Planning, Programming, Budgeting and Execution (PPBE)

Business, Cost Estimating, & Financial ManagementCapital and Northeast CampusDefense Acquisition University

RDT Version 3 16 Sep 05

Defense Acquisition University

PPBE OutlinePPBE Overview

Building Blocks FYDP, MFP, Program Elements

Old Process

New Process

Timing

Decision Support SystemsPlanning, Programming, Budgeting, & Execution

Acquisition Management SystemJoint Capabilities Integration & Development SystemQDR

Resource Management SystemPPBE is the primary resource management system for DoD:

Articulates strategyIdentifies size, structure and equipment for military forcesSets programming prioritiesAllocates resources Evaluates actual output against planned performance and adjusts resources as appropriate

PPBE PhasesPlanning Assess capabilities / review threatDevelop guidanceProgramming Turn guidance into achievable, affordable packagesSix-year program (Future Years Defense Program)Budgeting Scrub budget yearsTest for most efficient funds execution Prepare defensible budgetExecution Review (concurrent with program/budget review)Develop performance metricsAssess actual output against planned performanceAdjust resources to achieve desired performance goals

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/SeptemberPresidents Budget (PB) - January / February0708 09 10 1106X

Future Years Defense Program (FYDP) COMPONENTS DOD APPROPRIATIONS MAJOR FORCE PROGRAMS

Program ElementsPROGRAM ELEMENT (PE): Smallest aggregation of resources normally controlled by OSD- PE NUMBER: Used to track and identify resources; seven digit number followed by an alphabetic suffixPROGRAM 1 ( STRATEGIC FORCES ) 0101126F - B-1B Squadrons 0101215F - Peacekeeper Squadrons 0101228N - Trident 0101316A - Worldwide Joint Strategic Comm 0102424F - SPACETRACKPROGRAM 2 ( GENERAL PURPOSE FORCES )0202112A - Airborne Divisions0204224N - Frigates - Missile0207138F - F/A-22 Squadrons0207423F - Advanced Communications SystemsA - ARMYN - NAVYM - MARINEF - AFD - OSDC - MDAE - DARPAH - DSWAJ - JCSS - DLABB - SOCOMDBD - DFAS Ref: DoD 7045.7 - H

Old Process: Annual, Consecutive-Phase PPBSFY 02-07 POM and prior:

Defense Planning Guidance (DPG) (Apr)Programming (POM Development) (May Sep)Budgeting (BES Development / Review) (Sep Dec)Submission of Presidents Budget (Feb)Congressional Review of Budget Request (Feb Aug)Congressional Authorization and AppropriationExecution of Budget Authority Commit, obligate, expend, and outlay funds

Management Initiative Decision (MID) 913

Major Initiatives:Quadrennial Defense Review (QDR) shifted from the first to the second year of a new administrationMove to a true two-year cycleOff-year Strategic Planning Guidance (SPG)/Joint Programming Guidance (JPG) is optional (at the discretion of SECDEF); will not introduce major changes in off-yearOff-year review focus on execution and performanceCreate a single standardized programming and budgeting system for data collection and management

MID 913Changes 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

DEPSECDEF Direction forFY 2005 - 2009 SubmissionNo DPG-05Components 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)

Four Years in the Biennial Cycle Corresponding to Four-Year Presidential TermsYear 1 (Review and Refinement):Early National Security Strategy (NSS)Off-year SPG/JPG as required (at discretion of SECDEF)Limited Changes to Baseline ProgramYear 2 (Formalize the Agenda):Quadrennial Defense Review (QDR) Aligned with PB submission in second year of an administrationFiscal Guidance IssuedOn-year SPG/JPG (implementing QDR)POM/BES SubmissionsYear 3 (Execution of Guidance):Off-year SPG/JPG as required (at discretion of SECDEF)Limited Changes to Baseline ProgramYear 4 (Ensuring the Legacy):Fiscal Guidance IssuedOn-year SPG/JPG (refining alignment of strategy and programs)POM/BES Submissions

