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Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764 Defense Systems Management College

Requirements Executive Overview Workshop Planning , Programming, Budgeting and Execution (PPBE) Process. Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764 Defense Systems Management College Defense Acquisition University Fort Belvoir, Virginia 14 Dec 2016. PPBE Outline.

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Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764 Defense Systems Management College

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  1. Requirements Executive Overview WorkshopPlanning, Programming, Budgeting and Execution (PPBE) Process Roberta Tomasini roberta.tomasini@dau.mil 703-805-3764 Defense Systems Management College Defense Acquisition University Fort Belvoir, Virginia 14 Dec 2016

  2. PPBE Outline • PPBE Overview • PB 17 (Open Source Info) • PPBE Summary Info • “Will Cost” vs “Should Cost” • Building Blocks • FYDP, MFP, Program Elements • PPBE Process and Schedule

  3. PB 17 vs Current Caps and Prior Budgets (DollarsinBillions) $610 $590 $570 $550 $530 $510 OriginalBCACaps $490 $470 FY10 FY11 FY12 FY13 FY10-11-12 Actuals FY2015PB CurrentCaps FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY2013PB/DSG FY2017PB FY2016PB OriginalBCA Caps

  4. SecretaryCarter’sPrioritiesforThisBudget • Giventhecurrentlevelofbudgetresources($800BinBudget ControlActcuts),we • can’t reduceall risk. Instead, theDepartmentmust: • Prioritizeconventional deterrenceagainstourmostadvancedadversaries • Focusmoreontheshapethanthesizeoftheforce • Seekthebest balancebetweenforcestructure(size),modernization(capability)and • readiness • Emphasizelethalityandcapabilityoftheforceratherthansize • Emphasizepostureratherthanpresence • Emphasizeinnovation • Attracting,retaining,andmanagingtalent(ForceoftheFuture) • Updatewarplans andoperationalconcepts • Pursue“offset”technologies • Institutional efficiency andreform “Today’ssecurityenvironment isdramaticallydifferent…and it requiresnewwaysofthinkingandnewways ofacting” SecretaryCarter,February2,2016

  5. FY2017BaseFunding ByAppropriationTitle ByMilitaryDepartment MilitaryConstruction and Family Housing, $7.4 DefenseWide $94.5 Military Personnel, $135.2 Army $122.9 RDT&E, $71.4 Procurement, $102.5 Air Force $151.1 Navy $155.4 O&M, $205.8 FY2017Request: $523.9billion

  6. FY2017OCOFunding ByAppropriationTitle ByMilitaryDepartment MilitaryConstruction and Family Housing, $7.4 Military Personnel, $3.5 RDT&E,$.3 DefenseWide $8.5 Procurement, $9.5 Army $25.0 Air Force 15.8 O&M, $45.0 Navy $9.5 FY2017Request: $58.8billion

  7. FY2017TotalBaseandOCOFunding ByAppropriationTitleByMilitaryDepartment MilitaryConstruction and Family Housing, $7.6 DefenseWide $102.9 Army $148.0 RDT&E, $71.7 Military Personnel, $138.5 Procurement, $112.0 Air Force $166.9 Navy $164.8 O&M, $250.9 FY2017Request: $582.7billion

  8. HowwehitthelowerFY2017topline (DollarsinBillions) $10 $+5.0B $5 OCO Relief $-21.8B $-16.8B $0 FuelSavings, $-2.8B NetCuttoBase Budget FY 2017 InflationSavings, $-2.4B -$5 NewEfficiencies, $-0.4B GrossBBAcut -$10 NetProgramchanges, $-11.2B -$15 -$20 -$25 Comparison toFY2016PB Planfor FY2017

  9. Cutstohit thelowerFY2017Topline • Wewillprocurefewerweaponssystemsthanplanned: • 9AH-64Apachehelicopters(Army) • 24UH-60Blackhawkhelicopters(Army) • 5 F-35AJointStrikeFighters • 2 V-22aircraft(Navy) • 3 C-130Jaircraft(AirForce) • 4 LCACServiceLifeExtensionPrograms(Navy) • 77JointLightTacticalVehicles(MarineCorps) • Aircraftprocurementaccountsreduced$4.4billion • Shipbuilding reduced$1.75billion • Otherprocurementaccountsreduced$2.6billion • Reduceplansfornewmilitaryconstructionprojectsby$1.1billion Comparison toFY2016PB Planfor FY2017

