Nov. 20, 2017 —
In April of 2012, in response to an earlier request by Guatemala’s Minister of Defense, then U.S. Deputy Assistant Secretary of Defense for Western Hemisphere Affairs Frank Mora offered the Guatemalan Ministry of Defense (MOD) support in developing a national defense policy and broadly improving the Ministry’s budgeting processes. Within four years the MOD had published a National Defense Policy (NDP), produced program budgets, altered the military force structure, and introduced greater transparency and accountability in its financial management systems. These results were made possible by the establishment of a governance system that afforded the Minister a management platform, which allowed him to make strategic decisions about defense contributions, including weapons programs, required military capabilities, future force design, and budgets. The transformation of the MOD from an organization still shaped by the legacy of past civil wars into an institution operating on the principles of good governance—efficiency, effectiveness, transparency, accountability, and based on the rule of law and respect for human rights—is an exemplar of successful defense institution building (DIB).
The Minister’s request was rooted in a broader government-wide effort to address significant challenges in the national security sector. The government of Guatemala, led by newly-elected President Pérez-Molina, sought to revitalize the government’s national security architecture and attend to the country’s new realities and challenges. The peace accords ending the country’s civil war had been signed 20 years earlier and although the security environment had dramatically changed, the government’s thinking and approach to security and defense had not advanced to keep pace with these changes. The state was no longer battling insurgents intent on a government overthrow. Instead, new, complex, and adaptive threats—e.g., gangs and trans-national criminal networks—had long replaced the earlier challenges and were producing fundamental challenges to basic citizen security, which the government was not prepared to address. Encumbered with the tools of the past, the responses were wholly inadequate. The government’s understanding of national security also required updating prior to beginning an effective, whole-of-government transformation to address Guatemala’s new realities, and in order to provide a foundation for reforms in the security and defense sectors.
The changed context was not the only driver of reform. The MOD was not producing sustainable and effective defense contributions. The state of affairs in the Ministry and the armed forces was dire: years of mismanagement and corruption had contributed to a hollowed-out force, with the spoils going to a few well-connected and well-positioned individuals. The military was conducting missions for which it was not equipped, fully trained, or adequately resourced; furthermore, full legal authorities were not always provided, putting the troops at risk even when carrying out their orders. The structure of the armed forces was inefficient and didn’t support the operations being conducted. There also were no standardized planning processes to speak of to produce military capabilities, leading to unsustainable acquisitions that were disconnected from the country’s true defense needs. Budgeting processes were not responsive to strategic planning requirements, and it was nearly impossible to trace and therefore audit the money trail. Finally, the Minister simply did not have adequate tools, processes, or structures in place to effectively govern the Ministry.
Turning this situation around would be a heavy lift; however, the U.S. Department of Defense (DOD) support to Guatemala was able to generate the results it did because it took a holistic, top-down approach that considered the institution and its key elements and allowed the MOD to perform at higher levels. Stated differently, the reform effort was focused on improving governance at the institutional—not process—level, which addressed the root causes of inefficiency. Throughout the effort the MOD’s reform team worked within existing structures and conducted a critical redesign of key institutional elements, aimed to improve overall governance through the establishment of a high-level integrated governance system.
The effort provided the Minister with modern management tools to produce an effectively governed defense institution. Throughout the implementation of the reforms it was critical to evaluate the outcomes not just on their face value, but also in terms of how the reforms were contributing to improved governance. The outcomes could be analyzed in two ways: first, in how they allowed the MOD, through improved ministerial capacity, to produce better outputs. Determining this can be somewhat straightforward, as these results are largely visible and measurable, with evidence (or lack thereof) being produced as outputs of various processes (e.g., new program architectures or budgets), or through the visible implementation of new systems and processes. Second, the outcomes could be analyzed in terms of how they worked to improve governance. This is more difficult to measure but is required, as improved governance was the ultimate objective. Many of the outcomes observed from the Ministry’s reform effort provided indicators that good governance was in fact being exhibited in the functioning of the defense institutions in Guatemala, and that those indicators were a direct result of new mechanisms and paradigms resulting from the Ministry’s reforms.
The purpose of this chapter is to tell the story of the defense reform effort in Guatemala. It explores the drivers and approaches to the recent defense reform effort and focuses primarily on the outcomes and significance of the reforms, viewed through the lens of how they contributed to or were themselves the result of improved governance and management practices. This case study and documentation of some of the observed outcomes, contributes to the growing body of knowledge on “how to do DIB.”
Admittedly, one significant limitation of this analysis is that it is not informed by an independent evaluation of the program implemented in Guatemala. Rather, the analysis relies largely on personal observation, conversations with key leaders in the Guatemalan defense and security establishment, and a large body of reporting produced by the country project leads (of which the author is one). The lack of a framework for evaluating defense reform projects is discussed elsewhere in this book and represents one major shortcoming of the DOD DIB efforts.
Drivers of Defense Reform
2008 provides a natural point to begin discussing reform efforts in Guatemala. In that year the Guatemalan Congress passed a National Security System Framework Law that established a National Security Council and a Technical Secretariat (Secretaría Técnica del Consejo Nacional de Seguridad [STCNS]) to direct it. In 2012, newly-elected President Pérez-Molina sought to ensure the full implementation of the law’s requirements. In particular, he charged the STCNS with developing three of the legally-mandated documents: the National Security Policy, the National Security Strategic Agenda, and the Strategic Plan for National Security. Several attempts produce these by the previous President had all ended in failure. As the Minister would do later, President Pérez-Molina approached the United States seeking assistance on this initiative, and this was eventually provided by DOD under the aegis of a more comprehensive NSC-directed response to rising violence in Central America. This support to the government’s effort led to Guatemala’s first-ever National Security Policy, published in July 2012; the Agenda followed in October of that year, and the Plan one month later. Together these three documents included a candid account of the state’s many security challenges and the resultant social ills that accompanied them, and provided not only policy guidance and objectives to the government but also established roles, responsibilities, timelines, and even checklists for completion of key actions.
