Budget-based war games would foster critical thinking
To improve military acquisition, save precious defense dollars and get war fighters the tools they need to win our nation’s conflicts, we need a new type of war game. In this game, war fighters would choose capabilities and platforms and build force structures for the purpose of fighting a simulated battle, but with a twist: The players would receive a budget and face costs for capabilities and platforms. They use their scarce budget to build their force structures, and those force structures subsequently fight mock battles in simulated environments.
This budget-based war game puts war fighters at the center of the acquisition process and shows how actual operators would trade off between quantity and quality.
Recently, President Obama proposed a $400 billion cut from security and defense budgets over the next 10 years. Obama has directed Pentagon leadership “to conduct a fundamental review of America’s missions, capabilities and our role in a changing world,” after which he would decide on specific cuts. In response, then-Defense Secretary Robert Gates said the options for budget cuts should fully encompass the consequences and risks to force structure and capabilities so the president and the Congress “can make well-thought-out decisions.”
Defense acquisition must be a part of this process. According to many observers, though, today’s acquisition system needs a hard look. Under the current system, war fighters and defense officials determine what they want their ships, jets and weapons systems to do, which yields requirements. Once the requirements are identified, contractors then determine the costs.
This requirements-based acquisition system often results in unrealistically expensive systems. Frank Kendall, the Defense Department’s deputy chief of acquisitions, wants to discipline defense acquisition costs by disciplining requirements. Kendall used the example of a teenager asking his father for a Ferrari. “Well, I have the budget for a Ford, and that’s all you’re going to get,” he said. “That’s the sort of thing we’re going to have to impose on our requirements community.”
War fighters have made the same point. Navy Cmdr. Henry Hendrix, writing in the April 2009 issue of Proceedings, said, “Instead of producing a large number of ships with blunt, effective capabilities to meet the threats of today, the Navy has aligned with the shipbuilding industry to build an entire generation of ships with exquisite technologies that are the very best in the world, but are also so expensive that the Navy can only afford a limited number of hulls.”
Requirements-based acquisition yields a few gold-plated weapons, rather than a lot of good-enough weapons systems. In many cases, war fighters would prefer to have larger numbers of good-enough, reliable ships, jets and other weapons systems. As the old military saying goes, “quantity has a quality all its own.”
Requirements-based acquisition underrates the importance of quantity because the requirements process starts by asking war fighters the wrong question. Fundamentally, the requirements-based process says to war fighters: “You’re in a fighter jet. What do you want that jet to be able to do?” The right question incorporates costs by saying to war fighters: “You’re in a fighter jet. What do you want that jet to be able to do, and how many other friends in jets do you want helping you out?”
The budget-based war game helps solve this problem. Like requirements-based acquisition, the budget-based war game places the war fighters front and center, where they belong. Unlike requirements-based acquisition, in the budget-based war game, the war fighter confronts costs, which in turn affect the number of ships, jets and weapons systems the war fighter can buy.
A budget-based war game would operate in the following manner. First, experiment planners would gather input from cost and technical analysts to build menus of capabilities and costs for platforms and weapons systems. These menus would list capabilities and their associated dollar costs. For this purely notional example, using publicly available cost and capability data, players may choose between many types of jets, including the following:
• Cost: $55 million.
• Combat radius: 390 nautical miles.
• Top speed: Mach 1.8+.
• Capable of taking off and landing on a carrier.
• Armaments: One M61A1/A2 Vulcan 20mm cannon, AIM-9 Sidewinder, AIM-7 Sparrow, AIM-120 Advanced Medium-Range Air-to-Air Missile, Harpoon, Harm, Stand-Off Land Attack Missile, SLAM-ER (Expanded Response), Maverick missiles, Joint Stand-Off Weapon, Joint Direct Attack Munition, Data Link Pod, Paveway Laser Guided Bomb, various general purpose bombs, mines and rockets.
• Other data for players may include measures for the jet’s maneuverability.
• Cost: $25.94 million.
• Combat radius: 340 nautical miles.
