1. Planning, Programming, Budgeting, and Execution (PPBE)
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. FM Scope: From Requirement to Capability
Planning, Programming,
Budgeting and Execution
Life Cycle
Cost
Annual
Funding
Cost
Analysis
Estimate
ICE
Funding
Policies
Full
Funding (Exceptions)
FYDP DPG POM RMD
MFP PE BES SPR
CAIV
CCA
Fiscal
Environment
Incremental
Funding
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 Outline Overview Better Buying Power Initiatives Building Blocks
FYDP, MFP, Program Elements
PPBE Process and Schedule
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
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
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. 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

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

9. “Will Cost” vs “Should Cost” USD (AT&L) and USD(C) 22 Apr 11 Memo
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?

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?
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 12 13 14 15

11. 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)

12. Program Elements
A - ARMY
N - NAVY
M - MARINE
F - AF
D - OSD
C - MDA
E - DARPA
J - JCS
S - DLA
BB - SOCOM
DBD - DFAS
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 )
A - Aircraft Engine CIP
N - F/A-18 Squadrons
F - AMRAAM
PROGRAM 3 ( C3, INTEL & Space)
A - Joint Command and Control Program (JC2)
N - Aerial Common Sensor (ACS)
F - NAVSTAR GPS (User Equipment)
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

13. PPBE – Planning Phase President NSS SPR NDS QDR DPG * NMS CPR FEB/MAR
APR/SEP
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
President
National Security Council
CIA/DIA/JCS/OSD
Planning Phase focus:
Threat vs. Capabilities
Update strategy
Guidance for programming &
budgeting
NSS
To DoD “Large Group”/Integrated Program/Budget Submission & Review
SPR
D, CAPE/VCJCS/
USD(P)
Every
4 Years
OSD
With one exception, this slide depicts the “new” annual Planning phase that is to be used for the PPBE cycle starting in Calendar Year 2010 and which will, ultimately produce the Defense portion of the President’s Budget for FY2012. The one exception to the annual process is the QDR which is conducted in the 1st year of an administration and submitted to Congress in the 2nd year.
The DPPG replaces the GDF (Guidance for Development of the Force) and the JPG (Joint Programming Guidance) and is signed by the SECDEF.
The FEAs are intended to address major issues for the SECDEF early in the POM/BES review process. For the Calendar Year 2010 process the SECDEF has selected eight major issues.
The Director, CAPE is the Executive Secretary for the FEAs and tri-chairs the process with the VCJCS and the USD(P). Issues nominated but not selected for the FEA review process will be addressed by the DEPSECDEF through the Deputy’s Advisory Working Group (DAWG).
NDS
QDR
DPG *
Level
Guidance for POM/BES submission and Integrated Program/Budget Review
JCS
* 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).
NMS
Level
CPR
(JCS,
COCOMs,
SERVICES)

14. PPBE – Integrated Program/Budget Review OSD/OMB Budget Hearings
JUL
OCT
NOV
DEC
JAN/FEB
DoD
“Large Group”
SPR
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
3-Star Group
OSD/
CAPE
Issue
Resolution
POM
SECDEF/DEPSECDEF
SLRG & DMAG
CPA
CPMs
JCS
Components/
Defense
Agencies
Program Review focus:
Compliance with DPG
RMDs
This slide shows the FEAs, initiated in the previous chart (Planning Phase) continuing to be conducted into the Integrated Program/Budget Review time period. The issues included in the FEAs are to be resolved through the Large Group (similar in make-up to the Defense Senior Leadership Conference, as listed in DoD D , DoD Senior Governance Councils). The output of the Large Group, as well as that of the DAWG-addressed issues that were not selected by the SECDEF for FEAs, is provided to the SECDEF/DEPSECDEF. All other POM issues are addressed under the existing process led by the CAPE.
Asterisks (TBD) indicate that the organizations may be re-named or realigned, or that activities (MBI and reclama process) may or may not be conducted. Asterisks were placed based on feedback from OSD POCs.
The results of the review process for both the BES and the POM will be documented, as appropriate in RMDs. It is expected that an RMD will have two annexes – one for program-related decisions and the other for budget-related decisions.
DoDD specifically addresses the membership of the Defense Senior Leadership Conference, the Senior Leader Review Group, and the Deputy’s Advisory Working Group. The membership of the “Small Group”, the “Large Group”, and the “Large Group Plus” has been referred to in the media but not codified as of May 2010.
BES
USD(C) &
OMB
Adv Questions/
OSD/OMB Budget Hearings
MBI PB
FYDP
Update
FYDP
Update
Services / PEO / PM
Answer / Reclama
Budget Review focus:
- Pricing Phasing
- Funding policies - Budget execution

15. FY 14–18 Program/Budget Review Schedule
Mar Defense Planning Guidance (DPG) Issued
Mar 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

16. Resource Allocation Process Overlap
CY12
CY13
CY14 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
FY 12
Cycle
Execution
2nd Yr
3rd Yr
FY 12 and prior
FY 13
Cycle
Enactment
Execution
2nd Yr
3rd Yr
FY 13
FY 13 and prior PB
FY 14
Cycle
Planning
Program/Budgeting
Enactment
Execution
2nd
FY 14-18
DPG
FY POM
FY 14 BES
FY 14
FY 14 and prior PB
FY 15
Cycle
Planning
Program/Budgeting
Enactment
Exec
The RAP chart has been modified to reflect an annual cycle for all activities. It also incorporates terminology used for the FY12-16 POM/BES cycle.
FY DPG
FY POM
FY 15 BES
FY 15
FY15 & prior PB
FY 16
Cycle
Planning
Program/Budgeting
FY DPG
FY POM
FY 16 BES
DPG – Defense Planning Guidance
PB – President’s Budget
POM – Program Objectives Memorandum
BES – Budget Estimate Submission

17. BACKUP Charts

18. Most Probable Cost (MPC)
AKA Most Likely Cost
50% chance of overrunning/underrunning on a normal curve
The Fin Mgt Reg (DoD R) 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”

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
J-8
Battlespace Awareness
USD (I)
STRATCOM
J-2
Net Centric
Logistics
USD (AT&L)
TRANSCOM
J-4
Building Partnerships
USD (P)
Director, J-5
N/A
J-5
Protection
Director, 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. 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

22. 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.