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Navy Adds Transparency, Strategy Provisions to Budget Process

Secretary of the Navy (SECNAV) Ray Mabus testifies before the Senate Armed Services Committee on the Department of Navy's fiscal year 2017 budget and posture. US Navy Photo

Secretary of the Navy (SECNAV) Ray Mabus testifies before the Senate Armed Services Committee on the Department of Navy’s fiscal year 2017 budget and posture. US Navy Photo

Navy leadership will change how it crafts its budget in an effort to focus on strategic needs rather than starting the process with spending limits front and center, Vice Chief of Naval Operations Adm. Bill Moran told USNI News last week.

The service issued a planning document this month that outlines the new effort, setting out a path for budget planners across all of the Navy’s missions to transparently plot the Navy’s budget submission for Fiscal Year 2019.

In developing the submission for the FY 2018 budget, CNO Adm. John Richardson felt there was “less of a discussion about strategic priorities upfront than he would have liked and a lot more of that in the end,” Moran said.
“We felt like we should be doing that front-end work sooner to better inform the process.”

The new process starts with a strategy phase led by the Deputy Chief of Naval Operations (DCNO) for Operations, Plans and Strategy (N3/N5), with the budget submission officers and numbered fleets supporting the effort. Following the strategy phase, the Navy will move through a requirements and resources phase before arriving at the final product to be turned into the Office of the Secretary of Defense.

“The end product of the… development process will be a strategy-based, fiscally balanced and defendable Navy Program for submission to OSD, which appropriately implements OSD fiscal and programming guidance, addresses [Secretary of the Navy] and CNO priorities, and achieves the best balance of strategic guidance,” read the message sent out on Oct. 16, 2016.

In the past, different departments would submit their requests into a database without knowing what the other department’s submitted to the Navy’s chief financial officer.

“That is normally kept tightly controlled, it’s held very closely throughout the process,” Moran said.
“In a certain point throughout the process, the resource sponsors got to dump their data into the database and [service’s chief financial officer] would look at it and make decisions based on executability.”

Instead, the submissions into the database will be visible to those in the Navy involved in the budget process so decisions can be made transparently. The idea is the more scrutiny the process gets, the fairer it will be to the departments fighting for dollars in an era of tight budgets.

Mark Cancian, a senior advisor the Center for Strategic and International Studies, told USNI News the Navy’s challenge will be to effectively blend the strategy and programmatic elements of the new budget process.

“Sometimes it’s hard for strategists to grapple with programmatic issues,” said the former Marine who formerly who worked on Defense Department budgets for the Office of Management and Budget.
“I’m skeptical that you can make it stick.”

The new process also takes into account congressionally mandated headquarters staff cuts of 25 percent, Moran said.

“We didn’t enter into this realignment of staff functions and where people work without an eye toward the 25 percent mandate,” he said.
“[But] it would be foolish of us to institute a new process without looking at what the staff resources were to support that process. To some extent it was part of the rationale but it certainly didn’t start the conversation.”

  • Curtis Conway

    Regardless of the DoD procurement process, or US Navy Budget Process in place, without integrity in the system in the first place one is bound to fail, for we must follow the leader, so that leader better be a person of integrity with merit, has a vision, and that vision must be relevant to the cause. That vision must have specific relevancy to the war-fighter like Hybrid Electric Drive that permits commanders to stretch their fuel, and do more with less. The goal of ‘more renewable energy’ has limited application, particularly given our bountiful supply of fuel. Seeing the truth and not being able to change course because it was politically unwise? THAT is the HiStory of the DoD procurement process in general, and the US Navy Budget Process specifically, particularly with the extra factor of the Military Industrial Complex driving the process to continue to throw those entities solutions in their direction, with the skids greased with re-election money, so the politicians will continue to build something the does not work (LCS) just so they can keep jobs in their districts. It is one thing to compete and build for the military. It is another thing to award so many single-source, non-competed, open-ended contracts with no end in sight. Then, when a Righteous sacrifice IS made by industry, like Boeing in the KC-46A Pegasus Program, everybody stands around the throws rocks at them. THAT is not patriotism! Taking the financial hit in the competition, and delivering a solid product to the war-fighter, which will last 40+ years like its predecessor (KC-135 Statotanker) . . . now THAT is Patriotism. Don’t have enough of that going around. The troops give their lives in sacrificial service, but the manufacturers go home with them, and their employees, having full pockets. Something wrong with this equation. And then . . . there is that veteran shipyard worker who was giving me a hard time the other day . . . and he is just trying to make a living, feed his family, and continue to Honor His Oath, by building the best gadget he can with high quality. Now that IS Patriotism.
    Real strategic needs:
    1. Fast attack submarines in sufficient quantity to support operations if Russia once again stands up its FBM patrols in the Pacific and Atlantic.
    2. All ocean combatants that can function in the Arctic, particularly on the bottom end of the equation with a new capable frigate in numbers.
    3. More aviation-centric amphibious ships that can assume CSG slots with enhanced ESG assets (F-35B) by alternating well-deck and hangar-deck equipped LHA-6 Class vessels for the next ten (10) units, and developing the (VSTOL/STOVL) AEW&C to support those operations.
    4. Time for the US Navy to operate Icebreakers in the Arctic again as it once did, and those platforms be multi-mission capable (Icebreaker, BMD, aviation support, MARDET) in a now militarized Arctic Theater by Russia.
    5. Re-establish general purpose tenders in major theaters of operation.