Beyond producing documents, the STCNS, guided by DOD’s governance subject matter experts, sought several outcomes: among these, establishing a new concept and understanding of national security; identifying the broad functions and objectives for the state, through its National Security System (NSS) and National Security Council, to implement these new concepts; and creating mechanisms to ensure the government actually performed these functions. The STCNS was cognizant of the need to not only draft policy guidance, but to ensure policy implementation, compliance, and enforcement as well—the STCNS was thinking about governance in the national security sector. The DOD support to this effort deliberately considered and worked toward an outcome where the policies and strategies produced did not become coffee-table books but were in fact documents that could be implemented and guide the government’s agendas.
The documents were premised on several core principles such as transparency in government, the need for policy-budget alignment, transparent resource management systems, efficient and effective governance systems, and the need for institutional maturity. Some key observations about these documents illustrate this:
- The documents acknowledged endemic corruption and the need to address this scourge head-on. The Strategic Agenda in particular faulted “generalized corruption, impunity, [and] a lack of strategic leadership” as factors exacerbating the country’s current state of insecurity.1
- They focused on identifying objectives in order to drive the government to program for deliberate activities, and highlighted the importance of producing measurable results.
- There was an emphasis on the need for results-based management, improving the institutions of the government, and achieving higher institutional performance overall.
- The documents sought to align processes (e.g., planning and programming) and actions across the different ministries in order to produce better outcomes.
- The National Security Policy stressed the need to plan using only current resources, and noted the principles of efficiency, transparency, and accountability required in the management and execution of those resources.
The three documents and their key points fostered meaningful outcomes in national security, by providing guidance to the entire government and giving each ministry a foundation upon which to build. This applied as well to the defense institutions. In fact, these documents can be considered “ground zero” for the reform effort. By defining and establishing roles and responsibilities in the national security architecture, they provided the purpose for the defense institutions—and thereby also scoping their activities—while also giving them meaning and relevance. Absent these characteristics, the defense establishment would be in a position to self-define its attributes and thus its role in the state, undermining attempts at accountability.
The STCNS’s efforts to establish the foundations for a functioning security sector thus sowed the seeds for a reform effort in defense by providing the driver and the justification for that initiative. They also served as an anchor for defense reform while providing the Minister significant political top-cover. With this backdrop, the Minister was on very solid ground when he approached DOD for support.
In addition to drivers at the institutional level and the changed security environment, there were several internal challenges in the MOD generating the need for reform. Defense budgets had shrunk and the Ministry had no processes for prioritizing scarce resources; demands on the military continued to increase but did so in response to ill-defined security and defense requirements; the military’s structure matched neither the missions being conducted nor the resources being requested; defense budgeting processes were opaque, did not respond to policy guidance but rather emergent/tactical requirements, and had few accountability mechanisms; and the military training and education system was mired teaching doctrine of the past—which was wholly irrelevant to contemporary security challenges—with no ability to respond to the demands of the managers of the institution. Compounding these challenges was a lack of a culture of policy or strategy production, let alone one based on a national security framework.
As such, although the Minister’s initial request was centered on achieving discrete objectives—i.e., production of a defense policy and improvements in resource management practices—recognition of those fundamental challenges caused the effort to quickly grow into a broader, holistic undertaking focused on improving overall governance of the defense institution, and it did so with the full buy-in of both the sponsor and recipient nation. Other stakeholders also agreed that only a reform effort for improving the overall management of the institution could produce the results necessary to move the Guatemalan Defense Ministry to a higher level of performance. Working to improve one area would not suffice.
Scope and Methodology
The Defense Institutions Reform Initiative (DIRI) project, a multi-country U.S. program, was initiated in Guatemala in 2012. It is distinguished from others wherein the focus is on one or more specific functions resident in the core defense management processes. DIRI’s point of departure was an understanding that for any sub-system (logistics, resource management, etc.) to perform optimally over the long term, the institutional environment in which that system resides must be attended to. A singular focus on a specific defense function will admittedly improve, sometimes dramatically, the ability of an organization to execute that one function, but that improvement will not produce subsequent gains in the overall management of the larger institution. Furthermore, even dramatic gains in specific processes will not survive in the long term if other processes with which they are integrated are not improved as well, and if deficiencies in the larger system are not fixed. For example, establishing a state-of-the-art logistics management system requires appropriately trained and educated personnel for current and future operation of that system, generating a requirement for improvements in education, training, and professional development as well as the ability to formulate appropriate personnel policies to manage career progression, among many other requirements. This understanding, coupled with the challenges articulated above, quickly shifted the focus of the DIRI project from one of producing specific outputs (e.g., a new policy) or addressing a specific process or groups of processes (e.g., resource management) to one geared to generating outcomes (e.g., improved governance), which would themselves produce those and other outputs.
Put differently, it was that larger system and environment that the DIRI project sought to address. It thus considered the institution and its key elements among those: the normative architecture serving as the “birth certificate” for defense and defining its roles, missions, and functions; the nature and structure of the organizations and the flows of processes through them; and the rules, norms, values, and protocols guiding behaviors and establishing relationships among the different processes and actors throughout the defense institution.
The DIRI project was to work within existing structures and conduct a critical redesign of those elements with the aim of improving overall governance: by working at this institutional level, the project sought to support the MOD in establishing a high-level integrated governance system. The philosophy behind this approach was that there is a methodology that can be applied to produce governance, itself the critical component of generating “institutionality” and thereby actually doing institution building.
One convenient way of understanding the methodology as it was applied is by viewing it as a series of phases: assessment, modeling, prototyping, piloting, and implementation. The DIRI subject matter experts, through workshops and seminars, guided the work of a dedicated defense reform team through these overlapping phases of the project.
