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p Every year the USA spends huge sums for military purposes. The size and structure of military appropriations are determined by a great variety of factors, the chief of which is military strategy. The impact of strategy on the scale and shares of individual types of military work makes itself felt through the military budget. Budgetary funds are allocated in a way that adequately provides for the fulfilment of the armed forces development programmes.

p The revolution in military technology that has taken place over the past thirty years, as well as its continued rapid progress, calls for methods other than those used before World War II for planning the military strategy and the design of the armed forces, for choosing weapons systems and finding the optimum variants of allocating and utilising military appropriations. In the past, when military technology changed relatively slowly, the experience of military and political leaders was the basis for the practical solution of military problems. The armed forces development programmes were based on the existing level of military technology with little or no thought given to possible 87 changes. Today, when science and engineering are developing rapidly the picture has changed radically. Now that there is a great variety of weapons systems while resources that can be used for military purposes are limited, the choice of a weapons system assumes great importance from the standpoint of military power and the most judicious expenditure of military appropriations.

p In the late fifties, US experts on economic war problems, high-ranking government officials and political leaders became increasingly critical of the existing system of planning and financing the US armed forces development. It was pointed out that the system had serious drawbacks and was out of tune with the state of military art and tended to reduce the effectiveness of US military-economic activities.

p To improve the effectiveness of military expenditures the Administration introduced in the early fifties substantial changes in its methods of guidance of the Defence Department. The Administration instructed a group of economists to work out a system of methods of economic analysis for use in the practical solution of military problems. The Defence Department initiated a variety of economic studies to compare the efficiency of different ways of achieving war objectives and to identify a variant ensuring maximum results on a given outlay or the actual result on a minimum outlay. To choose the optimum variant of solving a military problem a comparison is made of the total expenditure on a programme and the effectiveness of this programme from the standpoint of the objectives facing the armed forces. Cost-effectiveness comparisons prompted the Defence Department to discontinue the development of many weapons systems which were in the R&D stage.

p In 1961 the Defence Department adopted a new system of military planning and financing known as planning- programming-budgeting (PPB). Under this new system, military decisions are taken not for individual armed services, as was the old practice, but according to the principle of dividing the overall national defence objectives into "program elements" and "program packages”. This division is the dominant feature of PPB. According to Pentagon parlance a "program element" stands for integrated specific units of 88 closely interlocking types of military power or other military activity. Program elements include, for instance, B-52 bomber wings, infantry battalions, warships, etc. Their equipment, armament, personnel, supply and other types of support necessary to make them an efficient combat force are considered in their totality. US military planning covers over a thousand of program elements. A special form is filled for each of these programmes, giving summarised data on related points.

p A "program package" groups together program elements relating to different arms and services but having common strategic and tactical objectives and functions. Examples include squadrons of Minuteman and Titan ICBMs, Polariscarrying nuclear-powered submarines, strategic B-52 and B-58 wings, army anti-aircraft missile battalions and other strategic forces thrown together in a single program package called "strategic forces”.

p The US armed forces comprise the following program packages: strategic forces, general purpose forces, intelligence and communications, airlift and sealift, guard and reserve, R&D, central supply and maintenance, training, medical and other general personnel activities, administration and associated activities, support of other nations.

p The five-year programme of military work based on PPB is not a substitute for the armed forces development planning and budgeting, since it is only a link connecting these two processes into one system composed of the following three organically integrated and successive stages: long-term military planning, programming and the drafting of the Defence Department annual budget. The point of departure for annual adjustment, updating and extension of armed forces development programmes and budget drafting is the standing five-year planning and financing programme for the US armed forces.

p The adoption of the PPB system marked the end of the old practice whereby prior to drafting a new budget for next year the President authorised in advance the limit for total military appropriations, and the Secretary of Defence distributed the total among the armed services, which in turn were to make their own plans on the basis of the funds allotted to them. The five-year armed forces development and 89 financing programme was the basis on which the military budget was drafted. The programme was drawn up in such a way as to permit the grouping together of data under traditional budgetary headings (military personnel, operation and maintenance, procurement, etc.) and the drafting of the Defence Department’s annual budget for next year. Allocations for each programme were classified according to the relevant article of the budget.

p PPB left intact the old official procedure of drafting and approving the military budget. This traditional procedure is considered convenient for discussion and approval of the budget in Congress and also for controlling budget fulfilment. The draft budget for the next fiscal year is presented to the Office of Management and Budget, which analyses and incorporates it in the federal budget. In January the latter is submitted to Congress for discussion and approval as the President’s budget message.

