Zero-Based Budgeting Could Save the DOD Up to $53 Billion

Budget Reform Could Promote Efficiency, Readiness: NCPA

Source: NCPA

Instituting zero-based budgeting in the Department of Defense could help refocus national security priorities – and possibly cease the endless parade of national budget crises, according to a new report by National Center for Policy Analysis Senior Fellow David Grantham and Research Associate Jacob Kohlhepp.

The current budgeting system begins with the previous year’s budget, and only requires department heads to justify variances – generally additions – for the next budget period. In contrast, zero-based budgeting starts at a base of zero, and requires departments to analyze and justify every expenditure. While initially time consuming, “zero-based budgeting could produce long term savings for the Defense Department and prove that it can be accomplished in other areas of government,” says Grantham.

Defense officials could make the zero-based budgeting approach feasible for the DOD by:

  • Instituting a comprehensive budget review every four years, in the middle of each presidential term. This approach could potentially avoid political problems and provide time for the Pentagon to grow accustomed to zero-based budgeting.
  • Requiring certain departments within DOD to adopt zero-based budgeting as a means to identify wasteful and redundant programs. For example, the Government Accountability Office (GAO) has identified different, overlapping camouflage and uniform initiatives as a cause of waste.
  • Allowing DOD departments to rollover unspent funds at the end of the fiscal year.An NBER study estimates that rollover reform of budgets could allow a department or agency to maintain the same level of procurement for 13 percent less money.

In other words, eliminating the “use it or lose it” mentality would likely save the DOD money – possibly freeing up more than $68 billion in funds, based on the 2016 DOD budget.

“By forcing every department to justify its spending, zero-based budgeting helps eliminate waste and redundancy without sacrificing military capabilities and readiness,” says Grantham. “With the right reforms, we can achieve a cost-effective and capable military at the same time.”

Budgeting Alternatives for the Department of Defense