The assessment phase, although a necessary starting point, continued throughout the whole effort and initially sought to critically analyze key elements of the defense institutions in order to identify gaps. The focus was not only on providing a baseline, but also generating consensus and a shared understanding of the nature of the problem and key concepts involved. For example, one aspect entailed a review of the normative architecture (i.e., laws, rules, policies, treaties, directives, etc.), which defined security and defense and established the boundaries of their activities, in order to identify what the roles, missions, and functions of the military were supposed to be, and what authorities existed for executing those, and then compare them to actual practices, in the process identifying multiple disconnects and gaps. Another activity entailed identifying how key processes and decisions flowed throughout the organization and why, in order to address challenges in authorities, protocols, and overall functional-organizational alignment.2 In fact, it was during the assessment phase that the project became manifest. In evaluating the nature of their institution, the Ministry teams quickly realized that in order to achieve an objective that could be simply stated as “improving budgetary practices,” there were broad considerations (other processes and systems) that first needed to be addressed. Not doing so would mean gains achieved in year one would be lost in year two, as those improved elements wouldn’t find themselves supported by, anchored in, or integrated with the many other processes with which they interacted.
The modeling phase provided theoretical models demonstrating the flow of key defense management processes in an organization-neutral environment, and exhibiting best practices. For example, for resource management processes, some of these practices could include embedded oversight mechanisms, integrated metrics, connectivity and responsiveness to policy priorities, and integration with other processes. During this phase, the partner would conduct a comparative analysis between the theoretical model and its own process and functional modeling, identifying not only gaps and inconsistencies, but simultaneously producing “best fit” solutions based on existing structures. A fuller understanding of the concept of transparency and the need to achieve it is gained by the partner during this effort, as inefficiencies in current practices are brought into full view, along with what are, at times, obvious solutions.
In the prototyping phase, the partner identified concrete reform recommendations to implement “best fit” solutions, and work as much as possible within the existing structures. These recommendations could be changes in process flows, authorities, organization, and so forth. Change management was key in this phase and continued in the piloting phase, to minimize disruptions as the prototype was tested alongside existing structures to validate the new models. Together, these two phases culminated in the gradual implementation of changes throughout the institution.
The application of this methodology was accompanied by some ground rules. These included ensuring reforms were produced with minimal (and preferably zero) cost, and keeping organizational changes to a minimum, in order to prevent disruptions to existing systems. In fact, as part of the DIRI support, only two organizational changes were recommended and later produced: the creation of a new Vice Ministry for Plans and Policy (in part to perform that change management function), and the elevation of the Inspector General to the level of a Vice Ministry (removing it from under the General Staff and placing it under the Minister, thus opening all MOD activities to auditing and inspection). Other profound organizational and force structure changes came later and are discussed below, but those were produced as a direct result of strategic decisions made by the Minister and other defense leaders, and in response to the implementation of the new governance structures.
Achieving Integrated Defense Governance: Defense Policy
Within a year of beginning the DIRI project, the MOD had published a National Defense Policy, achieving one of the Minister’s specified objectives from the DOD support and serving as a significant, and very public, milestone in the Ministry’s now-broader reform effort. The changes that were being contemplated in the Ministry, as well as those reform elements that had already been implemented (e.g., new planning processes and the way they were to flow through the organization), actually created the requirement for an overarching defense policy that would further direct and guide the reform effort and those new processes, while validating what had been achieved thus far, i.e., it institutionalized them. As such, the institution itself created the condition to ensure that its management (and consequently its outputs) was policy-driven: the NDP was born with built-in legitimacy.
The NDP was a significant outcome in several other, institutionally important ways. Its development flowed from the National Security Policy that preceded it, and it deliberately sought to implement the requirements articulated in that larger policy, thus ensuring that future defense contributions were responsive to and aligned with broader national security objectives. The NDP addressed key concepts required for achieving defense governance and framed those as requirements and mechanisms, allowing the Ministry to better participate in the state’s NSS. For example, in recognizing the need to meet the requirements identified in the NSS, the NDP states, “The best way to articulate capabilities and ever-scarce resources with other government actors calls for interoperability and coordinating mechanisms.”3 It later continues, “the alignment of decision cycles, based on results-based budgeting, is indispensable, and will in turn permit the Ministry to balance available resources with demands for National Defense, reconfiguring military capabilities.”4
Also, similar to the National Security Policy, the NDP included an honest assessment of the state of play in defense. It tellingly noted that continuing on the current path would exhaust resources and capabilities, and that pursuing an incorrect path would lead to catastrophic failure; thus the need to act quickly and in a correct manner (i.e., based on some methodological reference).5 The NDP also noted the gap between capabilities versus assigned missions, the disconnect between executed missions and the current force structure, and the growing demand for military support to internal security roles while still needing to meet traditional defense roles and mission requirements.
By including this assessment and recognizing these challenges, the NDP was also serving notice to the defense establishment that new paradigms were required. It provided extensive guidance to direct the Ministry’s strategic force planning, listing several principles. These included the need to produce multi-purpose, agile, and interoperable military units capable of responding to a range of scenarios; a clarification of the military’s role in internal security support missions; and the need to ensure alignment of military objectives with the budget requests.
The NDP thus provided clear guidance, tied defense contributions into the larger NSS, and began messaging on the new management concepts being developed. It also served to initiate change in the institutional culture of Guatemala’s defense sector: the very publication of a “national defense policy,” which was to be used as a guidebook, and which was deliberately subordinated to “national security,” was a new concept, and one that helped to begin defining and scoping what defense should be.
