LOA University:

Planning, Programming, Budgeting, and Execution (PPBE)

and

Congress

Roberta Tomasini Professor of Financial Management

Defense Acquisition Universityroberta.tomasini@dau.mil

703-805-3764

PPBE and Congress Outline

• PB 17 (8)

• PPBE (4)– PPBE Phases

– PPBE Process and Schedule

• Congressional Enactment

2

$490

$470

$510

$610

$590

$570

$550

$530

FY10 FY11 FY12FY13FY 10-11-12 ActualsFY 2015 PBCurrent Caps

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21FY 2013 PB/DSGFY 2017 PB

FY 2016 PBOriginal BCA Caps

Original BCA Caps

PB 17 vs Current Caps and Prior Budgets(Dollars in Billions)

3

How we hit the lower FY 2017 topline(Dollars in Billions)

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

FY 2017

$+5.0B

$-21.8B

Net C

ut to

Base B

ud

get

Gross BBA cut

OCO Relief$-16.8B

New Efficiencies,$-0.4B

Inflation Savings,$-2.4B

Net Program changes,$-11.2B

Fuel Savings,$-2.8B

Comparison to FY 2016 PB Plan for FY 2017 4

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 5

FY 2017 Base Funding

Army$122.9

Navy$155.4

Air Force$151.

1

Defense Wide$94.5

FY 2017 Request: $523.9 billion

By Appropriation Title By Military Department

RDT&E,$71.4

Military Construction and Family Housing,

$7.4

Procurement,$102.5

Military Personnel,

$135.2

O&M,$205.8

6

FY 2017 OCO Funding

Army$25.0

Navy$9.5

Air Force 15.8

Defense Wide$8.5

FY 2017 Request: $58.8 billion

By Appropriation Title By Military Department

RDT&E, $.3Military Construction and Family Housing,

$7.4Military

Personnel,$3.5

Procurement,$9.5

O&M,$45.0

7

FY 2017 Total Base and OCO Funding

Army$148.0

Navy$164.8

Air Force$166.

9

Defense Wide

$102.9

FY 2017 Request: $582.7 billion

By Appropriation Title By Military Department

RDT&E,$71.7

Military Construction and Family Housing,

$7.6

Procurement,$112.0

MilitaryPersonnel,

$138.5

O&M,$250.9

8

9

Secretary Carter’s Priorities for This Budget

• Given the current level of budget resources ($800B in Budget Control Act cuts), wecan’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

o Seek the best balance between force structure (size), modernization (capability) andreadiness

o Emphasize lethality and capability of the force rather than size

o Emphasize posture rather than presence

– Emphasize innovation

o Attracting, retaining, and managing talent (Force of the Future)

o Update war plans and operational concepts

o Pursue “offset” technologies

o Institutional efficiency and reform

“Today’s security environment is dramatically different … and itrequires new ways of thinking and new ways of acting”

Secretary Carter, February 2, 2016

10

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

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

11

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

19 20 21 22181716

12

CIA – Central Intelligence AgencyCOCOM – Combatant CommanderCPR – Chairman’s Program RecommendationDIA – 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 ReviewSCMR – Strategic Choices and Management ReviewUSD(P) – Undersecretary of Defense (Policy)

APR/MAY

PPBE Process – Planning Phase Lead by USD (P)

