Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764.

Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini Defense Systems Management College Defense Acquisition University Fort Belvoir, Virginia 19 April 2017

Outline DoD Budget: SecDef Mattis memo, 31 Jan 2017
PB 17 Overview (CRIKT, Third Offset, etc.) PPBE Overview Building Blocks FYDP and Program Elements PPBE Process and Schedule 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.

DoD Budget: Sec Def Mattis Memo, 31 Jan 2017
Phase 1: Improve Warfighting Readiness – the FY 17 Budget Amendment Address immediate and serious readiness challenges Driven by acceleration of campaign against ISIS May increase force structure and provide offsets from lower priority programs Will be a net increase over the FY 17 topline requested by the previous administration Due to OMB NLT 1 March 2017 ($30B: $25B base and $5B OCO; AKA RAA and ABS) Submitted to OMB 10 March 2017; submitted to Congress 16 March 2017; above budget caps Phase 2: Achieve Program Balance – the FY 18 PB Request Will conduct a comprehensive but accelerated FY 18 budget review Will include Buying more critical munitions Funding facilities sustainment at a higher rate Building programs for promising advanced capability demos Investing in critical enablers Growing force structure at the maximum responsible rate Due to OMB NLT 1 May 2017 ($54B over BCA cap for FY 18) Expected to offset from domestic appropriations Phase 3: Build Capacity and Improve Lethality – the National Defense Strategy (NDS) and FY Defense program NDS closely coordinated with the National Security Strategy (NSS) to be signed by President Trump Strengthen military and improve how DoD does business (includes horizontal integration to improve efficiency and take advantage of economies of scale)

PB 17 vs Current Caps and Prior Budgets (Dollars in Billions)
$610 $590 $570 $550 $530 $510 Original BCA Caps $490 $470 FY10 FY11 FY12 FY13 FY Actuals FY 2015 PB Current Caps FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY 2013 PB/DSG FY 2017 PB FY 2016 PB Original BCA Caps Tab 4 – PPBE

The FY 2017 Budget: Key Points
Adheres to the Bipartisan Budget Act of 2015 (Dollars in Billions) – Base budget request $523.9 – Overseas Contingency Operations (OCO) budget request $58.8 – Total budget request $582.7 Funds a joint force with the capacity and capability to: Defend the homeland Respond to five challenges (AKA CRIKT, CRIKCT, and 4+1) Russia China North Korea Iran Global counter-terrorism Respond to aggression from two different adversaries with overlapping timelines DoD requires funding above the BCA levels after FY 2017 to properly support this strategy

Secretary Carter’s Priorities for This Budget
Given the current level of budget resources ($800B in Budget Control Act cuts), we can’t reduce all risk Instead, the Department must: Prioritize conventional deterrence against our most advanced adversaries Focus more on the shape than the size of the force Seek the best balance between force structure (size), modernization (capability) and readiness Emphasize lethality and capability of the force rather than size Emphasize posture rather than presence Emphasize innovation Attracting, retaining, and managing talent (Force of the Future) Update war plans and operational concepts Pursue “offset” technologies Institutional efficiency and reform “Today’s security environment is dramatically different … and it requires new ways of thinking and new ways of acting” Secretary Carter, February 2, 2016 Tab 4 – PPBE

FY 2017 Budget Supports Planned force structure levels
Service readiness recovery plans A safe, secure and reliable nuclear force at New START levels Force of the Future initiatives Modernization: DDG modernization and SSN upgrades Surface ship advanced munitions and sensor technologies Investment in space capabilities Hypersonic research and development Cyber tools for Combatant Commanders Army aviation modernization plan Marine Corps vehicle modernization plan Key reform proposals (e.g., TRICARE) Tab 4 – PPBE

FY 2017 Force Structure Force structure assessed sufficient to execute the strategy Major elements include: 14 SSBNs, 450 ICBMs 96 Operational Bombers (154 total) 287-ship Navy with 11 Carriers in FY 2017 (Building to a 308-ship Navy) 54+1 Tactical fighter squadrons 990k Army Total End Strength (460k Active) (30 Active BCTs in FY 2017) 221k Marine Corps Total End Strength (182k Active) FY 2017 Force Structure Sufficient to Execute Strategy Tab 4 – PPBE

