January 23, 2015

Why Increasing Defense Spending Will Weaken America’s Military



Advocates of ever-increasing defense budgets assume that the Pentagon is struggling to modernize America’s military because of the limits placed on its ability to spend money by the Budget Control Act of 2011. It is not. And simply increasing defense spending will likely make matters worse.

The Department of Defense is the epitome of a top-down, centralized bureaucracy. The heart of its current planning system is known as Planning, Programming, Budgeting, and Execution (PPBE). It is essentially the same system put in place half a century ago by Robert McNamara. Serving as Secretary of Defense under John F. Kennedy, and later under Lyndon Johnson, McNamara wanted to rationalize defense planning and spending. Coming from Ford Motor Company, he brought with him the state of the art in corporate planning at the time. Unfortunately, by the 1980s the corporate world had largely moved on from the type of centralized system McNamara put in place, while the Pentagon remains mired in it up to the present day.

The reason this system is so problematic is that it creates numerous perverse incentives and offers few feedback mechanisms that would allow defense planners to adjust to bad outcomes.

PPBE has three phases. The first phase, the planning phase, is where things begin to go seriously wrong. The variety of planning documents the department use to guide the planning process—the administration’s National Security Strategy, the Quadrennial Defense Review (QDR), and the Defense Planning Guidance—are not only chronically late, they are exemplars of one of Henry Mintzberg’s “three fallacies of planning”: the “fallacy of predetermination.” Drawing on Mintzberg’s work, Ionut Popescu argues that Pentagon planning is doomed to fail because the environment in which it operates is too complex for such a centralized system. Instead of linking ends to means to resources as strategic planning should, Popescu argues that formal planning at the Department of Defense instead “pushes important parts of the military to worry more about protecting their favorite weapons systems rather than looking for innovative solutions to today’s challenges.”

Even if the process did not fall victim to Mintzberg’s fallacy of predetermination, there is little incentive to keep costs low in the planning phase. As Gordon Adams and Cindy Williams note, planning documents such as the Strategic Planning Guidance, and the QDR under the Bush administration, are meant to be “resource informed,” not “resource constrained.”

The problem with the failure to plan in a “resource constrained” manner is that it gives planners an incentive to ignore the cost of programs. Decisions on those programs are adjudicated in the programming phase of PPBE. But once items go into the budget, they become more difficult to remove. After a part of the bureaucracy settles on the purchase of a system, it is unlikely to forgo that purchase. Writing in the late 1980s, Aaron Wildavsky quoted a “knowledgeable defense official” who summed up this problem succinctly: “they put it in with shovels… we take it out with tweezers.” PPBE is supposed to provide mechanisms within its process to choose among the options presented by the various components within the Department of Defense, but the outcome of that process is most likely to be a compromise to avoid alienating part of the bureaucracy, rather than the best choice for America’s defense.

After programs begin they are even more difficult to end because the defense industry “buys-in” by underestimating the cost of the program. These lowball estimates allow the Department of Defense to sell the program to Congress as affordable. Companies then spread work on the program across as many states and districts as possible, virtually guaranteeing that no senator or representative will call for cancellation of a weapon system that creates jobs back home. With the initial low bid getting the ball rolling, defense contractors recoup their profits as the program develops—secure in the knowledge that few legislators will cancel the program even as they bemoan constant cost overruns in weapons acquisition.

There is also an incentive for the services to make the most technologically sophisticated requests they can. Defense managers realize that their programs can take years and even decades to come to fruition. Because of the long lead times, they attempt to ensure every possible technological upgrade is included. A practice known as “gold-plating.” Worse than that, defense planners often attempt to develop weapons based on immature or experimental technologies. The Government Accountability Office has reported on multiple occasions how this habit drives up program costs during development.

There are long term costs to gold-plating and the use of immature technologies. Even when they do not lead to delays, cost overruns, and cancellations, the use of increasingly complex technologies make modern weapons more expensive to maintain and contribute to the bloat in the Pentagon’s operations and maintenance account. As defense analyst Franklin “Chuck” Spinney pointed out several years ago, this cycle is one of the main reasons the Department of Defense is buying so much less for so much more.

Few feedback mechanisms exist within the Department of the Defense to provide information that could break that cycle. That problem began when McNamara instituted his system, but it was institutionalized with the passage of the Department of Defense Reorganization Act of 1986—better known as Goldwater-Nichols. That law, to quote Harvey Sapolsky of MIT, “cartelized” the military services. When the services competed with one another for shares of a fixed budget, they had incentives to both offer information to civilians about problems with a competing service’s systems and to innovate to obtain a larger share of defense spending. Goldwater-Nichols was the culmination of a process that institutionalized “jointness” at the expense of one the few avenues to innovation and accountability within the world’s largest bureaucracy.

All of this amounts to a vicious cycle that begins with an obsolete planning system. Increasing defense spending will only exacerbate these problems. A new system needs to be developed to replace the obsolete one now in place. Until then, budget scarcity can be a useful mechanism to encourage innovation and discipline in the Pentagon. In the years before World War II, budgets squeezed by the Great Depression and New Deal social programs, coupled with a belief that the Army should absorb it into the infantry, threatened the very existence of the U.S. Marine Corps. The USMC responded by developing its amphibious warfare doctrine that served the U.S. armed forces so well throughout the Pacific theater in World War II and on D-Day. Today’s military services can do the same if they so choose. Increasing the defense budget will simply allow them to avoid that choice.