1. Planning, Programming, Budgeting and Execution (PPBE)
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Planning, Programming, Budgeting and Execution (PPBE)
Business, Cost Estimating, & Financial Management
Capital and Northeast Campus
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RDT Version 3 – 16 Sep 05
This version includes note pages for all slides and incorporates 30 Jun 05 USD(C) guidance supplementing the 12 May 05 Dir, PA&E/USD(C) memo establishing policies and procedures for the FY 2007 – 2011 process

2. PPBE Outline PPBE Overview Building Blocks FYDP, MFP, Program Elements
Old Process
New Process
Timing
This is an outline of areas that we’ll address in this presentation
In particular, in the “New Process” area we’ll specifically address the FY 2007 – 2011 Integrated Program and Budget Review which became effective 12 May 2005
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3. Decision Support Systems
Planning, Programming, Budgeting, & Execution
QDR
Joint Capabilities Integration & Development System
Acquisition Management System
DoD has three Decision-making Support Systems:
AMS: How we acquire weapon systems, covered in the Series
JCIDS: The warfighter determines what is needed – covered in CJCSI 3170; moves from requirements to capabilities-based, with more emphasis on “jointness” (“Effects-based Capabilities”)
PPBE: Resource allocation – providing the warfighter with the best mix of forces, equipment and support attainable under fiscal constraints; changed from PPBS by Management Initiative Decision (MID) 913 (“Performance-based Budgeting”)
Emphasis on using performance metrics to focus on output, return-on-investment (ROI)
QDR: Quadrennial Defense Review - the major statement of defense strategy and business policy
MID 913 states that the QDR is the single hierarchical link integrating all internal decision-making processes
JCIDS and AMS are event-driven; PPBE is calendar-driven, backing off from the President’s Budget submission date
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4. 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.
It was initially developed by Secretary McNamara in 1961 and remained unchanged until 2003
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 programs will be funded now?
Resources - How much will be spent on each program?
Output - Where are we getting our best return – return-on-investment?
Transition: What are the phases in PPBE?
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5. PPBE Phases Planning Programming Budgeting
Assess capabilities / review threat
Develop guidance
Programming
Turn guidance into achievable, affordable packages
Six-year program (Future Years Defense Program)
Budgeting
Scrub budget years
Test for most efficient funds execution
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: Still have the same three phases: Planning, Programming and Budgeting
Major difference - 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
Joint Planning Guidance (JPG): end of the Planning phase and marching orders for next phase
Programming:
Components develop Program based on guidance in the JPG
OSD & 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?”
Performance metrics are used to examine program execution
TRANSITION: Before we go any further, let’s look at the FYDP (Future Years Defense Program) – the computerized data base that supports the PPBE process
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6. Future Years Defense Program (FYDP)
Computer database maintained by D,PA&E
Approved force structure and resources in SECDEF Defense Program
Contains PY, CY, BY1, BY2 + 4 Out-Years +
3 additional years for force structure only
Updated two times per PPBE Cycle:
Program Objectives Memorandum/Budget Estimate Submission (POM/BES) – August/September
President’s Budget (PB) - January / February X 06 07
Computer database maintained by Director, 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) submission
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 called the APOM by the Air Force, Mini-POM by the Army, and Program Review by the Navy. 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
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7. Future Years Defense Program (FYDP)
DOD APPROPRIATIONS
Procurement
Military Construction
Military Personnel
Ops & Maintenance
Other
RDT&E
OTHER
DEF
AGENCIES
AIR
FORCE
NAVY
ARMY
Strategic Forces
General Purpose Forces
Command, Control, Communications, Intell & Space
Mobility Forces
Guard & Reserve Forces
Research and Development
Central Supply & Maintenance
Training, Medical, and 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)
MAJOR FORCE PROGRAMS
This cube slide illustrates how the FYDP database is structured; it’s divided in three ways:
Appropriation categories for use by Congress and Comptroller; “Other” category represents the various other appropriations that exist, such as Family Housing
Component categories, of interest to Services and other DoD agencies
11 “Major Force Programs” (MFP) for DoD internal program management uses
The breakout for Planning and Programming is by MFP; Budgeting is broken out by Appropriation
Any single category can contain data from any or all of the other two major divisions
Example: MFP #1, Strategic Forces, contains both Navy and AF Ballistic Missiles, as well as data from all five appropriations
FYDP is broken down into manageable segments called Program Elements (PEs)
Note: Marines fall under Dept of Navy which is considered the “Component” - one Component, two Services
COMPONENTS
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8. 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/A-22 Squadrons
F - Advanced Communications Systems
A - ARMY
N - NAVY
M - MARINE
F - AF
D - OSD
C - MDA
E - DARPA
H - DSWA
J - JCS
S - DLA
BB - SOCOM
DBD - DFAS
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) – we’ll use Trident since talking about Ballistic Missiles
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
RDT&E PEs are used by Congress to control program funding levels and to set Below Threshold Reprogramming (BTR) limits; they are somewhat more structured and specific than most other PEs
All programs and all resources have PEs. The entire FYDP database can be listed by PE; there are over 3,600 PEs
SUMMARY: So now that we’ve talked about the major building blocks of PPBE: the FYDP, MFPs and PEs, let’s compare the old PPBS to the current PPBE…
Ref: DoD H
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9. Old Process: Annual, Consecutive-Phase PPBS
FY POM and prior:
Defense Planning Guidance (DPG) (Apr)
Programming (POM Development) (May – Sep)
Budgeting (BES Development / Review) (Sep – Dec)
Submission of President’s Budget (Feb)
Congressional Review of Budget Request (Feb – Aug)
Congressional Authorization and Appropriation
Execution of Budget Authority
Commit, obligate, expend, and outlay funds
The old Planning, Programming, and Budgeting System (PPBS) was:
Annual – no real change in process from year to year – did a full up Defense Planning Guidance (DPG), Program Objective Memorandum (POM) and Budget Estimate Submission (BES) every year
In the even-year, “anything was fair game”
In the odd-year/off-year, OSD directed that no major changes should be submitted and the documentation submitted was the same for both years
Consecutive – Planning was followed by Programming, then by Budgeting
Lots of rework – many decisions made during Program Review revisited during Budget Review; some decisions changed without complete analysis…
