Presentation on theme: "Planning, Programming, Budgeting, and Execution (PPBE)"— Presentation transcript:
1Planning, 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 TomasiniProfessor of Financial ManagementDefense Acquisition University
2FM Scope: From Requirement to Capability Planning, Programming,Budgeting and ExecutionLife CycleCostAnnualFundingCostAnalysisEstimateICEFundingPoliciesFullFunding (Exceptions)FYDP DPG POM RMDMFP PE BES SPRCAIVCCAFiscalEnvironmentIncrementalFundingPOEAoACongressionalEnactmentHAC 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
3PPBE Outline Overview Better Buying Power Initiatives Building Blocks FYDP, MFP, Program ElementsPPBE Process and ScheduleResource 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.
4Three 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” AcquisitionWhat’s a “Program of Record”? Where is it officially defined?
5Resource 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.
6PPBE 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…
7Better Buying Power Initiatives 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
8Better Buying Power Initiatives(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-Productive 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
9“Will Cost” vs “Should Cost” USD (AT&L) and USD(C) 22 Apr 11 Memo Used for programming and budgetingUsed for acquisition program baselines (APBs)Used for all reporting requirements external to DoDShould CostScrutinize every element of govt and contractor costs3 ways to develop should cost estimates:Bottoms –Up estimateDetermine specific discrete and measurable itemsUse competitive contracting and contract negotiations to identify should cost savings (old FAR definition)Model ProgramsAir Force : JSF, Global Hawk, SBIRS, EELV, AEHFArmy: Joint Air Ground Missile, UH-60M, GCV, Paladin Product Improvement (PIP), NETT WarriorNavy: JSF, E-2D, Presidential Helo, LCS, Ohio Replacement ProgramWhat Does Your Service Policy Memo Say?
10Future 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-Years3 additional years for force structure onlyWhat’s Your Latest Approved Numbers?Computer 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 structured12131415
11Future 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)
12Program ElementsA - ARMYN - NAVYM - MARINEF - AFD - OSDC - MDAE - DARPAJ - JCSS - DLABB - SOCOMDBD - DFASPROGRAM 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 2 ( GENERAL PURPOSE FORCES )A - Aircraft Engine CIPN - F/A-18 SquadronsF - AMRAAMPROGRAM 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
13PPBE – Planning Phase President NSS SPR NDS QDR DPG * NMS CPR FEB/MAR APR/SEPCIA – Central Intelligence AgencyCOCOM – Combatant CommanderCPR – Chairman’s Program RecommendationD, CAPE – Director, Cost Assessment & Program EvalDIA – Defense Intelligence AgencyDPG – Defense Planning GuidanceJCS – Joint Chiefs of StaffNDS – National Defense StrategyNMS – National Military StrategyNSS – National Security StrategyOSD – Office of the Secretary of DefenseQDR – Quadrennial Defense ReviewSPR – Strategic Portfolio ReviewUSD(P) – Undersecretary of Defense (Policy)VCJCS – Vice Chairman, Joint Chiefs of StaffPresidentNational Security CouncilCIA/DIA/JCS/OSDPlanning Phase focus:Threat vs. CapabilitiesUpdate strategyGuidance for programming &budgetingNSSTo DoD “Large Group”/Integrated Program/Budget Submission & ReviewSPRD, CAPE/VCJCS/USD(P)Every4 YearsOSDWith 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).NDSQDRDPG *LevelGuidance for POM/BES submission and Integrated Program/Budget ReviewJCS* 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).NMSLevelCPR(JCS,COCOMs,SERVICES)
14PPBE – Integrated Program/Budget Review OSD/OMB Budget Hearings JULOCTNOVDECJAN/FEBDoD“Large Group”SPRBES – Budget Estimate SubmissionCAPE – Cost Assessment & Prgm EvaluationCOCOM – Combatant CommanderCPA – Chairman’s Program AssessmentCPM – Capability Portfolio ManagerDMAG – Deputy’s Management Action GroupFYDP – Future Years Defense ProgramMBI – Major Budget IssuesOMB – Office of Management and BudgetPB – President’s BudgetPOM – Program Objectives MemorandumRMD – Resource Management DecisionSLRG – Senior Leader Review Group3-Star GroupOSD/CAPEIssueResolutionPOMSECDEF/DEPSECDEFSLRG & DMAGCPACPMsJCSComponents/DefenseAgenciesProgram Review focus:Compliance with DPGRMDsThis 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.BESUSD(C) &OMBAdv Questions/OSD/OMB Budget HearingsMBIPBFYDPUpdateFYDPUpdateServices / PEO / PMAnswer / ReclamaBudget Review focus:- Pricing Phasing- Funding policies - Budget execution
15FY 14–18 Program/Budget Review Schedule Mar Defense Planning Guidance (DPG) IssuedMar Fiscal Guidance IssuedMay-Aug 12 Strategic Portfolio Review (SPR) Results3 Aug 12 Component Program/Budget Submissions Due30 Jul-10 Aug 12 Component POM Briefs to 3-Star/DMAG31 Aug 12 Issue Nominations Due4 Sep 12 Budget Justification Material Due to OSD/OMB14 Sep 12 Issue Nomination DispositionSep-Oct 12 SPR Re-engagementSep - Nov 12 Program/Budget Review and Issue Team Analysis21 Dec 12 Budget Lock4 Feb 13 President’s Budget Submitted to Congress
16Resource Allocation Process Overlap CY12CY13CY14JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDFY 12CycleExecution2nd Yr3rd YrFY 12 and priorFY 13CycleEnactmentExecution2nd Yr3rd YrFY 13FY 13 and priorPBFY 14CyclePlanningProgram/BudgetingEnactmentExecution2ndFY 14-18DPGFY POMFY 14 BESFY 14FY 14 and priorPBFY 15CyclePlanningProgram/BudgetingEnactmentExecThe 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 DPGFY POMFY 15 BESFY 15FY15 & priorPBFY 16CyclePlanningProgram/BudgetingFY DPGFY POMFY 16 BESDPG – Defense Planning GuidancePB – President’s BudgetPOM – Program Objectives MemorandumBES – Budget Estimate Submission
18Most Probable Cost (MPC) AKA Most Likely Cost50% chance of overrunning/underrunning on a normal curveThe Fin Mgt Reg (DoD R) says budget to MPC2006 DAPA Rpt: 80% confidence level (CL) recommendedAir Force SAE (Mr. Van Buren) memo dated 17 Mar 10 says NLT mean (typically 55-65% CL) or “expected value”OSD CAIG using 50% CLWSARA 2009 Section 101DCAPE must issue guidance on confidence levels for cost estimates for MDAP and MAIS programsFY11 Defense Authorization Bill revisionMDAP 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”
19Capability 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.
20Capability Portfolio Managers (CPMs) Leadership andTier 1 JCACPMCivilianLeadMilitarySenior Warfighting Forum (SWarF)Lead *Joint StaffOPR *FunctionalCapabilityBoards *Command and ControlASD (NII)JFCOMJ-3J-8Battlespace AwarenessUSD (I)STRATCOMJ-2Net CentricLogisticsUSD (AT&L)TRANSCOMJ-4Building PartnershipsUSD (P)Director, J-5N/AJ-5ProtectionDirector, J-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)
21Senior 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
22Defense 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.