End Strengths in FY 2017 Budget and FYDP
End of FYDP Maintain strength ramps for Army and Marine Corps active and reserves forces Active Army includes support for 30 Brigade Combat Teams (BCTs) 460,000 450,000 Army Reserve 195,000 Army National Guard includes support for 26 BCTs 335,000 Total Army End Strength 990,000 980,000 Active Marine Corps supports rotation demands of 7.6 Infantry Battalions and enablers 182,000 Marine Corps Reserve 38,500 Total Marine Corps End Strength 220,500 Retain Navy force structure Active Navy 322,900 323,100 Navy Reserve 58,000 58,900 Total Navy End Strength 380,900 382,000 308 ships Navy with 11 Carriers by FY 2021 14 SSBNs Maintain active Air Force to address high optempo and shortfalls in active fighter maintainers Active Air Force 317,000 Air Force Reserve 69,000 68,500 Air National Guard 105,700 105,200 Total Air Force End Strength 491,700 490,700 96 operational bombers 55 combat coded fighter squadrons Total Active Forces End Strength 1,281,900 1,272,100 Total Reserve Forces End Strength 801,200 801,100

Military Construction and Family Housing,
FY 2017 Base Funding By Appropriation Title By Military Department Military Construction and Family Housing, $7.4 Military Personnel, $135.2 Defense Wide $94.5 RDT&E, $71.4 Army $122.9 Procurement, $102.5 Air Force $151.1 Navy $155.4 O&M, $205.8 FY 2017 Request: $523.9 billion

Military Construction and Family Housing,
FY 2017 OCO Funding By Appropriation Title By Military Department Military Construction and Family Housing, $7.4 Military Personnel, $3.5 RDT&E, $.3 Procurement, $9.5 Defense Wide $8.5 Army $25.0 Air Force 15.8 O&M, $45.0 Navy $9.5 FY 2017 Request: $58.8 billion

FY 2017 Total Base and OCO Funding
By Appropriation Title By Military Department Military Construction and Family Housing, $7.6 Defense Wide $102.9 RDT&E, $71.7 Military Personnel, $138.5 Army $148.0 Procurement, $112.0 Air Force $166.9 Navy $164.8 O&M, $250.9 FY 2017 Request: $582.7 billion

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…

Key PPBE Action Officers
AIR FORCE: Program Element Monitor ( PEM ) Works for Air Force SAE (SAF/AQ) Each Air Force program element is assigned a PEM Interfaces with Using Commands, Material Command, Air Staff, Air Secretariat, OSD, and sometimes Congress A PEM may be responsible for more than one program element NAVY: Requirements Officer ( RO ) Works for resource sponsor on OPNAV staff (e.g., Navy Aviation resource sponsor is N98) Interfaces with Using Commands, Systems/Developing Commands, OPNAV Staff, Navy Secretariat (especially ASN/RDA, Mr. Stackley), and OSD ARMY: Department of Army Systems Coordinator (DASC) Works for Army SAE (ASA/ALT) Interfaces with Using Commands, Developing Commands, Army Staff, Army Secretariat, OSD, and Congress Importance of Headquarters Action Officers in the PPBS process Each service does it somewhat differently with different players. AF = PEMs, Navy = ROs, Army = DASCs Important point about AOs is that it is absolutely essential the PMO stay connected to, and maintain open lines of communication with the PPBS AOs . This is especially true during POM build when Services are RESOURCING and prioritizing programs. Though it is important that PMO’s know what AOs are up to, it is equally important that PMO’s ensure that AOs know what is going on in their programs and keep them up to date and informed. PPBS Action Officers field questions about programs from Congress, OSD, Users, etc. on a regular basis--and they don’t always have time to confer with the PMO.