Return-on-investment questions often not considered until after funds were appropriated and were being executed
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10. Management Initiative Decision (MID) 913
Major Initiatives:
Quadrennial Defense Review (QDR) shifted from the first to the second year of a new administration
Move to a true two-year cycle
Off-year Strategic Planning Guidance (SPG)/Joint Programming Guidance (JPG) is optional (at the discretion of SECDEF); will not introduce major changes in off-year
Off-year review focus on execution and performance
Create a single standardized programming and budgeting system for data collection and management
Let’s look at the document that transitioned us from PPBS to PPBE
Change in focus resulted in MID 913, issued 22 May 03
QDR now drives the whole process – starting with the Planning phase
What was previously “draft planning guidance” is now Strategic Planning Guidance (SPG), which is “fiscally informed”
Joint Programming Guidance (JPG) studies address long-term, strategic issues
Programming direction in JPG must be “fiscally informed”
USD(P) & PA&E must provide funding / manpower implications of studies to DEPSECDEF before JPG publication
Program/Budget reviews address short-term issues in the FYDP
Last bullet: new infrastructure intended to reduce complexity of the review process
May also include revamped PE structure
Possibly restructure MFPs?
Possibly reduce number of PEs? (would increase DoD funding flexibility)
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11. MID 913 Changes to Program/Budget/Execution Review:
Transition to a true biennial process
Incorporate metrics and cost models
Focus on outputs: what are we getting for our money?
Over time, metrics will become the analytical underpinning to ascertain whether the appropriate allocation of resources exists
MID 913 is also looking to reduce complexity by better orchestrating and timing processes and products
What do we know about these metrics?
MID states that Components will submit metrics (existing or to be developed)
DOD news release announcing MID 913 (22 May 2003) indicated that “…the program assessment rating tool (PART)…” was considered one of these metrics and is used by civil agencies
The OMB Form 300 contains requirements for baselines and metrics and is used by civil agencies
Government Performance and Results Act (GPRA) has requirements for metrics
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12. DEPSECDEF Direction for FY 2005 - 2009 Submission
No DPG-05
Components comply with DPG-04 and PDM direction
No FY05-09 Program Objective Memorandum (POM) or Budget Estimate Submission (BES) submittal to OSD
Components instead submit Program Change Proposals (PCPs) or Budget Change Proposals (BCPs)
Both BCPs and PCPs will be cost neutral (offsets required)
PCPs resolved thru Program Decision Memorandums (PDMs)
BCPs resolved thru Program Budget Decisions (PBDs)
This information was included in the draft MID 913, but was taken out and issued as separate instructions for the FY05 submission only
Does this mean no planning phase activities in the off-year?
This approach allowed for tweaking the process in later years, as we will see for the FY 2007 – 2011 submission
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13. Four Years in the Biennial Cycle Corresponding to Four-Year Presidential Terms
Year 1 (Review and Refinement):
Early National Security Strategy (NSS)
Off-year SPG/JPG as required (at discretion of SECDEF)
Limited Changes to Baseline Program
Year 2 (Formalize the Agenda):
Quadrennial Defense Review (QDR) – Aligned with PB submission in second year of an administration
Fiscal Guidance Issued
On-year SPG/JPG (implementing QDR)
POM/BES Submissions
Year 3 (Execution of Guidance):
Year 4 (Ensuring the Legacy):
On-year SPG/JPG (refining alignment of strategy and programs)
This slide provides the “big picture” for the four years in the cycle
The four years in the Biennial Cycle align with the four-year Presidential term
The years shown are calendar years, not fiscal years
Year 1 and Year 3 are “off-years” – FY05-09 and FY07-11 are off-year
Year 2 and Year 4 are “on-years” – FY04-09 and FY08-13 are on-year
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14. Planning Phase SEP DEC MAR APR/MAY President NSS CPR JCS NMS JPD SPG
National Security Council
CIA/DIA/JCS/OSD
1st Year
2nd Year
Notes
SPG replaces Draft Defense Planning Guidance (DPG)
JPG replaces DPG
COCOM – Combatant Commander
CPR – Chairman’s Pgm Recommendation
JPD – Joint Planning Document
JPG – Joint Programming Guidance
NSS – National Security Strategy
NMS – National Military Strategy
QDR – Quadrennial Defense Review
SPG – Strategic Planning Guidance
NSS
1st year of a new administration
CPR
This slide shows the timeline for the Planning phase and where and when it transitions into the Programming phase
The 2003 House Auth Rpt (HASC) directed DoD to prepare the National Military Strategy (NMS) biennially in the even years starting 15 Feb 2004
The boxes and ovals cover documents and sequencing; the slide also shows the players in this phase, either as originators of, or providing input to documents, or being recipients of the documents
Per 31 Oct 03 SECEF Memorandum, Subject: Initiation of a Joint Capabilities Development Process:
Strategic Planning Guidance (SPG) is a “single, fiscally-informed document that will replace the policy/strategy sections of the Defense Planning Guidance (DPG). The SPG may include programmatic guidance on a few issues of paramount importance.”
Joint Programming Guidance (JPG) is “fiscally constrained” and “will record the decisions reached in the enhanced planning process.” “The JPG will replace the DPG and will include a demonstration that the totality of the programmatic guidance provided in the SPG and JPG is fiscally executable.”
SECDEF
JCS
COCOMs
SERVICES
NMS
JPD
SPG
JPG
JCS, OSD,
COCOMs,
SVC HQs,
ETC.
Strategy
also reflected in QDR
(2nd year of new administration)
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15. Concurrent Program/Budget Review
AUG
OCT
NOV
DEC
JAN/FEB
3-Star Group
OSD/
OMB
BES – Budget Estimate Submission
COCOM – Combatant Commander
CPA – Chairman’s Pgm Assessment
MBI – Major Budget Issues
PB – President’s Budget
PBD – Program Budget Decision
PDM – Program Decision Memo
POM – Program Objectives Memo
SLRG – Senior Leader Review Group
Issue
Resolution
POM
SECDEF
SLRG
PDM
CPA
JCS
Services
PEO/PM,
SVC HQs
COCOMs
Notes
3-Star Group replaces Program Review Group (PRG)
SLRG replaces Defense Resources Board (DRB)
This slide gives you the timeline, activities, documents, and players in the Programming phase
We start with the POM/BES submission in August for an on or even-year; the POM goes to PA&E; the BES goes to USD(C); note the update of the FYDP
The POM will be reviewed for compliance with previously issued guidance
Issues are identified and worked by the OSD staff and JCS
The 3-Star Group/SLRG will generally be the approval authority for Program Budget Decisions (PDMs) resulting from the “OSD/OMB“ “Issue Resolution” process. (Formerly, PDMs were approved by the SECDEF/DRB). The membership of both the 3-Star Group and SLRG are identified in succeeding slides
The BES will be reviewed by OSD and OMB concurrently with a review of a program’s execution
You may participate in hearings at the OSD level or receive written questions based on your budget justification material or any other source that the analysts and examiners may find