JPGJCSCOCOMsSERVICESNMSJPDNSSCPRSPGAPR/MAYJCS, OSD,COCOMs,SVC HQs,ETC.SEPDECMARSECDEF1st Year2nd Year1st year of a new administrationPlanning PhaseCOCOM Combatant CommanderCPR Chairmans Pgm RecommendationJPD Joint Planning DocumentJPG Joint Programming GuidanceNSS National Security StrategyNMS National Military StrategyQDR Quadrennial Defense ReviewSPG Strategic Planning GuidanceStrategyalso reflected in QDR(2nd year of new administration)Notes SPG replaces Draft Defense Planning Guidance (DPG) JPG replaces DPG

PBDs PDMServicesPEO/PM,SVC HQsCOCOMsBESPBMBIAdv Ques/HearingsAUG

JAN/FEBOCTIssue ResolutionSECDEFSLRGPOMOSD/OMBCPADECNOVServices / PEO / PM Answer / ReclamaJCSOSD/OMBBES Budget Estimate SubmissionCOCOM Combatant CommanderCPA Chairmans Pgm AssessmentMBI Major Budget IssuesPB Presidents BudgetPBD Program Budget DecisionPDM Program Decision MemoPOM Program Objectives MemoSLRG Senior Leader Review GroupConcurrent Program/Budget ReviewUpdatesFYDPUpdatesFYDP3-Star GroupNotes 3-Star Group replaces Program Review Group (PRG) SLRG replaces Defense Resources Board (DRB)

FY 0711 Program/Budget Process OverviewProcedural changes for FY 07-11 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 0813 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

FY 0711 Program/Budget ScheduleMay 31Military Departments composite rates dueAug 1FOL budget estimate notification memos dueAug 15OSD disposition of FOL changesSep 6Service/Agency CPs due; accepted FOL justification material & other OSD-directed documentation due electronicallySep 23Hardcopy data submission completeSep 28Detailed budget justification material dueSep 30OSD completes review of Service/Agency CPs (accept/reject)Oct-NovBRAC/QDR review & related OSD-generated CPsDec 20Program & Budget review completeJan DoD budget submitted to OMB

FY 0711 Program/Budget Procedures FOLsServices/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

FY 0711 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 programsAny realignment within S&T

MILCON/FHA:Any changes > than +/- 10% in any APPN yearAny 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 componentsException: Defense Health Program (DHP) & Special Operations Command (SOCOM) adjustments MUST be submitted as CPsAny Congressionally-mandated benefit adjustments

FY 0711 Program/Budget Procedures - FOLs APPN Guidance ContO&M:Any change to facilities sustainment & recapitalization metrics in any yearAny 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 estimatesAny changes to capital purchase programs that dont 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

FY 0711 Program/Budget Procedures - FOL & Service/Agency CPsNLT 6 Sep, Services/Agencies submit: CPs; accepted FOLs; & other OSD-directed changesElectronic submission of documentation includes:Accepted FOL changes in justification materialAny 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

FY 0711 Program/Budget Procedures Service/Agency CPs ContA CP must provide for:A single, coherent enhancement to Defense capabilityOffsets other than Tactical Intelligence & Related Activities (TIARA) & Joint Military Intelligence Program (JMIP); offsets must be consistent with OSD planning guidance & FY 0611 PDMs/PBDsProgrammatic/resource adjustments resulting from studies directed by FY 0611 JPG or PDMs/PBDs but not included in FY 06 Pres BudDeviations, other than pricing, from previous guidance, including PBD 753Out-year tails for enacted legislation

Proposed offsets may be used for the proposal or applied by OSD to other initiatives

FY 0711 Program/Budget Procedures Service/Agency CPs ContCPs must:Explain why the issue is not appropriate for the QDR process OSD will submit CPs to implement BRAC & QDR decisionsExplain why the issue cannot be deferred to the FY 0813 Program/Budget reviewIdentify 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

FY 07-11 Program/Budget Who Can Submit CPsSecretaries of Military DepartmentsChairman, Joint Chiefs of StaffUnder Secretaries of DefenseAssistant Secretary of Defense for Network Information & IntegrationDirector, Operational Test & EvaluationCommander, SOCOMDefense Agencies, thru Principal Staff AssistantCombatant Commanders, thru Executive Agents; info to Joint Staff