  • Lazarus

    In answer to Mark Cancian, I might suggest that programmers and analysts are somewhat ignorant of strategic principals. Perhaps the reason the Navy has seen so many program problems since 1992 is that long range planning and associated programming have not be better shaped by big picture global strategy? ADM Richardson’s change to a strategy lead for the POM cycle reflects the realization (in the Navy and Marine Corps at least,) that the nation has again entered a period of great power global competition where strategy is the opening requirement in the budget cycle. That strategic input can also no longer be an Army-like, force structure management over time project (like the 30 year shipbuilding plan.) It must be grounded in current geopolitical conditions and shaped by actual threats rather than intended capabilities.

    The last time that a strategic input was positioned as the first POM input (1982,) the product of that effort became the 1980’s Maritime Strategy. The Maritime strategy was famously put “on the shelf” by ADM Frank Kelso during his 1990 conformation hearings as CNO. Kelso declared that there was no need for a strategy in the absence of an enemy. Well, the US has a number of current and potential enemies at the present time and a new Maritime strategy is urgently required to meet them. The navy is the only US military force with a global battlefield and global outlook, so it would be logical for the Navy to lead the effort in countering the current global threat.

    • Curtis Conway

      “It must be grounded in current geopolitical conditions and shaped by actual threats rather than intended capabilities.”

      Agree. However, the best posture is to have multiple assets (sufficient numbers) of disparate capabilities (multi-warfare combatants) in numbers that are relevant and can handle a rapidly changing world and tasking where ever they have to go (all-ocean). That is being responsible with the $Billions you have spent . . . and for what. The OHP would be awesome by now if upgraded with those same dollars. Making a special purpose vessel for a specific threat environment that is less relevant when the platforms arrive is sheer folly, and that is what happened with LCS. The drain is stopped up because the process is way over-plumbed, slow, and unresponsive to a rapidly changing environment, and the commanders in the field are are reeling because they do no have enough relevant and effective resources.

      We have already seen the folly of “Kelso declared that there was no need for a strategy in the absence of an enemy.” Unforeseen threats must be recognized, planned and budgeted for, in an environment where it takes years to build a combat vessel that will meet the need. This current system does not function in a rapidly changing world . . . but it’s the law. I hope you sleep well at night knowing that! Building things that are very functional across multiple domains (versatile and multi-mission, forget the module concept), and can roll with the punches, must be our goal.

      “The navy is the only US military force with a global battlefield and global outlook, so it would be logical for the Navy to lead the effort in countering the current global threat.” I am Navy Blue through and through, but sure sounds Parochial to me, although I will agree with the premise, because we do, but . . . in concert with our Joint Force, particularly within the context of Electronic Warfare, and battling in the EM Spectrum, which is going to win our next war.

  • BudgetGeek

    This makes no sense to me. I have participated in, and studied, defense budgeting for decades. I think this change will worsen rather than improve the Navy’s budget.

    First, a CNO whose strategy is about getting in front of technological advances and instilling high velocity learning should not LENGTHEN the primary OPNAV decision process. It should be streamlined instead. This message basically says that the process is no longer P-P-B-E, it is now P-P/P-P-P/B-B-E. I fail to see any benefit from the newly created intermediate steps that more than offsets the cost.

    Second, if the programmers and budgeters are not applying a strategic decision rubric — which is the only reason why the intermediate steps might be necessary — then change their rubric and hold them accountable. Do not add steps to the process. Hold the sponsors accountable for delivering an SPP that comports with the guidance, rather than throw out a process that has worked pretty well for a very long time.

    Third, this message was part “POM process revision” and part “how to set ourselves up for HQ reductions”. I think both could have been served by simply deleting the billet of anyone who is currently working on POM-19. There is significant doubt about the amount and structure of the FY2017 appropriations, and the FY2018 budget depends entirely on the outcome of the election. Any effort on POM-19 before December (or even February) is fruitless and wasteful — there is simply too much uncertainty. Those who think we need this kind of leadtime are kidding themselves. Over 5% of the budget is reprogrammed in execution, so there is no need to even aim for perfection. Good enough ought to be good enough because it has always been good enough. Accept the fact that the budget crystal ball is much less than HD quality. And it always will be.