• Top speed: Mach 2+.
• Not carrier capable.
• Armaments: One M-61A1 20mm multibarrel cannon with 500 rounds; external stations can carry up to six air-to-air missiles, conventional air-to-air and air-to-surface munitions and electronic countermeasure pods.
• Other data for players may include measures for the jet’s maneuverability.
In this example, Jet 1 is the F-18 E/F and Jet 2 is the F-16C.
However, the real value of the game comes when designers put together different bundles of capabilities into ships, planes and unmanned systems, charge prices for those platforms and have players make choices. These types of questions (with more detail, of course), enable players to think in terms of concrete platforms with concrete attributes. In addition, this approach can incorporate notional platforms. Players could be asked to choose between notional but nonetheless realistic future platforms, some with much greater capability but much higher price tags.
There are several reasons for this approach: War fighters’ demand for capabilities depends on context. Context depends on enemy capabilities, other capabilities that are available to the war fighters and geography. In addition, people think more clearly when given concrete choices. Rather than asking war fighters about abstractions such as “speed” and “agility” and “cost,” we obtain more valuable information when we design concrete platforms and systems that embody speed and agility and ask war fighters to choose among those concrete platforms and systems by spending scarce resources.
More complex realities of force structure would drive more complicated games, with multiple layers of command and different teams deciding to buy force structures. For example, a carrier strike group can deploy over multiple areas of responsibility and may be available to different players at different times. In the budget-based war game, players may bid for carrier strike group time based on the operational context and their need. Players also could do this for national assets such as satellites.
For the first time, this would provide a full picture of the trade-offs that war fighters would like to make among very different weapons systems and platforms. The game would explore how players value and choose among ships, jets, UAVs and satellite time (among other things). Within the vast complexities of the Defense Department’s current acquisition and accounting systems, these types of issues simply cannot be addressed. To address these issues, we must put the war fighters together with the money and capabilities, and allow them to show how they would spend precious taxpayer dollars to win their fights.
In addition to putting the war fighter together with the money, the budget-based war game puts the war fighter and the money together with the operational context, including the enemy’s capabilities and the specific geography of the fight. Different geographies and enemy capabilities may drive radically different needs for war fighters. Context is everything, and the budget-based war game offers the opportunity to explore different contexts.
The budget-based war game offers other opportunities to decision-makers in defense. Decision-makers can use budget-based games to manage risk and develop contingency plans in acquisition. In many cases, acquisition programs start on the premise that the weapons system will have a reasonable cost. Then costs explode. There are many reasons for this. There may be “requirements creep,” where the program office increases the requirements even after the contract has been awarded. In addition, contractors may face strong incentives to underestimate the costs of the program when bidding for the contract because canceling a contract for a cost adjustment in the middle of testing and production becomes very costly to the government and is not likely to occur. As a result, the cost of the platform ends up much higher than the amount agreed to by the government. This creates a need to manage risk.
In the case of the F-35 Joint Strike Fighter, Defense Undersecretary for Acquisition Ashton Carter testified before the Senate Armed Services Committee that the projected costs for the jet were “unacceptable” and that the F-35 would be “unaffordable at that rate.” In response, Sen. John McCain said, “It seems to me [prudent that] we at least begin considering alternatives.”
Decision-makers need a way to assess risk and evaluate alternative courses of action if a program incurs higher-than-expected costs. Properly managing risk in defense acquisition isn’t just about managing risk to a particular program; it’s about managing holistic risks across all programs. If one program becomes more costly, that should have implications for other programs because the war fighters combine different platforms from different programs to win their fights. Cost changes in one program therefore have ripple effects across many other programs and even affect how war fighters may have to operate.
The budget-based war game offers a way to holistically assess risk from unexpected cost overruns. The budget-based game can help decision-makers manage risk and form contingency plans based on war-fighter expertise simply by changing costs in the game and observing how war fighters respond to higher costs for a platform. For example, a budget-based game could include the following jet as one of the platforms that war fighters may buy:
• Combat radius: more than 590 nautical miles.