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

CPR

Every 4 Years

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

YEAR 1 YEAR 2Elapsed Time: 15-16 Months

Feb 16 Fiscal Guidance

27-30 Jun 16 Component POM Briefs to 3-Stars

30 Jun 16 Component POM Submissions Due (Line item/PE level of detail)

29 Jul 16 Issue Nominations Due

15 Aug 16 Issue Nomination Disposition

15 Aug–10 Nov 16 Program Review

10 Nov 16 PDMs

1 Dec 16 BES due to OSD

1 Dec 16 Budget Justification Material due to OSD

Dec 16 – Jan 17 Budget Review

TBD PBDs

TBD Budget Lock

TBD President’s Budget Released

Source: Joint CAPE & USD(C) memo dated 26 Feb 2016

FY 18–22 Program/Budget Review Schedule

14

Version 3.4, 11-3-15 15

Feb Mar Apr May Jun Jul Aug Sep Oct

President’s Budget toCongress

BUDGETRESOLUTION

AUTHORIZATION

APPROPRIATION

HBC

SBC

HAC

SAC

HASC

SASC

HEARINGS

MARKUPS

CONFCONCURRENTRESOLUTION

HEARINGS

MARKUPS

HEARINGS MARKUPS

HEARINGS MARKUPS

FLOOR

FLOOR

FLOOR

FLOOR

CONF

FLOOR

FLOOR

HEARINGS MARKUPS FLOOR

CONF

FLOOR

HEARINGS MARKUPS FLOOR FLOOR

Authorizations Act

Notional Enactment Process and Timeline

Appropriations Act

Version 3.4, 11-3-15

Backups

16

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

• 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

• 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, and OSD

USD (Comptroller)DAU – EPMC 15-05

FY 2017 budget – Some Significant Items• S&T @ $12.5 billion (2.4% of TOA)• 63 F-35 - $10.5 billion: F-35A (43); F-35B (16); F-35C (4) (FYDP: $59B)• 10 new warships - $20.2 billion (2 SSN; 2 DDG; 2 LCS; 1 LHD; 3

others)• Cyber capabilities - $6.8 billion (up from $5.5B)• Rotary Lift aircraft - $6.7 billion• Unmanned Systems - $3.2 billion• Long Range Strike Bomber - $1.4 billion ($12.1 billion in the FYDP)• Space Programs - $7.0 billion (zero satellites)• Ground Vehicles - $4.1 billion• Ammunition - $5.0 billion (up from $3.9 billion)• Precision Guided Missiles - $2.3 billion• Ballistic Missile Defense - $9.1 billion (MDA @ $7.5 billion)• Ohio Replacement Program - $1.9 billion ($13.2 billion in the FYDP)• Nuclear Enterprise - $6.1 billion (of which $1.6 billion went to NNSA)

12

PB 2017 Focus on Technology Innovation• Funds science and technology to further innovation (FY 2017, $12.5 billion;

FYDP, $65.0 billion)

• Creates new connections with commercial sector– Establishing experimental defense innovation units

– IN-Q-TEL

• Funds innovative “offset technologies” to bolster conventional deterrence (FYDP, $18B). Examples:– Assured positioning, navigation and timing

– Large displacement unmanned undersea vehicles

– High speed strike weapons

– Arsenal plane

– Hypersonics

– Low-cost unmanned systems

– High-Velocity Projectiles from “powder guns”

DoD needs to accelerate delivering new capabilities

(Quantities/Dollars in Billions)

• Shipbuilding

• Space

Major Investments in the FY 2017 Budget

Requires Funding in 5-Year Plan + FY 2017 OCO*Includes Base + OCO Procurement and RDT&E Funding 11

• Aircraft FY 2017 FYDP

F-35 Joint Strike Fighter (USAF, USMC, USN) 63/$10.1 404/$56.3F/A-18 (Navy) 2/$0.4 16/$2.2KC-46 Tanker Replacement (Air Force) 15/$3.1 75/$15.7AH-64E Apache helicopters (Army) 52/$1.1 275/$5.6MQ-9 Reaper 24/$1.1 24/$3.9

Virginia Class submarines (Navy) 2/$5.2 9/$29.4

DDG-51 AEGIS Destroyers (Navy) 2/$3.4 10/$18.3Littoral Combat ships (Navy) 2/$1.3 7/$5.6

Evolved Expendable Launch Vehicle (Air Force) 5/$1.8 23/$9.4Global Positioning System (Air Force) --/$0.8 10/$5.6

FY 15

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

FY14 Cycle

Execution

FY 14 and prior

FY15 Cycle

Program/Budgeting Execution

FY 16

FY16 Cycle

FY17Cycle

Planning

CY14 CY15 CY16

Enactment Execution

FY 15 and prior

Enactment

FY 17

Planning

2nd Yr

2nd Yr

2nd

Enactment

FY18Cycle

3rd Yr

3rd Yr

FY 16 and prior

FY 17-21 DPG

Exec

FY17 & prior

Planning

Program/Budgeting

Program/Budgeting

PB – President’s Budget

FY 16-20DPG

Resource Allocation Process Overlap

FY 18-22 DPG

FY 17-21 POMFY 17 BES

FY 16-20 POMFY 16 BES

PB

PB

PB

DPG – Defense Planning Guidance

FY 18-22 POMFY 18 BES

BES – Budget Estimate Submission POM – Program Objectives Memorandum

• 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

22

Bipartisan Budget Act of 2015

• 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

23

Bipartisan Budget Act of 2015 Cont.

