2024 Election Presents Promise and Peril for PPBE Reform to Deliver Space Superiority 

Incoming Administration Must Implement Commission’s Recommendations, or Risk Losing Great Power Competition 

China’s rapid rise in adopting and deploying innovative technologies has sparked a new “Great Power Competition,” particularly in the space domain. Meanwhile, the budgetary process the Department of Defense (DOD) uses to acquire military capabilities – Planning, Programming, Budgeting, and Execution (PPBE) – is increasingly unable to keep up with the rapid innovations of modern technology. But now, after a Commission on Planning, Programming, Budget and Execution (PPBE) Reform delivered guidance for modernizing the budgetary process, the 2024 election presents both promise and peril for PPBE reform in acquiring the military capabilities necessary to deliver space superiority for the warfighter. 

“The doctrinal definition of space superiority is mission-oriented: to provide space capability at a time and place of your choosing,” said Shawn Barnes, partner at Elara Nova: The Space Consultancy. “But in the context of budgeting and strategy, space superiority is about having the space capabilities that provide superior capability to support the warfighter across domains to deter or defeat an adversary.” 

According to DOD officials, China is having a “strategic breakout” in space that directly coincides with their adoption of innovative space technologies. Major General Gregory J. Gagnon, the United States Space Force’s chief intelligence officer, recently acknowledged China has over 1,000 satellites on-orbit and has demonstrated a capacity for launching 200 satellites a year.  

For added context, Maj Gen Gagnon noted that just 10 years ago China was capable of putting only 24 satellites on-orbit in a single year. 

“China has gone from being a potential near-peer competitor to an out-pacing challenge in areas like quantum computing, air and missile systems and space capabilities,” Barnes said. “Meanwhile, one of our nation’s greatest attributes is innovation in the private sector, but the PPBE process no longer serves us as well as it should.” 

PPBE From the Cold War to Today 

The PPBE process evolved from the Planning, Programming, and Budgeting System (PPBS) originally introduced by Secretary of Defense Robert McNamara in the 1960s. By developing the DOD budget sequentially through four phases, PPBE brought discipline to the DOD’s budgetary process and enabled the United States to acquire the military capabilites it needed to project deterrence through the Cold War and maintain decades of military hegemony after the Soviet Union’s collapse.  

But in today’s Information Age, the PPBE process that once enabled military success is increasingly constricting the DOD’s capacity for keeping pace with technological innovation, most notably in space. 

“The cost of launch has been reduced dramatically, which enables cheaper and more frequent access to space,” Barnes said. “More capability can also be put into smaller satellites, which can be effectively networked to outperform larger satellites. These changes are accelerating innovation across the space ecosystem.” 

In response to this emerging Great Power Competition and the exponential rate of technological innovation, the Fiscal Year 2022 National Defense Authorization Act (NDAA) mandated a Commission on Planning, Programming, Budgeting, and Execution (PPBE) Reform to evaluate PPBE and recommend policy changes to modernize the process. 

Then last spring, the Commission published its Final Report with 28 recommendations across five critical areas to overhaul the budgeting process across the DOD’s military services. But given the inherent interconnection of space and technology, along with the growing reliance on space for Joint Force operations, the Commission’s recommendations can have an outsized influence in delivering space superiority. 

The Imperative for Strategy-Driven Budgets 

The first critical area the Commission provided recommendations for is to: “Improve the Alignment of Budgets to Strategy.” To do this, the Commission recommends creating a Defense Resourcing System (DRS) to replace the PPBE process and consolidate the PPBE’s four phases into three: strategy development, resource allocation and execution. 

“It is absolutely critical that we have strategy-driven budgets, and not budget-driven strategies,” Barnes said. “The Commission proposed an ongoing discussion within the DOD to provide timely updates to strategy that would come before each service’s budget submission to the Office of the Secretary of Defense (OSD).” 

Key documents such as the National Security Strategy, National Defense Strategy, and National Military Strategy will continue to drive the strategy development phase. But significant changes exist in the resource allocation phase, where senior leadership forums informed by strategic wargaming and analytics would produce a Defense Resourcing Guidance (DRG) that would replace the Defense Planning Guidance (DPG) document used today. 

“The Defense Planning Guidance is used as a grading mechanism after the services provide their budget recommendations to OSD, but the DPG doesn’t present difficult decisions for the OSD budget,” Barnes said. “So the new DRG would facilitate a more rigorous discussion upfront, where senior leaders across the DOD can evaluate budgetary risk in a more substantive manner.” 