p The adoption of PPB led to qualitative changes in the methods of administering the Defence Department. It resulted in greater centralisation in military decision-making and attempts to give it scientific substantiation. Before 1961 most military problems were solved independently by a corresponding military department, whereas after 1961 basic decisions began to be taken centrally by the Defence Secretary or by his closest aides. To make the most of the advantages offered by centralised management and arrive at the best military decisions it is vital that the decision-makers have adequate and fully reliable information, both statistical and analytical, on the problems under scrutiny. This information is provided by large-scale military-economic research conducted in the USA with a view to ascertaining the efficiency and cost of the military programmes being compared. These estimates are made and correlated by means of what is known as systems analysis. Although it is similar to operations analysis it differs from the latter substantially in that it examines not only the ways and means of using the available forces most efficiently (without analysing their composition, cost and effectiveness) for solving the given problems but also the problems themselves and the possibilities of developing optimal (according to the cost-effectiveness formula) forces needed to cope with them.

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p Evaluation of the effectiveness of alternative programmes is done by means of modelling, calculated experimentation and correlation.

p Effectiveness evaluation is only one aspect of systems analysis. Its another component is identification of the cost of alternative programmes by means of economic analysis. An analysis of the cost of a programme includes evaluation of its full cost, i.e., all the expenditures in all the stages of the programme (research and development, production and operation). Evaluation of the full cost is a must for adopting correct decisions on military programmes.

p After the military efficiency and cost of a programme have been evaluated alternative programmes are compared according to the cost-effectiveness formula, and the optimal ones are selected and approved.

p The PPB system has obvious advantages over the system of military planning and budgeting that existed in the United States until 1961. The military budget was drafted and. approved after an assessment of the armed forces requirements under such headings as military personnel, operation and maintenance, procurement, R&D, military construction, etc. This precluded assessment of the overall cost of a programme and its final military effect.

p The PPB system makes it possible, within the limits of individual program packages and, consequently, on the whole, to have a more accurate and better substantiated picture of the current and future requirements of the US armed forces (strength, structure and equipment).

p A serious drawback of the old system of military planning and budgeting which led to large unwarranted expenditures was incoordination between long-term and short-term planning of armed forces development and the drafting of the annual budget. Under the old system armed forces development plans were drawn up by the Joint Chiefs of Staff for a long period but there was no long-term budgeting programme. The financing of military-economic work was effected by the Office of the Comptroller General exclusively on the basis of the annual budget.

p The budget was based on the annual programmes drawn up by the military departments. Before World War II, when military budgets were relatively small, it was comparatively 91 easy to draft the budget. In the post-war period, however, with a considerable increase in military expenditures, the old method of drafting the budget involved great difficulties. Long-term armed forces development plans were often unsubstantiated financially, since the outlays involved exceeded by far as a rule the ceiling of the military budget annually set by the federal government. As a result, the Defence Department had to discard, curtail or slow down many programmes which had already consumed large sums.

p The PPB system has eliminated these drawbacks. Now long-term armed forces development planning is closely coordinated from the outset with budget decisions (without revising the traditional methods of managing both) to draw up military programmes backed up with adequate material and financial resources.

p In the past, a serious defect in drafting the military budget was priority attention to the budgets of individual military departments drawn up separately within the limits of sums allocated to each. As a result, each of the three armed services developed more or less in isolation, while forces entrusted with general functions and composed of different services were never considered as a whole.

p This incoordination between the budgets of the three armed services resulted, among other things, in stiff competition among them and in duplication of military work. Because of this competition, duplication and the inadequacy of methods for assessing military requirements, as well as the absence of a centralised logistic supply agency (each fighting service had its own), huge stocks of outdated and surplus equipment piled up at military depots.

p PPB reduced the autonomy of and competition between individual armed services and made for a more centralised and unified management of military-economic work.

p The wide-range military-economic studies at the Pentagon, which employs many civilian advisers, have led to a controversy between military and civilian officials of the Defence Department. Many career officers are disgruntled by what they feel is an intrusion by incompetent civilians on military authority and judgement, as the takeover by the Defence Secretary and his civilian advisers of the traditional functions of the military departments and the Joint Chiefs 92 of Staff. The controversy and discontent among military and civilian officials of the Pentagon became the subject of a debate in Congress.