  10. FY2017BudgetSupports • Plannedforce structure levels • Servicereadinessrecoveryplans • Asafe, secureandreliablenuclearforce at NewSTARTlevels • Force of the Future initiatives • Modernization: • DDGmodernizationandSSN upgrades • Surfaceshipadvancedmunitions and sensortechnologies • Investmentinspacecapabilities • Hypersonicresearchanddevelopment • Cybertools forCombatantCommanders • Armyaviationmodernizationplan • MarineCorpsvehiclemodernizationplan • Keyreform proposals(e.g.,TRICARE)

  11. FY2017 ForceStructure • Forcestructureassessedsufficienttoexecutethestrategy • Majorelementsinclude: • 14SSBNs,450ICBMs • 96OperationalBombers(154total) • 287-shipNavywith11Carriersin FY2017 • (Building toa 308-shipNavy) • 54+1Tacticalfightersquadrons • 990kArmyTotalEndStrength (460kActive) • (30Active BCTsinFY2017) • 221kMarineCorpsTotalEndStrength (182kActive) FY2017ForceStructure Sufficientto ExecuteStrategy

  12. 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

  13. 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

  14. “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)

  15. 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 16 17 18 19 2021 22

  16. Future Years Defense Program (FYDP) DOD APPROPRIATIONS Military Personnel Military Construction Ops & Maintenance Procurement D Other RDT&E E F O A (1) T Strategic Forces A I H G General Purpose Forces (2) R E E Command, Control, Comm, Intell & Space (3) N R N F A A MAJOR FORCE PROGRAMS C Mobility Forces (4) O V R I R Guard & Reserve Forces (5) Y M E C Research and Development (6) Y S E 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)

  17. Program Elements A - ARMY N - NAVY M - MARINE F - AF D - OSD C - MDA E - DARPA J - JCS S - DLA BB - SOCOM DBD - DFAS • 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) Ref: DoD 7045.7 - H

  18. PPBE – Planning Phase Lead by USD (P) President National Security Council CIA/DIA/JCS/OSD YEAR 1 YEAR 2 Elapsed Time: 15-16 Months FEB/MAR APR/MAY CIA – Central Intelligence Agency COCOM – Combatant Commander CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency DPG – Defense Planning Guidance JCS – Joint Chiefs of Staff NDS – National Defense Strategy NMS – National Military Strategy NSS – National Security Strategy OSD – Office of the Secretary of Defense QDR – Quadrennial Defense Review SCMR – Strategic Choices and Management Review USD(P) – Undersecretary of Defense (Policy) • Planning Phase focus: • Threat vs. Capabilities • Update strategy • Guidance for programming & • budgeting NSS Every 4 Years Guidance for POM/BES submission and OSD Integrated Program/Budget Review QDR NDS OSD DPG Level JCS NMS CPR Level (JCS, COCOMs, SERVICES)

  19. UNCLASSIFIED PB18 UNCLASSIFIED

  20. FY 18–22 Program/Budget Review Schedule

  21. 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)

  22. Backups

  23. 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

  24. 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

  25. 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 2nd Yr Enactment Execution 3rd Yr FY 15 FY 15 and prior PB FY16 Cycle Program/Budgeting 2nd Execution Planning Enactment FY 16-20 DPG FY 16 FY 16 and prior FY 16-20 POM FY 16 BES PB FY17 Cycle Program/Budgeting Enactment Exec Planning FY 17-21 POM FY 17 BES FY 17-21 DPG FY 17 FY17 & prior PB FY18 Cycle Program/Budgeting Planning FY 18-22 DPG FY 18-22 POM FY 18 BES DPG – Defense Planning Guidance PB – President’s Budget POM – Program Objectives Memorandum BES – Budget Estimate Submission

  26. PPBE – Program/Budget Submission/Review DEC NOV Year 3 JAN/FEB Yr2 JUL SEP OCT 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 USD(C) & OMB BES Adv Questions/ OSD/OMB Budget Hearings MBI PB FYDP Update FYDP Update Budget Review focus: - Pricing - Phasing - Funding policies - Budget execution Services / PEO / PM Answer / Reclama