FY 0711 Program/Budget Procedures Service/Agency CPs APPN GuidanceAppropriation:PROC & RDT&E:ACAT I any change to quantity profile or any change > +/- 10% in any APPN in any year within a programACAT II any start or terminationS&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 scopeAny MILCON/FHA CP must include a statement describing the effect of the CP on the recapitalization metric

FY 0711 Program/Budget Procedures Service/Agency CPs APPN Guidance ContMILPER:Change to projected end strength or average strength in any yearNew personnel benefits not mandated by CongressPCS funding change of +/- 5% or moreDHP & 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 ratesChanges that result in increase/decrease to customer BA reflected in FY 06 Pres BudChanges to capital purchase programs that increase/decrease total dollar amount for capital purchases reflected in FY 06 Pres Bud

FY 0711 Program/Budget Process OSD Level Actions3-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

FY 07-11 Program/Budget Process 3-Star GroupDirector, PA&EPrincipal Deputy, PA&EArmy DCS G-8Deputy CNO (Resources, Warfare Requirements, & Assessments)Air Force DCS (Plans & Programs)Marine Corps Deputy Commandant, Program & ResourcesJoint 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 IntegrationDirector, OT&EInvitees: Director, DR&E; Directors of Defense Agencies; etc.

FY 07-11 Program/Budget Process Senior Leader Review Group (SLRG)Secretary of DefenseDeputy Secretary of DefenseSecretaries of the Military DepartmentsChairman/Vice Chairman, Joint Chiefs of StaffUnder Secretaries of DefenseAssistant Secretary of Defense (Network Information & Integration)Chiefs of Staff, Army & Air Force; Chief of Naval Operations; Commandant of the Marine CorpsInvitees: as required by the Secretary/Deputy Secretary of Defense

Off-Year Process During 2005 (FY 07-11)OCT-DEC15 AUG30 SEP6 SEP20 DEC1 AUGServices&AgenciesFOL NotificationMemo toUSD(C) &Dir, PA&EServices/AgenciesCPs Dueto OSDElectronic OSD-RequiredR/P Forms DueSLRG Review ofCPsJAN-FEBFOL - Fact -of- LifeCP - Change ProposalSLRG - Senior Leader Review GroupQDR - Quadrennial Defense ReviewBRAC - Base Realignment & ClosurePDM - Program Decision MemorandumPBD - Program Budget DecisionR-Forms - Research & Development FormsP-Forms - Procurement FormsOSD PreparedBRAC/QDRCPs SubmittedOSD Staff ReviewSvcs/Agencies Accepted FOLs Entered into OSD Data BaseBudget LockPres Bud

Resource Allocation ProcessTime Now: August 2005FY05 DJJFMAMJASONJJFMAMJASONDJJFMAMJASOND FY04ExecutionFY04 and prior FY05Program/BudgetingExecutionFY06 FY06 FY07PlanningCY04CY05CY06 EnactmentExecutionFY05 and priorEnactmentFY07Planning2nd Yr2nd Yr2ndEnactment FY083rd Yr3rd YrFY06 and priorFY 07-11 SPG/JPGFY 07-11 FOL/CPExecFY07 & priorPlanningProgram/BudgetingProgram/BudgetingSPG Strategic Planning Guidance JPG Joint Programming Guidance POM Program Objective Memorandum BES Budget Estimate Submission CP Change Proposal FOL Fact-of-LifeFY06-11SPG/JPG FY 08-13 SPG/JPG FY 06-11 POMFY 06-07 BESFY 08-13 POMFY 08-09 BESPB PB PB

Key PPBE Action OfficersAIR 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 OSDInterface between Program Manager (PM) and Congress (through proper Legislative Liaison Offices)

Additional InformationOSD PA&E websitehttp://pae.osd.mil

OSD Comptroller websitehttp://www.dtic.mil/comptroller

DAU BCEFM Acquisition Community Connection (ACC) websitehttp://acc.dau.mil/bcefm

Old SlidesFY 2004-2009 Defense Planning GuidanceProgram Change Proposals (PCPs)Budget Change Proposals (BCPs)Who Submits PCPs/BCPsOff-Year Program/Budget ReviewFY 2006-2011 Program/Budget Schedule

FY 2004-2009 Defense Planning GuidanceThe Departments 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

