Business Management Reform in the Department of Defense in Anticipation of Declining Budgets

Abstract

Business management reform efforts have been part of the U.S. Defense Department agenda for decades. Current reform efforts have explicitly established the goal of generating, harvesting, and reinvesting savings from business management reform to buy more capital items; that is, they have focused on a measurable reallocation from operating and support costs to investment within a given budget top line. Recent increases in the defense top line, largely related to the war on terrorism, are not likely to persist; in addition, an examination of the factors affecting the top line suggests that a decline in the near term is likely. An examination of current and past defense management reforms suggests that efficiency‐seeking business management reforms are not likely to generate sufficient resources to cover a budget decline. Instead, management reform should be sustained for reasons of stewardship and accountability.