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Planning, Programming, Budgeting, and Execution (PPBE) Process

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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 Tomasini Professor of Financial Management Defense Acquisition University

2 Acquisition Program Baseline Commitment Reprogramming
From Requirement to Capability Planning, Programming, Budgeting and Execution Life Cycle Cost Annual Funding Cost Analysis Estimate ICE Funding Policies Full Funding (Exceptions) FYDP DPPG POM RMD MFP PE BES FEA CAIV CCA Fiscal Environment Incremental Funding MBIs POE AoA Congressional Enactment HAC HASC HBC SAC SASC SBC President’s Budget Budget Resolution Authorization & Appropriation Laws This 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 Baseline Operational Concept Force Structure Modernization Operational Capability Readiness Sustainability Feedback Commitment Reprogramming Capabilities-Based Assessment Capability Docs Budget Authority Obligation Expenditure Outlay Budget Execution

3 PPBE Process and Schedule Capability Portfolio Managers
PPBE Outline PPBE Overview Management Systems and Phases Major Changes in FY PPBE Cycle Front End Assessments DoD Efficiencies Initiative Building Blocks FYDP, MFP, Program Elements PPBE Process and Schedule Capability Portfolio Managers Membership of DAWG and SLRG Resource Allocation Process This 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 and Execution QDR Joint Capabilities Integration and Development System (JCIDS) Defense Acquisition System -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 process 2. 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 strategy Identifies size, structure and equipment for military forces Sets programming priorities Allocates resources Evaluates actual output against planned performance and adjusts resources as appropriate PPBE 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 1961 Allows for DoD to review it’s mission/strategies bottom up every two years What do we do in PPBE? Strategy - How are we going to defend the nation? National Goals Forces - 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 threat Develop guidance Programming (OSD CAPE) Turn guidance into achievable, affordable packages Five-year program (Future Years Defense Program) Budgeting (OSD Comptroller) Test for efficient funds execution Scrub budget year Prepare defensible budget Execution Review (concurrent with program/budget review) Develop performance metrics Assess actual output against planned performance Adjust resources to achieve desired performance goals Brief 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" model Capabilities-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 phase Programming: Components develop Program submissions based on guidance developed in the Planning phase OSD, OMB & Joint Staff review for priority, affordability Info captured in the FYDP Budgeting: Components develop budget submissions OSD(C) reviews budget inputs, with emphasis on funds execution Ultimate aim, to submit a defensible President’s Budget thru OMB to Congress Execution Review Overlays both Program Review and Budget Review processes In 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 execution Let’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 10 DPPG (was GDF and JPG) One budget year (was two on the “on years”) Makes this an annual budget cycle vs a biennial budget Every year is a “POM” year No more PRs (Navy), APOMs (AF), or mini-POMs (Army) Focus on a 5-year period Changed FY12-17 period to FY 12-16 DOD conducting Front End Assessments Eight 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 Operations Long Range Strike Family of Systems Airborne ISR Cyber Defense Global Posture Reset of Equipment from Operations Integrated Air & Missile Defense Tactical Aircraft

9 DoD Savings and Efficiencies Initiative as of 28 Jun 10
$B FY12 FY13 FY14 FY15 FY16 Total Army, Navy, Air Force Def Agency/Field Activity Combined Goal

10 OSD (C) Fact Sheet Savings and Efficiencies Initiative
Goal: Create more agile, flatter, and efficient organization Military departments can keep their savings and apply to critical areas such as Personnel in units Force structure Readiness to fight Investment in future capabilities Goals will be reviewed annually and may change Initiatives must be specific, actionable, and measurable Percentage and across-the-board reductions are not acceptable No organization, including OSD, is excluded Must 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 Growth Mandate affordability as a requirement Drive productivity growth through Will Cost/Should Cost management Eliminate redundancy within warfighter portfolios Make production rates economical and hold them stable Set shorter program timelines and manage to them Incentivize Productivity and Innovation in Industry Reward contractors for successful supply chain and indirect expense management Increase use of FPIF, where appropriate Use 50/50 share and 120% ceiling as point of departure Adjust progress payments to incentivize performance Extend the Navy’s preferred supplier program to a DoD-wide pilot Reinvigorate industry’s IRAD and protect the defense technology base Promote Real Competition Present a competitive strategy at each program milestone Remove obstacles to competition Require open systems architecture and set rules for acquisition of technical data rights Increase dynamic small business role in defense marketplace competition