BES decisions are documented in Program Budget Decisions (PBDs); if they are the least controversial, they will be issued by the DEPSECDEF or SECDEF; if they are not, the PBD may be issued by the USD(C)
The last step in the process is the MBI session – usually not more than five issues per component, COCOM, and Agency
Note the update of the FYDP
OSD/
OMB
Adv Ques/
Hearings
BES
PBDs
MBI PB
Updates
FYDP
Updates
FYDP
Services / PEO / PM
Answer / Reclama
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16. FY 07–11 Program/Budget Process Overview
Procedural changes for FY may not be institutionalized
USD(C) & Dir, PA&E co-leads for process
OSD emphasis is keeping biennial budget process & minimizing off-year changes; FY 06 Pres Bud is baseline
Fact-of-Life (FOL) changes for FY07 allow Services/Agencies to “fix” FY 07 due to PBD 753 & other defined issues; programmatic decisions will NOT be revisited
Out-years impacted by PBD 753 should be deferred, to the extent possible, to the FY 08–13 cycle
Services/Agencies will prepare Change Proposals (CPs) to implement very limited, defined adjustments
OSD will prepare CPs required to implement BRAC/QDR decisions
Senior Leader Review Group (SLRG) will meet periodically to review/decide issues
Services/Agencies not to propose offsets to National Intelligence Program (NIP) for non-NIPs
This slide takes us to the off-year process to be used for the FY Program & Budget cycle being done in calendar year 2005; the slide gives you a sense of some of policies and guidelines that are in place for the FY cycle
Note the 1st bullet:
What is being implemented for this cycle as a result of a 12 May 05 Memo jointly issued by the Director, PA&E and the USD Comptroller may not apply to the next off-year cycle
This cycle is being impacted by several events that do not normally occur simultaneously – the Base Realignment & Closing (BRAC) process and a Quadrennial Defense Review (QDR)
The OSD emphasis is to minimize changes to the FY 07 President’s Budget as it was baselined in the FY 06 submit to Congress
As you scan this slide, you will see that we no longer have Budget Change Proposals or Program Change Proposals; we have Fact-of-Life changes and Change Proposals
The Services and Agencies have the opportunity to submit for approval Fact-of-Life changes to adjust FY 07 and out wedges for programs impacted by PBD 753, though out-years generally should be deferred, to the extent possible, to the FY 08 –13 cycle
A very limited number of Service and Defense Agency Change Proposals will be accepted
A VERY important point – OSD will prepare all Change Proposals required to implement BRAC and QDR decisions
The Services and Defense Agencies are NOT to submit CPs in anticipation of those decisions
In previous years, the 3-Star Group and the Senior Leader Review Group would usually meet only once in a cycle to consider issues and advise the Deputy Secretary of Defense. This year they will meet 2 or 3 times in October and November to review issues and release one or more Program Decision Memorandums (PDMs)
2 final pieces of general guidance:
As you will see, proposed changes, whether Fact-of-Life or Change Proposals, must be resource-neutral
If you do NOT have a National Intelligence Program, you may not nominate one for an offset
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17. FY 07–11 Program/Budget Schedule
May 31 Military Departments’ composite rates due
Aug 1 FOL budget estimate notification memos due
Aug 15 OSD disposition of FOL changes
Sep 6 Service/Agency CPs due; accepted FOL justification material & other OSD-directed documentation due electronically
Sep 23 Hardcopy data submission complete
Sep 28 Detailed budget justification material due
Sep 30 OSD completes review of Service/Agency CPs (accept/reject)
Oct-Nov BRAC/QDR review & related OSD-generated CPs
Dec 20 Program & Budget review complete
Jan DoD budget submitted to OMB
This is the schedule, as contained in the joint PA&E/Comptroller 12 May 05 memo (subj: Procedures and Schedule for FY Integrated Program and Budget Review with three attachments), that we have for the FY Off-Year cycle; they are all key dates
However, note that:
Fact-of-Life information is due 1 August, with OSD decisions regarding compliance with the guidance and acceptability of offsets being made by 15 August
Service and Agency Change Proposals are due 6 September, along with electronic submissions of OSD-accepted Fact-of Life justification material and other material OSD requested in an USD(C) 30 Jun 05 memo
OSD expects to complete a review of the Service and Agency-submitted Change Proposals by 30 September
OSD will review for compliance with the guidance and acceptability of the offsets
Those Change Proposals that are accepted will be assigned to PA&E or USD(C) for further issue development and resolution
Please note that, as I said before, OSD staff will prepare any Change Proposals considered necessary to implement BRAC and QDR decisions that are made prior to submission of the FY 07 President’s Budget
The overall process should be complete by 20 December with the DoD budget lock
The 12 May 05 memo announcing the Procedures and Schedule for FY Integrated Program and Budget Review stated that detailed instructions would be provided later in another document and placed on the Program Review website; that guidance, issued by USD(C), was dated 30 Jun 05, subj: Fiscal Year (FY) Program and Budget Review, with 9 attachments addressing budget and execution review guidance, to include electronic and hard copy documentation submission requirements
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18. FY 07–11 Program/Budget Procedures – FOLs
Services/Agencies submit 1 Aug to USD(C) & Dir, PA&E, FOL proposals for “quick look” acceptance or rejection
FOLs to be submitted for pricing, program execution, or Congressional action changes; Congressional action ONLY if APPN Act signed by 1 Aug
Anticipated BRAC/QDR outcomes are NOT to be included
Any submissions MUST be resource-neutral
Now we’ll look at some of the specific guidance as we know it now
First are the Fact-of-Life changes
OSD is emphasizing the biennial process – minimal up or down changes from the FY07 baseline established in the FY 06 President’s Budget submit will be accepted
On 1 August the Services and Defense Agencies must submit to the Director, PA&E and the Comptroller a FOL Notification Memorandum in the format specified in Appendix B of the 12 May memo
Any FOLs submitted should be in accordance with the ground rules specified in Appendix A of the 12 May memo
The ground rules are summarized in the last 3 bullets on this chart
Note the term “quick look” in the 1st bullet – OSD will turn around the FOLs by 15 August
If a proposed FOL is accepted, documentation and justification is due 6 September, as you saw on the Schedule chart
If a proposed FOL is not accepted by OSD as an FOL, it may be resubmitted on 6 September as a Change Proposal
This is a potential opportunity to “fix” FY 07 impacted by PBD 753 where components did not have the time to adequately refine the level-of-detail for offsets identified in the FY 06 President’s Budget submit
This is NOT an opportunity to revisit programmatic decisions made through PBD 753
Components need to convince OSD that the FY 07 baseline established in the FY06 submit needs to be adjusted – that is, why the proposed FOL can not wait until the FY cycle