Achieving Integrated Defense Governance: SIPLAGDE
The Ministry’s response to the challenge of achieving effective governance in defense was establishing an integrated defense governance system, Sistema Integrado de Planeamiento y Gestión de Defensa, known by its acronym, SIPLAGDE. In fact, the first public mention of this was provided in the NDP. The NDP stated that defense planning was going to change and was going to do so based on the establishment of a capabilities-based planning model driven by policy priorities. It specifically named that model SIPLAGDE, “the principal tool for the adequate functioning and development of the National Defense System.”6
The SIPLAGDE is an integrated system of systems designed, developed, and implemented by the Guatemalans as an organic solution to their challenges, in line with their current structures, and responsive to their requirements. Although guided and supported by foreign subject matter experts, its development and subsequent implementation by Ministry-led teams, ensured that the system responded to the country’s and the Ministry’s unique cultural realities and was not an externally-imposed “best practices” solutions. It was developed and implemented incrementally, first as a model on paper for how new processes should flow, and then in reality as those new processes were implemented and executed in accordance with the model.
In the NDP the initial, broad structure of this governance platform was laid out, and as the system matured, it was further refined and developed in other planning and policy documents. For example, the National Defense White Book, published in 2015, goes on to cite the SIPLAGDE as the “Guatemalan version of the so-called high-level integrated governance systems” and lists its overarching objective as allowing the defense establishment “to link the operational activities of its components with the administration of financial resources,”7 noting how the system’s articulating logic is based on value chains—i.e., the production of value added in the conversion of inputs into outputs.8
The system, as briefed publicly by Ministry representatives, consists of four main processes: capability-based planning; performance-based programming; results-based budgeting; and metrics-based evaluations. Each component of the system is itself comprised of several actors, multiple processes, and various subsystems. The system’s outputs include:
- Annual defense planning guidance signed by the Minister
- A proposed force design based on current realities, considering future alternative scenarios, and in line with the NDP’s guidance
- Capability programs required by the force design, and an associated program architecture to produce them
- A defense budget request, aligned with policy, and responsive to capability requirements
While not an exact comparison, it is useful to understand the SIPLAGDE as analogous to DOD governance systems. In particular, the Defense Acquisition System, described by the Department as “the backbone for developing DOD military capability,” exhibits similar characteristics, and while it carries the word “acquisition” in its title, it is in fact a broader governance mechanism, an integrated system of systems that produces, in the end, operational military forces.9 Furthermore, it is one of several governance tools the Secretary of Defense has to manage the Defense Department.
With the SIPLAGDE the Ministry established a governance system and thus achieved another key reform objective; but the SIPLAGDE also represented a broad range of other, institutionally significant outcomes. First, it provided the Minister with a platform with which to make strategic and structural decisions on defense.10 This platform was responsive to his requirements and priorities, precisely because the system was driven by policy directives. Secondly, the SIPLAGDE aligned and integrated various sub-systems and processes, removing system inefficiencies and allowing all processes to work together in producing value-added outcomes. Third, the SIPLAGDE brought stability—a hallmark of good governance—and predictability to the MOD by virtue of being based on fully integrated processes that were transparent, analytical, and repeatable. It fostered “institutionality” by grounding the Ministry and its performance in processes as opposed to personalities, making the functioning of the Ministry personality-independent. That strong integration of the various processes—e.g., ensuring the outputs of one process were required inputs of the next—also strengthened the stability and durability of the system; trying to undo it would be both difficult and disastrous. Fourth, the SIPLAGDE provided the MOD a platform for dialogue with the other ministries (notably those with the financial and planning portfolios) as well as the congress, in particular during discussions on budget requests. With the SIPLAGDE the Ministry was able to clearly articulate the capabilities the requested budgets would provide, the risks associated with reduced allocations, and the direct linkage between the military’s budget request and the government’s articulated policy priorities.11 Finally, the SIPLAGDE served to combat corruption in the Ministry’s financial systems. By establishing new processes to formulate budgets, which included multiple stakeholders and embedded oversight mechanisms, and by adhering to the principle that everything in the budget needed to be clearly linked to articulated military requirements flowing from identified, prioritized mission sets, the system automatically and naturally reduced spaces where corruption could occur. One retired Guatemalan general went so far as to describe the SIPLAGDE as “a straightjacket that would even constrain the Minister” when it came to developing and executing budgets.
It is important to note that the establishment of any system that will produce good governance necessarily includes, as part of its narrative, the idea of combatting corruption. However, the SIPLAGDE was not designed nor ever envisioned as a mechanism to audit past practices; rather, it was a forward-looking project the intent of which was precisely to address the challenges articulated in the NDP (e.g., the misalignment of force structure with missions and budgets) and allow the Ministry to produce better defense contributions. In the process of improving management and planning practices, the SIPLAGDE necessarily increased transparency and accountability, two other hallmarks of good governance.
Considering Resource Management
Reform of the Ministry’s financial management and budgeting systems was always on the table, given an original program objective was improving budgeting practices. As the project progressed, it became apparent that a major overhaul of these systems was required. The Ministry itself clearly recognized it was in a death spiral, even articulating in the NDP what the “end of the road” would look like if things were not improved.
Signs of the many challenges the Ministry faced and that made it perform inefficiently were readily apparent; some were highlighted earlier, including the significant mismatch between assigned missions and allocated budgets, a lack of transparency in how budgets were formulated and later executed, and budgets that responded to emergent tactical requirements rather than long-term policy priorities.
The root causes of these problems lay in the inability to properly manage those resource management processes as one integrated and integral element of the larger institution. The Ministry simply did not have adequate systems to execute these, including those that would implement coherent frameworks for force planning in order to then identify budgetary requirements; link those resource requests with intended outputs and outcomes; execute assigned allocations; and use measures of effectiveness to evaluate the results and inform future years’ budgets. Stated differently, the Ministry couldn’t determine what it needed, for what, how it would use that, and how it would evaluate its decisions.
