Research for Budgets

Given the lack of an immediate threat by a superpower, the pressures to fund nondefense programs, and the desire to shrink the deficit, the military's budget, in real terms, is unlikely to increase. Yet, we must fund modernization efforts and new initiatives, such as 'the Revolution in Military Affairs.' The only source for these funds appears to be the current military infrastructure accounts. Therefore, this paper calls for a 'Revolution in Business Affairs' (RBA) to provide an efficient and flexible infrastructure that supports changing military requirements at a price that does not overwhelm modernization efforts. The RBA will achieve this by changing fundamental DoD business process to those that have worked in the private sector.

This paper investigates the dynamic nature of the Navy's Research and Development (R&D) budget by examining the Navy's budget in the aggregate and by functional activity (i.e., manpower, operation and maintenance, procurement, and research and development). Qualitative conclusions about trends in each functional area are made using constant-dollar plots for the period 1955-88. The percentage of the aggregate Department of the Navy (DON) budget that is allotted to R&D has been remarkably consistent at 10 percent over the last 30 years. A forecast for the R&D budget percentage is made for the next 5 years using statistical techniques. Thus, independent forecasts of the aggregate DON budget can be used to generate alternative R&D budget forecasts.

This research memorandum describes an analysis of methods that will enable OP-01 to monitor more closely the execution of the Military Personnel Navy (MPN) appropriation. In particular, the analysis is concerned with the identification of leading indicators of MPN obligations that provide accurate forecasts of fiscal year obligations within a few months of the fiscal year's start. The study demonstrates that succinct and accurate estimation techniques may be applied to basic pay, retired pay accrual, basic allowance for quarters, FICA, and officer basic allowance for subsistence. Other pay categories exhibit too much irregularity to be amenable to such forecasting methods. The analysis exhibits the margins of error that apply to the forecasts and are inherent in the Navy's information systems.

Estimates of the costs of the tanker portion of the Ready Reserve Force (RRF) from 1987 to 1995 are provided. These estimates show what it would cost if the Navy chose to fill the entire shortfall of U.S.-owned militarily useful tankers by building up the RRF. The study does not recommend this course of action, but merely establishes what the Navy's dollar costs are likely to be in the years ahead. An important finding is that the annual costs of an RRF of that size would substantially exceed budgeted funds as reflected in the latest Five Year Defense Plan. Without additional funding of about $200 million or more per year over the next nine years, the tanker RRF probably would not be able to accomplish the Navy's fuel-delivery mission. Even with such an infusion of funds the RRF may not be workable, because adequate supplies of U.S. merchant sailors and U.S. shipyards may not be available.