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Using Data Envelopment Analysis (DEA) for measuring efficiency in the Defense Sector

Ivan Okromtchedlishvili

Abstract: The way to improve the efficiency and effectiveness of public spending, which is a top priority for any government in any country, implies the introduction of Performance-Based Budgeting (PBB). One of the more advanced government-wide performance budgeting systems that uses performance information systematically in the preparation of the government budget is program budgeting. It is important to keep in mind that without systematic development and use of program performance information and adequate and effective performance indicators, program budgeting in the defense sector does not make sense as a tool to improve the efficiency and effectiveness of the defense resource management process. Only by defining and tracking success can it be known if the defense organizations and units perform efficiently and effectively. In this article, data envelopment analysis (DEA) was considered as an excellent mathematical programming tool that can be used to measure, evaluate, and analyze the efficiency of the defense organizations, in particular of the infantry battalions of the infantry brigades under the Eastern and Western Commands of the Georgian Defense Forces (GDF), on the delivery of readiness. A sample DEA model was proposed to measure the efficiency of the abovementioned units. Some recommendations to facilitate the use of the DEA and other statistical tools to measure and evaluate the performance of the GDF units were also proposed.
Keywords: DEA / efficiency in the Defense / infantry / GDF / budgeting / model / measure the efficiency / defense organizations / performance information

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