Planning, Programming, Budgeting, and Execution (PPBE)

Roberta Tomasini Professor of Financial Management

Defense Acquisition Universityroberta.tomasini@dau.mil

703-805-3764

Life CycleCost

ICE

FiscalEnvironment

CostAnalysis

Estimate

AnnualFunding

IncrementalFunding

MFP PE BES SPRFunding Policies

Planning, Programming,Budgeting and Execution

President’sBudget

Commitment ReprogrammingBudget Authority Obligation Expenditure Outlay

BudgetExecution

Congressional Enactment

Force StructureModernizationOperational CapabilityReadinessSustainability

POECCA

SAC SASC SBC HAC HASC HBC

FM Scope: From Requirement to Capability

OperationalConcept

AoA

Capabilities-Based

Assessment

Feedback

CAIV

FullFunding

(Exceptions)

FYDP DPG POM RMD

Acquisition Program Baseline

BudgetResolution

Authorization&

Appropriation Laws

Capability Docs

2

PPBE Outline

• Overview• Better Buying Power Initiatives• Building Blocks

– FYDP, MFP, Program Elements• PPBE Process and Schedule• Resource Allocation Process

3

Planning, Programming, Budgeting and Execution

Joint CapabilitiesIntegration andDevelopment System (JCIDS)

DefenseAcquisitionSystem

Three Major DoD Management Systems

QDR

4

What’s a “Program of Record”? Where is it officially defined?

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

5

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 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

6

Better Buying Power InitiativesUSD(AT&L) 14 Sep 10 Memo

• Target Affordability and Control Cost Growth– Mandate affordability as a requirement– Drive productivity growth through Will Cost/Should Cost management– Eliminate redundancy within warfighter portfolios– Make production rates economical and hold them stable– Set shorter program timelines and manage to them

• Incentivize Productivity and Innovation in Industry– Reward contractors for successful supply chain and indirect expense management– Increase use of FPIF, where appropriate

• Use 50/50 share and 120% ceiling as point of departure– Adjust progress payments to incentivize performance– Extend the Navy’s preferred supplier program to a DoD-wide pilot– Reinvigorate industry’s IRAD and protect the defense technology base

• Promote Real Competition– Present a competitive strategy at each program milestone– Remove obstacles to competition

• Require open systems architecture and set rules for acquisition of technical data rights

– Increase dynamic small business role in defense marketplace competition

7

Better Buying Power Initiatives(cont.)USD(AT&L) 14 Sep 10 Memo

• Improve Tradecraft in Services Acquisition– Create a senior manager for acquisition of services in each component, following the Air

Force’s example– Adopt uniform taxonomy for different types of services– Address causes of poor tradecraft in service acquisition– Increase small business participation in providing services

• Reduce Non-Productive Processes and Bureaucracy– Reduce number of OSD level reviews…– Eliminate low-value added statutory processes– Reduce by half, the volume and cost of internal and congressional reports– Reduce non-value-added overhead imposed on industry– Align DCMA and DCAA processes to ensure work is complimentary– Increase use of Forward Pricing Rate Recommendations to reduce admin costs

8

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

• Will Cost• Used for programming and budgeting• Used for acquisition program baselines (APBs)• Used for all reporting requirements external to DoD

• Should Cost• Scrutinize every element of govt and contractor costs• 3 ways to develop should cost estimates:

• Bottoms –Up estimate• Determine specific discrete and measurable items• Use competitive contracting and contract negotiations to identify

should cost savings (old FAR definition)• Model Programs

• Air Force : JSF, Global Hawk, SBIRS, EELV, AEHF• Army: Joint Air Ground Missile, UH-60M, GCV, Paladin Product

Improvement (PIP), NETT Warrior• Navy: JSF, E-2D, Presidential Helo, LCS, Ohio Replacement Program

What Does Your Service Policy Memo Say?9

Future Years Defense Program (FYDP)

• Computer database maintained by CAPE • Contains approved force structure and resources for

all Defense Programs • Updated two times per annual PPBE cycle:

– Program Objectives Memorandum/Budget Estimate Submission (POM/BES) – July

– President’s Budget (PB) - February

• Reflects PY, CY, BY, + 4 Out-Years 3 additional years for force structure only

What’s Your Latest Approved Numbers?

