Presentation on theme: "Planning, Programming, Budgeting, and Execution (PPBE) Process"— Presentation transcript:
1 Planning, Programming, Budgeting, and Execution (PPBE) Process I’m __________ and I’ll be discussing PPBE with you today. First, a little about my background…….PPBE is one of the three major decision support systems in the weapon system acquisition business. The other two, JCIDS and the acquisition management system, have already been discussed.Roberta TomasiniProfessor of Financial ManagementDefense Acquisition University
2 Acquisition Program Baseline Commitment Reprogramming From Requirement to CapabilityPlanning, Programming,Budgeting and ExecutionLife CycleCostAnnualFundingCostAnalysisEstimateICEFundingPoliciesFullFunding (Exceptions)FYDP DPPG POM RMDMFP PE BES FEACAIVCCAFiscalEnvironmentIncrementalFundingMBIsPOEAoACongressionalEnactmentHAC HASC HBCSAC SASC SBCPresident’sBudgetBudgetResolutionAuthorization&AppropriationLawsThis chart is intended to show how we get from “Requirement” to “Capability” from a Financial Management perspective…..Starting with the lower left cloud, “Operational Concept”, as this is where it all starts for any discipline in acquisition. Operational Concept is the same as JCIDS plus. It includes the capability documents generated through the JCIDS process as well as a capabilities- based analysis and all acquisition programs have an acquisition program baseline (APB), which is a signed document between the program manager and the milestone decision authority in the acquisition chain of command. The agreement is on cost, schedule and performance parameters for a specific program.Operational concept leads to the first major area of Financial Management (FM), “Cost Analysis”. This includes doing a cost estimate, which is the foundation for the rest of the FM process.The second major area of FM is “Funding Policies”. This involves taking the cost estimate and turning it into a budget. Understanding funding policies is an important part of developing the budget.The third major area of FM is “PPBE”. This is the DoD process for allocating resources. We take a budget and submit it up the chain to get buy-in from our service/agency and OSD. This session will focus on this area.The end of the PPBE process is the president’s budget submission to Congress. This leads to the fourth area of FM, “Congressional Enactment”.The end of “Congressional Enactment” is the Authorization and Appropriation laws, which leads to the fifth and final area of FM, “Budget Execution”. Budget execution relates to actual appropriated funds.Now let’s focus on PPBE.Acquisition Program BaselineOperationalConceptForce StructureModernizationOperational CapabilityReadinessSustainabilityFeedbackCommitment ReprogrammingCapabilities-BasedAssessmentCapability DocsBudget Authority Obligation Expenditure OutlayBudgetExecution
3 PPBE Process and Schedule Capability Portfolio Managers PPBE OutlinePPBE OverviewManagement Systems and PhasesMajor Changes in FY PPBE CycleFront End AssessmentsDoD Efficiencies InitiativeBuilding BlocksFYDP, MFP, Program ElementsPPBE Process and ScheduleCapability Portfolio ManagersMembership of DAWG and SLRGResource Allocation ProcessThis is the outline for the PPBE session.There are couple of overview charts…There are a few charts on the PPBE building blocks…..namely, FYDP (the Future Years Defense Program, MFP (Major Force Programs), and program elements.This will be followed by the timing, key players, and key documents in the PPBE process.Lastly, there are charts of the schedule for this PPBE cycle, which is FY10-15.