Future Years Defense Program (FYDP)
Computer Database Maintained by OSD CAPE Contains Approved Force Structure and Resources for all Defense Programs Updated 3 Times this PPBE Cycle: Program Objectives Memorandum (POM) – Jun Budget Estimate Submission (BES) Dec President’s Budget (PB) - TBD Reflects PY, CY, BY, + 4 Out-Years 3 additional years for force structure only Component PPBE databases Navy: PBIS Air Force : ABIDES Army: PROBE 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 16 17 18

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)

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 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) 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 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

PPBE – Planning Phase - Led by USD (P)
YEAR 1 FEB/MAR Elapsed Time: Months YEAR 2 APR/MAY President National Security Council CIA/DIA/JCS/OSD CIA – Central Intelligence Agency COCOM – Combatant Commander CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency DPG – Defense Planning Guidance DSR – Defense Strategy Review formerly known as the Quadrennial Defense Review JCS – Joint Chiefs of Staff NDS – National Defense Strategy NMS – National Military Strategy NSS – National Security Strategy OSD – Office of the Secretary of Defense USD(P) – Undersecretary of Defense (Policy) NSS Every 4 Years Guidance for POM/BES submission and OSD Program & Budget Review OSD NDS DSR DPG Level New slide - Removed reference to SPRs 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). JCS Planning Phase focus: Threat vs. Capabilities Update strategy Guidance for Programming & Budgeting NMS Level CPR (JCS, COCOMs, SERVICES)

PPBE - Program Review CAPE POM JUN JUL AUG SEP OCT NOV DoD
CAPE – Cost Assessment & Prgm Evaluation CPA – Chairman’s Program Assessment DEPSECDEF – Deputy Secretary of Defense DoD – Department of Defense DMAG – Deputy’s Management Action Group DPG – Defense Planning Guidance FYDP – Future Years Defense Program POM – Program Objectives Memorandum PDM – Program Decision Memoranda SLRG – Senior Leader Review Group SECDEF – Secretary of Defense Components/ Defense Agencies Issue Resolution SECDEF / DEPSECDEF SLRG & DMAG POM CAPE CPA JCS FYDP Update 3-Star Group Teams DoD “Large Group” PDM Program Review focus: Compliance with DPG

Services / PEO / PM Answer / Reclama OSD/OMB Budget Hearings
PPBE – Budget Review BES – Budget Estimate Submission FYDP – Future Years Defense Program MBI – Major Budget Issues OMB – Office of Management and Budget OSD – Office of the Secretary of Defense PEO – Program Executive Officer PB – President’s Budget PM – Program Manager PBD – Program Budget Decision USD(C) – Undersecretary of Defense (Comptroller) Components/ Defense Agencies BES PB MBI USD(C) & OMB FYDP Update Services / PEO / PM Answer / Reclama DEC JAN FEB PBDs Adv Questions/ OSD/OMB Budget Hearings Budget Review focus: Pricing Funding policies Phasing Budget execution

FY 18–22 Program/Budget Review Schedule

Backups

Process for SD Decision
PB18 Service POMs Injects Review Criteria Process for SD Decision Budget Review Army Navy USAF USMC SOCOM MDA Other components SPRs (~$20B initiatives) Ground Combat CP2 Third Offset Space Munitions Contested Mobility Stress on the Force SecDef Priorities Five Challenges (CRIKCT) Innovative Capabilities & Operational Concepts Big Bets (Space, Cyber, EW) Force of the Future Principled and Inclusive Security Network Reform Issue Teams Topline Supplemental Economic Assumptions Execution 3 Stars DMAGs SD Decisions Issue Papers ($87B accepted) Russia/ERI Cyber, ISR, Space & Nuclear OCO & Readiness Innovation & Third Offset PDM (November) Components submit balanced BES Tab 4 – PPBE

PPBE – Planning Phase Lead by USD (P)
New slide - Removed reference to SPRs 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).

