1
Introduction

BACKGROUND

New Challenges

In military planning, resources are never sufficient to achieve all that leaders want to do with the desired minimal level of risk. In addition, over the past 15 years, the Department of Defense (DOD) has faced a constant stream of new challenges. Now, rather than being prepared to face a major Soviet threat and a few major regional contingencies (e.g., North Korea) in conventional warfare scenarios, the United States must be prepared to respond to a larger number of more diverse scenarios with varied attributes and to do so in circumstances involving complex and uncertain risks. There has always been uncertainty about threats to U.S. interests, but today, the scope of uncertainties is better recognized, making it more difficult to decide what quantities and qualities of forces are preferred within available resource limits. Decisions need to be based on assuring flexible capabilities. Changes that have contributed to this need include the following:

  • In the not-too-distant past, planners often assessed the adequacy of U.S. air forces, naval forces, and ground forces separately. They performed analyses in which the Services’ forces were used to a large extent independently, a reflection of reality. Over the past decade or so, however, the United States has placed great emphasis on increasing jointness, and in today’s networked world, the necessity for this emphasis, including jointness at smaller unit levels within the Services, is more apparent than ever.



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Naval Analytical Capabilities: Improving Capabilities-Based Planning 1 Introduction BACKGROUND New Challenges In military planning, resources are never sufficient to achieve all that leaders want to do with the desired minimal level of risk. In addition, over the past 15 years, the Department of Defense (DOD) has faced a constant stream of new challenges. Now, rather than being prepared to face a major Soviet threat and a few major regional contingencies (e.g., North Korea) in conventional warfare scenarios, the United States must be prepared to respond to a larger number of more diverse scenarios with varied attributes and to do so in circumstances involving complex and uncertain risks. There has always been uncertainty about threats to U.S. interests, but today, the scope of uncertainties is better recognized, making it more difficult to decide what quantities and qualities of forces are preferred within available resource limits. Decisions need to be based on assuring flexible capabilities. Changes that have contributed to this need include the following: In the not-too-distant past, planners often assessed the adequacy of U.S. air forces, naval forces, and ground forces separately. They performed analyses in which the Services’ forces were used to a large extent independently, a reflection of reality. Over the past decade or so, however, the United States has placed great emphasis on increasing jointness, and in today’s networked world, the necessity for this emphasis, including jointness at smaller unit levels within the Services, is more apparent than ever.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning In recent years, the nation’s adversaries have come to recognize that they cannot deal with U.S. forces head-to-head and must therefore adopt what are sometimes referred to as the tactics of asymmetric warfare. And, of course, the war on terrorism has had profound and continuing effects on U.S. operations, including the extremely deep operations into Afghanistan and the increased emphasis on the need, upon occasion, to strike preventively at adversaries abroad, rather than planning only for response operations (e.g., Operation Iraqi Freedom). As a result of these and other factors, the current world environment has created an increased demand for assessing the capabilities of packages of different types of forces with the expectation that they will need to be used in many different ways, some of them unanticipated.1 New Opportunities In addition to the demand to respond to new challenges, technological advances and innovative thinking by U.S. warriors and planners provide the opportunity to develop new and different concepts of operation for using both older collections of force units and new types of force units. Thus, even if U.S. adversaries were not adaptive in responding to U.S. military operations, there would be a continuing need to assess new combinations of technology and military tactics, techniques, and procedures. Antecedents of Capabilities-Based Planning It is not new to the DOD to assess varied aggregations of different types of military units for use in a wide range of circumstances so that decision makers can decide how best to allocate resources among them. Nor is the concept of assessing “how much is enough” (i.e., the magnitude of capability at which decision makers believe that the risks in the given area are tolerable and that additional resources should instead be applied to a different area). As noted in a recent monograph, “capabilities-based planning is not all new, to either DOD or elsewhere. Many historical instances of related reasoning can be found, albeit sometimes by different names.”2 The same publication cites a number of ex- 1   See especially Secretary of Defense Donald Rumsfeld, 2001, Report of the Quadrennial Review, Department of Defense, Washington, D.C., September. See also information available at <http://www.mors.org/cbp/read/AA-Korean-Presentation-Early-Spr.pdf>. Last accessed on October 18, 2004. 2   Paul K. Davis. 2002. Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, National Defense Research Institute, RAND, Santa Monica, Calif., p. 67. For further discussion of how secretaries of defense have usually thought in terms of capabilities, see the introductory chapters of the same author’s earlier book: Paul K. Davis, 1994, New Challenges in Defense Analyses: Rethinking How Much Is Enough, RAND, Santa Monica, Calif.