4 Three Major DoD Management Systems Planning,Programming,Budgeting andExecutionQDRJoint CapabilitiesIntegration andDevelopmentSystem (JCIDS)DefenseAcquisitionSystem-DoD has three Decision-making Support Systems-1. AMS (Acquisition Management System)-- how we acquire weapon systems-- primary document is DoDI-- also referred to as little “a” acquisition-- event driven process2. JCIDS--determines what is needed-- primary document is CJCSI 3170, which is capabilities-based with more emphasis on jointness-3. PPBE-- resource allocation in DoD – providing warfighter with best mix of forces, equipment and support attainable under fiscal constraints-- increased emphasis on using performance metrics to focus on output, return on investment-- Calendar driven-QDR: the major statement of defense strategy and business policy--MID 913 states that QDR is the single hierarchical link integrating all internal decision processes-JCIDS and AMS are event-driven; PPBE is calendar-driven, backing off from the PB-All three circles form “Big “A” Acquisition
5 Resource Management System PPBE is the Primary Resource Management System for DoD:Articulates strategyIdentifies size, structure and equipment for military forcesSets programming prioritiesAllocates resourcesEvaluates actual output against planned performance and adjusts resources as appropriatePPBE is the primary resource management system for DoD for all appropriated funding – not unique to weapon system acquisition.Only minor changes since developed by McNamara in 1961Allows for DoD to review it’s mission/strategies bottom up every two yearsWhat do we do in PPBE?Strategy - How are we going to defend the nation? National GoalsForces - What are we going to use to defend the nation? to execute that Strategy?Prioritize - Which ones, which programs will be funded now?Resources - How much will be spent on each program?Output - Where are we getting our best return?There are three phases in PPBE as shown on the next chart.
6 PPBE Phases Planning (OSD Policy) Programming (OSD CAPE) Assess capabilities / review threatDevelop guidanceProgramming (OSD CAPE)Turn guidance into achievable, affordable packagesFive-year program (Future Years Defense Program)Budgeting (OSD Comptroller)Test for efficient funds executionScrub budget yearPrepare defensible budgetExecution Review (concurrent with program/budget review)Develop performance metricsAssess actual output against planned performanceAdjust resources to achieve desired performance goalsBrief Overview of PPBE phases: There are three phases: planning, programming and budgeting. The major difference is that we now have a review of program execution/program performance concurrent with the program and budget review (NOT Army’s PPBES)Planning: QDR 2001 shifted the basis of defense planning from a "threat-based" model that dominated thinking in the past to a "capabilities-based" modelCapabilities-based model:– Focuses on how an adversary might fight rather than specifically who the adversary might be or where a war might occur.– Recognizes that it is not enough to plan for large conventional wars in distant theaters. Instead, the United States must identify the capabilities required to deter and defeat adversaries who will rely on surprise, deception, and asymmetric warfare to achieve their objectives.Strategic Planning Guidance (SPG)/Guidance for the Development of the Forces (GDF) and Joint Programming Guidance (JPG): Marching Orders for next phaseProgramming:Components develop Program submissions based on guidance developed in the Planning phaseOSD, OMB & Joint Staff review for priority, affordabilityInfo captured in the FYDPBudgeting:Components develop budget submissionsOSD(C) reviews budget inputs, with emphasis on funds executionUltimate aim, to submit a defensible President’s Budget thru OMB to CongressExecution ReviewOverlays both Program Review and Budget Review processesIn past emphasis on input, “how much to spend on each program”; now emphasis is on output, “what are we getting for our money?”Using performance metrics to examine program executionLet’s look at the years reviewed in the PPBE process…
7 One budget year (was two on the “on years”) 4 Major Changes in the FY PPBE Cycle DepSecDef memo, dated 9 Apr 10DPPG (was GDF and JPG)One budget year (was two on the “on years”)Makes this an annual budget cycle vs a biennial budgetEvery year is a “POM” yearNo more PRs (Navy), APOMs (AF), or mini-POMs (Army)Focus on a 5-year periodChanged FY12-17 period to FY 12-16DOD conducting Front End AssessmentsEight issues with SecDef oversight via the “Large Group”All other issues led by DepSecDef via the DAWG