“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)

FY 18-22 Program Budget Review Cycle
SecDef selected 7 Strategic Portfolio Reviews (SPRs) Third Offset Strategy (USD(AT&L) and D,CAPE) Strategic Mobility in a Contested Environment (US TRANSCOM and D,CAPE) Stress on the Force, Posture, and Global Presence (USD(P), Joint Staff, and D,CAPE) Ground Combat (Joint Staff, USD(AT&L), and D,CAPE) Space (Principal DoD Space Advisor and D,CAPE) Munitions (Joint Staff and D,CAPE) Counter-Power Projection (USD(P) and D,CAPE) Importance of Headquarters Action Officers in the PPBS process Each service does it somewhat differently with different players. AF = PEMs, Navy = ROs, Army = DASCs Important point about AOs is that it is absolutely essential the PMO stay connected to, and maintain open lines of communication with the PPBS AOs . This is especially true during POM build when Services are RESOURCING and prioritizing programs. Though it is important that PMO’s know what AOs are up to, it is equally important that PMO’s ensure that AOs know what is going on in their programs and keep them up to date and informed. PPBS Action Officers field questions about programs from Congress, OSD, Users, etc. on a regular basis--and they don’t always have time to confer with the PMO.

How we hit the lower FY 2017 topline (Dollars in Billions)
$10 $5 $0 -$5 -$10 -$15 -$20 -$25 OCO Relief Gross BBA Cut Fuel Savings, -$2.8B Inflation Savings, -$2.4B New Efficiencies, -$0.4B Net Cut to Baseline Budget Net Program Changes, -$11.2B Comparison to FY 2016 PB Plan for FY 2017

Cuts to hit the lower FY 2017 Topline
We will procure fewer weapons systems than planned: 9 AH-64 Apache helicopters (Army) 24 UH-60 Blackhawk helicopters (Army) 5 F-35 A Joint Strike Fighters 2 V-22 aircraft (Navy) 3 C-130J aircraft (Air Force) 4 LCAC Service Life Extension Programs (Navy) 77 Joint Light Tactical Vehicles (Marine Corps) Aircraft procurement accounts reduced $4.4 billion Shipbuilding reduced $1.75 billion Other procurement accounts reduced $2.6 billion Reduce plans for new military construction projects by $1.1 billion Comparison to FY 2016 PB Plan for FY 2017 Tab 4 – PPBE

Bipartisan Budget Act of 2015
FY 16 (Base) Revised Security Revised Non-Security Current Law (BCA 2011) $523B $493B Revised Cap (BBA 2015) $548B $518B Delta $25B +$25B FY 17 (Base) Current Law (BCA 2011) $536B $504B Revised Cap (BBA 2015) $551B $519B Delta $15B +$15B Total Federal Govt Discretionary Base increase $80B (FY 16 $50B; FY 17 $30B) Defense FY 16 Base -$12B (PB 16 $534B - $522B BBA 2015) FY 16 OCO +$7B (PB 16 $52B - $59B BBA 2015) FY 16 Net $5B FY 17 Base -$21B (PB 16 $547B - $526B BBA 2015) FY 17 OCO +$2B (PB 16 $57B - $59B BBA 2015) FY 17 Net -$19B

Bipartisan Budget Act of 2015 Cont.
Debt ceiling suspended until March 2017 Revenue sources: Tightening tax rules for business relationships Selling off crude oil reserve Auctioning off government controlled wireless spectrums Spending adjustments Make changes to Medicare and Social Security

Resource Allocation Process Overlap
CY14 CY15 CY16 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 FY14 Cycle Execution 2nd Yr 3rd Yr FY 14 and prior FY15 Cycle Enactment Execution 2nd Yr 3rd Yr FY 15 FY 15 and prior PB FY16 Cycle Planning Program/Budgeting Enactment Execution 2nd FY 16-20 DPG FY POM FY 16 BES FY 16 FY 16 and prior PB FY17 Cycle Planning Program/Budgeting Enactment Exec FY DPG FY POM FY 17 BES FY 17 FY17 & prior PB FY18 Cycle Planning Program/Budgeting FY DPG FY POM FY 18 BES DPG – Defense Planning Guidance PB – President’s Budget POM – Program Objectives Memorandum BES – Budget Estimate Submission