Also note that neither the Services nor Agencies are to submit FOLs for anticipated BRAC or QDR decisions
AND, components must provide an offset in order to plus-up a line – the submissions must be resource-neutral; the propose offsets must also address the risks associated with the tradeoffs
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19. FY 07–11 Program/Budget Procedures – FOLs APPN Guidance
Appropriation:
PROC & RDT&E:
Any changes > than +/- 10% in any APPN in any year within ACAT III or IV programs
Any realignment within S&T
MILCON/FHA:
Any changes > than +/- 10% in any APPN year
Any change to recapitalization metrics in any year
MILPER:
MOAs documenting any change in Service support manpower provided to combatant commands, Defense agencies, or other Defense-wide components
Exception: Defense Health Program (DHP) & Special Operations Command (SOCOM) adjustments MUST be submitted as CPs
Any Congressionally-mandated benefit adjustments
Now we’ll look at some of the guidelines as they apply to the Appropriation Categories
1st and foremost are adjustments mandated by Congressional action IF an Appropriation act is signed by 1 August
If a proposed FOL change/issue meets or exceeds any of the thresholds for various Appropriations listed on the next 2 charts, it must be highlighted and explained in the Notification Memo
For PROC and RDT&E:
If you have an ACAT III or IV program with a greater than +/- 10% change for FY 07-11
A realignment in your S&T programs
The focus for Military Construction and Family Housing is also FOL changes greater than +/- 10% or changes to recapitalization metrics for FY 07-11
The last Appropriation on this slide, MILPER:
Has a caveat for proposed adjustments impacting the Defense Health Program and SOCOM – those types of adjustments MUST be submitted as Change Proposals, which we’ll look at shortly
And requires an FOL for any Congressionally-mandated benefit changes
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20. FY 07–11 Program/Budget Procedures - FOLs APPN Guidance Cont’
O&M:
Any change to facilities sustainment & recapitalization metrics in any year
Any change to O&M metrics other than OPTEMPO metrics
Revolving Funds:
Any changes based on FY 05 execution that result in changes to FY 06 and FY 07 estimates
Any changes to capital purchase programs that don’t change total-dollar amount for capital purchases reflected in FY 06 Pres Bud
All other FOLs changes to be generally explained in 1 Aug notification memo to OSD
If a submitted FOL is not accepted by OSD as an FOL, it may be resubmitted as a CP
In the O&M Appropriation Category, OSD is looking for any changes to facilities sustainment and metrics other than OPTEMPO metrics
For Revolving Funds:
FY 05 execution experiences impacting FY 06 and FY 07 should be submitted as FOLs
And also changes to Capital Purchase Programs that don’t change the dollar amounts in the FY 06 President’s Budget
Any FOLs that the Services or Agencies want that do not fall under the criteria addressed in the 12 May memo must be explained in general terms in the Notification Memo to OSD
Finally, I already mentioned that if an FOL is not accepted as an FOL by OSD, the Service or Agency has the option of resubmitting the issue as a Change Proposal on 6 September
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21. FY 07–11 Program/Budget Procedures - FOL & Service/Agency CPs
NLT 6 Sep, Services/Agencies submit: CPs; accepted FOLs; & other OSD-directed changes
Electronic submission of documentation includes:
Accepted FOL changes in justification material
Any other OSD-directed documentation such as major programs, etc.
Tailored, limited budget exhibits
Submissions MUST be resource-neutral
OSD will complete review for acceptance/rejection of CPs by 30 Sep
Decisions on accepted CPs to be addressed in PDMs & PBDs
6 September is a Key Date
The Services and Agencies must enter into the OSD data base the accepted FOLs and provide any other documentation requested by OSD as addressed in the 30 Jun 05 memo
They must provide the limited budget exhibitis that are addressed in the 30 Jun 05 OSD guidance, AND
The Services and Agencies must submit to the Director, PA&E and the Comptroller any Change Proposals they want considered, to include any CPs previously submitted as FOLs but not accepted as FOLs; this is the last opportunity for the Services and Agencies to have direct input into the process
As with the FOLs, the Change Proposals must be resource-neutral – a zero-sum change
Also as with the FOLs, OSD will be on the fast-track for review and preliminary decisions regarding the CPs – submitted on 6 September with the review to be completed by 30 September
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22. FY 07–11 Program/Budget Procedures – Service/Agency CPs Cont’
A CP must provide for:
A single, coherent enhancement to Defense capability
Offsets other than Tactical Intelligence & Related Activities (TIARA) & Joint Military Intelligence Program (JMIP); offsets must be consistent with OSD planning guidance & FY 06–11 PDMs/PBDs
Programmatic/resource adjustments resulting from studies directed by FY 06–11 JPG or PDMs/PBDs but not included in FY 06 Pres Bud
Deviations, other than pricing, from previous guidance, including PBD 753
Out-year tails for enacted legislation
Proposed offsets may be used for the proposal or applied by OSD to other initiatives
While this and the following slide address the purpose and general content of a Change Proposal, Appendix C of the 12 May Memo does, and the Program Review Website will, contain more detailed information
A given CP may propose enhancements to more than one program, but they must tie to a single, coherent enhancement, as the chart notes
The opening slide for the FY Process Overview noted that Intelligence-related programs were not to be used for billpayers for non-Intelligence programs – the 2nd sub-bullet is a little more specific
Furthermore, any proposed offset must be in compliance with previous programmatic decisions – again, this is not the time to revisit the programmatics of PBD 753
Please note the last bullet – proposed offsets or billpayers may be used by OSD for other proposals or major initiatives
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23. FY 07–11 Program/Budget Procedures – Service/Agency CPs Cont’
CPs must:
Explain why the issue is not appropriate for the QDR process – OSD will submit CPs to implement BRAC & QDR decisions
Explain why the issue cannot be deferred to the FY 08–13 Program/Budget review
Identify the risks (operational, future, institutional, force management, business) that would be increased if the proposed offsets are accepted
Reminder - proposed offsets may be used for the proposal or applied by OSD to other initiatives
Please remember that the emphasis for this cycle is the biennial budget process and minimizing changes to the FY 06 Pres Bud submit
Because OSD will generate Change Proposals for BRAC and QDR decisions, the Service or Agency must explain:
Why the Change Proposal cannot wait to be considered during the QDR process, AND
Why it cannot be deferred to the FY Program and Budget Review
In the 3rd sub-bullet, you must define the risks associated with the proposed offsets – what they are and why they are acceptable compared to not funding the enhancement
Finally, the last bullet is the reminder – the proposed offset may be accepted, but not the enhancement
Defense Acquisition University