These management gaps eventually led to the over-concentration of the financial management processes, contributing to these becoming opaque and opening ample space for corruption. The lack of transparency in financial decisions made it nearly impossible, for example, to determine where the money was going—i.e., how the amounts being received were being allocated throughout the force, both in terms of amounts and their responsiveness to force requirements. Furthermore, what items the military did acquire did not fully account for the funds that had been provided to the Ministry. Contracts were being awarded that were grossly overpriced and did not match the military’s mission requirements. Also, there was no subsequent auditing to provide feedback that would highlight this or indicate the effectiveness of what was in fact received. Unsurprisingly, years of operating under these conditions had produced a hollowed-out military that was incapable of sustaining what little capabilities it possessed—an observation the NDP also made—let alone acquire new ones.
This situation also prevented the military from making the most of foreign assistance, including U.S. Security Cooperation. There were no processes to incorporate into the budget foreign funding (which increased the overall budget, displaced Ministry funds and released them for other uses) or to account for the operating costs of equipment received (e.g., for fuel, spares, and maintenance). There were also no processes to consider out-year sustainment costs, or costs associated by additional requirements generated by materiel assistance (e.g., new facilities, or training for personnel to operate and maintain the donated equipment). As in many other countries with similar challenges, the Ministry’s natural tendency was to accept all assistance offered, and when funding dried up for those missions that were being funded, donated equipment would continue to be operated until all cannibalization opportunities were exhausted.
There were thus two main challenges in seeking to fix this situation, one procedural, the other socio-cultural. The procedural one entailed continuing on the reform path, i.e., establishing the processes and systems to produce program budgets responsive to force needs, and everything that entailed. The socio-cultural one entailed managing those actors who were benefiting from the current state of affairs.
The analytical and methodological approach employed in the reform effort provided two critical characteristics that were useful for addressing these challenges. First, it generated the requirement to look at those financial management and budgeting systems. Second, it provided an unassailable approach to addressing inefficiencies and ineffective resource management procedures. These characteristics were important because as the project began to get closer to the locus of major financial decisions, it would begin directly affecting individuals’ wallets and their ability to influence the system for personal gain. The design of the project itself and the NDP’s very public validation of the need to reform created the necessary conditions to continue. Also, by remaining both forward-looking and analytically-based, DIRI’s approach had proposed solutions that could be demonstrated to have improved the Ministry’s performance and were consequently difficult to argue against. The project was allowing the Ministry to identify the cost of “producing defense,” to request the necessary resources, and subsequently to execute programs and measure their effectiveness; basic prerequisites to improving performance. Moreover, by this stage the reform effort had generated significant support throughout the Ministry and General Staff, as officers saw how the implementation of new management models would allow them to produce more effective military contributions and provide demonstrable results.
Since no management process in modern, complex systems exists in isolation—particularly those that produce resource requests—the reform of the Ministry’s resource management processes really began at the start of the reform effort as new methods were being implemented in force planning and new processes established for developing capabilities. What was required was integrating these efforts fully to produce value-added outcomes, as well as incorporating and redesigning the full complement of current budgeting and financial management processes.
With the SIPLAGDE in place, even in its initial, embryonic stages, the Ministry began using modern management tools and best practices to conduct long-term planning, and subsequently prepare budget requests (activities that were now grounded in policy priorities, nested under and responding to national security concerns on the use of the defense forces). In moving to the stage of actually formulating the budget, several agreed-upon core principles were applied:
- Only one, all-inclusive budget, i.e., all programs needed to be reflected and there could be no parallel or shadow budgets
- All programs validated and developed using capability-based planning models
- All funding streams included, e.g., including expected foreign assistance
- Adherence to international accounting standards and good practices
- Resource allocation tied to performance
Discussing the full complexity and processes involved in the Ministry’s budget development and its evolution is not possible here. However, it was during this stage that the other reform elements that had been developed and implemented came together to both “cost” defense and produce the budget to pay for it. The specific examples that follow highlight three of those key reform elements—capability-based planning, life cycle cost analysis, and logistics—and their role at this stage, while also highlighting other outcomes being produced as a consequence of their implementation. Continued process and functional modeling served to guide the effort to integrate these elements.
The modeling of systems, functions, and processes to ensure alignment and correct development was a constant. During this stage it was important that all actors understood how the full system should function in order to produce a results-based program budget as an output, which would be based on inputs from the various sub-systems and ongoing processes throughout the Ministry. The inputs for the budget had to be produced at the appropriate times, requiring the appropriate chronological alignment of different processes; each of these in turn had its own input requirements (e.g., policy directives or defense planning guidance), which also had to be properly sequenced. The integrated nature of the burgeoning governance system became ever-more apparent, and the modeling served to clarify and continue identifying gaps and offering solutions. Modeling also considered the post-budget request processes: assuming an approved budget, how would those resources be received, allocated, executed, controlled, and measured? As discussed previously, by comparing the model with the current structures and processes, the Ministry identified multiple areas that needed to be fixed in order to ensure that allocated resources were in fact applied to the programs, executed according to the established planning (which had generated the requirement for these resources), and measured in order to inform the next year’s cycle. In order to achieve this outcome, new processes, authorities, and organizations would be required.
Capability-based planning drove the formulation of the 2014 military budget, along the way demonstrating the value of analytically-based, objective criteria assessments. The path from strategy and policy to budgets was being clearly established. The new planning paradigms were based on validated mission areas and responsive to articulated policies. Statements were produced to identify the capabilities necessary to produce effects in those mission areas; these generated program options for producing those capabilities. They were built out to identify requirements and costs associated with each, and the selected options were then translated into a budget request, considering fiscal realities.