15 16 17 18 141312

10

DOD COMPONENTS

Strategic ForcesGeneral Purpose ForcesCommand, Control, Comm, Intell & SpaceMobility ForcesGuard & Reserve ForcesResearch and DevelopmentCentral Supply & MaintenanceTraining, Medical, & Other Personnel ActivitiesAdministration and Associated ActivitiesSupport of Other NationsSpecial Operations Forces

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Procurement

Military

Constructi

on

Military

Personnel

Ops & Mainten

ance

Other

NAVY

DEF AGENCIES

OTHER

DOD APPROPRIATIONS

AIR FORCE

ARMY

RDT&E

MAJOR FORCE

PROGRAMS

Future Years Defense Program (FYDP)

11

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 ) 0203752A - Aircraft Engine CIP 0204136N - F/A-18 Squadrons 0207163F - AMRAAM

• PROGRAM 3 ( C3, INTEL & Space) 0303158A - Joint Command and Control Program

(JC2)0307207N - Aerial Common Sensor (ACS)0305164F - NAVSTAR GPS (User Equipment)

A - ARMYN - NAVYM - MARINEF - AFD - OSDC - MDAE - DARPAJ - JCSS - DLABB - SOCOMDBD - DFAS

Ref: DoD 7045.7 - H

Program Elements

12

CIA – Central Intelligence AgencyCOCOM – Combatant CommanderCPR – Chairman’s Program RecommendationD, CAPE – Director, Cost Assessment & Program EvalDIA – Defense Intelligence AgencyDPG – Defense Planning GuidanceJCS – Joint Chiefs of StaffNDS – National Defense StrategyNMS – National Military StrategyNSS – National Security StrategyOSD – Office of the Secretary of DefenseQDR – Quadrennial Defense ReviewSPR – Strategic Portfolio ReviewUSD(P) – Undersecretary of Defense (Policy)VCJCS – Vice Chairman, Joint Chiefs of Staff

APR/SEP

PPBE – Planning Phase

PresidentNational Security CouncilCIA/DIA/JCS/OSD

(JCS,COCOMs,

SERVICES)

NMS

DPG *

NSS

Planning Phase focus:• Threat vs. Capabilities• Update strategy• Guidance for programming & budgeting

NDSOSDLevel

JCSLevel

QDR

FEB/MAR

To DoD “Large Group”/Integrated Program/Budget Submission & Review

SPRD, CAPE/VCJCS/

USD(P)

CPR

Every 4 Years

* Note: DPG is the current name of this document but is subject to change from one cycle to the next. Other names used previously include Defense Planning & Programming Guidance (DPPG) and Joint Programming Guidance (JPG).

Guidance for POM/BES submission and Integrated Program/Budget Review

PPBE – Integrated Program/Budget Review

Components/Defense Agencies

BES PBMBIAdv Questions/OSD/OMB Budget Hearings

JUL JAN/FEBOCT

Issue Resolution

SECDEF/DEPSECDEFSLRG & DMAG

POM

OSD/CAPE

CPA

DECNOV

JCS

USD(C) &OMB

BES – Budget Estimate SubmissionCAPE – Cost Assessment & Prgm EvaluationCOCOM – Combatant CommanderCPA – Chairman’s Program AssessmentCPM – Capability Portfolio ManagerDMAG – Deputy’s Management Action GroupFYDP – Future Years Defense ProgramMBI – Major Budget IssuesOMB – Office of Management and BudgetPB – President’s BudgetPOM – Program Objectives MemorandumRMD – Resource Management DecisionSLRG – Senior Leader Review Group

FYDPUpdate

FYDP Update

3-Star Group

Program Review focus:• Compliance with DPG

CPMs

Budget Review focus: - Pricing - Phasing - Funding policies - Budget execution

RMDs

Services / PEO / PM Answer / Reclama

DoD“Large Group”