24. FY 07-11 Program/Budget – Who Can Submit CPs
Secretaries of Military Departments
Chairman, Joint Chiefs of Staff
Under Secretaries of Defense
Assistant Secretary of Defense for Network Information & Integration
Director, Operational Test & Evaluation
Commander, SOCOM
Defense Agencies, thru Principal Staff Assistant
Combatant Commanders, thru Executive Agents; info to Joint Staff
This chart reflects what positions may submit Change Proposals
Both the Comptroller and the Director, PA&E will review all submissions for compliance with the guidance and determine if acceptable offsets are included to remain resource-neutral
If a Change Proposal is accepted, the OSD staff will develop the issue for consideration by the Senior Leader Review Group (SLRG)
Defense Acquisition University

25. FY 07–11 Program/Budget Procedures – Service/Agency CPs APPN Guidance
Appropriation:
PROC & RDT&E:
ACAT I – any change to quantity profile or any change > /- 10% in any APPN in any year within a program
ACAT II – any start or termination
S&T – any reduction below the Service/Agency FY 06 Pres Bud in any year
MILCON/FHA:
FY 07 ONLY – any change to FY 07 project list submitted to Congress or any change in project scope
Any MILCON/FHA CP must include a statement describing the effect of the CP on the recapitalization metric
Like the FOLs, the Change Proposals also have specific Appropriation Category guidance, to include programmatic thresholds; if a proposed change meets, or exceeds the following thresholds, they MUST be submitted as CPs and NOT FOLs
For PROC and RDT&E, CPs are only expected for:
ACAT I program quantity or dollar changes, as shown
ACAT II starts or stops, AND
For S&T, any decrease below the FY 06 President’s Budget baseline
For Military Construction and Family Housing:
ANY changes to the project list for FY 07 submitted with the FY 06 President’s Budget must be addressed, as well as changes in scope, AND
Any impacts on recapitalization metrics
Defense Acquisition University