As part of the budget formulation exercise, in the early months of 2013 all major programs being submitted for calendar-year 2014 funding had to be evaluated against validated capability requirements, their ability to be integrated into the larger force, and their total, life-cycle costs. This evaluation resulted in recommendations to cancel major programs, including one to fund new ships for the navy and another to acquire a major C4I program, which included radars and light attack Tucano aircraft from Brazil. The inability of the responsible agencies to clearly justify these programs in light of the new requirements being sought or the programs’ total costs resulted in recommendations to cancel them. The subsequent and very public termination of Tucano contract (announced by the President himself) made headlines in both the Guatemalan and Brazilian press, with the unexplained, dramatic cost increase of that contract listed as a main reason for the decision.12
Life-cycle Cost Analysis
Life-cycle cost analysis (LCCA) of desired capabilities was a best practice the Ministry began implementing in its budgeting exercise. As with other militaries in the region, the Guatemalans had experience acquiring new materiel (including foreign donations, as indicated above) only to see it cannibalized for spares in the out years for not having considered subsequent operation, maintenance, and sustainment costs. By employing LCCA as another tool, the Ministry was able to make better-informed decisions, resulting in part, as in the example above, in decisions to cancel programs.
LCCA also affected, from the early stages of the reform effort, Guatemala’s outlook not just on programs being requested by different defense components, but also on U.S.-provided security assistance. The Guatemalans now had processes in place that would allow them to determine, first, whether foreign assistance met their capability requirements and could be incorporated without major distortions into their planned force, and second, whether they would be able to sustain and fund that materiel assistance in the out-years. In fact, this recognition of the need to ensure that U.S.-provided assistance would meet the needs of the military and be sustainable once U.S. assistance terminated was a major discussion topic during the first U.S.-Guatemala Bilateral Working Group. It resulted in the establishment of a sub-working group precisely to address the issue and seek mechanisms to align U.S. Security Cooperation offerings with the new planning-programming-budgeting cycles of the Ministry.13 In a self-assessment produced by the Ministry on the reform effort, this issue was also recognized: “We understood that many external assistance programs had been received without considering the ability of sustainment, maintenance, and technical specifications, and that in time the Ministry would not be able to sustain the projects. From then on the SIPLAGDE served to inform the Minister’s decision regarding what to receive and what to request in terms of foreign assistance, in particular from the United States.”14
The role of the logistics system in determining force needs highlighted its inputs and contributions to the budget formulation and execution process, and thus its importance as a defense governance sub-system. It was this governance role—and not the execution of operational logistics functions—that generated the requirement for improvement in this system. This required both internal process improvements and appropriate integration of the logistics function with those resource management processes.
Certain logistics functions, for example identifying and costing the actual resources required to provide certain capabilities, are themselves processes that translate policy into budgets and thus are crucial to defense governance. Understanding this context was important in order to keep the improvements being sought in logistics management aligned with the overall effort to improve the Ministry’s functioning.
The Logistics Support Command (Comando de Apoyo Logístico, CAL) had been created to perform consolidated logistics planning and acquisition, but had not fully executed those missions in part because lacking budgetary control authority, several functions, including contracting and acquisitions, had largely remained concentrated with other financial management functions in the MOD’s Finance Directorate. Furthermore, there were no processes in the military to accurately account, down to the unit level, for allocated funding and equipment (e.g., inventories and utilization rates); as such, there was also no data available to inform future planning and budgeting decisions.
Those gaps, however, would need to be addressed to allow the CAL to perform its functions. For example, in establishing the SIPLAGDE, the CAL played the major role in the performance-based programming component of the system, through its development of the full portfolio of programs and their associated projects designed to ensure the required, identified capabilities could be acquired and sustained. One output was a comprehensive program architecture that could be costed, in the process performing the policy-to-budget translation function. Creating this new process in the CAL also anchored and integrated the logistics system into the larger governance system. To inform this and other processes, information was needed as to the disposition and performance of previous years’ acquisitions. CAL eventually produced tables identifying utilization rates (e.g., including fuel and spares) and estimated requirements based on each unit’s table of organization and equipment (TOE), operating conditions, and assigned missions. While supporting the upcoming year’s planning process, this new visibility throughout the force also provided the CAL information, which allowed the Ministry to make informed decisions on operational-level issues such as fuel distribution. For example, where previously fuel quotas were determined using the same formula, the introduction of additional variables such as the different fuel consumption of different vehicles, different operating terrain (mountainous jungle vs. city street), and different missions (constant border patrol vs. commander’s vehicle) allowed the CAL to develop a stop-light matrix correlating current fuel supplies with expected requirements based on those variables, and providing a visibility that then permitted informed fuel distribution decisions to be made. The information served not just the CAL but could also be compiled into reports for the General Staff and even the Minister. This and other examples in developing the force’s logistical requirements began yielding cost savings through the identification and elimination of excesses that were previously unaccounted for, and through improvement of inefficient distributions of resources, while helping to constantly evaluate requirements for future years’ budgets.
In focusing on improving the Ministry’s budgeting processes then, these elements—continued modeling, implementation of a capabilities-based planning process to identify requirements, LCCA, and the logistics system’s role in governance—were only a few of several that were required in order to achieve that outcome. The mechanical exercise of creating a budget thus relied on system-wide inputs from processes that resided throughout the organization. The interrelated nature of these provided built-in oversight mechanisms while simultaneously producing transparency and accountability. More importantly, they were also generating increasing requirements for transparency and accountability in other processes in order for the full system to function appropriately, a conclusion further supported by the analytical modeling.
Resource Management Reforms
Those requirements, along with the need to continue seeking efficiencies, induced the Ministry to produce directives establishing new procedures in two areas; contracting and acquisitions, and budget control and execution. These policy directives were significant in that they formally began to break apart the largely singular and somewhat insular process for financial decisions resident in the Financial Directorate. By deliberately introducing inefficiencies at the lower, process level, the larger system would gain in efficiency; this was captured pithily as, “he who requests doesn’t pay; he who pays, doesn’t receive; he who receives, doesn’t use.” By making different actors responsible for different processes in the financial management system, the Ministry was also establishing additional, embedded oversight and accountability mechanisms.
