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  1. NAVY PPBE PROCESS 2010 Department of the Navy Human Resources Conference April 28th, 2010 Captain Drew Flavell - Office of the Chief of the Navy Reserve

  2. Today’s Discussion – The PPBE ProcessCaptain Drew Flavell - • PPBE is DoD’s resource allocation process • Planning establishes strategic priorities and capabilities required to achieve the strategy • Programming applies resources to programs that provide the capabilities required to achieve the strategic priorities • Budgeting properly prices the programs, develops justification and an execution plan • Execution performs the approved plan • Constrained resources drive the process • Successively, within Navy & USMC, to DON, to OSD and to OMB • Must know requirements, and priorities among them • Must achieve both program and TOA balance

  3. The Federal Budget Over the Long Run $ in B 6000 5000 4000 Welfare & Other Services Net Interest Entitlement Programs Medicare 3000 Other Retirement & Disability Social Security 2000 Medicaid 1000 Discretionary Programs Defense Other Discretionary 0 1970 1980 1990 2000 2010 2020 2030 … DoD competes for $$

  4. Combatant Commanders

  5. Navy Secretariat Organization DoN Chief Information Officer Secretary of the Navy Chief of Information Judge Advocate General of the Navy Undersecretary of the Navy Chief of Legislative Affairs Auditor General Naval Inspector General Assistant for Administration* Director Program Appraisal Director Small & Disadv Bus. Utilization Asst Secretary Of the Navy (Research, Dev & Acq) Asst Secretary Of the Navy (Fin Mgmt & Comptroller) Asst Secretary Of the Navy (Manpower & Resv Affairs) Asst Secretary Of the Navy (Installations & Environment) General Counsel of the Dept of the Navy Chief of Naval Research Chief of Naval Operations Commandant of the Marine Corps

  6. The DoN Secretariat Secretary of the NavyHonorable Ray Mabus Under Secretary of the Navy Honorable Robert Work OLA RADM Miller AG R. Leach GC SecNav Pers Staff CHINFO RMDL Moynihan IG VADM Winns OPA Jo. Decker AAUSN E. Roberson CNR RADM Carr JAG VADM MacDonald DONCIO Robert Carey Dir NCIS Thomas Betro DUSN for Departmental Plans, Policy, Oversight, and Integration Bill Natter DUSN for Business Enterprise Operations and Transformation Eric Fanning ASN RD&A Sean Stackley GC Anne Brennan (Acting) ASN-FM&C John McNair (Acting) ASN-I&E Roger Natsuhara (Acting) ASN-M&RA Juan Garcia

  7. MCPON

  8. Joint Military Community (JMC) – Reporting Relationships President of the United States Secretary of Defense Other Defense Agencies Delegated Oversight Responsibility CJCS JCS Joint Staff Functional and Geographic Combatant Commanders Military Departments/Services Component Commands

  9. Linking to External Partners: OSD and JCS CAPE

  10. Navy Enterprise INDIVIDUAL WARFARE ENTERPRISES Demand Signals CNO REQUIREMENTS PROVIDERS & ENABLERS NNFE NAE SWE USE NECC MPT&E AT&L Installs OUTPUT = READINESS AT COST Health Care S&T USFF/ VCNO/ ASN (RDA) N8/ ASN (FMB) PROVIDERS RESOURCES • PRODUCTIVITY DRIVERS: • Priorities • Behavioral Changes • Single Processes/ Owners • Common Metrics • Integrated Capabilities • Transparency of Information

  11. PPBE Overlapping ‘Cycles’ Today POM: Program Objective Memorandum PB: President’s Budget POM10 FY10 PB PR: Program Review Programming Budgeting Execution Planning PR11 FY11 PB Programming Budgeting Execution • Perform the plan Planning POM12 FY12 PB • Develop the strategy • Capability assessment Programming • Allocate resources • Fiscal constraints • Program balance Budgeting • Detail & accuracy • Justification • Develop the plan JAN 10 JAN 08 JAN 11 JAN 09

  12. PPBE Products In a Notional POM Cycle * POM On-year Planning Programming SecDef Guidance for the Development of the Force (GDF) Budgeting SecDef Joint Programming Guidance Execution DON Budget Submits PerformancePlan Navy Strategic Plan (NSP) Budget Estimate Submission CNO Guidance Funds Allocation Navy Capability Plans SecDef Program/Budget Decisions Supplemental Request CNO Investment Strategy Navy POM Reprogramming Request USMC POM President’s Budget DON POM Appropriation & Authorization * PR (off-year) products discussed in Programming module