• Maximum speed: Mach 1.6+.
• Not capable of taking off on a carrier.
• Armaments: GAU-22/A 25 mm cannon, internally mounted with 180 rounds; six external pylons with a capacity of 15,000 pounds and two internal bays, and provisions to carry combinations of air-to-air, air-to-surface missiles and anti-ship missiles.
In one round of the game, players could choose to buy this jet for $62.5 million and decision-makers could observe how many jets and other systems the players buy, along with how players employ those platforms and systems. In the next round, players would face a new price for the same jet: $115 million. Players would then respond to the new cost for the jet and buy a new mix of platforms and systems.
By observing the changes in the players’ choices in response to the cost change, decision-makers could observe two things. First, they could observe how strongly players switch away from the jet when its cost rises. This would help decision-makers understand how the value of the platform changes to war fighters as its cost changes. In addition, decision-makers could observe the other types of platforms and systems players buy in lieu of the more expensive jet, and how players use these platforms and systems. Results from the budget-based war game would indicate what other platforms and systems war fighters would prefer if the cost of one platform rises, and how war fighters would change the way they fight in response to higher costs. This generates a holistic and systemic contingency plan across acquisition programs.
Finally, the budget-based war game can also show how war fighters would change their platforms and systems and operations in response to tighter budgets, and help decision-makers identify when and how certain missions become unaffordable. Players would start with an initial budget, buy their platforms and weapons, develop concepts of operations and then fight the war game. In another round, players would see their budgets cut and would change both what they purchase and their concepts of operations. At some point, the budget would simply get too low and players would be unable to put together any combination of platforms and concepts of operations to accomplish the mission. This would tell decision-makers how to accomplish the most for their budget dollars, and the point at which budget cuts would require the Defense Department to forgo missions.
A budget-based war game would require significant analytical work upfront, especially if the game is supposed to provide significant input to real decisions. For example, designers may also want to consider logistics and personnel costs associated with different platforms and systems. Many unmanned vehicles that function as intelligence sensors, for instance, might have relatively low costs for the actual vehicle, but might generate significant demands for analysts to process the sensor data.
There are multiple ways to run the budget-based war game. The Defense Department could commission the design of computer games that would have players face different operational scenarios, spend money to build forces and fight these scenarios. This would produce a lot of different ideas from across the war-fighting community and possibly beyond. There are precedents for this approach. The Defense Department has recently used games in which players were given the role of Somali pirates. In the game, players were given budgets which they used to build their pirating operations.
The Defense Department could also run in-person war games with different war fighters at different ranks and types of expertise. These games could be more fluid and dynamic, where tactical experts could offer insights that actually change the prices themselves. A recent Wired magazine article discussed how war fighters realized that the F-15C’s larger nose cone could fit larger and better radars, thus negating the stealth advantage of the Chinese J-20. In a budget-based war game setting, innovative insights like this could produce new prices and even new notional platforms. Game designers would then consider notional jets that may not have as much stealth, but have space for stealth-negating electronic equipment, and add those to the mix of jets that players may buy.
While this article has focused mainly on weapons systems and platforms, the budget-based war game could be expanded or modified to address organization, training, personnel, education, interoperability and policy issues. This would require some thoughtful analysis to properly execute.
The budget-based war game would give us an opportunity to relate budgets to war fighting and operational thinking by confronting the war fighters with scarce resources and seeing how they decide to use those resources to win fights. This would enable us to stretch our dollars as far as possible and manage risk across acquisition programs in a comprehensive and holistic way. The budget-based war game deserves further exploration. AFJ
KEITH BROWN is an economist and operations research analyst with the Phoenix Group, specializing in military experimentation. He has more than 10 years’ experience as an economist and operations research analyst at the Federal Communications Commission, the Center for Naval Analyses and the Phoenix Group, and holds a Ph.D. in economics from Texas A&M University. The views expressed here are the author’s own and do not necessarily reflect those of the Phoenix Group.