Stealth Works in the Budget Too!

First thing: Yesterday’s blog on Shared Services fell flat on the website with only a handful of hits.  I take it the world of Shared Services is not so hot on the list of “interesting” topics.  But there’s still a lot of money to be saved there.  In fact, I would contend that there’s a lot of money floating around in areas that most people don’t find so interesting.  It’s the uninteresting that ironically is the most interesting in terms of budget cutting.  They escape scrutiny during the year-to-year  budget battles, floundering in cash. The big programs which matter, act like a Black Hole, sucking up more and more money with less and less light escaping.  On the other side of the coin, the programs with marginal dollars become the darling of the Pentagon budget cutters.  It’s ooh  so easy to cut a Billion or so from the commissary subsidy program, but try and take $10 Million from the JSF and the fan starts getting hit with “not-so-nice stuff.”  With leaders unwilling to take on the issues that really matter and foolishly focusing instead on the margins, I would suggest that they take a look at the “stealth” portions of the budget, those areas with relatively large dollars, but never targeted for cuts.  Forcing agencies into a shared service environment is one of those areas. (There, I said it and I promise never to write another word on Shared Services!).  When looking at these stealthy programs, there’s virtually no risk of offending a large defense corporation, a Congressman or Senator, or even another Service because they have no constituency.  When I did the budget for the Navy I used to think that out of the $130 Billion or so under my control, every Million had a evangelist waiting in the wings to mount the pulpit and extoll the value of their million over the remaining 129,999 million.

How about the family of Defense Working Capital Funds (WCF) and Revolving Funds?  These funds exist  in the shadows, out of public scrutiny, but with lots of dollars associated with them.  For those of you not familiar with working capital funds I suppose you could relate them to petty cash, or “Walking Around” money.  It’s the corpus of operating cash the Department uses to pay  bills day-to-day.  Here’s a link to short list of many of the DoD funds and what’s in them.  In simple terms, when  Organization A provides a service or item to Organization B, it uses the WCF funds to pay their costs and they bill Organization B, using rates set at the beginning of the year.  A takes money from the WCF and B pays it back (at least in theory).  How much money is in these accounts you ask?  North of $100 Billion…..Yep, that’s correct…$100 Billion!!  One of the reasons there’s so much money in these funds is the requirement to carry 7-10 days of cash on-hand.  In this age of electronic accounting, ERPs and near-perfect connectivity I can’t for the life of me figure out why it has to be so much.  Most of these WCFs have their own accounting systems (Darn! I said I wasn’t going to mention Shared Services again).  To be fair, these funds are as close to being run like a commercial business as anything in DoD, and individually they are generally well managed.  But there’s not a lot of cross-talk, the rates don’t generally reflect the real costs of good and services and they are sometimes used as a cash cow to buy just about anything.

So the next time you hear the DoD poobahs whining about the cost of  benefits, people, etc.,  why not ask them about the Working Capital Funds and what they are doing to trim them back.  I’ll bet you they will have to take that question for the record!  Not in their scan because it’s stealthy money, they don’t understand how it works and would rather slash the margins because of their inability to slash the big ticket items.

 

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