26. FY 07–11 Program/Budget Procedures – Service/Agency CPs APPN Guidance Cont’
MILPER:
Change to projected end strength or average strength in any year
New personnel benefits not mandated by Congress
PCS funding change of +/- 5% or more
DHP & SOCOM manpower adjustments must be codified in MOAs & submitted as CPs
O&M:
Changes to OPTEMPO program metrics, e.g., steaming hours, flying hours, tank miles, Marine Corps ready-days
Revolving Funds:
Changes to Service/Agency obligation authority that impacts customer rates
Changes that result in increase/decrease to customer BA reflected in FY 06 Pres Bud
Changes to capital purchase programs that increase/decrease total dollar amount for capital purchases reflected in FY 06 Pres Bud
This slide generally addresses the guidance for MILPER, O&M, and the Revolving Funds
The bullets for MILPER are fairly straight forward
Regarding Defense Health Program and SOCOM adjustments, you may recall that the FOL guidance directed that these types of adjustments be addressed only as CPs
For O&M, while FOLs addressed other than OPTEMPO metrics, Change Proposals are to address OPTEMPO
And finally for Revolving Funds, the Change Proposals are to focus on increases and decreases to rates and budget authority levels established in the FY 06 President’s Budget submit
Defense Acquisition University

27. FY 07–11 Program/Budget Process – OSD Level Actions
3-Star Group/SLRG will review BRAC/QDR & any other OSD CP issues 2-3 times/month
OSD decisions will be issued thru PDM(s)/PBDs
OSD/OMB hearings will be “by exception”
OMB will provide economic assumptions, deficit projections, & top-line guidance
Defense “Budget Lock” projected for 20 Dec
We’ve talked about Service and Agency Change Proposals; what about OSD-generated CPs for BRAC and QDR decisions and other OSD issues?
Both the 3-Star Group, whose membership is on the next slide, and the Senior Leader Review Group will convene 2 or 3 times in October and November to review issues addressed in the BRAC and QDR and Change Proposals prepared by the OSD staff
During the October to December timeframe, OSD will issue PBDs and 1 or 2 PDMs to implement SLRG and SECDEF decisions
Through-out the entire FOL and CP process, whether for Service/Agency prepared CPs, or OSD-prepared CPs, “hearings” as we know then from previous cycles, will be the exception
As usual, OMB will provide the guidance in the 4th bullet and may recommend funding adjustments
The projected “Budget Lock” date for DoD is 20 December
The submission to OMB will be in January and the FY 07 President’s Budget will be submitted to Congress not-later-than 6 February 2006
Defense Acquisition University

28. FY 07-11 Program/Budget Process – 3-Star Group
Director, PA&E
Principal Deputy, PA&E
Army DCS G-8
Deputy CNO (Resources, Warfare Requirements, & Assessments)
Air Force DCS (Plans & Programs)
Marine Corps Deputy Commandant, Program & Resources
Joint Staff Director for Force Structure, Resources, & Assessments (J-8)
Principal Deputy USD(C)
Principal Deputy USD(AT&L)
Principal Deputy USD(Policy)
Principal Deputy USD(Intelligence)
ASD for Networks & Information Integration
Director, OT&E
Invitees: Director, DR&E; Directors of Defense Agencies; etc.
Finally, this slide identifies the positions that comprise the 3-Star Group that will assist in considering the BRAC, QDR, and OSD staff-generated issues, along with the SLRG
The next slide addresses the composition of the SLRG
Defense Acquisition University