These directives brought the contracting and acquisition functions to the CAL (generating the establishment of a new office to perform them); it also designated 12 defense organizations as budget execution units with associated cost centers, providing them authorities and responsibilities for the execution of their respective allocated budgets. The Finance Directorate would have a continuing role, but one significantly reduced in terms of authorities and responsibilities, as the budget execution, for example, would be largely removed and distributed among the 12 organizations.15 These policy-driven reforms in defense were bringing the Ministry’s financial practices in line with the government’s public financial accounting systems, many of which were web-based and publicly accessible, thereby creating additional transparency, accountability, and oversight mechanisms. These were mechanisms that resided outside of the defense institution, allowing not just the government but the people to see where their tax dollars were being spent. These changes also brought the Ministry into greater compliance with current legislation. They were later further back-stopped by congressionally-led changes in the country’s contracting laws, which mandated what the Ministry was essentially on the path to already establishing.16
Several observations can be made about impacts at the institutional/governance level. First is that the system itself was not just identifying problems but also producing its own solutions to them. Notably, the initial specified objectives of the Minister—a defense policy and budget process improvements—were produced not by focusing on those as the outcomes, but by addressing defense governance mechanisms that later produced those as outputs because the system required it. Secondly, key acquisition decisions were being made based on recommendations from the system’s processes—reducing the role of personalities and their influence. Third, the system and its processes were changing the Ministry’s relationship with a key foreign donor, the United States, and elevating the nature of the conversations in that relationship. In this regard we can understand the Ministry’s implementation of governance and management platforms as affecting the foreign policy realm (i.e., relations with the United States) and also implying a changing domestic role for Defense in the government’s internal conversations on foreign policy. Fourth, the role for logistics was re-conceptualized; beyond playing a functional/operational role (getting the forces what they needed), it became a governance sub-system in its own right, and one with critically important responsibilities. Finally, Ministry policy was leading legislative changes. The Ministry was well on its way to implementing new structures to produce financial transparency prior to the law catching up and legally mandating the path the Ministry had already embarked on. These legislative changes further validated, protected, and served to consolidate the reforms implemented to that point.
Restructured Force: Case Study in Governance Outcomes
The initial, reformed processes the Ministry began implementing were the building blocks that generated new forms of governance. As they were being established, they began producing outcomes, several of which have already been identified. As seen above, even as they were being employed for one purpose these emerging governance systems and processes began identifying other gaps, which in turn generated discussions on solutions. The new planning and budgeting processes, for example, highlighted the need for a dedicated office to oversee and shepherd them along, but none existed; after identifying this requirement, the General Staff established the D7 Office of Strategic Plans and Policy to perform those functions, in the process also creating a natural coordination point with the Vice Ministry of Plans and Policy, which had been established earlier in the reform effort.
The most dramatic organizational change that occurred was the reorganization of the military structure into regional commands (RC). There were two main drivers for this change, each illustrating how the SIPLAGDE itself was driving reforms. The first was that these new governance platforms increasingly required more attention from the General Staff, and required that this organization function more like a general staff than an operational Army headquarters.17 Functions like long-term planning, budgeting, and logistics management to support the entire force were consuming more of the staff’s resources and time, necessitating a new structure and allowing the institution to better focus on operations while still managing those staff functions.
The second driver was generated by the actual results being produced by employing new planning frameworks. The establishment of new mission areas and the implementation of capability-generating processes were producing solutions that spoke to a new military structure being required. For example, one mission area addressed what is commonly called “defense support to civil authorities” during events such as natural disasters. Another mission area addressed the need to improve the country’s sovereignty. Further breakdown of this area yielded the need for a greater focus on securing the borders, with the goal of preventing or diminishing the illicit trafficking (in arms, drugs, and people) that was generating multiple internal security problems. Identifying and analyzing the requirements for a command and control structure for these mission areas supported an option in which the forces would be structured differently, in order to achieve efficiencies in this capability. This analysis played into the option being generated that recommended the force restructure.18
The establishment of RCs would relieve the General Staff of daily operational responsibilities, as these would reside with each RC Commander. The existing structure had all of the Army’s eleven brigades responding directly to the General Staff, making the Chief of Defense (CHOD) essentially three-hatted: Chief of General Staff, Army Commander, and Operational Commander. Under the new construct, the brigades would be incorporated into the RCs, removing the operational responsibilities from the General Staff and allowing it to focus on the longer-term development and ongoing sustainment of the force. The RCs would have assigned forces (i.e., multiple brigades) and would operate in a defined area of responsibility, providing the focus and necessary capabilities to meet the operational demands of each mission area.
This course of action was recommended and subsequently approved by the defense leaders. Graphics produced by the Ministry to communicate the changes show this before-and-after transformation:
The “Before” slide, shows the original force structure with 20 distinct units encompassing 15 Army Brigades and disparate Air Force and Navy units, as well as functional command headquarters all reporting directly to the General Staff (JEMDN). The “After” slide shows the new structure of four regional commands each with its assigned brigades, and other units reporting through their functional parent command (Logistics, Education, Strategic, Air Force, and Navy).
The first RC was stood up and a commander named following the publication of a governmental accord in July 2015 indicating its establishment, “With the aim of strengthening peace and internal security in the national territory, and to continue with the process of force design contained in the Integrated Defense Planning and Management System, an organizational restructuring of military units is necessary, to that effect creating the Central Regional Command.”19 Ministry-internal policy directives would later prioritize the stand-up of the other regional commands, along with the resources necessary to ensure their full functioning.
The area of responsibility of the Central RC consisted of four administrative departments, which covered the capital city and three adjacent areas, including part of the country’s Pacific Coast; this RC—and by inference the entire RC construct—would show its value-added months later when in October heavy rains caused major landslides a few miles east of capital city. The military support to the government’s relief operations was provided, coordinated, and directed by the Central RC—not by the General Staff. The new organizational construct facilitated the military’s ability to respond—the forces were already designated, command structures established, and capabilities resident in the RC. The General Staff was in the background ensuring the Central RC’s efforts would be sustained and supported, while being able to better focus on liaison activities with the national government in responding to this crisis.