Program Change Proposals(PCPs)Identify areas to take additional risk (offsets)Offsets may be used for other initiativesLimited to items that exceed $250 million across FYDPThreshold at individual programmatic issue levelMay address smaller issues if serious programmatic problemIf less than $250 million, may submit as BCP if budget year is affectedMust comply with PDM decisionsCombatant Commanders may submit up to six prioritized PCPs regardless of dollar valueFull budgetary data submitted for accepted PCPs

Budget Change Proposals(BCPs)Generally limited to fact-of-life changes:Cost increasesSchedule delaysManagement reform savingsWorkload changesBudget execution experienceCongressional actionMay involve FYDP years if total cost is less than $250 million and budget year is affectedOffsets requiredBacked up with appropriate budget exhibits

Who Submits PCPs/BCPsUnder Secretaries of Defense (USDs)ASD (Network and Information Integration)Director, Operational Test & Evaluation (DOT&E)Chairman, Joint Chiefs of StaffSecretaries of Military DepartmentsCombatant Commanders (COCOMs)Submit PCPs through J-8Submit BCPs through Service Executive AgentDirectors of Defense AgenciesSubmit PCPs through OSD Principal Staff AssistantSubmit BCPs to OSD Comptroller

PBDs PDMServicesPEO/PM,SVC HQsCOCOMsBCPsPBMBIAdv Ques/HearingsAUG

JAN/FEBOCTAccepted PCP ResolutionSECDEFSLRGPCPsOSD/OMBCPADECNOVServices / PEO / PM Answer / ReclamaJCSOSD/OMBBCP Budget Change ProposalCOCOM Combatant CommanderCPA Chairmans Pgm AssessmentMBI Major Budget IssuesPB Presidents BudgetPBD Program Budget DecisionPCP Program Change ProposalPDM Program Decision MemoSLRG Senior Leadership Review GroupOff-Year Program/Budget Review3-Star GroupUpdatesFYDPNotes 3-Star Group replaces Program Review Group (PRG) SLRG replaces Defense Resources Board (DRB)

FY 2006-2011 Program/Budget ScheduleAug 2POM/BES Electronic Database SubmissionsSep 1POM Briefings to SLRGSep 15POM/BES FYDP AvailableSep 15Detailed Budget Justification Material DueSep 24 Program Review Issues DueOct 3Issue Disposition MemoOct NovOSD MeetingsOct NovProgram Review SLRGsNov 22PDMDec 6-10MBI SessionsDec 20Program Budget Lock UpFeb 7FY 2006 Congressional Submission

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

This is an outline of areas that well address in this presentation

In particular, in the New Process area well specifically address the FY 2007 2011 Integrated Program and Budget Review which became effective 12 May 2005DoD has three Decision-making Support Systems: AMS: How we acquire weapon systems, covered in the 5000 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 policyMID 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 Presidents Budget submission date

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?

Brief Overview of PPBE phases: Still have the same three phases: Planning, Programming and BudgetingMajor difference - we now have a review of program execution/program performance concurrent with the program and budget review (NOT Armys 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 objectivesJoint Planning Guidance (JPG): end of the Planning phase and marching orders for next phase

Programming: Components develop Program based on guidance in the JPGOSD & Joint Staff review for priority, affordabilityInfo captured in the FYDP

Budgeting: Components develop Budget submissions OSD(C) reviews budget inputs, with emphasis on funds executionUltimate aim - to submit a defensible Presidents Budget thru OMB to Congress

Execution ReviewOverlays both Program Review and Budget Review processesIn past, emphasis on input - how much to spend on each program; now emphasis is on output - what are we getting for our money?Performance metrics are used to examine program execution

TRANSITION: Before we go any further, lets look at the FYDP (Future Years Defense Program) the computerized data base that supports the PPBE process

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), andPresidents 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 Presidents 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: Lets take a look at how the FYDP is structured

This cube slide illustrates how the FYDP database is structured; its divided in three ways: Appropriation categories for use by Congress and Comptroller; Other category represents the various other appropriations that exist, such as Family HousingComponent 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

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) well 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 appropriationRDT&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 weve talked about the major building blocks of PPBE: the FYDP, MFPs and PEs, lets compare the old PPBS to the current PPBE

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 yearIn 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 yearsConsecutive Planning was followed by Programming, then by BudgetingLots 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

Lets look at the document that transitioned us from PPBS to PPBEChange in focus resulted in MID 913, issued 22 May 03QDR now drives the whole process starting with the Planning phaseWhat 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)

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

This information was included in the draft MID 913, but was taken out and issued as separate instructions for the FY05 submission onlyDoes 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

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 termThe years shown are calendar years, not fiscal years

Year 1 and Year 3 are off-years FY05-09 and FY07-11 are off-yearYear 2 and Year 4 are on-years FY04-09 and FY08-13 are on-year

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.

