A panel of experts who recently completed a two-year review of the Pentagon’s system for planning and executing budgets concluded that the Department of Defense needs more budget flexibility to cope with accelerating threats.
But that recommendation is already facing resistance on Capitol Hill, as Sen. Elizabeth Warren (D-Mass.) argued during a March 20 hearing that the Pentagon already has too much funding flexibility, and that the massive cost overrun on the Air Force’s Sentinel intercontinental ballistic missile proves it.
Warren, who has repeatedly criticized the cost of nuclear modernization and what she views as Pentagon overspending in general, said giving DOD more latitude to reprogram funds is “a terrible idea” during a Senate Armed Services Committee hearing to discuss the report of the Commission on Planning, Programming, Budgeting and Execution Reform.
Other committee members thanked the panelists for their two years of work on the PPBE commission and said they were willing to help see some recommendations through to law, but many said they felt Congress has already given sufficient authorities to accelerate programs for rapid prototyping.
Warren, meanwhile, asserted that the initial cost estimate of Sentinel was low-balled to gain congressional approval, and that the new Nunn-McCurdy breach—when the Air Force estimated the program will cost 37 percent more than expected—“may be worse than that.”
The Air Force reported the overrun will mean the Sentinel program, baselined at $93.5 billion, will now cost $118 billion and take two years longer than expected. The service said it expected to be able to use more of the Minuteman III missile’s infrastructure for Sentinel, but that bad wiring, foundation problems, and other costs, largely civil engineering, were underestimated at the program outset.
If the Pentagon is given “more tools to cover up its mistakes, then I think it becomes even more tempting to lowball the costs and the risks of a new program. This looks to me like the perfect recipe for mismanaging tens of billions of dollars,” Warren said. “The Pentagon arguably has too much flexibility as it is, when it comes to taxpayer dollars.”
The 394-page report from the PPBE commission was released March 6 and offered 28 recommendations on how the Pentagon’s acquisition system should be changed to better “keep up or keep ahead” of China and other world competitors, panel co-chair and former Pentagon comptroller Robert Hale said at the hearing.
The recommendations called for an overhaul of how the Defense Department sets requirements, organizes program data and delegates authority to program officers. It urges new business systems, more informational engagements between the Pentagon and Congress, consolidation of budget program elements into portfolios, and new databases that both can access to stay on top of projects. The commission recommended re-naming the enterprise the “Defense Resourcing System.”
If implemented, the changes would also work to “mitigate” the effects of continuing resolutions, which keeps funding frozen at the previous year’s levels, said co-chair and former undersecretary of defense for acquisition and sustainment Ellen Lord. Hale explained that the new rules would allow new programs to start under CRs and permit about five percent of operating monies to overlap fiscal years, to avoid mad-dash spending sprees to meet end-of-the-fiscal-year deadlines.
Warren was seemingly unmoved by the argument that the Pentagon needs more flexibility to move funds around and disregard “color of money” limits, saying it’s “terrifying” that none of the armed services except the Marine Corps have ever passed an audit.
“I think we can say from that … that DOD is not doing a good job of keeping track of where its money goes. So it’s puzzling that, despite this failure of basic internal controls, this commission is asking for DOD to have significantly more flexibility to move money around,” Warren said.
Warren asked Hale if giving the Pentagon “more flexibility to move money around from program to program makes it more likely or less likely that DOD will provide accurate cost estimates for major programs?”
Hale responded that he didn’t think the changes would affect “the accuracy of the programs because they’re moving money around within the guidelines of the Justification books, and they [already] told you how … it’s going to be spent.”
The proposed new rules would not “solve some of the problems that you are raising,” he continued, “but I don’t think it would worsen any of them and it would allow us to react to technological change or allow DOD to react to technological changes in ways that will I think, strengthen national security.”
Warren also used the hearing to criticize the yearly practice of different Pentagon organizations submitting unfunded priority lists to Congress after the budget request has been submitted, calling it a “second bite at the apple” that “leads to chaotic budgeting.”
Pentagon leadership signaled support last year for a bill sponsored by Warren to do away with unfunded priority lists, which are required by law. However, the legislation stalled and never received a vote.