Planning, Programming, Budgeting, and Execution (PPBE) Roberta Tomasini DSMC-SPM (703) 805-3764 e-mail: roberta.tomasini@dau.mil

From Requirement to Capability Planning, Programming, Budgeting and Execution Life Cycle Cost Annual Funding Cost Analysis Estimate Funding Policies ICE FYDP DPPG POM RMD Full Funding (Exceptions) MFP PE BES FEA CAIV CCE Fiscal Environment Incremental Funding MBIs POE AoA Congressional Enactment HAC HASC HBC SAC SASC SBC President’s Budget Budget Resolution Authorization & Appropriation Laws REVIEW: - Last refresher looked at cost estimating concepts and required documentation. We said then that the cost estimate is the basis for the program’s budget requests. - In this refresher, we’ll examine how we turn the cost estimate into a budget. 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

PPBE Outline PPBE Overview Building Blocks FYDP, MFP, Program Elements PPBE Process Membership of DAWG and SLRG Capability Portfolio Managers (CPMs) FY 12-16 Schedule

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 5000.2 -- 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

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. Until now, unchanged since developed by McNamara in 1961 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? Trans: What are the phases in PPBE?

PPBE Phases Planning (OSD Policy) Assess capabilities / review threat Develop guidance Programming (OSD CAPE) Turn guidance into achievable, affordable packages Five-year program (Future Years Defense Program) Budgeting (OSD Comptroller) Test for efficient funds execution Scrub budget years 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

Future Years Defense Program (FYDP) Computer database maintained by D,CAPE Approved force structure and resources in SECDEF Defense Program Contains PY, CY, BY + 4 Out-Years + 3 additional years for force structure only Updated two times per PPBE Cycle: Program Objectives Memorandum/Budget Estimate Submission (POM/BES) – July President’s Budget (PB) - February 12 13 14 15 16 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 three phases of PPBS Updated two times per year to reflect the BES (Aug/Sep), and President’s Budget (Jan/Feb) submissions. New Approved Numbers for your program 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 “odd years”. The components will “tweak” the 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. QTS: When was the POM/BES submission this year? 22 Aug 02 TRANSITION: Let’s take a look at how the FYDP is structured

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 Cube Chart to illustrate how the FYDP is structured: 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) mission-oriented for DoD internal management uses. Break by MFP in Planning & Programming; by Appropriation in Budgeting 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

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 ) 0101126F - B-1B Squadrons 0101215F - Peacekeeper Squadrons 0101228N - Trident 0101316A - Worldwide Joint Strategic Comm 0102424F - SPACETRACK PROGRAM 2 ( GENERAL PURPOSE FORCES ) 0202112A - Airborne Divisions 0204224N - Frigates - Missile 0207138F - F-22 Squadrons 0207423F - Advanced Communications Systems A - ARMY N - NAVY M - MARINE F - AF D - OSD C - MDA E - DARPA J - JCS S - DLA BB - SOCOM DBD - DFAS Program Elements are 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 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 Thresholds Reprogramming (BTR) limits, and are, therefore, somewhat more structured and specific than most other PE’s -- we will discuss this further in FM 5. All programs and all resources have PEs. The entire FYDP database can be listed by PE. There are over 3600 of them. SUMMARY: So now that we’ve talked about the major Building blocks of PPBS: the FYDP, MFPs and PEs, Let’s compare the old PPBS to the new PPBE… Ref: DoD 7045.7 - H

FEAs PPBE – Planning Phase APR ( DPPG)/Sep ( FEAs) Finish 2nd Year ~Starts FEB/MAR (1st Year) President National Security Council CIA/DIA/JCS/OSD FEAs Planning Phase focus: Threat vs Capabilities Update strategy Guidance for programming Under direction of CAPE FEAs developed in Planning Phase. Used To inform program reviews. NSS To Concurrent Program/Budget Review NDS QDR DPPG OSD Level JCS NMS CPR Level (JCS, COCOMs, SERVICES) CIA – Central Intelligence Agency; COCOM – Combatant Commander; CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency; DPPG –Defense Planning &Programming Guidance; JCS – Joint Chiefs of Staff NDS – National Defense Strategy; NMS – National Military Strategy; NSS – National Security Strategy OSD – Office of the Secretary of Defense; QDR – Quadrennial Defense Review; FEA – Front End Assessments