12 Better Buying Power (cont.) USD(AT&L) 14 Sep 10 Memo
Improve Tradecraft in Services Acquisition Create a senior manager for acquisition of services in each component, following the Air Force’s example Adopt uniform taxonomy for different types of services Address causes of poor tradecraft in service acquisition Increase small business participation in providing services Reduce Non-Predictive Processes and Bureaucracy Reduce number of OSD level reviews… Eliminate low-value added statutory processes Reduce by half, the volume and cost of internal and congressional reports Reduce non-value-added overhead imposed on industry Align DCMA and DCAA processes to ensure work is complimentary Increase use of Forward Pricing Rate Recommendations to reduce admin costs

13 Future Years Defense Program (FYDP)
Computer database maintained by CAPE Contains approved force structure and resources for all Defense Programs Updated two times per annual PPBE cycle: Program Objectives Memorandum/Budget Estimate Submission (POM/BES) – July President’s Budget (PB) - February Reflects PY, CY, BY, + 4 Out-Years + 3 additional years for force structure only FYDP (updated CY 2010) would include: FY for force structure & resources FY for force structure only Computer database maintained by Dir (PA&E) Summarizes forces, equipment, and resources Comprises 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 only It is a “living” record reflecting the decisions made in the various phases of PPBE Updated two times per year to reflect the POM/BES (Aug/Sep), and President’s Budget (Jan/Feb) submissions Why 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 effort APOM by the Air Force Mini-POM by the Army Program Review by the Navy However, 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 structured 10 11 12 13

14 Future Years Defense Program (FYDP)
DOD APPROPRIATIONS Military Construction Military Personnel RDT&E Procurement Ops & Maintenance Other D E F O A Strategic Forces (1) T I A General Purpose Forces (2) R G H E E Command, Control, Comm, Intell & Space (3) N F N R MAJOR FORCE PROGRAMS A A Mobility Forces (4) O C R V I Guard & Reserve Forces (5) R M Y C E Teaching 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) Y E S Central Supply & Maintenance (7) Training, Medical, & Other Personnel Activities (8) Administration and Associated Activities (9) DOD COMPONENTS Support of Other Nations (10) Special Operations Forces (11)

15 Program Elements PROGRAM 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 suffix PROGRAM 1 ( STRATEGIC FORCES ) F - B-1B Squadrons F - Peacekeeper Squadrons N - Trident A - Worldwide Joint Strategic Comm F - SPACETRACK PROGRAM 2 ( GENERAL PURPOSE FORCES ) A - Airborne Divisions N - Frigates - Missile F - F-22 Squadrons F - Advanced Communications Systems A - ARMY N - NAVY M - MARINE F - AF D - OSD C - MDA E - DARPA J - JCS S - DLA BB - SOCOM DBD - DFAS Program 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 Council CIA/DIA/JCS/OSD ~Starts FEB/MAR (1st Year) APR ( DPPG)/Sep ( FEAs) Finish 2nd Year FEAs Planning Phase focus: Threat vs Capabilities Update strategy Guidance for programming Under direction of CAPE NSS FEAs to be a strategic view used to inform program/budget reviews. To Concurrent Program/Budget Review NDS QDR DPPG OSD Level JCS NMS CPR Level (JCS, COCOMs, SERVICES) CIA – Central Intelligence Agency;COCOM – Combatant Command; CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency; DPPG –Defense Planning &Programming Guidance; JCS – Joint Chiefs of Staff NDS – National Defense Strategy; NMS – National Military Strategy; NSS – National Security Strategy OSD – Office of the Secretary of Defense; QDR – Quadrennial Defense Review; FEA – Front End Assessments

