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Planning, Programming, Budgeting, and Execution (PPBE) Roberta Tomasini Professor of Financial Management Defense Acquisition University

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Presentation on theme: "Planning, Programming, Budgeting, and Execution (PPBE) Roberta Tomasini Professor of Financial Management Defense Acquisition University"— Presentation transcript:

1 Planning, Programming, Budgeting, and Execution (PPBE) Roberta Tomasini Professor of Financial Management Defense Acquisition University 703-805-3764

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

3 PPBE Outline Overview Better Buying Power Initiatives Building Blocks –FYDP, MFP, Program Elements PPBE Process and Schedule Resource Allocation Process 3

4 Planning, Programming, Budgeting and Execution Joint Capabilities Integration and Development System (JCIDS) Defense Acquisition System Three Major DoD Management Systems QDRQDR 4 What’s a “Program of Record”? Where is it officially defined?

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 5

6 PPBE Phases Planning (OSD Policy) –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 6

7 Better Buying Power Initiatives 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 7

8 Better Buying Power Initiatives(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-Productive 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 8

9 “Will Cost” vs “Should Cost” USD (AT&L) and USD(C) 22 Apr 11 Memo Will Cost Used for programming and budgeting Used for acquisition program baselines (APBs) Used for all reporting requirements external to DoD Should Cost Scrutinize every element of govt and contractor costs 3 ways to develop should cost estimates: Bottoms –Up estimate Determine specific discrete and measurable items Use competitive contracting and contract negotiations to identify should cost savings (old FAR definition) Model Programs Air Force : JSF, Global Hawk, SBIRS, EELV, AEHF Army: Joint Air Ground Missile, UH-60M, GCV, Paladin Product Improvement (PIP), NETT Warrior Navy: JSF, E-2D, Presidential Helo, LCS, Ohio Replacement Program What Does Your Service Policy Memo Say? 9

10 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 What’s Your Latest Approved Numbers? 15 16 17 18 14 13 12 10

11 DOD COMPONENTS Strategic Forces General Purpose Forces Command, Control, Comm, Intell & Space Mobility Forces Guard & Reserve Forces Research and Development Central Supply & Maintenance Training, Medical, & Other Personnel Activities Administration and Associated Activities Support of Other Nations Special Operations Forces (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Procurement Military Construction Military Personnel Ops & Maintenance Other N A V Y D E F A G E N C I E S O T H E R DOD APPROPRIATIONS A I R F O R C E A R M Y RDT&E MAJOR FORCE PROGRAMS Future Years Defense Program (FYDP) 11

12 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 2 ( GENERAL PURPOSE FORCES ) 0203752A - Aircraft Engine CIP 0204136N - F/A-18 Squadrons 0207163F - AMRAAM PROGRAM 3 ( C3, INTEL & Space) 0303158A - Joint Command and Control Program (JC2) 0307207N - Aerial Common Sensor (ACS) 0305164F - NAVSTAR GPS (User Equipment) A - ARMY N - NAVY M - MARINE F - AF D - OSD C - MDA E - DARPA J - JCS S - DLA BB - SOCOM DBD - DFAS A - ARMY N - NAVY M - MARINE F - AF D - OSD C - MDA E - DARPA J - JCS S - DLA BB - SOCOM DBD - DFAS Ref: DoD 7045.7 - H Program Elements 12

13 CIA – Central Intelligence Agency COCOM – Combatant Commander CPR – Chairman’s Program Recommendation D, CAPE – Director, Cost Assessment & Program Eval DIA – Defense Intelligence Agency DPG – Defense Planning 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 SPR – Strategic Portfolio Review USD(P) – Undersecretary of Defense (Policy) VCJCS – Vice Chairman, Joint Chiefs of Staff APR/SEP PPBE – Planning Phase President National Security Council CIA/DIA/JCS/OSD (JCS, COCOMs, SERVICES) NMS DPG * NSS Planning Phase focus: Threat vs. Capabilities Update strategy Guidance for programming & budgeting NDS OSD Level JCS Level QDR FEB/MAR To DoD “Large Group”/Integrated Program/Budget Submission & Review SPR D, CAPE/VCJCS/ USD(P) CPR Every 4 Years * Note: DPG is the current name of this document but is subject to change from one cycle to the next. Other names used previously include Defense Planning & Programming Guidance (DPPG) and Joint Programming Guidance (JPG). Guidance for POM/BES submission and Integrated Program/Budget Review