8 Front End Assessments SecDef memo, dated 11 May 10 Strategic Comm and Info OperationsLong Range Strike Family of SystemsAirborne ISRCyber DefenseGlobal PostureReset of Equipment from OperationsIntegrated Air & Missile DefenseTactical Aircraft
9 DoD Savings and Efficiencies Initiative as of 28 Jun 10 $B FY12 FY13 FY14 FY15 FY16 TotalArmy, Navy, Air ForceDef Agency/Field ActivityCombined Goal
10 OSD (C) Fact Sheet Savings and Efficiencies Initiative Goal: Create more agile, flatter, and efficient organizationMilitary departments can keep their savings and apply to critical areas such asPersonnel in unitsForce structureReadiness to fightInvestment in future capabilitiesGoals will be reviewed annually and may changeInitiatives must be specific, actionable, and measurablePercentage and across-the-board reductions are not acceptableNo organization, including OSD, is excludedMust be in POM/BES FY submission to OSD due 30 Jul 10
11 Better Buying Power USD(AT&L) 14 Sep 10 Memo Target Affordability and Control Cost GrowthMandate affordability as a requirementDrive productivity growth through Will Cost/Should Cost managementEliminate redundancy within warfighter portfoliosMake production rates economical and hold them stableSet shorter program timelines and manage to themIncentivize Productivity and Innovation in IndustryReward contractors for successful supply chain and indirect expense managementIncrease use of FPIF, where appropriateUse 50/50 share and 120% ceiling as point of departureAdjust progress payments to incentivize performanceExtend the Navy’s preferred supplier program to a DoD-wide pilotReinvigorate industry’s IRAD and protect the defense technology basePromote Real CompetitionPresent a competitive strategy at each program milestoneRemove obstacles to competitionRequire open systems architecture and set rules for acquisition of technical data rightsIncrease dynamic small business role in defense marketplace competition
12 Better Buying Power (cont.) USD(AT&L) 14 Sep 10 Memo Improve Tradecraft in Services AcquisitionCreate a senior manager for acquisition of services in each component, following the Air Force’s exampleAdopt uniform taxonomy for different types of servicesAddress causes of poor tradecraft in service acquisitionIncrease small business participation in providing servicesReduce Non-Predictive Processes and BureaucracyReduce number of OSD level reviews…Eliminate low-value added statutory processesReduce by half, the volume and cost of internal and congressional reportsReduce non-value-added overhead imposed on industryAlign DCMA and DCAA processes to ensure work is complimentaryIncrease use of Forward Pricing Rate Recommendations to reduce admin costs
13 Future Years Defense Program (FYDP) Computer database maintained by CAPEContains approved force structure and resources for all Defense ProgramsUpdated two times per annual PPBE cycle:Program Objectives Memorandum/Budget Estimate Submission (POM/BES) – JulyPresident’s Budget (PB) - FebruaryReflects PY, CY, BY, + 4 Out-Years +3 additional years for force structure onlyFYDP (updated CY 2010) would include:FY for force structure & resourcesFY for force structure onlyComputer database maintained by Dir (PA&E)Summarizes forces, equipment, and resourcesComprises one prior year (PY), the current year (CY), the “biennial” budget years (BY1 and BY2), four additional years for resources (POM) and three additional years for force structure onlyIt is a “living” record reflecting the decisions made in the various phases of PPBEUpdated two times per year to reflect thePOM/BES (Aug/Sep), andPresident’s Budget (Jan/Feb) submissionsWhy two budget years?The process was intended to produce a two year budget. However, Congress appropriates one year at a time. So, we have “off-years/odd-years”. Originally, OSD and the Components were expected to “tweak” the 2nd year of the President’s Budget/POM as part of an off year effortAPOM by the Air ForceMini-POM by the ArmyProgram Review by the NavyHowever, there have been changes in this off-year/odd-year process, starting in calendar year 2003.TRANSITION: Let’s take a look at how the FYDP is structured10111213