  13. PPBE Timeframes To Congress Spring 2010 POM12 (‘On Year’) Every Year 27 06 07 09 11 12 13 14 15 16 17 18 19 20 21 22 23 08 24 25 26 10 Programming Execution Planning • Five Years Defense Plan (FYDP) • Five-year period for resource allocation • Planning years • Horizon for planning force structure & recapitalization • Anticipate FYDP resource implications (e.g. advanced procurement) • Budget year • Congress review, authorization and appropriation • Execution years • 1-10 prior years, depending on type of appropriation

  14. POM-12 Timeline

  15. PPBEFocus of the decision Aircraft Force Application Facilities Space Force Support Battlespace Awareness Ships Base Support Intelligence Medical Depot Maintenance Communications Property Repair Construction Spare Parts Manpower Fuel Programming Program view Procurement RDTEN Planning Capabilities view Budgeting Commodities/Appropriations view

  16. Achieving Resource Balance Manpower Integration for Resource Balance Readiness Investment • The right level of resources • The right program prioritization • The right amount of risk • The right program tradeoffs …among and between MANPOWER, INVESTMENTS, and READINESS

  17. PPBE - (Planning) POM: Program Objective Memorandum PB: President’s Budget POM12 FY12 PB Planning Programming • Develop the strategy • Capability assessment Budgeting • Allocate resources • Fiscal constraints • Program balance Execution • Detail & accuracy • Justification • Develop the plan • Perform the plan • Strategy development - N3/N5 (N51) • Develop/refine military & business strategies • Capabilities assessment - N8 (N81) • Identify and balance the warfighting & support capabilities needed to achieve the strategy JAN 09 JAN 11 JAN 12 JAN 10

  18. N81: Strategic Assessment Determination of warfare requirements, allocation of resources, program planning, and study efforts N81/QDR Director Assessments N810 Joint Requirements & Acquisition N811 Studies, Resources & Costing N812 Warfighting Assessment N814 Warfighting Support Analysis N816 Campaign Analysis N81F* FORCEnet N81G* Sea Shaping N81M* Sea Basing N81P* Sea Shield N81T* Sea Strike * N-81 Pillar Leads

  19. Maritime Strategy The Navy is setting out a series of strategic plans to guide its way ahead in the 21st century. The Cooperative Strategy for 21st Century Seapower (a.k.a. CS21) is one element of a larger four-part structure that includes: Vision sets the ends. The Navy’s vision is Sea Power 21. Strategy is the ways and means to achieve the ends set forth in the vision. The new Maritime Strategy will fill this role. Operations, as addressed in the Naval Operations Concept, comprise the way resources are used and applied by the warfighter Resources are finite & the Navy Strategic Plan will establish CNO priorities and risk guidance for use by programmers in the development of the budget submission

  20. Navy Planning: Assessing Capability POM 12 PB 12 Planning Programming Budgeting Execution JAN 09 JAN 10 JAN 11 JAN 12 CNO Guidance Navy Strategic Plan Guidance for Development of the Force Campaign Analysis Baseline Front End Assessment (N81) Integrated Capability Plan (N81) Warfighting Capability Plan (N81) Integrated Readiness Capability Assessment (N4) Integrated Sponsor Capability Plans (N1 & N6) Integrated Infrastructure Requirements (N4/CNI) Integrated Program Assessment (N81 April) CNO Investment Strategy (N802) CNO Approved Budget to FMB (May) Budget Estimate Submission to OSD (July) NOV JUL 09 SEP JAN 10 MAR

  21. PPBE Programming POM: Program Objectives Memorandum PB: President’s Budget PR: Program Review Planning Programming • Develop the strategy • Capability assessment Budgeting • Allocate resources • Fiscal constraints • Program balance Execution • Detail & accuracy • Justification • Develop the plan • Perform the plan • Program development • Assign resources to programs, to meet capabilities • Apply resource constraints to achieve fiscal balance • Program review (not PR) • Balance across programs to optimize effectiveness JAN JAN JAN JAN

  22. Resource Programming Allocation of future resources ‘buy’ programs that provide capabilities from Planning Phase Allocate in each year over the FYDP Constraints are imposed ‘Topline’ TOA limits Many participants have competing requirements Guidance from ‘higher authority’ (Navy, DOD, OMB, Congress) Fact-of-life (e.g. basing), ability to execute Iterative processes, within Navy and within DOD, to achieve program balance Program development and recommendation Program review (not to be confused with PR), adjustment and decision Approved ‘program’ is starting point for budget

  23. ‘Resource’ in Programming The commodity that is allocated in programming In each FY over the FYDP Commodities can be freely exchanged within a FY Each has an established/approved ‘price’ Three types of resources Quantities: Equipment procured during a FY End strength: Manpower planned at the end of a FY $$$: For all other programs Total F/A-18 Resources (for one FY) $243,000K Qty 3 $/each $75,000K Subtotal $225,000K Endstrength 25 $/each $120K Subtotal $3,000K Flt Hours 3,000 $/hour $5,000 Subtotal $15,000K