14 PPBE – Integrated Program/Budget Review Components/ Defense Agencies BES PB MBI Adv Questions/ OSD/OMB Budget Hearings JUL JAN/FEB OCT Issue Resolution SECDEF/DEPSECDEF SLRG & DMAG POM OSD/ CAPE CPA DEC NOV JCS USD(C) & OMB BES – Budget Estimate Submission CAPE – Cost Assessment & Prgm Evaluation COCOM – Combatant Commander CPA – Chairman’s Program Assessment CPM – Capability Portfolio Manager DMAG – Deputy’s Management Action Group FYDP – Future Years Defense Program MBI – Major Budget Issues OMB – Office of Management and Budget PB – President’s Budget POM – Program Objectives Memorandum RMD – Resource Management Decision SLRG – Senior Leader Review Group FYDP Update FYDP Update 3-Star Group Program Review focus: Compliance with DPG CPMs Budget Review focus: - Pricing - Phasing - Funding policies - Budget execution RMDs Services / PEO / PM Answer / Reclama DoD “Large Group” SPR

15 Mar 12 Defense Planning Guidance (DPG) Issued Mar 12 Fiscal Guidance Issued May-Aug 12 Strategic Portfolio Review (SPR) Results 3 Aug 12 Component Program/Budget Submissions Due 30 Jul-10 Aug 12 Component POM Briefs to 3-Star/DMAG 31 Aug 12 Issue Nominations Due 4 Sep 12 Budget Justification Material Due to OSD/OMB 14 Sep 12 Issue Nomination Disposition Sep-Oct 12 SPR Re-engagement Sep - Nov 12 Program/Budget Review and Issue Team Analysis 21 Dec 12 Budget Lock 4 Feb 13 President’s Budget Submitted to Congress FY 14–18 Program/Budget Review Schedule 15

16 FY 13 DJJFMAMJASONJJFMAMJASONDJJFMAMJASOND FY 12 Cycle Execution FY 12 and prior Program/Budgeting Execution FY 14 Planning CY12CY13CY14 EnactmentExecution FY 13 and prior Enactment FY 15 Planning 2nd Yr 2nd Enactment 3rd Yr FY 14 and prior FY 15-19 DPG Exec FY15 & prior Planning Program/Budgeting PB – President’s Budget FY 14-18 DPG Resource Allocation Process Overlap FY 16-20 DPG FY 15-19 POM FY 15 BES FY 14-18 POM FY 14 BES PB DPG – Defense Planning Guidance FY 16-20 POM FY 16 BES BES – Budget Estimate SubmissionPOM – Program Objectives Memorandum FY 13 Cycle FY 14 Cycle FY 15 Cycle FY 16 Cycle

17 BACKUP Charts 17

18 Most Probable Cost (MPC) AKA Most Likely Cost 50% chance of overrunning/underrunning on a normal curve The Fin Mgt Reg (DoD 7000.14R) says budget to MPC 2006 DAPA Rpt: 80% confidence level (CL) recommended Air Force SAE (Mr. Van Buren) memo dated 17 Mar 10 says NLT mean (typically 55-65% CL) or “expected value” OSD CAIG using 50% CL WSARA 2009 Section 101 –DCAPE must issue guidance on confidence levels for cost estimates for MDAP and MAIS programs –FY11 Defense Authorization Bill revision MDAP and MAIS programs must disclose confidence level, and “ensure that such confidence level provides a high degree of confidence that the program can be completed without the need for significant adjustment to program budgets” 18

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 19

20 Capability Portfolio and Tier 1 JCA CPM Civilian Lead CPM Military Lead Senior Warfighting Forum (SWarF) Lead * CPM Joint Staff OPR * Functional Capability Boards * Command and ControlASD (NII)JFCOM J-3J-8 Battlespace AwarenessUSD (I)STRATCOM J-2 Net CentricASD (NII)STRATCOM J-8 LogisticsUSD (AT&L) TRANSCOM J-4 Building PartnershipsUSD (P)Director, J-5JFCOMN/AJ-5 ProtectionUSD (AT&L) Director, J-8STRATCOMN/AJ-8 Force SupportUSD (P&R)Director, J-8JFCOMN/AJ-8 Force Application USD (AT&L) USD (P) Joint Requirements Oversight Council (JROC) JFCOM SOCOM STRATCOM J-8 Corporate Management & Support DCMODirector, Joint Staff N/A * As designated by the Chairman of the Joint Chiefs of Staff (CJCS) Capability Portfolio Managers (CPMs) Leadership 20

21 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 * Or Principal Deputy 21

22 Defense Appropriations “Colors of Money” RDT&E PROC MILPERS O&M MILCON Military Personnel (MILPERS) Active & Reserve Forces Operation & Maintenance (O&M) Active & Reserve Forces (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 22

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