14 Future Years Defense Program (FYDP) DOD APPROPRIATIONSMilitary ConstructionMilitary PersonnelRDT&EProcurementOps & MaintenanceOtherDEFOAStrategic Forces(1)TIAGeneral Purpose Forces(2)RGHEECommand, Control, Comm, Intell & Space(3)NFNRMAJOR FORCE PROGRAMSAAMobility Forces(4)OCRVIGuard & Reserve Forces(5)RMYCETeaching Points:Data is divided into 11 “Major Force Programs” (MFP) for DoD internal management uses during the planning and programming phases of PPBE.Data is also divided into five Appropriation categories (plus one catch-all “other” category, which simply represents the various other appropriations that exist -- although we in the acquisition community are not normally very interested in their details) for use by Congress when reviewing budget requests and enacting budget authority.Data is also divided into service or component categories.Important to note here that the data in any single category (for example: RDT&E, Army or Strategic Forces) from any one of the three major divisions (i.e., Appropriation, Component or MFP) can contain data from any or all of the remaining two major divisions (for example: Strategic Forces could contain data from all five appropriations and all four Components).The lowest level of detail in the FYDP database is the program element, which is explained on the next chart…..Research and Development(6)YESCentral Supply & Maintenance(7)Training, Medical, & Other Personnel Activities(8)Administration and Associated Activities(9)DOD COMPONENTSSupport of Other Nations(10)Special Operations Forces(11)
15 Program ElementsPROGRAM ELEMENT (PE): Smallest aggregation of resources normally controlled by OSD- PE NUMBER: Used to track and identify resources; seven digit number followed by an alphabetic suffixPROGRAM 1 ( STRATEGIC FORCES )F - B-1B SquadronsF - Peacekeeper SquadronsN - TridentA - Worldwide Joint Strategic CommF - SPACETRACKPROGRAM 2 ( GENERAL PURPOSE FORCES )A - Airborne DivisionsN - Frigates - MissileF - F-22 SquadronsF - Advanced Communications SystemsA - ARMYN - NAVYM - MARINEF - AFD - OSDC - MDAE - DARPAJ - JCSS - DLABB - SOCOMDBD - DFASProgram Elements are the lowest level of detail in the FYDP database.Program Elements are a tool OSD uses to track resources by program, system, or function so they can see how much is being spent on them.PEs can be very broad, containing several programs. They also can be very specific, covering a single component of a weapon system. It all depends on the visibility OSD wants to maintain.These are some examples of Program Elements (PEs), use F-22.Seven digit code followed by a letter suffix designating the applicable component or agency.The first two digits indicate the MFP to which the PE belongs. Although a PE is limited to a specific MFP, it is not in most cases, limited to a single Appropriation.All programs and all resources have PEs. The entire FYDP database can be listed by PE. There are a few thousands of them.Most acquisition programs have two program elements: one that begins with “06” for the development effort and one that begins with something other than “06” for the production and O&S effort.Ref: DoD H
16 FEAs PPBE – Planning Phase President NSS NDS QDR DPPG NMS CPR National Security CouncilCIA/DIA/JCS/OSD~Starts FEB/MAR (1st Year)APR ( DPPG)/Sep ( FEAs)Finish 2nd YearFEAsPlanning Phase focus:Threat vs CapabilitiesUpdate strategyGuidance for programmingUnder direction of CAPENSSFEAs to be a strategic viewused to inform program/budget reviews.To Concurrent Program/Budget ReviewNDSQDRDPPGOSDLevelJCSNMSCPRLevel(JCS,COCOMs,SERVICES)CIA – Central Intelligence Agency;COCOM – Combatant Command; CPR – Chairman’s Program RecommendationDIA – Defense Intelligence Agency; DPPG –Defense Planning &Programming Guidance; JCS – Joint Chiefs of StaffNDS – National Defense Strategy; NMS – National Military Strategy; NSS – National Security StrategyOSD – Office of the Secretary of Defense; QDR – Quadrennial Defense Review; FEA – Front End Assessments
17 Concurrent Program/Budget Review JULDECOCTNOVFEBFEAs Continued3-Star GroupOSD CAPE/OMBIssueResolutionPOMSECDEF/DEPSECDEFSLRG*&DAWG*CPMsCPAJCSComponentsDefenseAgenciesRMDsTBD = *Budget Review:There are four areas considered by the USD(C) and OMB analysts as principal issue areas during the review and “scrub” of the budget submission from the Services and agencies: program pricing, program phasing, funding policies and program/budget execution.Program Pricing - Examines whether the specific program has been priced out properly (e.g., that the budget was prepared on the basis of “most likely cost” of the work to be done and that the proper escalation index has been applied to the constant- year budget