Published: 08.03.2022

Bringing it all together

Achieving an “ideal” end state for financial management

In previous articles covering DoD financial management in general and the Planning, Programming, Budgeting, & Execution (PPBE) process in particular, we’ve shared our thoughts on improving connections with Congress, shifting the FM mindset, and PPBE modernization.

In this final article, we’ll wrap up the three-part series by putting ourselves in the shoes of Congress and take a look at how they view the problem, as well as approach existing, outdated DoD FM processes. Along the way, we’ll outline the optimized FM environment that is the ultimate aim.

What does the “ideal” end state for DoD FM look like?

The objective is to ensure that DoD is able to consistently “do it right” when it comes to spending on mission priorities. This stands in stark contrast to the existing tilt towards meeting obligation goals and spending with a “use it or lose it” mindset. The potential overarching benefits are clear: more timely, effective, and efficient use of taxpayer dollars in pursuit of DoD priorities.

The objective is to ensure DoD FM is able to consistently “do it right” when it comes to spending on mission priorities.

Follow the money (spoiler: that puts Congress in charge)

In the previous articles we explored three potential approaches to improving financial management from the perspective of the FM community, each of which can play a role in overall optimization. Successful execution, however, requires the U.S. Congress to motivate the change through their approach to DoD FM – specifically when it comes to spending habits such as “use it or lose it.”

As the legislative branch of our government, from our viewpoint Congress has and always will have the ability to instill change within the culture and processes of DoD FM. There are two fundamentals for this: control of money and lawmaking authority.

Congress has the ability to tax and spend public money for the Federal government. Congress has the power of the purse, holding the strings on DoD’s budget. In coordination with DoD, it controls and prioritizes spending within the Department.

Federal appropriations law puts real power into the hands of Congress. The legislative branch controls the Purpose, Time, & Amount (PTA) of spending for the entire DoD FM community and can act as it sees fit to restrict or enable DoD FM professionals when it comes to meeting DoD mission requirements.

Congress has several tools it is able to leverage to control PTA:

  • Implementation of legislation that directly impacts DoD FM such as The Audit the Pentagon Act of 2021 and the National Defense Authorization Act, along with oversight through The Commission on Planning, Programming, Budgeting, and Execution (PPBE).
  • Restricting appropriations to limit DoD’s PTA spending flexibility. For example, currently Operations & Maintenance is a one-year appropriation, while ship building is a five-year appropriation. As a result, DoD must plan accordingly and the outcome may not be best use of taxpayer dollars.
  • Prioritizing Congressional interests over DoD needs and aims. Popularly known as “pork barrel spending,” the practice of exerting influence to ensure that funds go to Congressional members’ constituents is deeply embedded in American politics. Such spending is not necessarily wasteful, but it can and does go against DoD priorities from time to time. One example of this was the 2014 decision by Congress to include $120 million in the NDAA for Abrams tanks that the Army had repeatedly said it did not want – a boon for the General Dynamics Lima, Ohio plant, located in the district represented by the then-chair of the Tactical Air and Land Forces Subcommittee of the House Armed Services Committee.
Congress may have the power to drive change, but even it faces hurdles

Even with Congress’s power of the purse and ability to drive the change there are still barriers to progress.

  • Competing interests that create internal struggles over money and influence. The Abrams tank funding cited above is an example of this. That money did deliver benefit in one sense, but it could have been spent elsewhere (and perhaps better) had priorities been considered objectively.
  • Cultural inertia that inhibits change. The DoD FM mindset is “use it or lose it” while for elected members of Congress it’s to obtain funds for their state or district. Overcoming these persistent attitudes makes achieving an “ideal” end state very difficult.
  • Turnover that stifles momentum regarding large-scale, systemic change. Turnover in the senior ranks of career Federal workers is less than that of political appointees, but the realities of election cycles are inescapable. This makes it difficult to establish cohesive long-lasting expertise, institutional knowledge, and most importantly, clarity of future vision.
  • Lack of meaningful repercussions for wasteful DoD spending. Currently, DoD just needs to show improvement. Non-compliance with the audit doesn’t carry any consequences. This mode of operation is one of the reasons we believe we are stuck in an endless cycle of antiquated FM processes and lack of progress between Congress and DoD.

As discussed in the earlier articles in this series, we believe there are several ways in which Congress and DoD can instill a more trustworthy connection and overcome barriers to improving DoD FM. Some of those include:

  • Tying money to both DoD mission and Congressional priorities to mitigate internal conflict. This would mean having the willingness to compromise and adapt to find the best path forward.
  • Self-reflection regarding spending priorities and habits on the part of both DoD and Congress, ideally on a quarterly basis, to better plan for the future. This is a matter of balancing current priorities against future benefit. This is not unlike a child having an allowance: The child can opt for instant gratification and spend it all on candy bars – or to use a DoD analogy, a wasteful or antiquated program. A child with the ability to reflect and think more deeply about how that money could be spent may well cut spending to a minimum, save up and invest in something far more useful and substantial in the future.
  • Consistent, clear two-way communications with the DoD FM community (both internal and external) to assess motivating factors that influence the “do it right” vs. “do it right now” decision point. Keeping a finger on the pulse of the DoD FM community is critical to motivating change, just as it is in the corporate world: if leadership doesn’t communicate with the workforce, how can it know what motivates them? This knowledge can help determine whether incentives need to be adapted by individual office, or whether there are opportunities for change on a larger scale.
  • Fostering better transparency and collaboration by establishing a platform that securely enables all information and people involved in the various parts of the PPBE process the ability to connect with one another in a targeted, role-specific and relevant manner.
A wish list to advance towards the “ideal” end state

As we look holistically at the many challenges and opportunities for optimizing DoD FM – and our suggestions for action – two specific changes rise to the top. If implemented, these could go a long way to enabling the flexibility to improve the situation in a lasting way. This in turn could lead to more rapid advancement in other areas. They are:

  1. Provide DoD FM “no-year” spending appropriations to enable better long-term planning

  2. Allow DoD FM to spend as required especially at year end, rather than continue down the longstanding (and in our view, wasteful) “use it or lose it” path.

These two initiatives are a solid start. They may not happen overnight and likely won’t, but at some point, changes such as these need to be attempted and enforced.

The DoD FM community can lead

To promote and, ideally, drive implementation of the multiple changes we’ve suggested, the DoD FM community needs to put in the work. Congress holds the power but the community has the ability to guide the application of that power. It’s like any relationship – positive, proactive engagement is critical and the message needs to be sent on a constant and consistent basis. This ongoing communication must be done by influencers well versed in the topic with the following of the widest possible audience of stakeholders.

This is the key: to make the case for clearly and concisely, have realistic and actionable proposals and show that every problem is also an opportunity to learn from the past and do better in the future.