  27. DoDBudgetPlansvs.BCACaps IncludingBBA15 ($B) $680 $665 $650 $635 $620 $605 $590 $575 $560 $545 $530 $515 $500 $485 $470 PB2014 SCMR PB17 PB15/QDR/PB16 Original BCACaps FY10 FY11 FY12 FY13 FY2012PB FY2017PB FY14 FY15 FY16 PB13/QDR Original BCACaps FY17 FY18 FY2014PB Sequester-Level FY19 FY20 SCMR FY21 FY10-11-12Actuals PB15/QDR C02-16-101_V9

  28. FY 16 PB (cont.) • Service Shares (PB 16) • Navy/MC 30% • Air Force 29% • Army 24% • Modernization Accounts (Procurement and RDT&E) • Procurement $108B (PB16) vs $90B (PB15) vs $107B (PB10) • For the fight 10 years from now • RDT&E $70B (PB16) vs $63B (PB15) vs $79B (PB10) • For the fight 20 years from now (Acq programs in development) • For the fight 30 years from now (Science and Technology efforts) • $12B floor

  29. Three Major DoD Management Systems Planning, Programming, Budgeting and Execution QDR Joint Capabilities Integration and Development System (JCIDS) Defense Acquisition System

  30. Senior Leader Review GroupAKA “The Large Group” • 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 • 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 * Or Principal Deputy

  31. Created 27 Oct 14: Source: adapted from USD(AT&L) charts: http://bbp.dau.mil/docs/BBP_3.0_Presentation_Frank_Kendall_19_Sept_14.pdf Achieve Affordable Programs Continue to set and enforce affordability caps Achieve Dominant Capabilities While Controlling Lifecycle Costs Strengthen and expand “should cost” based cost management Build stronger partnerships between the acquisition, requirements, and intelligence communities Anticipate and plan for responsive and emerging threats Institutionalize stronger DoD level Long Range R&D Planning Incentivize Productivity in Industry and Government Align profitability more tightly with Department goals Employ appropriate contract types, but increase the use of incentive type contracts Expand the superior supplier incentive program across DoD Increase effective use of Performance-Based Logistics Remove barriers to commercial technology utilization Improve the return on investment in DoD laboratories Increase the productivity of IRAD and CR&D Incentivize Innovation in Industry and Government Increase the use of prototyping and experimentation Emphasize technology insertion and refresh in program planning Use Modular Open Systems Architecture to stimulate innovation Increase the return on Small Business Innovation Research (SBIR) Provide draft technical requirements to industry early and involve industry in funded concept definition to support requirements definition Provide clear “best value” definitions so industry can propose and DoD can choose wisely Eliminate Unproductive Processes and Bureaucracy Emphasize Acquisition Executive, Program Executive Officer and Program Manager responsibility, authority, and accountability Reduce cycle times while ensuring sound investments Streamline documentation requirements and staff reviews Promote Effective Competition Create and maintain competitive environments Improve technology search and outreach in global markets Improve Tradecraft in Acquisition of Services Increase small business participation, including more effective use of market research Strengthen contract management outside the normal acquisition chain Improve requirements definition Improve the effectiveness and productivity of contracted engineering and technical services Improve the Professionalism of the Total Acquisition Workforce Establish higher standards for key leadership positions Establish stronger professional qualification requirements for all acquisition specialties Strengthen organic engineering capabilities Ensure the DOD leadership for development programs is technically qualified to manage R&D activities Improve our leaders’ ability to understand and mitigate technical risk Increase DoD support for Science, Technology, Engineering and Mathematics (STEM) education Better Buying Power 3.0 DRAFT Achieving Dominant Capabilities through Technical Excellence and Innovation Continue Strengthening Our Culture of: Cost Consciousness, Professionalism, and Technical Excellence

  32. 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 Affordability

  33. 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

  34. BBP Comparison [Aligned to 3.0 Draft]

  35. AffordabilityDefense Acquisition Guide (DAG), Oct 2012 (1/4) • Chapter 3.2.1. -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

  36. AffordabilityDAG (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

  37. AffordabilityDAG (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

  38. AffordabilityDAG (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) 5000.02, November 25, 2013 states that the DoD component will demonstrate that the program will be fully funded within the FYDP at MS A

  39. 4 Major Changes in the FY 12-16 PPBE CycleDepSecDef 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 13-17 PPBE Cycle had six issues

  40. MILPERS O&M PROC RDT&E MILCON Defense Appropriations“Colors of Money” 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 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

  41. Defense Topline Budget

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