estimate to determine the current then-year funding requirement).Program phasing - Examines the compatibility between the approved acquisition strategy and the funding necessary to pay for the requirements shown in that strategy (e.g., that have Procurement funds been phased properly to coincide with program plans for production).Funding policies - Examines the compliance of the budget request with the proper policy for each specific appropriation category (e.g., RDT&E has been budgeted on an incremental basis; procurement and MILCON on a full funding basis; and O&M and MILPERS on an annual basis).Program/Budget execution - Examines the efficiency with which an organization has executed (i.e., obligated and expended) currently available funds and the effect of current year execution on budget year submissions. As an example, has the organization met established goals for obligations and expenditures during the current fiscal year? If not, can those “excess” funds from the current fiscal year be allowed to slip into a future year and, therefore, allow a decrease in the funding requirement in that future year?Of the four budget review issues, program executability/budget execution is the primary concernAdv Questions/Budget HearingsUSD(C)/OMBBESMBI*PBServices / PEO / PMAnswer / ReclamaUpdatesFYDPUpdatesFYDPBES – Budget Estimate Submission; CAPE – Cost Assessment & Prgm EvaluationCOCOM – Combatant Commander; CPA – Chairman’s Pgm Assessment; CPM – Capability Portfolio ManagerDAWG – Deputy’s Advisory Working Group; FEAs- Front End Assessments; FYDP – Future Years Defense ProgramMBI – Major Budget Issues; OMB – Office of Management and Budget; PB – President’s BudgetPOM – Program Objectives MemoRMD – Resource Management Decision; SLRG – Senior Leader Review Group
18 FY 12–16 Program/Budget Schedule 2 April 10 Fiscal Guidance Issued30 April 10 Defense Planning and Programming Guidance (DPPG) Issued30 July 10 Component POM/BES Submissions Due2-13 Aug 10 Component POM Briefs to 3-Star/DAWG30 Aug 10 Issue Nominations Due3 Sep 10 Budget Justification Material Due to OSD/OMB22 Nov 10 Program/Budget Review Complete7 Feb 11 President’s Budget Submitted to Congress
19 Capability Portfolio Managers (CPMs) 9 Portfolios are Based on Existing Joint Capability Area (JCA) StructureCivilian/Military Co-Leads Designated by DEPSECDEFHave No Independent Decision Making AuthorityAfforded Access to JROC, DAB & Other Established Component ForumsShall Establish or Identify Existing Portfolio-Level Governance for Each PortfolioRoles and responsibilities of the CPMs , based on DepSecDef memos and draft 7045.aa as of Aug 08CPMS are primarily advisory to the DAWG, but note that they do not have decision making authority.
20 Capability Portfolio Managers (CPMs) Leadership andTier 1 JCACPMCivilianLeadMilitarySenior Warfighting Forum (SWarF)Lead *Joint StaffOPR *FunctionalCapabilityBoards *Command and ControlASD (NII)JFCOMJ-3Battlespace AwarenessUSD (I)STRATCOMJ-2Net CentricJ-6LogisticsUSD (AT&L)TRANSCOMJ-4Building PartnershipsUSD (P)Director, J-5N/AJ-5ProtectionDirector, J-8J-8Force SupportUSD (P&R)Force ApplicationJoint Requirements Oversight Council (JROC)SOCOMCorporate Management & SupportDCMODirector, Joint Staff* As designated by the Chairman of the Joint Chiefs of Staff (CJCS)
21 Deputy’s Advisory Working Group Deputy Secretary of Defense (Chair)Vice Chairman Joint Chiefs of Staff (Vice Chair)Under Secretary of Defense (AT&L)Under Secretary of Defense (Policy) and Principal DeputyUnder Secretary of Defense (Comptroller) /Chief Financial Officer or Principal DeputyUnder Secretary of Defense (P&R) or Principal DeputyUnder Secretary of Defense (Intelligence) or Principal DeputySecretary or Under Secretary of the ArmySecretary or Under Secretary of the NavySecretary or Under Secretary of the Air ForceChief or Vice Chief of Staff of the ArmyChief or Vice Chief of Naval OperationsChief or Vice Chief of Staff of the Air ForceCommandant or Assistant Commandant of the Marine CorpsCommander or Deputy Commander, SOCOMDeputy Chief Management OfficerASD (Legislative Affairs)ASD (Networks & Information Integration/Chief Information OfficerASD for Public AffairsGeneral CounselDirector of Administration and ManagementDirector or Principal Deputy Director, CAPEDirector, Joint StaffChief, National Guard Bureau or DeputyDirector, SP&P-J5Director, FS,R&A-J8This is the membership of the DAWG, chaired by DepSecDef. It started out as the ”Group of 12” for the QDR reviews done in 2005.
