Costello Research Government Accounting

George �鶹��Ƶ’s government contracting center is helping the Pentagon enter the 21st century

Jennifer Anzaldi — Thu, 30 May 2024 16:17:30 +0000

George �鶹��Ƶ’s government contracting center is helping the Pentagon enter the 21st century Jennifer Anzaldi Thu, 05/30/2024 - 12:17

When the Pentagon attempts to field innovative technology, its contracting decisions are largely dictated by a process that predates personal computing. Known as the Planning, Programming, Budgeting and Execution (PPBE) resourcing system, it betrays its mid-20th-century origins in its extreme emphasis on long-range management and sequential planning over more agile and rapid program execution.

Jerry McGinn

Calls for PPBE reform are nothing new in the halls of the Pentagon, but recent geopolitical threats have contributed to a general recognition within the federal government that change is badly needed to speed the development and acquisition of new military capabilities.

Hence Congress’s formation in 2022 of an independent commission tasked with closely assessing the current process and making specific recommendations for reform.

The Commission on PPBE Reform promptly engaged the Greg and Camille Baroni Center for Government Contracting at the Donald G. Costello College of Business at �鶹��Ƶ as a key research partner. The center was awarded a $645,000 Department of Defense (DoD) research contract consisting of two projects.

First, the research team, headed by the center’s executive director Jerry McGinn, prepared six case studies documenting PPBE’s effect on DoD’s work with both research and development centers and industry to develop and adopt new technologies.

“We set up hypotheses and did background research on the programs,” McGinn says. “Our conclusions were based on a number of interviews with government and industry officials.”

For example, one of the case studies dealt with the Air Force’s Collaborative Combat Aircraft (CCA) program, for the development of AI-piloted combat drones. Five Air Force officials involved in CCA told the Baroni research team that PPBE complicated necessary collaborations with the Navy and other agencies, due to siloed budgeting protocols making it difficult to align priorities and make resource decisions in a timely manner.

Next, the Baroni research team turned their attention to three inter-related subtasks delving into specific rules governing PPBE’s application.

“For this project, we used a mixture of non-public DoD unclassified databases as well as information available to the general public,” says McGinn.

The researchers investigated whether PPBE should vary based on DoD’s acquisition categories or remain the same for all categories, concluding that the categories were similar enough to warrant a unified process. They were also asked to evaluate how military departments and agencies use PPBE’s various acquisition pathways, resulting in a determination that “budget justification documents, particularly for RDT&E (research, development, testing and evaluation), are overly complex, unnecessarily intricate, and lack standardization”. Finally, the researchers performed an extensive analysis of PPBE’s legal underpinnings and the wider governmental implications of reforming the process.

The team’s final report, submitted to the commission early in 2024, contained a consolidated list of dozens of findings and recommendations. In its own report issued in March 2024, the PPBE Reform Commission cited the Baroni team’s research numerous times.

“Our work played a large role in informing the Commission’s findings and reinforcing their policy recommendations,” McGinn noted. “These inputs are today being considered as Congress debates 2025 appropriations and DoD concurrently develops and vets the budget for 2026 and 2027.

Shortly after the release of the Commission’s report, the Greg and Camille Baroni Center for Government Contracting hosted a rollout event at �鶹��Ƶ Square featuring the Commission’s chair, vice-chair and executive director. A series of additional events around PPBE reform are being planned for the summer.

“Our report reflects the strategic vision with which George �鶹��Ƶ established this research center. Our research and analysis inform the federal government as well as the large government contracting industry here in the national capital region. Our relationships and location make the center uniquely situated to benefit policy-makers and entrepreneurs, alike,” McGinn says.

In This Story

John G. (Jerry) McGinn

Learn more about the Costello College of Business

Topics

Operations - Costello

Costello College of Business News

Costello Research Government Accounting

Costello Research Strategic Management

Costello Research Innovation Strategy

Costello College of Business Faculty Research

Center for Government Contracting

Center for Government Contracting News

Research

�鶹��Ƶ Momentum

How large is the U.S. “green economy”?