    Fourth, this leads to a broader criticism of budgeting in the Pentagon. The PPBE process was designed to link strategy and plans to resource allocation and execution. Yet, it was incapable of funding the war on terrorism, so a separate parallel process was created that has since morphed into the dysfunctional OCO budget that both the DoD and Congress have exploited to serve their unique interests. In short, the war got inside the Pentagon’s resource allocation OODA loop. Lately, the political process (BCA, BBA, CRAs) has also gotten inside the budget OODA loop. Lengthening the process exacerbates the problem, but it does nothing to address it. There needs to be a leaner budget process, not a more complex one.

    Fifth, I fantasize about a CNO taking over who chooses not to reorganize the OPNAV staff. There are many reasons for outcomes that are not ideal: defects in process design, information quality and clarity, coordination, resources, reward and incentive systems, staffing (both levels and particular individuals in influential positions), etc. But the default tool in the toolbox is to reorganize. I am pleased to see some process change along with a reorganization, but I have lost count of the number of times the OPNAV codes have been reorganized during my 30 years of service in favor of what probably would have been a more effective action.

    Sixth, a former Director of Programming (N80) once told me that the POM process is so long because everyone gets a voice. I asked why everyone should have a voice. I heard crickets chirp, because no good answer was forthcoming. Everyone does NOT need a voice, nor should everyone have a voice. This is a military, not a democracy. We are such a large organization that specialization of labor is necessary and breeds efficiency. So let the specialists specialize. We have a headquarters to make decisions; we have Echelon 2 and 3 commands to carry them out. OPNAV should the make decisions in a timely manner, as efficiently as possible. No person who is part of this process is a warfighter; they are bureaucrats who drain resources from current or future readiness.

    I predict that this change is not going to result in any better budget decisions. It seems to perpetuate wasteful steps in an already overly complex process. It does not get the decision process ahead of its environment; it actually falls further behind. It misses the root cause of the problem. While i applaud a more strategy-based decision process, these changes make the bad worse far more than they make the good better.

    • Lazarus

      I think you are missing the primary point of the CNO’s plan. Adding a strategy input again at the outset of the POM cycle is designed to avoid the creation of unneeded systems and prevent the sort of programming issues you suggest. The primary analyst complaint will be that strategy inputs are, “not cost constrained.” Perhaps they should instead suggest that more $$$ should be spent instead to achieve an appropriate level of national security.

      • BudgetGeek

        “adding a strategy input again at the outset of the POM cycle” – that is what doesn’t make sense. Planning (strategy & assessment) is designed to come immediately before programming. It should not need to be repeated, unless the problem is that the programmers are not paying attention to it. (Which is likely.)

        “The primary analyst complaint will be that strategy inputs are, “not cost constrained.”” – nor should they be. The programmer’s job is to apply the cost constraint to the portfolio of potential investments in a manner that is driven by that strategy. This is my point number two, above: change the rubric used by the programmers, but that should not necessitate additional time or steps.

        • Lazarus

          Adding a strategy at the outset of the POM cycle now is for the same reason it was added in 1982. The Navy needs help in articulating its budget choices to Congress. Mere capabilities-based assessment is no longer acceptable in a 4+1 world of enemies.

          The strategy input was not a delaying item in the 1980’s and should not be so in the present. That said, the answer to the programmer might be that more money must be spent by Congress in order to achieve the desired strategic end state. The argument, “it’s not cost constrained” may be irrelevant given the present threat. Programmers must be prepared for this answer.

    • Curtis Conway

      Hear Hear! You keep going BudgetGeek! Experienced relevant analysis by someone who has been there.

  • Taxpayer71

    A maritime strategy can not be developed in isolation, it has to be part of the larger national security strategy. Moreover, the development and refinement of national and maritime strategy is a time consuming, intellectually rigorous process that has to occur more or less continuously, adjusting as the world situation and future projections change. The renewed emphasis on strategy as the first step in the POM process makes eminent good sense.

    The memorandum suggests that the N3/N5 will convene some sort of group to develop strategy as the first step in the POM process. Given the nature of strategy development, this approach seems doomed to devolve into a strategy that by extension reflects and supports the favored programs of the most effective participants.

    • Lazarus

      The pre-1992 N3/N5 (OP 06) and N51 (OP 603) built 4 successive versions of the Maritime Strategy from 1982-190. OP 603 built the “From the Sea” successor to the Maritime Strategy as well. N3/N5 is not beholden to any of the warfare “barons” now and OP 06/OP 603 were equally divorced from them in the 1980’s. Why condemn an approach that generated so much success in the 1980’s?

  • old guy

    Did you mean STRATEGY or TRAJEDY?

  • aloxxley

    Priorities: kill any funding associated with littoral warfare, de-emphasize expeditionary warfare, emphasize sea control.