29. FY 07-11 Program/Budget Process – Senior Leader Review Group (SLRG)
Secretary of Defense
Deputy Secretary of Defense
Secretaries of the Military Departments
Chairman/Vice Chairman, Joint Chiefs of Staff
Under Secretaries of Defense
Assistant Secretary of Defense (Network Information & Integration)
Chiefs of Staff, Army & Air Force; Chief of Naval Operations; Commandant of the Marine Corps
Invitees: as required by the Secretary/Deputy Secretary of Defense
The actual attendees from the SLRG vary according to then issues that will be addressed
Defense Acquisition University

30. Off-Year Process During 2005 (FY 07-11)
1 AUG
15 AUG
6 SEP
30 SEP
OCT-DEC
20 DEC
JAN-FEB
FOL Notification
Memo to
USD(C) &
Dir, PA&E
Svcs/Agencies
Accepted FOLs
Entered into
OSD Data Base
OSD
Completes
Service/Agency
CP Review
OSD Staff
Review
OSD FOL
Decisions
SLRG Review of
CPs
Electronic
OSD-Required
R/P Forms Due
Services
&
Agencies
PDM(s) & PBDs
Issued
Budget
Lock
Pres
Bud
Services/Agencies
CPs Due
to OSD
This slide gives you a notional roll-up of key activities, decisions, and dates as outlined in the 12 May 05 Memo, and summarizes what we’ve been talking about
1 August the Services and Defense Agencies will submit to the Comptroller and Director, PA&E their Notification Memos for Fact-of-Life changes
By 15 August, the OSD staff will have completed its reviews of the FOLs and accepted or rejected them; if the FOLs were rejected, the submitter has the option of resubmitting the change as a Change Proposal
6 September is a key date; the Services and Agencies must have entered the accepted FOLs into the OSD data base and submitted the electronic versions of the OSD requested R-and P- Forms as specified in the 30 Jun 05 memo
On 6 September the Services and Agencies must also submit to the Comptroller and Director, PA&E their Change Proposals, which do NOT address anticipated BRAC or QDR decisions
By 30 September, OSD will complete the review of the Service/Agency submitted CPs for compliance with the guidance and acceptability of offsets; those that are accepted will have the issues developed by PA&E or USD(C)
Also during the September-November timeframe, the OSD staff will prepare CPs for BRAC and QDR evolving decisions and for any other issues deemed appropriate
During the October-November timeframe the 3-Star Group and the SLRG will meet periodically to review and consider the accepted change proposals submitted by the Services/Agencies and those submitted by the OSD staff
The decision-making will be documented in PBDs and PDMs
The BRAC and QDR decisions will be incorporated into the data base and justification material in the November-December timeframe
Budget Lock is then scheduled for 20 December with the President’s Budget submitted no-later-than 6 February 2006
FOL - Fact -of- Life
CP - Change Proposal
SLRG - Senior Leader Review Group
QDR - Quadrennial Defense Review
BRAC - Base Realignment & Closure
PDM - Program Decision Memorandum
PBD - Program Budget Decision
R-Forms - Research & Development Forms
P-Forms - Procurement Forms
OSD – Prepared
BRAC/QDR
CPs Submitted
Defense Acquisition University

31. Resource Allocation Process Time Now: August 2005
CY04
CY05
CY06 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
FY04
Execution
2nd Yr
3rd Yr
FY04 and prior
FY05
Enactment
Execution
2nd Yr
3rd Yr
FY05
FY05 and prior PB
FY06
Planning
Program/Budgeting
Enactment
Execution
2nd
FY06-11
SPG/JPG
FY POM
FY06
FY06 and prior PB
FY BES
FY07
This slide is a graphic representation of the resource allocation process that incorporates PPBE and is similar to the Platinum Card – if you know what “time now” is, and adjust the years on this chart, you’ll always know where you’re at in the PPBE timeline
Timeline across the top shows calendar year (CY) CY04, CY05, and CY06 subdivided into months
Left side of the graphic is labeled vertically with fiscal year (FY) starting with FY04; under it is FY05, FY06, FY07, and FY08
Each FY label corresponds to a bar going horizontally across the graphic timeline representing resource allocation for that specific FY’s funding over time
The bar for FY04 starts at the left side of the timeline (Jan of CY04) and is subdivided as follows: “Execution (FY04 and prior)” starts at the far left and ends at the end of Sep CY04; “2nd Yr” starts Oct CY04 and ends Sep CY05; “3rd Yr” starts Oct CY05 and ends Sep CY06
The FY05 bar starts at the far left of the timeline and is subdivided as follows: “Enactment (FY05)” starts Jan/Feb CY04 and ends Sep CY04; “Execution (FY05 and prior)” starts Oct CY04 and ends Sep CY05; “2nd Yr” begins Oct CY05 and ends Sep CY06; “3rd Yr” begins Oct CY06 and ends at the far right of the timeline (Dec CY06)
For Aug CY05:
We’re executing the 2nd year of FY04 RDT&E and PROC and 3rd year of FY03 PROC
We’re executing the 1st year of FY05 RDT&E and PROC
FY06 and FY07 are on the Hill
We’re working the FY07-FY11 process that has just been discussed
Planning is beginning for FY08-FY13, which the QDR will heavily influence
Planning
Program/Budgeting
Enactment
Exec
FY SPG/JPG
FY FOL/CP
FY07
FY07 & prior PB
FY08
Planning
Program/Budgeting
FY SPG/JPG
FY POM
FY BES
Defense Acquisition University
SPG – Strategic Planning Guidance JPG – Joint Programming Guidance POM – Program Objective Memorandum BES – Budget Estimate Submission CP – Change Proposal FOL – Fact-of-Life

