Avoiding the midnight money drain

If it were easy, somebody would have done it by now. So I’ll say there is a simple, rather than an easy, fix to the problem of dumping billions of dollars into contract actions for which the primary requirement is the ability to get the funds placed on the contract by the 30th of September.

Despite the general narrative, and despite the impression that is conveyed, most of the effort does not really go toward randomly shoveling vast piles of money down rat-holes just to overcome a lack of prior planning, at least in the most direct sense.  In fact, it occurs because of an excess of planning!

How is that possible? When you plan too much at the detailed level, it doesn’t take long before the random effects of reality creep in to upset an elaborately detailed plan. As the military likes to say, “no plan survives first contact with the enemy”.  Things never turn out the way you expect, and often a little change in a detail can undermine the entire concept in some complex and carefully-designed scheme.

In the case of government spending, the inordinate lead times to complete relatively routine transactions have led to a solution in which elaborate work plans are created around the thousands of specific contracting actions and the specific funding that those line-items will include. Those plans never work out. Prices change; providers are bought up or disappear; customers waffle on what they really need; funding isn’t allocated down to the work units in a timely manner; and, despite all those reasons why the program offices ought to be keeping on top of things, quite often the program staff who do the actual work simply don’t get around to it. So the bars of the Gantt charts don’t line up it the calendar they way they should, and money that wasn’t spent as expected gets re-allocated not to those who could use it the most but to those who can spend it the fastest. Let’s at least give them credit for using it to purchase things that they would have needed to buy in the coming year anyway so there is not a complete waste of funds on frivolities, although no doubt there are a thousand anecdotes in which exactly that has occurred.

One would think the obvious solution to this would be to get rid of the pixie-dust syndrome in which money that was there last week ceases to exist this week. That’s not going to happen. Congress was put into place specifically to prevent agencies from hoarding money to the extent that they would become even more insulated from public redirection and oversight than they are today, and there is no doubt in my mind that is exactly what would happen.  That’s not just a reflection on current politics: this was decided decades ago, and I have had this opinion for many years. Maybe it’s just now becoming more obvious.

So what’s the alternative?

Oddly enough, since what I’m about to advocate may sound like more centralized control, the Agile approach is on the right track. and yet the solution itself comes from the very old school: programmatic appropriations and PPBES (the Planning, Programming, Budgeting and Execution System).  Much of our current dilemma comes from trying to manage line items at the most centralized level. I could get behind that if the idea was to optimize the overall outcome. That’s not the case: it’s done to facilitate shuffling the micro-details around in an effort to make the numbers come out exactly, and in the process losing all sight of the impacts on actual outcomes.

How would a programmatic approach help?  Stop moving money between programs unless it is absolutely necessary.  Any effective program manager (and the government does have thousands of these, not to mention tens of thousands of equally-competent contract support staff)  knows what contracts have to award by when, and when packages must be turned in to make a timely award possible. They are also quite capable of detecting when a contracting office is likely to fail to deliver its end of the bargain in a reasonably timely manner. Given all that, they are also able to decide when to shift gears, either adjust the program’s delivery plans to accelerate or slow down specific contracts to accommodate what is feasible, or possibly to change the entire solution approach if it appears that funding or contact actions will not be available in the necessary time-frame. The program still has to account for its spend rates, but the PM isn’t wasting time sitting around in meetings discussing every other program’s spending.

This approach doesn’t undermine the enterprise’s need to manage priorities: those needs should have been made clear in the initial assignment of objectives and funding at the enterprise level. Constant reshuffling of specific funding and actions between programs effectively takes the prioritization back out of the hands of the governance committees and places it at the whim of fate, represented in this case by the ability of junior functionaries to carry out their tasks in a timely manner.

As a stop-gap measure, the enterprise will always want to have in reserve the funds for a couple of programs with some rapidly scalable and somewhat discretionary expenses that can be executed in almost no time through direct orders (for the IT people, think “laptop refreshment”). Given that ability to exercise fine-tuning towards the close of a fiscal year, by focusing on a programmatic level rather than specific actions the organization can provide a relatively stable financial and requirement environment. That would permit the governance boards and the program managers to focus on coordinating cross-program dependencies and making sure that the investments deliver value.

I’ve put together a book on how an organization can structure its programs and projects to deliver more reliably in a chaotic environment. It’s free! You can get to it here.

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Thanks, as always for entertaining my ideas. It often happens that I’m going in the wrong direction, or that I overlooked a key point.  Please feel free to enter a reply below!

Douglas Brown
PhD, PgMP, LSS Master Black Belt, RTBMA

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