In addition to the observed and expected operational benefits, the Army’s organizational transformation was very significant in what it represented: this new structure operationalized a strategic vision for defense’s contributions to the government’s national security agenda, as articulated in those normative documents produced by the STCNS. It was a visible manifestation of how the military was transforming in response to national security requirements, and thus to the citizens’ needs—the essence of social accountability.
This structural change was also noteworthy in the several ways in which it supported institution building. For starters, by producing this outcome, the governance platform validated itself: it demonstrated the ability to produce options of both a strategic and structural nature, and to do so guided by governmental policies and strategies. The Army was producing new and innovative solutions (new force structures) employing a flexible and responsive “solutions-producing” system (SIPLAGDE).
The fact that the published government accord specifically identified the SIPLAGDE was also important institutionally. The governance platform, which by now had been repeatedly identified in several official Ministry publications, was being cited by the government as the responsible entity for generating this change: the accord implied the Army was not requesting authority to reorganize, but rather a process within a governance system had produced that recommendation as its output.
The transformation itself produced a new governance sub-system, necessarily integrated into the larger system, and thus strengthening the entire construct. The creation of this sub-system is actually captured above in the “after” slide, which the Ministry titled “Guatemalan Army’s Theater Management System” (SGT-EG). This title carries the recognition that the establishment of this new organizational structure itself created a new management system in the defense institutions. As with the other systems and processes being established, the SGT-EG would be fully integrated and would be cross-cutting across several of those processes—logistics, resource management, long-term planning, etc.—required for defense governance. As stated earlier, the ability to separate any one process or sub-system would become nearly impossible, ensuring the survival of the whole and contributing to overall system stability.
Additionally, in order for each RC to be fully functional it would require financial resources be assigned in order to be executed at that level, further decentralizing budgetary execution. In fact, the Central RC was one of those organizations designated a budget execution unit. The establishment of the RCs would also have an impact on local economies. A factor considered in their establishment was their ability to acquire supplies (e.g., fuel and food) closer to their point of use, something that was not possible with the earlier construct. Each RC would count with the financial resources required, as well as a regionally-based logistics support command responsive to its requirements, allowing them to enter into arrangements with local suppliers, in the process likely reducing overall transit and warehousing costs for the military. These factors could be leveraged to generate greater civil-military relations and cooperation, as military units and the communities in which they resided grew more interdependent.
Finally, in line with the new policies (cost centers) and paradigms (results-based budgeting), the RCs would need to provide data in order to secure resources for future years. This would need to include not just financial accounting for expenses, but operational data to determine how each was performing its mission, in turn contributing to other factors that were generating system-wide requirements for metrics and evaluations.20
These are only a few of the outcomes the Guatemala MOD produced through the DIRI support. There were others, for example the complete revamping of professional military education and officer development to produce future managers and “thinker-leaders,” in turn supporting the sustainment of the reforms. There were also domestic and regional spillover effects as the MOD shared its lessons learned and included “defense governance and institution building” as topics in its engagements.
The top-down approach of the DIRI project—i.e., focused on producing good governance—is what allowed those and other outcomes to be produced. The Minister had requested support to address very specific challenges and produce very specific outputs. The DIRI project delivered those outputs not by focusing on them as key objectives, but by understanding them as expected products from an efficiently functioning Ministry. The issue then was one of improving ministerial capacity writ large, and not one of addressing singular processes. Even at its inception the DIRI project was designed to improve defense governance, and to do so by establishing a high-level, integrated governance system. Furthermore, the project design and its sequencing very deliberately and carefully considered how and when those initial specific outputs would be produced, ensuring the Minister’s objectives would be met, and that they would be achieved within acceptable timeframes. This focus on governance also naturally addressed the Ministry’s critical defense management functions; more importantly, it addressed their relationships and interactions with each other, while improving them in a parallel, integrated fashion, ensuring the management system being created was stable and integrated from the start. With the system in place, the Ministry now had a platform that allowed its leaders to continually produce new solutions to the challenges in defense—and also produce relevant and sustainable defense contributions. The Ministry would be able to determine what kind of military it needed, for what missions, and how much it would cost to produce it.
Also key to success in Guatemala were a variety of favorable factors recognized as necessary for any reform effort, including the presence of key drivers for reform; buy-in from the highest political level, in the Guatemalan case going all the way up to the presidency; a clear champion for change; and several quick wins early on that demonstrated the value of reform and generated additional momentum and commitment to change. Support and buy-in from U.S. stakeholders was also critical to the reform effort, as it communicated continued U.S. support and commitment, while serving as an important acknowledgement of Guatemalans’ accomplishments.
The broader U.S.-Guatemala security cooperation relationship will be key in supporting the continued consolidation and sustainment of the reforms, recognizing that the DIRI effort in Guatemala will have to formally conclude at some point. Rethinking the execution of this relationship, including those considerations that the Guatemalans’ identified in their self-assessment, will be critical so that assistance does not unintentionally undo or distort what they have produced. Forcing U.S. equipment solutions without consideration to their governance cycles and the requirements they generate, is the wrong approach. There are too many examples of donated U.S. equipment being the wrong kind for the partner nation’s mission requirements or being too costly to maintain and operate. How we plan for and provide security cooperation assistance, how we deliver it, and how we work within the Guatemalan Ministry’s constructs and timelines will all need to be reconsidered. Fully understanding Guatemala’s reform accomplishments and thus its new military requirements is a necessary first step. In the end, this will not only provide better support to our partner, but will ensure that our assistance will be maintained and sustained in the out years, and continue to produce value-added military contributions based on their requirements.