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 guidanceIssues are identified and worked by the OSD staff and JCSThe 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 programs executionYou 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 findBES 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 AgencyNote the update of the FYDP

This slide takes us to the off-year process to be used for the FY 07-11 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 07-11 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 cycleThis 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 Presidents 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 decisionsThe 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-neutralIf you do NOT have a National Intelligence Program, you may not nominate one for an offset

This is the schedule, as contained in the joint PA&E/Comptroller 12 May 05 memo (subj: Procedures and Schedule for FY 2007-2011 Integrated Program and Budget Review with three attachments), that 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 regarding compliance with the guidance and acceptability of offsets being made by 15 AugustService 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 SeptemberOSD will review for compliance with the guidance and acceptability of the offsetsThose 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 Presidents 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 07-11 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) 2007-2011 Program and Budget Review, with 9 attachments addressing budget and execution review guidance, to include electronic and hard copy documentation submission requirements

Now well look at some of the specific guidance as we know it now

First are the Fact-of-Life changesOSD is emphasizing the biennial process minimal up or down changes from the FY07 baseline established in the FY 06 Presidents Budget submit will be acceptedOn 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 memoThe 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 AugustIf a proposed FOL is accepted, documentation and justification is due 6 September, as you saw on the Schedule chartIf 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 Presidents 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 08-13 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

Now well 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 07-11A 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 well look at shortlyAnd requires an FOL for any Congressionally-mandated benefit changes

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 FOLsAnd also changes to Capital Purchase Programs that dont change the dollar amounts in the FY 06 Presidents 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

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

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 07-11 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

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, ANDWhy it cannot be deferred to the FY 08-13 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

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)

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 shownACAT II starts or stops, ANDFor S&T, any decrease below the FY 06 Presidents Budget baseline

For Military Construction and Family Housing:

ANY changes to the project list for FY 07 submitted with the FY 06 Presidents Budget must be addressed, as well as changes in scope, ANDAny impacts on recapitalization metrics

This slide generally addresses the guidance for MILPER, O&M, and the Revolving Funds

The bullets for MILPER are fairly straight forwardRegarding 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 Presidents Budget submit

Weve 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 Presidents Budget will be submitted to Congress not-later-than 6 February 2006

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

The actual attendees from the SLRG vary according to then issues that will be addressedThis slide gives you a notional roll-up of key activities, decisions, and dates as outlined in the 12 May 05 Memo, and summarizes what weve been talking about1 August the Services and Defense Agencies will submit to the Comptroller and Director, PA&E their Notification Memos for Fact-of-Life changesBy 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 Proposal6 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 memoOn 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 decisionsBy 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 appropriateDuring 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 staffThe decision-making will be documented in PBDs and PDMsThe BRAC and QDR decisions will be incorporated into the data base and justification material in the November-December timeframeBudget Lock is then scheduled for 20 December with the Presidents Budget submitted no-later-than 6 February 2006

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, youll always know where youre 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 FY08Each FY label corresponds to a bar going horizontally across the graphic timeline representing resource allocation for that specific FYs 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:Were executing the 2nd year of FY04 RDT&E and PROC and 3rd year of FY03 PROCWere executing the 1st year of FY05 RDT&E and PROCFY06 and FY07 are on the HillWere working the FY07-FY11 process that has just been discussedPlanning is beginning for FY08-FY13, which the QDR will heavily influence

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 PMOs 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 informedPPBE AOs field questions about programs from Congress, OSD, Users, etc. on a regular basis - they dont always have time to confer with the PMO

Additional information is available on these websites

The following slides reflect superseded guidance. They are included for continuity for comparison of what has changed in the process.