New Insights from the RAND National Security Research Division

May 6, 2024

Is the Department of Defense's (DoD) Planning, Programming, Budgeting, and Execution (PPBE) System nimble enough to meet national security needs in a time of dynamic threats, increasingly capable adversaries, and rapid technological changes? A congressional commission was tasked with probing the DoD PPBE System's effectiveness, considering alternatives, and recommending ways that DoD's budgeting process could better support national security goals.

To establish a baseline for comparison, the commission considered the budgeting processes first of nine and then eventually of 16 organizations. This update summarizes lessons from the final seven organizations considered: five are allied and partner defense agencies—of France, Germany, Japan, Singapore, and Sweden—and two are U.S. federal agencies—the Department of Veterans Affairs (VA) and the Department of Energy's National Nuclear Security Administration (NNSA).

Security challenges in Europe and the Indo-Pacific require these countries to develop new defense capabilities, modernize legacy infrastructure, and boost industrial capacity—all of which entail large financial commitments. These challenges present opportunities for these countries to work together toward shared goals but also require the United States and its allies and partners to develop better combined approaches. For example, U.S. foreign military sales are an important means of advancing shared goals, but such sales need to be balanced with efforts to maintain each country's domestic industrial capacity.

Most of these countries have robust processes in place to ensure that resources are spent as intended, much like the oversight role that Congress and the audit agencies in the United States play. However, oversight approaches for ensuring transparency, efficiency, and accountability vary by country.

We did not find examples of budget turbulence emerging from political friction between branches of government to the same degree that we see in the United States. The points of friction in U.S. budget execution—from continuing resolutions to potential government shutdowns to threats of budget sequestration—do not appear to be significant concerns in these countries.

These countries place greater emphasis on budget predictability and long-term stability than on agility. Nonetheless, each budget system offers some flexibility to address unanticipated crises and to change budgets during a fiscal year—for example, by considering supplemental requests, carrying forward money into the next fiscal year, redirecting resources to meet emerging needs, moving resources within a program or across programs or even across ministries, and providing special funding outside regular budget processes (and fiscal constraints). All five countries have had processes in place to adjust their budgets in response to the COVID-19 pandemic or the urgent need to support Ukraine, but they generally have placed a high priority on budget certainty, offering steady signals to industry partners and supporting long-term plans.

A variety of VA and NNSA budget mechanisms enable flexibility and agility. VA's advance appropriations are particularly notable: They allow VA to withstand the instability from a delayed regular appropriation and position itself for more stable planning. For NNSA, the lack of designated types of funding appropriations ("colors of money"), plus the comparatively small number of appropriation accounts, afford it more discretion on how to prioritize investments and adjust to meet emerging needs. No-year appropriations enable NNSA to carry over unobligated funds from year to year, allowing the agency to better align appropriated funds to priorities rather than spending one-year appropriations in a rush at the end of a fiscal year. VA also has access to multiyear and no-year appropriations for long-term projects, such as construction and land acquisition.

These mechanisms help VA and NNSA weather continuing resolutions and other sources of budget turmoil. Just as VA's advance appropriations mitigate the challenges of delayed regular appropriations and constrained operations under a continuing resolution, NNSA's no-year appropriations give the agency a budgetary cushion if a regular appropriation is delayed.

There is value in exploring the ways in which Congress gives VA and NNSA added flexibility—while still maintaining adequate oversight—so that DoD can ask for similar kinds of flexibility to support more innovation and to make funding more predictable over multiple years, which would have the added benefit of minimizing disruption during continuing resolutions. DoD may also want to pursue less rigid appropriation categories and appropriations for line items instead of portfolios.

• Innovation and agility in planning and budgeting need to be balanced with the stability and predictability required for complex, long-term development efforts.
• DoD resource planning decisions have implications for the defense industrial base of other nations and thus for interdependent, co-development efforts with allies and partners.
• Reinvigorating the defense industrial base is a primary concern for several of the countries discussed here, as well as for NNSA; doing so will require stable and predictable funding over many years, plus a strategy to manage that base.
• Continuing resolutions and other sources of budgetary uncertainty that impede DoD resource planning are challenges not encountered by the allies and partners considered here.
• Other U.S. government agencies have developed tailored approaches and mechanisms that enable budget flexibility and agility to meet mission needs.
• VA and NNSA, which are granted special budget authorities by Congress, appear to have exceptionally flexible authorities that largely insulate them from budget instability and turbulence.

This summary is derived from Volumes 5 through 7 (Phase Two) of the RAND National Security Research Division series Planning, Programming, Budgeting, and Execution in Comparative Organizations, by Stephanie Young, Megan McKernan, Andrew Dowse, Nicolas Jouan, Theodora Ogden, Austin Wyatt, Mattias Eken, Linda Slapakova, Naoko Aoki, Ryan Consaul, Laurinda L. Rohn, Frank G. Klotz, Michael Simpson, Jade Yeung, Sarah W. Denton, Yuliya Shokh, Clara Le Gargasson, Charlotte Kleberg, Phoebe Felicia Pham, Madison Williams, Erik Silfversten, James Black, Turner Ruggi, Maxime Sommerfeld Antoniou, Raphael S. Cohen, John P. Godges, Heidi Peters, and Lauren Skrabala.

Phase One of this study (Volumes 1 through 4) examined the defense establishments of China and Russia—two near-peer competitors; the allied defense agencies of Australia, Canada, and the United Kingdom; and four U.S. federal agencies—the Department of Homeland Security (DHS), the Department of Health and Human Services (HHS), the National Aeronautics and Space Administration (NASA), and the Office of the Director of National Intelligence (ODNI).

Our analysis of PPBE reform comes at a time when the critical significance of allied and partner relationships in deterring and responding to global security threats is increasingly apparent. As a result, in two additional reports (forthcoming) on AUKUS and NATO we examine how international PPBE reforms can strengthen allied defenses in Europe and the Pacific.

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