p The critics of the Pentagon’s new procedure for dealing with military problems usually argue against its two aspects: first, overcentralisation of authority, the drastic curtailment of the autonomy of the military departments in weapons development and procurement owing to their functions being increasingly taken over by the Office of the Defence Secretary; second, overemphasis on a scientific approach to military problems and an extensive use of cost-effectiveness studies for military programmes.  [92•1  A vivid description of the controversy is provided by Hanson Baldwin in his article "Slow-Down in the Pentagon" carried by the journal Foreign Affairs in January 1965. He writes: "Mr. McNamara’s ‘whizkids’, complete with slide rules and computers, brushed aside the factor of professional judgment or scientific hunch ... and their emphasis upon ’perfection on paper’ and the cost part of the cost-effectiveness formula has definitely slowed the pace of military development.”

p Without doubt, the adoption of PPB has improved methods of planning and financing US military development. However, this system cannot eliminate all drawbacks in military work, still less those which stem from the capitalist principles of organising military-economic work. What is more, the PPB system, even in the opinion of those who favour it, has a number of weak points. For instance, the Defence Department budget as part of the federal budget continues to be drawn up on an annual basis, while the planning and programming of armed forces development are conducted on a long-term basis. This tends to complicate somewhat the functioning of the PPB system.

p Another drawback of the PPB system is the unavailability of methods for forecasting accurately enough the cost and effectiveness of military programmes, especially those relating to new weapons systems. Military-economic studies provide only a rough estimate of the cost of military programmes being compared. The toughest problem is an accurate evaluation of the military effectiveness of alternative 93 programmes. This is explained by the absence of a standard criterion of effectiveness and by the multipurpose nature of individual programmes.

p For these reasons, cost-effectiveness estimates are far from accurate, which limits their value as the basis for decisions taken by the higher echelons of the Defence Department.

p According to American experts, another drawback of the PPB system is overcentralisation of authority in the person of the Defence Secretary, which straight jackets the initiative of the lower echelons and complicates the procedure for amending approved five-year programmes.

p The PPB system calls for a good deal of additional analysis, which at times may hinder or delay the solution of military problems. For instance, at one time, the Department of the Navy requested the installation of a nuclear power plant on a newly built aircraft carrier. The request was examined in the Office of the Defence Secretary and turned down as inadequately substantiated.

p American writers on military-economic affairs cite examples showing the essential weaknesses of the PPB system and incompetent decisions made by the Democratic Administration. These include the construction of the /. F. Kennedy aircraft carrier with a conventional power plant, the F-101 fighter-bomber development, and the scrapping of the Skybolt missile project.

p In 1965 President Johnson ordered the introduction of the PPB system in other departments.

p According to the American press the Nixon Administration has introduced essential changes into the system of management of the Defence Department adopted under the ex-Secretary Robert McNamara. Specifically, methods of taking important military decisions within the PPB framework are being revised.

p Today, armed forces development planning and programming and military budgeting are based from the beginning of the PPB cycle on strategic and financial guidelines set by the President and the National Security Council.

p There has been a reversion to the former practice of setting a tentative expenditure ceiling to programmes and annual budgets drafted by the three military departments 94 as a measure to secure a more realistic and better substantiated budget. A tendency towards decentralisation of authority is in evidence within the US Department of Defence. Formerly, estimation of military requirements, armed forces development planning and financing were initiated by the central agencies of the Department of Defence (the Systems Analysis Board in particular), whereas now the Joint Chiefs of Staff and the three military departments have the decisive role to play in drafting five-year armed forces development programmes and annual budgets. This has taken away a large share of responsibility for making military decisions from some central divisions of the Department of Defence, the Systems Analysis Board in particular. According to the US press, the Board will henceforth be concerned with analysis and evaluation of long-range military programmes and annual budgets drafted by the three military departments.

p Changes in military planning and programming, decisionmaking and budgeting are aimed at improving the management of military-economic work so as to raise the effectiveness of military expenditures, to develop and maintain armed forces best adapted (in strength, structure, equipment, mobility, etc.) to the political and military strategy of US imperialism. Americans themselves admit that the DOD management system still suffers from many serious failings.

The current changes in the US system of regulating military-economic activity should be closely studied, because today, the military power of a country is determined not only by her total military expenditures but also by their effectiveness.