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Matching Funding to Strategy at the FBI’s Office of the Director

October 24, 2019
How can you exercise financial discipline while also meeting unimpeachable standards of quality? It is a demand faced by those charged with financing some of the most sensitive functions of our government – in the Federal Bureau of Investigation. On the one hand, their central mission is to keep us safe – and to that end, no expense should be spared. On the other hand, they must be responsible stewards of taxpayers’ money – only spending what is necessary and maximizing the return on dollars spent. Failure on either front is an easy target for public and congressional scrutiny. This is one of the challenges for today’s FBI.

The most important guiding principle is the matching of funding to strategy. When funding levels and strategic priorities become misaligned, potential drawbacks are twofold; not only can FBI divisions be left with insufficient funding to adequately fulfill their crucial missions, but a door can also be opened to frivolous or outsized spending of taxpayer dollars on items and programs which are not strategic priorities. In either case, the strategic return on dollars spent is diminished. Trade-offs between competing priorities naturally exist and must be understood, and agile processes and efficient allocations must be employed to ensure that the FBI’s finances align with its strategy.

Budgeting at the FBI

Financial planning is already different at government agencies than at private companies. At private companies, if cash is running low, additional funds can under usual circumstances be gathered from investors to fill the gap. But most government agencies, by law, cannot spend any money that has not been specifically appropriated and authorized by Congress in advance. Careful upfront planning is therefore necessary to ensure that strategically important programs will have sufficient funding when the time comes to execute their missions. When the mission is law enforcement and protecting national security, as it is at the FBI, the stakes are higher.

This summer I had the opportunity to join the Administrative Management and Analysis Unit (AMAU) of the FBI’s Resource Planning Office (RPO), the unit that, among other functions, guides strategic financial planning decisions for 17 divisions and offices. As non-investigative entities they account for a small portion (less than 2% in fiscal 2018) of the FBI’s total budget, but being housed under the Office of the Director (DO), they are crucial in setting the FBI’s direction.

Budgeting at the FBI is a two-step process. AMAU first helps each division formulate a base budget, termed a Zero Base Resource Allocation (“ZBRA”), for the upcoming fiscal year and allocate that allotment among programs, contracts, and other various products and services. But that does not necessarily represent all of the money that will be available for the division to spend. As the fiscal year progresses, RPO also helps the divisions secure additional funding as it becomes available.

Where It Can Go Wrong

One might reasonably assume that this two-step system would work itself out – that funding and strategy would naturally align, with the most strategically important programs being the first to see funding. But you would be surprised. Even if money eventually reaches the right places, relying on supplementary funding as a backstop can give rise to significant budgetary inefficiencies. Below I will highlight some of the more glaring examples: FBI.gov, the FBI’s website managed by the Office of Public Affairs, is significantly underfunded. Operating and supporting the website is a multimillion dollar program annually, but is allotted only about one-third of its required outlays in the base budget – requiring supplemental funding for the balance.

FBI.gov’s central importance is self-evident, as it serves as the FBI’s most visible point of contact with the public and is instrumental to public education and employee recruiting. More important from a law enforcement perspective, the website provides a key channel for investigatory tips. Such a predictable and strategically essential need would certainly better be fully financed with annual base funding. The Office of the General Counsel’s multimillion dollar Discovery program is also not fully funded. Discovery is the process by which all of the FBI’s electronic information (e-mails, instant messages, electronic documents, and other data) is located, preserved, reviewed, and, if necessary, produced in litigation. Not only is Discovery a strategically prudent program, but it is required by law. Failure to fully comply may result in fines and/or reputational damage to the FBI. Yet even if the OGC’s entire budget (currently allocated to other things) were devoted solely to Discovery, it still could not fully fund the program.

The Strategic Review Office (SRO) is another long-term strategic asset that is entirely unfunded. Established in 2016, SRO collaborates with contracted management consultants to analyze a variety of FBI-involved incidents as well as steady-state management processes to extract lessons learned and best practices which are then distributed throughout the FBI. Over three years, SRO has produced several comprehensive reports on topics ranging from security at the 2016 political party conventions, to the 2017 Las Vegas shooting, to best practices in personnel accountability. In this way, SRO is a high-return long-term investment towards the FBI’s vision to be “ahead of the threat through leadership, agility, and integration.” Despite being a strategic asset, SRO’s budget is completely unfunded in the base budget.

We can see the problem here. Important programs are left at risk of being temporarily discontinued if supplemental funding is ever either exhausted or unavailable to be distributed. This could be detrimental to the FBI’s potential legal liability (in the case of Discovery), the FBI’s ability to continuously improve and stay ahead of threats (in the case of SRO), and even the FBI’s ability to enforce the law and defend national security (in the case of FBI.gov’s tip line).

What We Can Do

Understanding the problem points to a clear solution – prioritize programs based on their strategic importance and ensure that funding flows to the most vital programs first. In many cases, this will involve empowering financial managers to reshuffle budgets. In some cases, it may involve allowing unit chiefs less leeway over how they allocate their budgets, in order to reduce agency problems.

Thankfully, AMAU budget managers have already embarked upon efforts to rightsize the FBI’s budgets. In many cases, additional funding has been secured. Most importantly, new money has not simply been distributed pro rata; rather, new budget dollars have been redirected to some of the most strategically important programs that had been historically underfunded.

One of the most conspicuous victories has been at the Insider Threat Office (INTO) – the group tasked with identifying and eliminating espionage within the FBI’s own ranks – and, of course, preventing it before it can occur. INTO is charged with preventing another Robert Hanssen, a FBI special agent who spied for Soviet and Russian intelligence agencies from 1979 – 2001, selling the KGB thousands of FBI documents detailing U.S. intelligence-gathering strategy (he is currently serving 15 consecutive life sentences without possibility of parole). INTO is a strategic priority for the FBI, and the national security value of having it be fully-funded is clear. But as an office stood up on its own only recently, INTO lacked for several years nearly any base funding of its own – relying almost solely on supplemental funding to execute its crucial mission. For 2019, INTO was able to secure a multimillion dollar budget to cover mostly all its expenses.

Progress has been made, but the work continues. The challenge, in part, is to find the most cost-efficient way to fulfill the FBI’s crucial mission. To accomplish that mission, it has a set of strategies. But strategies must be financed. The more closely aligned the financing is to the strategy, the more effectively and efficiently the mission can be achieved.

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

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