase potential impacts to spending quality if an alternative measure of performance were to be adopted. The impacts were applied in two ways: maximizing value and minimizing cost. By changing the way performance is measured, decision-makers can have access to the information required to truly make the best use of financial resources—and do so without substantive administrative and legislative adjustment.