Defense Business Operations Fund (DBOF): Problems and Promise

In 1991, the United States Department of Defense established the Defense Business Operations Fund (DBOF). The DBOF includes support activities with a business volume well in excess of $80 billion annually, and it provides activities and services that are essential to the operation of the military forces. The necessity to reduce the defense budget and to find innovative ways of producing more defense than would be possible under prior operating and management arrangements caused the Department of Defense (DoD) to look to alternative economic and business models. The changes made are dramatic. The implementation has not gone as smoothly as some observers expected, and Congress and former Secretary of Defense Aspin each considered reversing the innovation. This article addresses the problems and the promised improvements in the context of the economic and management concepts undergirding the DBOF, concepts that are dramatically different than those previously applied in the DoD