Marianne Klinker — Wed, 10 May 2023 14:45:01 +0000

How large is the U.S. “green economy”? Marianne Klinker Wed, 05/10/2023 - 10:45

A �鶹��Ƶ professor is the sole academic working with the U.S. government in an unprecedented effort to measure environmental-economic activity.

One way to gauge a country’s attention to the environment may be measuring how much of its economy is devoted to protecting, rehabilitating, and preserving the natural environment. While the U.S. has made prior attempts at tracking “green jobs” and “green goods and services,” the U.S. government does not currently account for this sector.

Kelly Wentland

Kelly Wentland, an assistant professor of accounting at �鶹��Ƶ School of Business, is helping to fill this data gap. She is the sole academic working with the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) to develop a pilot account tracking the environmental, goods and services (EGSS) sector of the U.S. economy. (The UN defines ESGG as “compris[ing]…the economic activities that result in products for environmental protection and resource management”.)

Wentland and the BEA team have produced a pilot EGSS account, along with preliminary results that formed the basis of a recent working paper, presented at the March 2023 NBER-CRIW conference.

“What we’re doing is, we’re developing a national account based on the supply side of our economy,” Wentland explains.

Ninety countries have introduced their own environmental-economic accounts based on frameworks from the UN Statistical Commission. The challenge for Wentland and the BEA team was to design their pilot account so that it would be comparable to those of other countries while aligning with established approaches from the U.S. federal government. This involved making a huge number of close comparisons between European and American product and industry classification standards to identify shared data points that mapped to UN guidelines.

After carefully selecting for relevant economic activity during the years 2015 and 2019, the team used the BEA’s supply-use tables–extremely detailed compilations of economic inputs and outputs for more than 5,300 product categories–to build their estimates.

So far, the reaction to Wentland’s work from government-affiliated economists has been markedly positive.

They found that EGSS accounted for $620.6 billion in 2015, and $724.5 billion in 2019. The top four categories were responsible for about 70 percent of the total. These were: waste management (far and away the top category, comprising one-quarter of the entire sector), management of water, wastewater management and protection of biodiversity and landscapes. This roughly matches up with equivalent studies in the EU, which also have waste management as the largest environmental-economic category, with 26-27 percent of the total.

Wentland and her collaborators also divided EGSS activity into private- and public-sector output. In 2015, the government portion of environmental output stood at 28.3 percent, and the private-sector contribution at 71.7 percent. By 2019, the balance had shifted slightly, with 27.2 percent attributed to government spending, and 72.8 percent to commerce.

Wentland stresses that the account is very much a work in progress. “It’s very important to point out that it is not an official BEA national account. It is purely a pilot effort to see how far we can get with the data the U.S. already has.” Part of the purpose of the pilot is to identify gaps in the current data available as future avenues to improve estimates. Environmental research and development (R&D) is one potentially significant area where data were inaccessible.

“A lot of companies are putting out sustainability reports, but when you get down to what percentage of them actually include an annual dollar value attached to their activity, it’s very low,” Wentland says. She notes that the SEC’s proposals for mandated environmental reporting–which may be scaled down amid strong corporate pushback–could help fill this void. “The alternative is likely adding questions to other lengthy surveys the BEA collects from these companies.”

So far, the reaction to Wentland’s work from government-affiliated economists has been markedly positive. “The main critique had to do with the international guidelines for product classifications themselves, rather than our methodology,” Wentland reports.

As of this writing, further development of the EGSS pilot account hinges upon the progress of President Biden’s budget for 2024. “It’s formally listed in the budget that they have an increase allocated to this as part of the increase in the BEA’s budget. Obviously, we’ll have to see how things pan out in terms of whether the budget moves forward.”

As Wentland sees it, calculating the dollars and cents that go into the “green economy” would enable granular, impact-focused policy debate on climate issues. “You could think about research or policy that wants to say, ‘When we spend more on EGSS, do we see emissions change or which types of investment have more impact than others?’ You have to be able to measure both the effort and the outcome, in order to be able to say something about its effectiveness.”