Linking resource allocation to performance management and strategic planning: An Air Force Challenge

Aerospace Power Journal, Winter, 2001 by Stephen R. Maj Gen Lorenz, James A. Lt Col Hubert, Keith H. Maj Maxwell

Editorial Abstract: As a service, the Air Force fights much better than it buys things. In fact, our service--the world's most powerful and capable air force--would probably fail quickly as a business corporation. We must do better, and this article raises some thought-provoking ideas about how to improve.

IN LATE 2000, the service chiefs testified before Congress that the US military required upwards of $100 billion per year of additional spending (a 30 percent increase) to maintain readiness and modernize the force. But the recent tax cut, a slow economy, and spending increases needed for nonmilitary priorities make a 30 percent increase in defense spending unlikely. Without the needed funds, the military will face many difficult decisions concerning allocation of the remaining resources. The question is and always has been, What is the best way to allocate those limited resources?

The approach to allocating resources throughout the Department of Defense (DOD) at the beginning of the twenty-first century has several deficiencies. It doesn't provide a connection among where we are (performance), where we want to go (strategy), and how we get there (resources). In addition, the process identifies shortfalls but not the sources to pay for them. It rewards advocates who are the most adept at articulating increases in spending but sometimes punishes programs that can produce savings. Even worse, it lacks fundamental measures of value on which to base decisions. Eliminating these deficiencies may not solve the shortfall in resources, but it can ensure that we spend the money we have more wisely.

The key to enabling Air Force leaders to make better resource decisions lies in implementing three major changes in the way we do business. First, we must link resource allocation to performance management and strategic planning. These three management functions must work in unison to ensure consistent direction. Second, we need a process that is simple, transparent, and reproducible. It must be simple enough to be implemented quickly and improved upon; it must be transparent to identify the trade-offs and provide incentives for cost reduction; and it must be reproducible through a structured planning framework that relates capability to cost. Third, we must deliver the best value to the war fighter over time and with the resources available. This requires measuring Air Force capabilities and relating them to resources and operational effectiveness for the near, mid, and long terms.

Such changes are within reach; however, getting there requires a cultural change. The Air Force management processes currently in place provide little incentive to reduce costs and only limited accountability for those costs. Gen Gregory S. Martin, commander of United States Air Forces in Europe (USAFE), recently observed that "the only way we're going to get anywhere in the Air Force today is to develop the tools and performance measures which will allow our people to have control and accountability for their resource and mission performance. And then we can push decisions hard and fast to the lowest level possible.... That's the only way we'll really make major progress in the future." (1)

The Air Force has recognized the need for change and is making the transition. Under the leadership of F. Whitten Peters, the former secretary of the Air Force, and Gen Michael E. Ryan, the former chief of staff, Headquarters Air Force created a team to reengineer the Air Force Resource Ailocation Process (AFRAP). (2) Led by Maj Gen Danny A. Hogan, the AFRAP team recommended a capabilities-based process for allocating resources. (3) As a result, Headquarters Air Force chose a new approach for building the budget for fiscal year 2003 (FY03) as an initial step to implementing the AFRAP recommendations. Each major command received a topline dollar amount along with the direction to present a balanced, capabilities-based input to the Amended Program Objective Memorandum for FY03.

The USAFE team responded by developing a Resource Allocation Model (RAM) that produced a balanced program and at the same time provided tremendous insight into the command's capabilities. The purpose here is not to wave the USAFE flag but to use its experience as a case study. The USAFE RAM not only works for an operations and maintenance command but also offers promise towards improving resource allocation for the entire Air Force. We're on a Journey

We're on a Journey

Throughout history, military spending has been based on available resources that the citizens of a country were willing to spend in peacetime and war. At the macrolevel, we won the Cold War by engaging in a long-term expenditure of resources while maintaining a large standing military. Today, with our vision of Global Vigilance, Reach, and Power, significant technological advantages have changed this equation. Vigilance has progressed from scouts and spies taking days or weeks to provide information, to satellites and unmanned aerial vehicles producing results in minutes. Reach has progressed from the walking pace of horse-drawn wagons to moving millions of ton-miles-per-day (thousands of tons halfway around the world every day). Technological advances in precision and stealth have significantly changed the nature of power in battle from using numerous, large munitions to destroy a target, to using fewer, more precise weapons to achieve desired effects. Beginning with Operation Desert Storm and progressing fu rther during the air war over Serbia under the leadership of Gen John P. Jumper, then the commander of USAFE, the goal has now become "effects-based" operations. (4) Technology has enabled us to pick and choose which of the enemy's centers of gravity to affect and to strike them with crippling speed.