OSD/OMB Budget Hearings
PPBE – Program/Budget Submission/Review Yr 2 JUL SEP OCT NOV DEC Year 3 JAN/FEB DoD “Large Group” BES – Budget Estimate Submission CAPE – Cost Assessment & Prgm Evaluation COCOM – Combatant Commander CPA – Chairman’s Program Assessment 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 Issue Teams SECDEF/DEPSECDEF SLRG & DMAG CPA 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

DoD Budget Plans vs. BCA Caps Including BBA15
Tab 4 – PPBE

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

Senior Leader Review Group AKA “The Large 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

Affordability vs CRIs vs Should Cost
Cost Reduction Initiatives Should Cost Should Cost applies to the Program of Record Should Cost should become the focus after MS B

Typical Cost Elements of a Program (Typical Largest Cost Drivers in Program Acquisition)
Contract Costs (recurring versus non-recurring) Direct Labor Materials Other Direct Charges (ODC) Indirect Overhead G&A Cost of Money Other Govt Costs Govt testing GFE Program Office Support Support Contractors SE/TA Support Other Regardless of the cost methodology used, we must try to reduce the impact of cost drivers. These are the three most common types. We often think of cost risk in terms of high programmatic risk – a new technology or integrating several new technologies. When would we expect to see this type of risk? Also important is items that have a high variation in cost. Precious metals are often used in satellites. Small value items can have a major impact in overall cost if a lot of them are used – for example, rivets. Even if the cost of a rivet goes up by a tenth of a cent, your cost will rise if you need a few million rivets.

Affordability Defense Acquisition Guide (DAG), Oct 2012 (1/4)
Chapter Affordability in the DoD Decision Support System JCIDS – Balances cost vs performance in establishing KPPs Milestone A – 10 U.S.C. 2366a – Congressional certification (for MDAPs) MDA certifies to Congress that a cost estimate has been submitted After consultation with JROC With Concurrence from D,CAPE PM must notify MDA between MS A and MS B, if 1. Projected cost of program exceeds the cost estimate by 25% OR 2. The time to reach IOC exceeds the scheduled duration by 25% The DAB considers affordability in the context of the capability portfolio and from a unit cost standpoint Portfolio: Done by lead service in the context of all other weapons systems in the portfolio or mission area Unit cost: Nominally the average unit acquisition cost* and average annual O&S cost per unit (* could be PAUC or APUC) Affordability targets are recorded in the MS A ADM

Affordability DAG (2/4) Milestone B – 10 U.S.C. 2366b – Congressional certification Based on a business case analysis, MDA certifies to Congress: The program is affordable Trade-offs between C/S/P have been made D,CAPE concurs with reasonable cost and schedule estimates Funding is available in the FYDP

Affordability DAG (3/4) 3.2.2 Affordability Assessments
Projected annual funding – 4-step process Address acq and O&S funding, force structure, and manpower requirements FYDP +/- 12 years Unit cost approach Compare unit cost of current program to unit cost of legacy system Use base year dollars

Affordability DAG (4/4) 3.2.3 Full Funding
At MS B, the most likely cost dollars and manpower needed to carry out the acquisition strategy are in the FYDP For MDAPs, the MDA must certify this in the 2366b certification and D,CAPE must concur MDAs should assess this for all major decision points for all acq programs NOTE: DODI (Interim) , November 25, 2013 states that the DoD component will demonstrate that the program will be fully funded within the FYDP at MS A

DPPG (was GDF and JPG; now DPG for FY 13-17)
4 Major Changes in the FY PPBE Cycle DepSecDef memo, dated 9 Apr 10 DPPG (was GDF and JPG; now DPG for FY 13-17) One Budget Year (was two on the “on years”) Makes this an annual budget cycle vs a biennial budget Focus on a 5-Year Period Changed FY12-17 period to FY 12-16 DOD Conducting Front End Assessments Eight issues with SecDef oversight via the “Large Group” All other issues led by DepSecDef via the DAWG (now DMAG) NOTE: FY PPBE Cycle had six issues

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.

Defense Topline Budget

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 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

Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764.

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Presentation on theme: "Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764."— Presentation transcript:

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Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764.

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Presentation on theme: "Requirements Executive Overview Workshop Planning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764."— Presentation transcript:

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