PPBE – Program/Budget Submission/Review

Components/Defense Agencies

BESPBMBIAdv Questions/

OSD/OMB Budget Hearings

Yr 2 JUL SEP

Year 3 JAN/FEBOCT

Issue Resolution

SECDEF/DEPSECDEFSLRG & DMAGPOM

OSD/CAPE

CPA

DECNOV

JCS

USD(C) &OMB

BES – Budget Estimate SubmissionCAPE – Cost Assessment & Prgm EvaluationCOCOM – Combatant CommanderCPA – Chairman’s Program AssessmentDMAG – 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

IssueTeams

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

RMDs

Services / PEO / PM Answer / Reclama

DoD“Large Group”

FYDPUpdate

13

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)

PPBE Overview (3/3):“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 government 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)

26

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 - ARMY

N - NAVY

M - MARINE

F - AF

D - OSD

C - MDA

E - DARPA

J - JCS

S - DLA

BB - SOCOM

DBD - DFAS

A - ARMY

N - NAVY

M - MARINE

F - AF

D - OSD

C - MDA

E - DARPA

J - JCS

S - DLA

BB - SOCOM

DBD - DFAS

 Ref: DoD 7045.7 - H

PPBE Building Blocks (3/3) Program Elements

27

DOD COMPONENTS

Strategic Forces

General Purpose Forces

Command, Control, Comm, Intell & Space

Mobility Forces

Guard & Reserve Forces

Research and Development

Central Supply & Maintenance

Training, Medical, & Other Personnel Activities

Administration and Associated Activities

Support of Other Nations

Special Operations Forces

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Procu

rem

ent

Military

Constru

ctio

n

Militar

y Per

sonnel

Ops & M

ainte

nance

Other

NAVY

DEF AGENCIES

OTHER

DOD APPROPRIATIONS

AIR FORCE

ARMY

RDT&E

MAJOR FORCE

PROGRAMS

PPBE Building Blocks (2/3) Future Years Defense Program (FYDP)

28

Planning, Programming, Budgeting and Execution

Joint CapabilitiesIntegration andDevelopment System (JCIDS)

DefenseAcquisitionSystem

PPBE Overview (1/8) Three Major DoD Management Systems

QDR QDR

29

Senior Leader Review GroupAKA “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 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

30

OSD Budget Review - Micro Level

• Phasing– Development to Production (Concurrency)– Schedules: Acq Milestones, Testing, Contract Award– First/Fourth Quarter new starts are at risk

• Pricing– Basis of Estimates for programs and Cost Exhibits– Contract data– Inflation, Learning curves, Production rates, Unit costs

• Policy - Annual, Incremental and Full funding• Execution - likelihood budget request can be

executed– Historical (3-5 years) track record– Obligation Rates, Expenditure Rates– Availability of prior year funds for budget year efforts

31

Defense Appropriations“Colors of Money”

RDT&E

PROC

MILPERS

O&M

MILCON

Military Personnel (MILPERS) Active & Reserve Forces

Operation & Maintenance (O&M) Active & Reserve Forces (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 32

Life CycleCost

ICE

FiscalEnvironment

CostAnalysis

Estimate

AnnualFunding

IncrementalFunding

MFP PE BESFunding Policies

Planning, Programming,Budgeting and Execution

President’sBudget

Commitment Reprogramming

Budget Authority Obligation Expenditure Outlay

BudgetExecution

Congressional Enactment

Force StructureModernizationOperational CapabilityReadinessSustainability

POE

CCA

SAC SASC SBC HAC HASC HBC

DoD Budget Overview (1/4)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

33