17 Concurrent Program/Budget Review
JUL DEC OCT NOV FEB FEAs Continued 3-Star Group OSD CAPE/ OMB Issue Resolution POM SECDEF/DEPSECDEF SLRG*&DAWG* CPMs CPA JCS Components Defense Agencies RMDs TBD = * 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 concern Adv Questions/ Budget Hearings USD(C)/ OMB BES MBI* PB Services / PEO / PM Answer / Reclama Updates FYDP Updates FYDP BES – Budget Estimate Submission; CAPE – Cost Assessment & Prgm Evaluation COCOM – Combatant Commander; CPA – Chairman’s Pgm Assessment; CPM – Capability Portfolio Manager DAWG – Deputy’s Advisory Working Group; FEAs- Front End Assessments; FYDP – Future Years Defense Program MBI – Major Budget Issues; OMB – Office of Management and Budget; PB – President’s Budget POM – Program Objectives Memo RMD – Resource Management Decision; SLRG – Senior Leader Review Group

18 FY 12–16 Program/Budget Schedule
2 April 10 Fiscal Guidance Issued 30 April 10 Defense Planning and Programming Guidance (DPPG) Issued 30 July 10 Component POM/BES Submissions Due 2-13 Aug 10 Component POM Briefs to 3-Star/DAWG 30 Aug 10 Issue Nominations Due 3 Sep 10 Budget Justification Material Due to OSD/OMB 22 Nov 10 Program/Budget Review Complete 7 Feb 11 President’s Budget Submitted to Congress

19 Capability Portfolio Managers (CPMs)
9 Portfolios are Based on Existing Joint Capability Area (JCA) Structure Civilian/Military Co-Leads Designated by DEPSECDEF Have No Independent Decision Making Authority Afforded Access to JROC, DAB & Other Established Component Forums Shall Establish or Identify Existing Portfolio-Level Governance for Each Portfolio Roles and responsibilities of the CPMs , based on DepSecDef memos and draft 7045.aa as of Aug 08 CPMS are primarily advisory to the DAWG, but note that they do not have decision making authority.

20 Capability Portfolio Managers (CPMs) Leadership
and Tier 1 JCA CPM Civilian Lead Military Senior Warfighting Forum (SWarF) Lead * Joint Staff OPR * Functional Capability Boards * Command and Control ASD (NII) JFCOM J-3 Battlespace Awareness USD (I) STRATCOM J-2 Net Centric J-6 Logistics USD (AT&L) TRANSCOM J-4 Building Partnerships USD (P) Director, J-5 N/A J-5 Protection Director, J-8 J-8 Force Support USD (P&R) Force Application Joint Requirements Oversight Council (JROC) SOCOM Corporate Management & Support DCMO Director, 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 Deputy Under Secretary of Defense (Comptroller) /Chief Financial Officer or Principal Deputy Under Secretary of Defense (P&R) or Principal Deputy Under Secretary of Defense (Intelligence) or Principal Deputy Secretary or Under Secretary of the Army Secretary or Under Secretary of the Navy Secretary or Under Secretary of the Air Force Chief or Vice Chief of Staff of the Army Chief or Vice Chief of Naval Operations Chief or Vice Chief of Staff of the Air Force Commandant or Assistant Commandant of the Marine Corps Commander or Deputy Commander, SOCOM Deputy Chief Management Officer ASD (Legislative Affairs) ASD (Networks & Information Integration/Chief Information Officer ASD for Public Affairs General Counsel Director of Administration and Management Director or Principal Deputy Director, CAPE Director, Joint Staff Chief, National Guard Bureau or Deputy Director, SP&P-J5 Director, FS,R&A-J8 This 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 Defense Deputy Secretary of Defense Secretary or Under Secretary of the Army Secretary or Under Secretary of the Navy Secretary or Under Secretary of Air Force Chairman Joint Chiefs of Staff Vice Chairman Joint Chiefs of Staff Under 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 Commandant of the Marine Corps Director of Administration and Management Chief or Vice Chief of Staff of the Army Chief or Vice Chief of Naval Operations Chief of Staff or Vice Chief of the Air Force General Counsel ASD (Legislative Affairs) ASD (Networks & Information Integration/Chief Information Officer ASD for Public Affairs Director, Cost Assessment and Program Evaluation Director, Joint Staff Deputy Chief Management Officer Chief, National Guard Bureau This is the membership of the Senior Leader Review Group, chaired by SecDef. * Or Principal Deputy

