Defense innovation bumps up against a Cold War budget system

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Pentagon planners know that the U.S. military needs new technology, new innovation, if they hope to stay on top. But many innovation initiatives are not gaining momentum. Jerry McGinn says this is due to the planning, programming, budgeting and execution (PPBE) process of the 1960s used by the Department of Defense. He is the Executive Director of the Center for Government Contracts at George Mason University, and he has joined Federal Drive with Tom Tamin in the studio.

Tom Temin: Jerry, it’s good that you’re back.

Jerry McGinn: Great to be here, Tom.

Tom Temin: Good. Thus, PPBE dates back to the 1960s. It’s a long job, what’s with her?

Jerry McGinn: Well, like you said, it was modern art in the 1960s [Robert] McNamara and Whiz Kids came to the Pentagon. It is a centralized planning that attempts to build and define requirements for defense programs and requirements for the future. And then planning is centralized. However, the commercial industry is long gone and is now making innovations through iteration. They set broad parameters, give a budget portfolio or different approaches that allow much more dynamic development of products and concepts. Meanwhile, the Department of Defense is stuck on 60s approaches that require three years to really plan and then program and then execute in a system that doesn’t really fit well, without the needs of the department today.

Tom Temin: Well, just to play the devil’s advocate, some of the robust systems still in use are still reliable F-15, F-16, F-18, many of these platforms were developed in that old PPBE process. Although, if you read their detailed story, they were all late, they were credited to the entire budget, they were all doomed to failure, but nonetheless, they somehow succeeded. But now this is not enough.

Jerry McGinn: No, I don’t think so. Because with these programs, they kind of proved that if you’re trying to set requirements for the things you need in five or six years, identifying the ones that will be unlocked five years before the earliest prototypes is kind of nonsense. So you need a way to do that and then scale it. So we need to kind of go back to the future and think about how the department handled the budget to the PPBE and how the commercial industry is doing it now, and so it’s very timely for Congress to adopt this commission to reform the PPBE in 2022. Act. And that commission, a lot of commissions just seem to yawn, these things seem to have never led anywhere except for the last few years, the efforts aimed at the Solarium Commission on Cyber ​​Security and this Commission on Artificial Intelligence have been very influential. So we have a good recent story. And I like to think that PPBE can do the same.

Tom Temin: So, this commission is working now, but has not yet released what its results are.

Jerry McGinn: Not at all. I think 14 commissioners need to be named and they have identified 11 of them. I think there are a few left. However, it seems to be involved in the budget process, believe it or not. They cannot start work before the adoption of the 22 budget, and this is not the case, so they have to appoint a new executive director for staff. And then for them it’s a three-year process. The first results will be in ’23. So it will take some time. But it’s nice to see that there’s a strong commitment from the two parties, as well as a commitment from the executive and Congress to do something about it.

Tom Temin: You see, say, the possibility of dual systems, because some things you can plan in advance, such as manpower. Planners know the cost of labor, they know what direct and indirect costs it will actually be, quite accurately in the future. While developing a new platform, for example, can go any of a million ways. So could it be that they need a dual system? And some part of the budget is set aside for a different planning system than PPBE?

Jerry McGinn: Yeah, that’s a great moment, Tom, and I think it’s going to have to be done through iteration and piloting. They need to figure out where we need that kind of push because there are some things where you don’t need that kind of flexibility that’s very dynamic. But in developing the systems that our fighters need today and tomorrow, it’s very important because, you see, over the last three administrations there have been a lot of innovative efforts that have introduced new technologies and so on. But the problem is a lot of those like you mentioned, the start was large-scale. And that’s because the budget was set up three years ago, and trying to replenish or adjust to reprograms is really hard to do. So we need to be able to do it more dynamically.

Tom Temin: I think the explosive aircraft carriers of the Iraq war are an example when Secretary Bob Gates said, “We need it now because the conflict is killing soldiers in insane numbers.” And it was designed and filed for the Pentagon in a staggeringly short time. Here are the things you mean.

Jerry McGinn: That’s right. Our colleague Jim Hasik has just published a book on this case study on the development of MRAP, marketing for the military. This is a kind of exception that confirms the rule that it was so hard to do. And it required Gates to really just grab people by the neck and chase them. And we need a way to do something that doesn’t require an Herculean effort. And one of the important things in this is that it needs to be done transparently. It’s not that the Pentagon gets its pot of money and they can go do whatever they want. We need to change the way we report because Congress needs oversight, right? And that’s very appropriate. And we have very clear ways of reporting in PPBE, how will that affect that? So that’s an important part of this commission, the critical part, because otherwise you won’t get a buy-in on Capitol Hill and the executive branch.

Tom Temin: We are talking to Jerry McGinn, executive director of the Center for Government Contracts at George Mason University. And that issue isn’t really a procurement issue, although procurement itself is a feature that is under close scrutiny at the Pentagon, always every year at the NDAA. There’s something to do with buying and purchasing. But you are actually talking about a much broader system in which procurement is only the last part.

Jerry McGinn: I think so, but I think my point is that you see the inadequacy of the PPBE system most drastically in procurement and research and development, which, as you said, is less affecting staff and operation. So I encourage the commission not to use so many approaches to financial management, but to really focus on where it doesn’t allow us to have the most capable military we need today. And I believe it is in these areas in procurement and research and development. And this is where I think change would be most beneficial for the department.

Tom Temin: Because you have these units, AFWERX, and there are several other “werx” throughout the defense. And you have a defense innovation department. You have all these different gambits to try to speed things up, but they all work on a small scale year after year. Are you also arguing?

Jerry McGinn: Yes, and you saw it in Reagan [National] Defense Forum in December, Secretary [Lloyd] Austin remarked on the need the department needs to do better. And I would agree, because SBIR, small business innovation research or small efforts that makes AFWERX and so on, which are excellent, but they are not scalable. And there was real tension at the Reagan Defense Forum, where venture companies from Silicon Valley and others have made it very clear that time is running out. We need to be able to find some ways to get production contracts from these innovative efforts, not just small prototypes that go nowhere.

Tom Temin: And just to pay tribute to McNamara, he was a system planner and production. If you love the Ford Falcon, then love Robert C. McNamara.

Jerry McGinn: I think that’s right. But it was a completely different time. And I think the car industry has gone further.

Tom Temin: But I mean, he came as an agent of radical change right at the top. I mean, he was the president of Ford, I think three months before Kennedy nominated him to be Secretary of Defense, he was young and he took it all and shook that building. And I think there are people who are still angry about it. But such an agent, I think, is needed to influence such changes if this commission says, “That’s what we need to do.”

Jerry McGinn: That’s fair, it comes down to leadership. And I hope the commission will do it in a way that will allow the department and Congress to work with it.

Tom Temin: Jerry McGinn is the executive director of the Center for Government Contracts at George Mason University. As always, thank you very much.

Jerry McGinn: Thanks, Tom. It was so wonderful to be with you.

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