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning amples, including those from strategic nuclear planning in the 1960s, strategic mobility, and naval presence. Regarding strategic mobility, for example: The Office of the Secretary of Defense’s analysis of strategic mobility issues has been particularly important over the years because funding of related systems has never been a natural organizational priority. No example of planning has ever been more obviously “capabilities based” than mobility planning, in that everyone has always understood that our strategic-mobility systems would be used in a vast range of circumstances. Scenario-based studies were … useful … [but the] scenarios were not something to be narrowly optimized against. [Looking across the scenario analysis:] It was concluded that the metric of millions of tons of miles per day was broadly useful; a sequence of studies generated reasonable goals that were then used to monitor and enforce program initiatives.3 Thus, in this work, scenario-based analysis was essential, but the conclusions and abstractions were more general and more robust. While the principles of capabilities-based planning are easy to understand, they are more difficult to implement. Successful implementation requires a strategic sense, analytical thinking, applied common sense, and the questioning of assumptions (even of “blessed” assumptions). It also requires building knowledge about the particular areas of concern by small groups of personnel with a mixture of skills. Defining and analyzing the right statements of issues for analysis and decision are difficult tasks that involve much more than the development or running of large, complex, and inflexible models, which often bury issues and preclude exploration. THE NAVY’S CURRENT PROBLEM AND CHALLENGE The Navy needs to excel at capabilities-based planning (CBP) for at least two reasons: (1) to maximize the effectiveness of the resources that it receives and (2) to be a credible participant in the larger DOD arena, in which capabilities-based planning is the primary process that the Secretary of Defense is currently using to guide and assess Service program proposals. Moreover, as noted above, external demands on the DOD and continuing technological changes with the promise of new opportunities will require good capabilities-based planning and analysis to assist many future CNOs, secretaries of the Department of the Navy, and secretaries of the Department of Defense. 3   Paul K. Davis. 2002. Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, National Research Defense Institute, RAND, Santa Monica, Calif., pp. 69-70.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning The challenge for the Navy is to excel in doing its internal capabilities-based planning and analysis and to positively influence the larger DOD community in the development of the DOD-wide processes. The challenge is particularly difficult both inside the Navy and in the larger DOD environment because there is not yet a consensus within the DOD on precisely what CBP is. Part of this lack of consensus arises from trying to integrate the former, somewhat independent decision processes for (1) overall resource allocation (programming and budgeting), (2) development and approval of “requirements” for new acquisition systems (for both hardware and software), and (3) the management of those acquisition systems. Integration will require breaking the cultural mold that many members of the Office of the Secretary of Defense (OSD), Office of the Joint Chiefs of Staff (OJCS), and military department staffs are reluctant to forgo because they believe either that the systems can operate more or less independently, or that the decision system that they themselves primarily support should be dominant in some sense. Currently, the three systems converge only at the level of the Secretary/Deputy Secretary of Defense. The Navy will have to address the same types of integration issues across its own “stovepipes” and work with the OSD and OJCS staffs as they do so department-wide. The Navy faces many major substantive programmatic challenges that should provide its leadership with strong incentives to improve capabilities-based planning and analysis activities. Three particularly difficult challenges are as follows: Preparing a future Navy that can both (1) carry out joint expeditionary operations in, for example, Iraq and Afghanistan in the Middle East and in South Asia, and (2) preserve traditional strategic dominance of the seas against countries such as China that might seriously compete for it. These two strategic missions potentially require two different types of navy. Since the United States can deploy only one navy, the CBP task is to help determine the proper mix of both types of asset. Possibly reconsidering the vision of a larger fleet. The Navy had a vision of expanding the number of its ships to include a fixed number of different types in each category. In reality, it is not likely to possess procurement budgets big enough to fund this vision. If not, it will have to make do with fewer ships. The CBP challenge is to help determine if a smaller fleet should be based on the earlier version but with fewer ships of each type, or on a different mix of ships to be deployed (e.g., proportionately fewer submarines and more destroyers). And with CBP, the output focus needs to be on capabilities, not on numbers of ships. Reducing operations and maintenance (O&M) spending in order to increase funds for the procurement of new ships. An analytical challenge arises in this area because the Navy’s O&M and procurement accounts cannot readily be compared. The CBP challenge is to develop metrics for both that can be compared for budgeting purposes, thereby allowing better judgments to be made

