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Recommended PDI 2022 Major Topic - Time to Talk About Internal DoD Financial Management Issues and How to Fix Them

  • 1.  Recommended PDI 2022 Major Topic - Time to Talk About Internal DoD Financial Management Issues and How to Fix Them

    Posted 12-22-2021 02:03

    Professional budget execution analysis IS critical to successful program execution.  That's why 30-years experience as a senior budget analyst and branch head across multiple appropriations at the Assistant Secretary of the Navy (Financial Management) and Under Secretary of Defense (Comptroller) levels, revising the Navy's online Budget Execution course and writing its online Budget Formulation course, tells me we need to stop repeating the standard line about continuing resolutions delays and new start problems, reprogrammings inflexibilities, extending one-year appropriations to spend those last few dollars, and two-year budgeting being a fix.  None of these is the problem or a real solution.  The problem starts with our own poor management practices and being able to understand the internal and underlying dynamics of how funding flows during the fiscal year.


    For example, more than half the defense budget (MILPERS and O&M, and a large portion of RDT&E) is one-year money funded on a cash-flow basis by OMB during a CR and, unless there is a bump-up in a new year's budget, is NOT impacted.  Even the increase can be managed.  Second, recent articles on two-year budgeting is a false solution.  The Congress will never forfeit its power of the purse.  But DoD programs, budgets and submits five-year profiles in its FYDP at the Dash One level (R-1, O-1, P-1, M-1, C-1) to the Congress, and submits a FYDP budget for RDT&E and procurement appropriations.  No real need to ask for the second year money, especially when you like to proclaim that under Purpose, Time and Amount (PTA) statutes you don't need it (on a cash-flow basis) until the second year.  Third, the easiest method to fix the funds availability and expiration problems is not two-year budgeting, it's simply requesting its money as indefinite appropriations, like non-defense departments and agencies do.  An indefinite appropriation is simply an annually renewing checkbook, which Congress and GAO (which does annual budget execution reviews) can easily track.  (It would also require less accountants, lawyers and eliminate almost all Antideficiency Act Violations.)  Fourth, acquisition can better be supported by aligning budgets (which focus on obligations and contractual liabilities to the government) to cash-flow (which is expenditures) like private business does.  We pay most vendors (including all large contracts like ships, submarines, major weapons and other major procurements) under progress payments anyway, so why not align contracts to that structure, instead of single, one-amount obligations (all of which should be in the second and third quarters based on Congress' historic failure to pass a budget on time).  Also, commercial companies pay for product manufacturing and their development and improvements and then get paid by their customers.  We need contractors to cash-flow more of their goods and services, especially in major procurements, and certify reimbursement ONLY if the products work.  Easier to change the Federal Acquisition Regulations and DoD Financial Management Regulations than Congress.  Different rules, same outcome. We adapt when fighting wars, why not when managing that money?


    We need better DoD financial management instead of complaining.  Time for experienced financial and budget analysts to flood leadership with ideas and practical solutions than whining about Congress.  Time for a little internal accountability at senior management levels why we've made no progress in this area.


    To start this internal accountability, I recommend we start identifying these major problem areas and talk what to do about them – RIGHT NOW – at the 2022 PDI, rather than whining about them and Congress.


    Thanks for being involved and concerned about the future of DoD financial management.



    John King

    Stafford, VA