Concurrent Program/Budget Review JUL OCT NOV DEC FEB FEAs Continued 3-Star Group OSD CAPE/ OMB Issue Resolution POM SECDEF/DEPSECDEF SLRG*&DAWG* CPMs CPA JCS Components Defense Agencies RMDs TBD = * Budget Review: There are four areas considered by the USD(C) and OMB analysts as principal issue areas during the review and “scrub” of the budget submission from the Services and agencies: program pricing, program phasing, funding policies and program/budget execution. Program Pricing - Examines whether the specific program has been priced out properly (e.g., that the budget was prepared on the basis of “most likely cost” of the work to be done and that the proper escalation index has been applied to the constant- year budget estimate to determine the current then-year funding requirement). Program phasing - Examines the compatibility between the approved acquisition strategy and the funding necessary to pay for the requirements shown in that strategy (e.g., that have Procurement funds been phased properly to coincide with program plans for production). Funding policies - Examines the compliance of the budget request with the proper policy for each specific appropriation category (e.g., RDT&E has been budgeted on an incremental basis; procurement and MILCON on a full funding basis; and O&M and MILPERS on an annual basis). Program/Budget execution - Examines the efficiency with which an organization has executed (i.e., obligated and expended) currently available funds and the effect of current year execution on budget year submissions. As an example, has the organization met established goals for obligations and expenditures during the current fiscal year? If not, can those “excess” funds from the current fiscal year be allowed to slip into a future year and, therefore, allow a decrease in the funding requirement in that future year? Of the four budget review issues, program executability/budget execution is the primary concern Adv Questions/ Budget Hearings USD(C)/ OMB BES MBI* PB Services / PEO / PM Answer / Reclama Updates FYDP Updates FYDP BES – Budget Estimate Submission; CAPE – Cost Assessment & Prgm Evaluation COCOM – Combatant Command; CPA – Chairman’s Pgm Assessment; CPM – Capability Portfolio Manager DAWG – Deputy’s Advisory Working Group; FEAs- Front End Assessments; FYDP – Future Years Defense Program MBI – Major Budget Issues; OMB – Office of Management and Budget; PB – President’s Budget POM – Program Objectives Memo RMD – Resource Management Decision; SLRG – Senior Leader Review Group

Deputy’s Advisory Working Group Deputy Secretary of Defense (Chair) Vice Chairman Joint Chiefs of Staff (Vice Chair) Under Secretary of Defense (AT&L) Under Secretary of Defense (Policy) and Principal Deputy Under Secretary of Defense (Comptroller) /Chief Financial Officer or Principal Deputy Under Secretary of Defense (P&R) or Principal Deputy Under Secretary of Defense (Intelligence) or Principal Deputy Secretary or Under Secretary of the Army Secretary or Under Secretary of the Navy Secretary or Under Secretary of the Air Force Chief or Vice Chief of Staff of the Army Chief or Vice Chief of Naval Operations Chief or Vice Chief of Staff of the Air Force Commandant or Assistant Commandant of the Marine Corps Commander or Deputy Commander, SOCOM Deputy Chief Management Officer ASD (Legislative Affairs) ASD (Networks & Information Integration/Chief Information Officer) ASD for Public Affairs General Counsel Director of Administration and Management Director or Principal Deputy Director, CAPE Director, Joint Staff Chief, National Guard Bureau or Deputy Director, SP&P-J5 Director, FS,R&A-J8 This is the membership of the DAWG, chaired by DepSecDef. It started out as the ”Group of 12” for the QDR reviews done in 2005.

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 & Prgm Eval 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

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.

Capability Portfolio Managers (CPMs) Leadership and Tier 1 JCA CPM Civilian Lead Military Senior Warfighting Forum (SWarF) Lead * Joint Staff OPR * Functional Capability Boards * Command and Control ASD (NII) JFCOM J-3 Battlespace Awareness USD (I) STRATCOM J-2 Net Centric J-6 Logistics USD (AT&L) TRANSCOM J-4 Building Partnerships USD (P) Director, J-5 N/A J-5 Protection Director, J-8 J-8 Force Support USD (P&R) Force Application Joint Requirements Oversight Council (JROC) SOCOM Corporate Management & Support DCMO Director, Joint Staff * As designated by the Chairman of the Joint Chiefs of Staff (CJCS)

FY 12–16 Program/Budget Schedule 2 Apr 10 Fiscal Guidance Issued Apr 10 Defense Planning and Programming Guidance Issued 30 Jul 10 Component POM/BES Submissions Due (databases lock) 2-13 Aug 10 Component POM Briefs to 3-Star/DAWG 30 Aug 10 Issue Nominations Due 3 Sep 10 Budget Justification Material Due to OSD/OMB 22 Nov 10 Program/Budget Review Complete 7 Feb 11 President’s Budget Submitted to Congress NOTE: Submission includes FY 12 OCO (supplemental) request This is the schedule we have for the FY 07-11 Off-Year cycle; they are all Key dates However, note that: Fact-of-Life information is due 1 August with OSD decisions 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 any other material OSD may have requested OSD expects to complete a review of the Service and Agency-submitted Change Proposals by 30 September They’ll review for compliance with the guidance and acceptability of the offsets Those 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 Pres Bud The overall process should be complete by 20 December with the DoD budget lock This is a good time to point out that the 12 May Memo announcing the Procedures and Schedule for FY 07-11 Integrated Program and Budget Review stated that detailed instructions will be provided later in another document and on the Program Review website 16