Wednesday, June 27, 2012

Bucking the Bang Budgetry

Bucking the Bang Budgetry
The bang for the buck calculation should include the costs of putting the beans, parts, and metal through the METL cost per diem before componentized career management optimization and resulting basing costs are considered.  Can a Guard or Reserve fighter squadron score better or worse than an Active Component squadron in identical situations?  Does an Active Component artillery battery shoot six times better than a Reserve Component  battery because the Manpower costs are about six to one?

When talking about welfare and combat readiness of the services we are really talking about budget and more specifically about the Appropriations for Military Pay (MP) by service and component, O&M (Operations and Maintenance), and Procurement..

Military Pay is driven by staffing levels often counted in Year End Strengths (YES) instead of FTE (Full Time Equivalent formally known as Man Years).  The current plan for force reductions between the Active Components and Reserve Components are divided equally 50-50 YES (Year End Strengths). The MP costs of Active vs Reserve Component in FTE (full time equivalents) is a default six to one ratio comparing the drill status reservist whose base pay is used in calculating drill time and annual training adds up to around 60 days vs 360 for Active forces.

The O&M Appropriation  (Operations and Maintenance) “finance those things whose benefits are derived for a limited period of time, i.e., expenses, rather than investments”. This includes combat operational expenses for the combat service support tasks are to feed, arm, fuel, fix, and move the force.

O&M is activity driven, such things as pencil lead vs full metal-jacketed lead.
The O&M Appropriation includes a lot of expenses that have little to do with feeding, arming, fueling, fixing and moving the force, but do have to do with the costs of maintaining support of the force when it is not in a hostile or operational mode.  This includes housing and the civilian civil service, mercenaries and privateers.

Procurement budget is focused on the larger dollar amount items with those below certain thresh holds funded under O&M such as major components of tanks and aircraft (motors, guns, etc).  This latter cost was once called PM Secondary. 

Banging the Buck

The overall balance between readiness and staffing to produce an optimum mix of buck and bang, both in the quick draw or rotational roundup requires more calculation than a corporate CEO can do on the back of an envelope, even with the feet propped up on the desk power mode.  This requires an algorithm to determine the optimum mix of MP and OM (personnel and service support) adjusted first to eliminate garrison costs and focus on combat “operating costs” aggregated on a Range of Missions (ROM) basis..

The Range of Missions is based on what it takes to perform in a particular Joint Operational Environment based on contingency plans such as the order FDR gave to Ike {Invade the Continent of Europe and defeat Germany) as opposed to “Bringing OBL to Justice”. The Range of Missions can provide the probabilities of how much each type mission would cost in time and frequency as a basis for determining the optimum allowance of MP and OM (people, guns, ammo, etc).

The Cost of METL
OBTW: The Range of Missions, and the parts thereof have been around for thirty years in the METL (Mission Essential Task List) complete with the hierarchy of skills, knowledge and tasks in terms of action, condition, and standard.  All we do is to put dollars to do it and to train for it.
Existing budget categories include appropriations for training and for field operations.

US Army Field Operating Cost Agency (USAFOCA)
Once upon a time (71-72), I was the Executive Officer of the US Army Field Operating Costs Agency, a Class II activity of the Comptroller of the Army that performed operation costs analysis (MPA, O&MA, and PEMA Secondary) of units, activities, and equipment.  These analyses used Operations and Systems Analysis (ORSA) instead of accounting techniques. It consisted of analysis of the cost driving elements of that activity, unit, or equipment and what documents recorded pertinent information. This meant taking portable microfilm cameras (suitcase sized) and scanning morning reports, and stock record cards.

The cost of an Army infantry division in one year in combat in Vietnam including a slice of the supporting forces in theater averaged one billion dollars (Nixon-Ford) per year. The single greatest cost driver was the cost in field artillery and a slice of supporting aerial ordnance.  The 1st Cavalry cost 1.4 billion and the 1st Infantry about $650,000 in the same time frame. The 1st Cavalry has an additional aviation brigade and a screening mission in contact with VC/NVA forces across a three hundred km front.

The cost-driving element of ground vehicles was largely driven by the number of gears in the power train.

Optimum Benefit Cost Reduction Ratio
It is a magical myth that cost reduction leads to a leaner and more effective force (or business), especially since the normal cost reduction occurs where the METL meets the Metal. In civilian terms, fire the clerical and maintenance staffs to preserve the executive pretense of omniscience and omnipotence to cover the lack thereof until the plant blows up. The final warning bell is when the CEO gets an industry award for excellence.

In a perfect world, not the present emulation of Wonderland, one might find that the olde more experienced veteran not only has the METL internalized, but infects other neophytes with the most cost effective training device, the tales of glory of bygone days often spiced with cordite and parfum d’diesel in the field.

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