23 Resource Allocation Process
CY10 CY11 CY12 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D FY10 Execution 2nd Yr 3rd Yr FY 10 and prior FY11 Enactment Execution 2nd Yr 3rd Yr FY 11 FY 11 and prior PB FY12 Planning Program/Budgeting Enactment Execution 2nd FY 12-16 DPPG FY POM FY 12 BES FY 12 FY 12 and prior PB FY13 Planning Program/Budgeting Enactment Exec FY DPPG FY POM FY 13 BES FY 13 FY13 & prior PB FY14 Planning Program/Budgeting FY DPPG FY POM FY 14 BES PB – President’s Budget POM – Program Objectives Memorandum BES – Budget Estimate Submission DPPG – Defense Planning & Programming Guidance

24 Backups

25 Major Force Program 6 - RDT&E

26 DoD Supplemental Appropriations

27 Most Probable Cost (MPC)
AKA Most Likely Cost 50% chance of overrunning or underrunning on a normal curve The Fin Mgt Reg (DoD R) says you should budget to MPC DAPA 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 estimate OSD CAIG using 50% CL WSARA 2009 Section 101 DCAPE must issue guidance on confidence levels for cost estimates for MDAP and MAIS programs MDAP and MAIS programs must disclose confidence level If less than 80%, must explain

28 Below Threshold Reprogramming
Level of Control Appropriation Max Into Max Out Research, Development, Test & Evaluation (RDT&E) Lesser of $10 million Or 20% Lesser of $10 million Or 20% Program Element Procurement (PROC) Lesser of $20 million Or 20% Lesser of $20 million Or 20% Line Item Operations & Maintenance (O&M) $15 million No Limit, Unless specified Budget Activity Military Personnel (MILPERS) $10 million No Congressional Restrictions Budget Activity Military Construction (MILCON Lesser of $2 million Or 25% No Congressional Restrictions Project

29 Multiyear Procurement (MYP)
Exception to Full Funding Policy A 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 Years After initial MYP Approval by Congress, the Service Requests – and Congress Appropriates – Required Budget on a “Year by Year” Basis to Obligate Against the Contract Source: DoD R, Vol 2A, Chap 1, Section

30 Defense Appropriations “Colors of Money”
Military Personnel (MILPERS) Active & Reserve Forces Operation & Maintenance (O&M) (civilian Salaries, supplies, spares, fuels, travel, etc…) Environmental Restoration Former Soviet Union Threat Reduction Overseas Humanitarian, Disaster, & Civic Aid Procurement Aircraft Missiles Weapons Weapons & Tracked Combat Vehicles Ammunition Other Procurement Shipbuilding & Conversion Marine Corps Defense wide procurement National Guard & Reserves Research, Development, Test & Evaluation (RDT&E) Basic Research Applied Research Advanced Technology Development Advanced Component Development & Prototypes System Development & Demonstration RDT&E Management Support Operational Systems Development Military Construction (MILCON) Facilities Family Housing Base Realignment & Closure (BRAC) Other Defense Health Program Chemical Agents & Munitions Destruction Drug Interdiction & Counter-Drug Activities Joint Improvised Explosive Device Defeat Fund Rapid Acquisition Fund Office of the Inspector General RDT&E PROC MILPERS O&M MILCON Teaching 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.

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