SPR

Mar 12 Defense Planning Guidance (DPG) Issued

Mar 12 Fiscal Guidance Issued

May-Aug 12 Strategic Portfolio Review (SPR) Results

3 Aug 12 Component Program/Budget Submissions Due 30 Jul-10 Aug 12 Component POM Briefs to 3-Star/DMAG

31 Aug 12 Issue Nominations Due

4 Sep 12 Budget Justification Material Due to OSD/OMB

14 Sep 12 Issue Nomination Disposition

Sep-Oct 12 SPR Re-engagement

Sep - Nov 12 Program/Budget Review and Issue Team Analysis 21 Dec 12 Budget Lock

4 Feb 13 President’s Budget Submitted to Congress

FY 14–18 Program/Budget Review Schedule

15

FY 13

DJJ F M A M J A S O NJJ F M A M J A S O N D JJ F M A M J A S O N D

FY 12Cycle Execution

FY 12 and prior

Program/Budgeting Execution

FY 14

Planning

CY12 CY13 CY14

Enactment ExecutionFY 13 and prior

Enactment

FY 15

Planning

2nd Yr

2nd Yr

2nd

Enactment

3rd Yr

3rd Yr

FY 14 and prior

FY 15-19 DPGExec

FY15 & prior

Planning

Program/Budgeting

Program/Budgeting

PB – President’s Budget

FY 14-18DPG

Resource Allocation Process Overlap

FY 16-20 DPG

FY 15-19 POMFY 15 BES

FY 14-18 POMFY 14 BES

PB

PB

PB

DPG – Defense Planning Guidance

FY 16-20 POMFY 16 BES

BES – Budget Estimate Submission POM – Program Objectives Memorandum

FY 13Cycle

FY 14Cycle

FY 15Cycle

FY 16Cycle

BACKUP Charts

17

Most Probable Cost (MPC)• AKA Most Likely Cost • 50% chance of overrunning/underrunning on a normal

curve• The Fin Mgt Reg (DoD 7000.14R) says budget to MPC• 2006 DAPA Rpt: 80% confidence level (CL) recommended • Air Force SAE (Mr. Van Buren) memo dated 17 Mar 10

says NLT mean (typically 55-65% CL) or “expected value”• OSD CAIG using 50% CL• WSARA 2009 Section 101

– DCAPE must issue guidance on confidence levels for cost estimates for MDAP and MAIS programs

– FY11 Defense Authorization Bill revision• MDAP and MAIS programs must disclose confidence level, and • “ensure that such confidence level provides a high degree of

confidence that the program can be completed without the need for significant adjustment to program budgets”

18

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

19

Capability Portfolioand

Tier 1 JCA

CPMCivilianLead

CPMMilitaryLead

Senior Warfighting

Forum (SWarF)Lead *

CPMJoint Staff

OPR *

FunctionalCapabilityBoards *

Command and Control ASD (NII) JFCOM JFCOM J-3 J-8

Battlespace Awareness USD (I) STRATCOM STRATCOM J-2 J-2

Net Centric ASD (NII) STRATCOM STRATCOM J-8 J-8

Logistics USD (AT&L)

TRANSCOM TRANSCOM J-4 J-4

Building Partnerships USD (P) Director, J-5 JFCOM N/A J-5

Protection USD (AT&L)

Director, J-8 STRATCOM N/A J-8

Force Support USD (P&R) Director, J-8 JFCOM N/A J-8

Force Application USD

(AT&L)USD (P)

Joint Requirements

Oversight Council (JROC)

JFCOMSOCOM

STRATCOM

J-8 J-8

Corporate Management & Support

DCMO Director, Joint Staff

N/A N/A N/A

* As designated by the Chairman of the Joint Chiefs of Staff (CJCS)

Capability Portfolio Managers(CPMs) Leadership

20

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 AirForce• General Counsel• ASD (Legislative Affairs)• ASD (Networks & InformationIntegration/Chief Information Officer• ASD for Public Affairs• Director, Cost Assessment and

ProgramEvaluation• Director, Joint Staff• Deputy Chief Management

Officer• Chief, National Guard Bureau

* Or Principal Deputy

21

Defense Appropriations“Colors of Money”

RDT&E

PROC

MILPERS

O&M

MILCON

Military Personnel (MILPERS) Active & Reserve ForcesOperation & Maintenance (O&M) Active & Reserve Forces (civilian Salaries, supplies, spares, fuels, travel, etc…) Environmental Restoration Former Soviet Union Threat Reduction Overseas Humanitarian, Disaster, & Civic AidProcurement 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 DevelopmentMilitary 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 22