32. Key PPBE Action Officers
AIR FORCE: Program Element Monitor ( PEM )
Interfaces with Using Commands, Developing Commands, Air Staff, Air Secretariat, OSD, and sometimes Congress
NAVY: Requirements Officer ( RO )
Works Navy position on Resource Allocation by “Warfighting Specialty”
Interfaces with Using Commands, Developing Commands, CNO Staff, Navy Secretariat, and OSD
ARMY: Department of Army Systems Coordinator (DASC)
Interfaces with Using Commands, Developing Commands, Army Staff, Army Secretariat, and OSD
Interface between Program Manager (PM) and Congress (through proper Legislative Liaison Offices)
Importance of Headquarters Action Officers (AOs) in the PPBE process: they are the “eyes and ears” of the program manager and are located in the Pentagon; they are usually military officers in the grades of O-4 or O-5
Each Service does it somewhat differently with different players. AF = PEMs, Navy = ROs, Army = DASCs
Important points about AOs:
Absolutely essential the PMO stay connected to, and maintain open lines of communication with, the PPBE AOs
Especially true during POM build when Services are resourcing and prioritizing programs; important that PMO’s know what AOs are doing and equally important that PMOs ensure that AOs know what is going on in their programs and keep them up to date and informed
PPBE AOs field questions about programs from Congress, OSD, Users, etc. on a regular basis - they don’t always have time to confer with the PMO
Defense Acquisition University

33. Additional Information
OSD PA&E website
OSD Comptroller website
DAU BCEFM Acquisition Community Connection (ACC) website
Additional information is available on these websites
Defense Acquisition University

34. Old Slides FY 2004-2009 Defense Planning Guidance
Program Change Proposals (PCPs)
Budget Change Proposals (BCPs)
Who Submits PCPs/BCPs
Off-Year Program/Budget Review
FY Program/Budget Schedule
The following slides reflect superseded guidance. They are included for continuity for comparison of what has changed in the process.
Defense Acquisition University

35. FY 2004-2009 Defense Planning Guidance
“The Department’s current planning, programming, budgeting and acquisition systems are rigid, unresponsive and ill-suited for a dynamic and uncertain security environment. DoD needs to streamline and integrate PPBS and the major acquisition and requirements processes with particular attention paid to those areas where technological change occurs most rapidly.”
Tasked the Senior Executive Council, under the leadership of the SECNAV, to provide a systematic approach for replacing these processes
Defense Acquisition University

36. Program Change Proposals (PCPs)
Identify areas to take additional risk (offsets)
Offsets may be used for other initiatives
Limited to items that exceed $250 million across FYDP
Threshold at individual programmatic issue level
May address smaller issues if serious programmatic problem
If less than $250 million, may submit as BCP if budget year is affected
Must comply with PDM decisions
Combatant Commanders may submit up to six prioritized PCPs regardless of dollar value
Full budgetary data submitted for accepted PCPs
Defense Acquisition University

37. Budget Change Proposals (BCPs)
Generally limited to fact-of-life changes:
Cost increases
Schedule delays
Management reform savings
Workload changes
Budget execution experience
Congressional action
May involve FYDP years if total cost is less than $250 million and budget year is affected
Offsets required
Backed up with appropriate budget exhibits
Defense Acquisition University

38. Who Submits PCPs/BCPs Under Secretaries of Defense (USDs)
ASD (Network and Information Integration)
Director, Operational Test & Evaluation (DOT&E)
Chairman, Joint Chiefs of Staff
Secretaries of Military Departments
Combatant Commanders (COCOMs)
Submit PCPs through J-8
Submit BCPs through Service Executive Agent
Directors of Defense Agencies
Submit PCPs through OSD Principal Staff Assistant
Submit BCPs to OSD Comptroller
Defense Acquisition University

39. Off-Year Program/Budget Review
AUG
OCT
NOV
DEC
JAN/FEB
3-Star Group
OSD/
OMB
BCP – Budget Change Proposal
COCOM – Combatant Commander
CPA – Chairman’s Pgm Assessment
MBI – Major Budget Issues
PB – President’s Budget
PBD – Program Budget Decision
PCP – Program Change Proposal
PDM – Program Decision Memo
SLRG – Senior Leadership Review Group
Accepted PCP
Resolution
PCPs
SECDEF
SLRG
PDM
CPA
JCS
Services
PEO/PM,
SVC HQs
COCOMs
Notes
3-Star Group replaces Program Review Group (PRG)
SLRG replaces Defense Resources Board (DRB)
OSD/
OMB
Adv Ques/
Hearings
BCPs
PBDs
MBI PB
Updates
FYDP
Services / PEO / PM
Answer / Reclama
Defense Acquisition University

40. FY 2006-2011 Program/Budget Schedule
Aug 2 POM/BES Electronic Database Submissions
Sep 1 POM Briefings to SLRG
Sep 15 POM/BES FYDP Available
Sep 15 Detailed Budget Justification Material Due
Sep 24 Program Review Issues Due
Oct 3 Issue Disposition Memo
Oct – Nov OSD Meetings
Oct – Nov Program Review SLRGs
Nov 22 PDM
Dec 6-10 MBI Sessions
Dec 20 Program Budget Lock Up
Feb 7 FY 2006 Congressional Submission
Defense Acquisition University