Defense Budget Reform with Katharina McFarland, Bill Greenwalt, and Bob Daigle

I was please to host a webinar event with George Mason's Center for Government Contracting featuring three former Pentagon executives. We discussed my white paper on defense budget reform, which provides an overview of (1) the history of budgeting; (2) why budget reform is necessary for accelerating innovation; and (3) a proposed solution. I argue that the budget is the primary obstacle to transforming the defense force structure away from legacy platforms and toward emerging technologies. If budget line items can be consolidated, allowing more flexibility to start, ramp up, pivot, or cancel projects, it will provide mission-driven organizations the one thing they've always lacked: the ability to become true portfolio managers. I was joined by Katharina McFarland (former Assistant Secretary of Defense for Acquisition), Bill Greenwalt (former SASC staffer and Deputy Assistant Secretary for Industrial Policy), and Bob Daigle (former HASC staffer and Director of Cost Assessment and Program Evaluation). In general, they agree with the idea of budget reform I put forward, but each panelist had their own insights and perspectives to add. Katharina argued that the defense acquisition process is not agile by design, and it cannot be changed overnight. There are too many people that have equity in each and every program, slowing the entire process down and creating roadblocks to substantial change. She considers how people aspect of the problem, as well as how to create better systems of data collection and analysis to inform decisions than what we currently have in the budget. Bill considers the defense budget process as a relic of the Cold War that needs complete change. The DoD attached itself to central planning ideologies because (1) it was the best practices of 1950s firms like Ford Motor and GM; and (2) because the Soviet Union posed an existential threat. Yet as Bill argues, the waterfall planning processes the DoD installed actually led to the rapid decline of US auto-makers in the decades after. Moreover, the US didn't win the Cold War because its defense management was better than at central planning than the Soviets, but simply because the US had a market economy. With modern tech companies doing agile development and a new Chinese threat, there may be a window to complete overhaul of the defense budget like was done in 1961. Bob points to the requirements process as the root of many problems with budgeting and accelerating technology. Requirements take several years to get defined, and are detailed to an excruciating level. That detail hen gets reflected in the programs that get budgeted for, creating inflexibility. Bob argues that both requirements and budgets should be less specified -- raised up a couple levels -- but that the fundamental Planning-Programming-Budgeting-Execution process is sound. Bob argues that defense is too big and complex to change at once, and requires smaller pilot programs that carve out completely new space that can then be scaled. This podcast was produced by Eric Lofgren. Soundtrack by urmymuse: "reflections of u". You can follow us on Twitter @AcqTalk and find more information at AcquisitionTalk.com.