The sprawling Department of Defense relies on extensive funding to support the military services and other defense agencies. The Pentagon’s fiscal year 2024 budget reached approximately $841.4 billion in fiscal year 2024, and it has requested $849.8 billion for FY 2025.
Though processes for handling such large amounts of money are already in place DOD-wide and within each military department, barriers to efficiency remain present. According to Russell Rumbaugh, assistant secretary of the Navy (financial management and comptroller), these issues have given DOD financial processes a reputation for being rigid and unresponsive.
During the Potomac Officers Club’s 2024 Navy Summit on Thursday, Rumbaugh argued that these systems are not necessarily inflexible, but stovepiped.
“I emphasize there is flexibility in the system, but the seams in the current system have been in place for a long time,” he said.
“What flexibilities there are have been taken. A person empowered at that low level has already exploited the flexibility available to them,” he said. “If we change where the seams are, we will empower lower echelon folks to use their judgment and the new flexibility to move in a totally different direction and get new solutions out of it.”
Consensus, said Rumbaugh, is the driving factor behind flexibility. When there is agreement on the importance of a new technology, Navy leaders are motivated to move through processes efficiently. He offered the Columbia-class submarine program and a project under the Replicator initiative as examples in which processes were accelerated.
To achieve consensus, proposers must make it clear to leadership that their solution is necessary, but stovepipes within the system can make this difficult.
In contracting, breaks in the process often occur during the expense cycle, where invoices are paid and recorded in the contracting system rather than the budget system, Rumbaugh said. These gaps prevent budget professionals from being able to access these records when they are needed without bringing in someone on the contracting side of financial operations.
“We see the same break when we look at installations. We see the same break when we look at the supply system. We see the same break in broader procurement,” Rumbaugh noted.
“Our budgeting system is really good at building congressional budget justifications. It’s not always so good at helping the big bosses think about trades, even in budgetary terms,” he continued.
The solution to breaking down budget barriers, he said, is audit. According to Rumbaugh, what the DOD needs is to start using a control-based audit approach, but that is not possible if areas like procurement, contracting, budgeting and supply are all separate.
“We can only get there if we tie those systems together. I believe not only will that give us auditability, it will also create a better end to end,” he noted.
What combining these processes would do, he continued, is enable leaders to make decisions quickly and allow budgeters to more easily check the status of department finances.
The Navy is already working to tie these processes together through Jupiter, the service branch’s Advana enclave. So far, said Rumbaugh, the Navy has called back around $500,000 in unspent funds using this tool.
The Potomac Officers Club’s next event, the 2024 Intel Summit on Sept. 19, will gather public and private sector intelligence experts for a deep dive into the Intelligence Community’s top challenges and priorities. To unlock the opportunity to hear from these leaders in person, register to attend the event on the Potomac Officers Club website.