22 Senior Leader Review Group Secretary of DefenseDeputy Secretary of DefenseSecretary or Under Secretary of the ArmySecretary or Under Secretary of the NavySecretary or Under Secretary of Air ForceChairman Joint Chiefs of StaffVice Chairman Joint Chiefs of StaffUnder Secretary of Defense (AT&L)*Under Secretary of Defense (Policy)*Under Secretary of Defense (Comptroller)/Chief Financial Officer*Under Secretary of Defense (Intelligence)*Under Secretary of Defense (P&R)*Commandant or Assistant Commandantof the Marine CorpsDirector of Administration and ManagementChief or Vice Chief of Staff of the ArmyChief or Vice Chief of Naval OperationsChief of Staff or Vice Chief of the AirForceGeneral CounselASD (Legislative Affairs)ASD (Networks & InformationIntegration/Chief Information OfficerASD for Public AffairsDirector, Cost Assessment and ProgramEvaluationDirector, Joint StaffDeputy Chief Management OfficerChief, National Guard BureauThis is the membership of the Senior Leader Review Group, chaired by SecDef.* Or Principal Deputy
27 Most Probable Cost (MPC) AKA Most Likely Cost50% chance of overrunning or underrunning on a normal curveThe Fin Mgt Reg (DoD R) says you should budget to MPCDAPA Report (2006) recommended 80% confidence level (CL)Air Force SAE (Mr. Van Buren) memo dated 17 Mar 10 says NLT mean (typically 55-65% CL) or expected value of cost estimateOSD CAIG using 50% CLWSARA 2009 Section 101DCAPE must issue guidance on confidence levels for cost estimates for MDAP and MAIS programsMDAP and MAIS programs must disclose confidence levelIf less than 80%, must explain
29 Multiyear Procurement (MYP) Exception to Full Funding PolicyA Single Contract for a Specific Quantity of Usable End Items to be Delivered Over a Period of Time Greater Than One Year But Not More Than Five YearsAfter initial MYP Approval by Congress, the Service Requests – and Congress Appropriates – Required Budget on a “Year by Year” Basis to Obligate Against the ContractSource: DoD R, Vol 2A, Chap 1, Section
30 Defense Appropriations “Colors of Money” Military Personnel (MILPERS)Active & Reserve ForcesOperation & Maintenance (O&M)(civilian Salaries, supplies,spares, fuels, travel, etc…)Environmental RestorationFormer Soviet Union ThreatReductionOverseas Humanitarian,Disaster, & Civic AidProcurementAircraftMissilesWeaponsWeapons & Tracked CombatVehiclesAmmunitionOther ProcurementShipbuilding & ConversionMarine CorpsDefense wide procurementNational Guard & ReservesResearch, Development, Test &Evaluation (RDT&E)Basic ResearchApplied ResearchAdvanced Technology DevelopmentAdvanced Component Development& PrototypesSystem Development & DemonstrationRDT&E Management SupportOperational Systems DevelopmentMilitary Construction (MILCON)FacilitiesFamily HousingBase Realignment & Closure (BRAC)OtherDefense Health ProgramChemical Agents & MunitionsDestructionDrug Interdiction & Counter-DrugActivitiesJoint Improvised Explosive DeviceDefeat FundRapid Acquisition FundOffice of the Inspector GeneralRDT&EPROCMILPERSO&MMILCONTeaching Point:In the unlikely case the term “colors of money” is not familiar. This also shows a break out of the major appropriations.The different RDT&E budget categories are also referred to as different colors of money by some.