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Naval Analytical Capabilities: Improving Capabilities-Based Planning about the relationships between opportunity costs and marginal returns as resources are transferred from one account into the other. In the time allotted for this study, the Committee on Naval Analytical Capabilities and Improving Capabilities-Based Planning did not address these challenges, nor did the Navy provide the committee with briefings about any ongoing work to use CBP to assess these challenges. Moreover, as is discussed in Chapter 3, there is no evidence that the Navy has yet developed or acquired all of the analytic tools needed to address this type of portfolio-management issue. However, with improved capabilities-based analysis, the Navy leadership could improve its resource allocation and achieve a better future Navy. CAPABILITIES-BASED PLANNING OVER THE LONGER TERM The briefings that this committee heard and the work that it reviewed to prepare this report in response to its tasking were focused predominantly on hardware systems and operational aspects of Navy forces. Over the longer term, for capabilities-based planning to be most effective for the Navy, and for the DOD, it must be applied to all aspects of Navy (and DOD) programs. As noted, but not emphasized, in the Joint Defense Capabilities Study (referred to as the Aldridge Study) done for the Secretary of Defense, “a large percentage of DOD’s resources is devoted to enterprise operations … a wide range of necessary and vital support functions that enable the Department to prepare for, deploy to, execute, sustain, and rapidly recover from its military operations.”4 The study team points out that the DOD’s investment in these enterprise operations and the resulting capabilities must be accounted for in the resource-allocation process, but the study does not address this large portion of the defense program in depth. The enterprise operations referred to above are roughly the same as the activities that a report by a previous Naval Studies Board committee called the infrastructure in its broadest sense, as defined by the Joint Chiefs of Staff (i.e., all activities that provide support or control from fixed bases of operation).5 According to that report, the Navy infrastructure accounts for about 40 percent of Navy resources, compared with about 30 percent for Navy modernization (research, development, testing, and evaluation (RDT&E) and procurement) and about 30 4   Joint Defense Capabilities Study Team. 2004. Joint Defense Capabilities Study: Improving DoD Strategic Planning, Resourcing, and Execution to Satisfy Joint Requirements, Final Report, Department of Defense, Washington, D.C., January, pp. 3-7. The study was led by outgoing Under Secretary of Defense (Acquisition, Technology, and Logistics), E.C. “Pete” Aldridge, Jr. 5   National Research Council, Naval Studies Board. 1998. Recapitalizing the Navy, National Academy Press, Washington, D.C.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning percent for Navy operations (the operation of force units at sea and those that fly, including the manpower directly associated with them). Thus, it can be seen that capabilities-based planning and analysis activities limited to force operations and their modernization would exclude about 40 percent of the Navy’s dollar resources. As the Navy works over the longer term to fully implement capabilities-based planning, enterprise/infrastructure functions need to be included. It is also important to relate the inputs to these support functions to the ability of current and future combatant commanders to carry out the missions assigned to them now and in the future. If some parts of manpower, personnel, communications, and other support activities cannot be directly related to the needs of current or future combatant commanders or to the DOD’s ability to implement missions assigned to it by the President, they should be candidates for possible reduction or elimination. There are also other reasons for using capabilities-based planning and analysis to address critical support functions. For example, (1) the organization and training of individuals and force units directly affect the readiness and capabilities of the force units, and (2) manpower and personnel policies both affect the readiness and capabilities of force units (possibly at very different times). The elements in these examples also affect each other and thus can conflict if not well integrated and assessed together. Over the longer term, the Navy (and the DOD) needs to review the resource allocation of the entire set of programs of the Navy (and the DOD) using the same capabilities-based planning and analysis principles and processes. Not to do so would risk a maldistribution of resources and the possible placement of unnecessary risk on the combatant commanders and their operational forces. FOCUS OF THIS REPORT Given the short duration of the committee’s review, it would have been inappropriate in this report to attempt a definitive critique of the topics listed in the terms of reference for this study (see the Preface of the report). This was especially true because the Navy’s efforts are evolving rapidly, and some of the impressions that the committee obtained from the review may be overtaken by events. Thus, Chapters 3 and 4 focus largely on principles and include some suggested checklists that may be of enduring value to Navy leadership. The report includes some more-detailed critique, but it does so only tentatively, to indicate where problems exist and may persist unless intervention occurs. Consistent with this philosophy of avoiding the ephemeral, the committee also based its assessments largely on published Department of the Navy documents and on a very few key briefings presented to the committee at its July 27-29, 2004, workshop (see Appendix B). When laying out recommendations for

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Naval Analytical Capabilities: Improving Capabilities-Based Planning how to proceed with capabilities-based planning, the committee drew on the philosophy clearly expressed on the subject by the Secretary of Defense, on published work cited earlier drawing on a decade’s study, and on the personal experiences of its members. ORGANIZATION OF THIS REPORT Chapter 2 contains an overview of capabilities-based planning principles and associated risk allocation considerations. Chapter 3 presents observations and recommendations on the Navy’s conceptual framework, analytic tools, and personnel and organizations and their relationship to the Navy’s development of its internal capabilities-based programs to meet Navy goals. Chapter 4 offers the committee’s understanding of how the Navy is participating in the ongoing joint capabilities-based processes underway in the DOD and, in particular, those involving the OSD and the OJCS. The committee also offers some recommendations as to what the Navy should do to improve its contributions to important joint defense capabilities and the related process. Chapter 5 addresses additional inputs and assessment areas that could not be covered within the committee’s limited work plan and that could be of benefit to the Navy in improving its analytical activities and capabilities-based planning.