The Commission also recommends replacing the Program Objective Memorandum (POM) and Budget Estimate Submission (BES) documents with a single, Resource Allocation Submission (RAS) proposal. This step would streamline what OSD submits as the DOD portion of the President’s Budget that will ultimately go to Congress.  

Balancing Discipline with Flexibility 

The second critical area identified by the Commission is to: “Foster Innovation and Adaptability.” To this end, the Commission aims to increase the availability of Operating and Maintenance (O&M) funds, which expire at the end of the fiscal year regardless of when those dollars are appropriated. 

In other words, if Congress does not pass a budget on October 1st – the first day of the fiscal year – but rather passes a Continuing Resolution (CR) until a budget is passed at a later date, the O&M funds still expire on September 30th of that fiscal year. 

“The DOD only has so much time to expend O&M funds,” Barnes said. “Sometimes at the end of the fiscal year, there is a mad rush to spend money as quickly as possible. So the Commission proposes that about five percent of O&M funding be eligible to roll-over as two-year or three-year money to make better use of taxpayer dollars.” 

The Commission also recommends the DOD be able to fund new programs and capabilities, known as “new-starts,” which is currently prohibited under a CR. The Final Report also suggests eliminating Below Threshold Reprogramming, or the amount of funds the DOD can transfer between programs without Congressional approval, to facilitate flexibility in responding to evolving military requirements. 

A Collaborative Relationship to Streamline Budget Development 

Each of these efforts, however, will still require a level of transparency with the Hill. That’s why the Commission emphasizes a need for transparency in its third critical area: “Strengthen Relationships Between DOD and Congress.” 

It’s for this purpose that the Commission recommends establishing enclaves for both classified and unclassified information exchanges between the DOD and Congress, which in turn may also promote greater cohesion between the authorizers and appropriators in Congress.  

“The Senate Armed Services Committee and the House Armed Services Committee are the ‘Authorizers’ that write the NDAA, a policy bill that describes what money is available for certain requirements,” Barnes said. “But the four Appropriations Committees are more data-driven and focused on their oversight role. Sometimes, different views between the Authorizers and the Appropriators can create tension in the DOD when they receive authorization for a program, but aren’t appropriated the money to implement it.” 

The Commission concludes its report by recommending a single, common data system from which each service can build its budget under the fourth critical area: “Modernize Business Systems and Data Analytics,” and providing more education and training related to the budgeting process in its fifth critical area: “Strengthen the Capability of the Resourcing Workforce.”  

2024 Election Implications for PPBE Reform 

Since its release, Deputy Secretary of Defense Kathleen Hick pledged to evaluate the Commission’s Final Report in collaboration with executive and legislative partners. At the same time, the DOD also published an Implementation Plan for the Commission on PPBE Reform’s Interim Report, which was previously released in August 2023. 

But the 2024 election creates both promise and peril for the Commission’s recommendations to reform the PPBE process. While a change in executive and legislative branches can facilitate an opportunity to implement these necessary changes, the Commission’s Final Report is also at risk of being neglected during the transition – thus, perpetuating the status quo.  

“The Implementation Plan signals that DOD is taking the Commission’s recommendations seriously, and they are willing to work with the Hill to implement it,” Barnes said. “A new Congress also creates an opportunity to adjust the budgetary process and the Commission’s recommendations add flexibility without removing the discipline. We live in perilous times, and space is not unique in suffering the budgeting challenges that the PPBE process has today, so it’s especially important to apply these changes to acquire the innovative commercial space technologies of the future.” 

Elara Nova: The Space Consultancy recognizes the significant role government policy serves in the acquisition process, and its’ experts are prepared to support not only the commercial space companies developing innovative technologies, but also the government partners seeking to leverage policy to exploit these technologies to deliver space superiority to the warfighter. 

“The breadth and depth of experience at Elara Nova is unparalleled,” Barnes said. “There are Elara Nova experts who understand the resource allocation process, and its relationship between the executive and legislative branches. But there’s also experts who have been program managers and program executive officers leading large acquisition organizations within the DOD. So when a company wants to work with Elara Nova, they get the benefit of all of that experience across the space security spectrum.” 

Elara Nova is a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain. Learn more at https://elaranova.com/.