  24. Resource Integration (N80) Integration for Resource Balance • Program Development • Support balanced investment (warfighting) requirements • Monitor programs throughout • POM Strategy • R3B Secretariat/Issue Coord • CNO Investment Strategy • Develop POM guidance, controls, timelines • Emergent OSD, Joint, Fleet, USMC Requirements

  25. Manpower, Personnel, Training & Education (N1) Provide the right person in the right place at the right time Strive to satisfy personal goals and improve their quality of life Provide meaningful and rewarding career opportunities, promote and retain the best Ensure fair and equitable treatment of all hands, by all hands, at all times Manpower N1 Manpower, Personnel, Education & Training Chief of Naval Personnel N10 MPN Financial Management N12 Total Force Programming Manpower & Information Resources Management N13 Military Personnel Plans & Policy N16 Chief Information Officer MPT&E Information Management N11 Civilian Community Management

  26. Readiness & Logistics (N4) Provide relevant policy, resources, structures and mechanisms to meet leadership defined readiness requirements of Navy operating forces and their associated shore installations Enable a responsive, adaptive and efficient logistics support structure that facilitates that readiness and supports the integration of Naval forces into the joint force Readiness N4 Fleet Readiness & Logistics N41 Supply, Ordnance & Logistics Operations N42 Strategic Mobility & Combat Logistics N43 Fleet Readiness N46 Ashore Readiness N40 Logistics, Planning & Innovation N45 Environmental Protection & Readiness

  27. Investments (N8F, N8(x)) CNO’s principal advisor for warfare capability requirements and integration Conduct warfighting analysis and programming to support PPBE Fleet’s OPNAV focal point for warfighting & joint requirements Investment

  28. Resource Sponsor Responsible for an identifiable group of resources constituting certain warfare or supporting tasks Interrelated programs or parts of programs in several mission areas Ensuring an effective and balanced program within assigned fiscal controls Assisting during internal-Navy budget reviews in order to maintain a balanced program SECNAV: AAUSN Wears the “hat” Process Coordinator

  29. Programmatic options to “fix” disconnects Resource Sponsor Actions • Fund Requires resources • Restructure Adjust program’s required results • Reengineer Revise processes to use fewer resources There is a non programmatic option…accept the risk Most often, accepting risk involves delaying funding or assuming the problem can be fixed in execution

  30. Programming Process Funded Most Dear FY09 New Funded Content Least Dear Most Dear FY09 New Funded Content Least Dear Most Dear FY09 New Funded Content Least Dear Most Dear FY12/17 New Funded Content Least Dear Unfundeds Offsets Most Dear FY12 New Funded Content Least Dear New Requirements RS Unfundeds Most Dear FY12/17 Funded Content Least Dear Most Dear FY06/07 Existing Funded Content Least Dear Unfundeds (Risk) • Adjust program content by moving resources from lower priority content to content of higher priority • In each successive activity, the services adjust the content of the FYDP based on new or changing requirements • Low priority programs gave way to fund higher priority programs

  31. In general, there are four sources of offsets Reducing or delaying investments Cutting RDT&E funds, delaying modernization, stretching procurement Reducing/accepting risk in readiness Cutting operational and formal skills training budgets, eliminating forward basing Divesting forces Planes, ships, readiness, people Reducing infrastructure Base support, tech refresh, ranges and minor facilities Some will argue for a fifth source: efficiencies Sources of Offsets

  32. Programming - Fiscal Guidance DoD DoN USN N6 $5B Air Force $143B N4 $27B USN $120B DoN $148B N1 $30B Army $139B N8F $54B Other $81B USMC $25B SRB $2B Other $4B • OSD issues Service TOA controls across the FYDP • SECNAV approves DoN ‘Blue – Green’ split • N8 distributes Resource Sponsor shares for SPP development **Numbers may not add due to rounding to nearest $Billion.

  33. Sponsor Program ProposalMany Inputs, Two Outputs Each Sponsor has an internal process to: Explore options Capabilities balance Programbalance Resource balance Allocate across FYDP Endstrength Investment Readiness, support, etc. TOA Make recommendations Database issue details Briefing to BOD …. FY09 FY11 FY15 Priority 1 . . . . w Above Core Issues (Unfunded) …. FY09 FY11 FY15 Congress Actions N80 POM/PR WARNORD PLANORD FRAGORD(s) 1 . . . . p Core Issues (Funded) Fiscal Guidance N81 Invest Strategy COCOM IPLs CNO ‘Path Ahead’ CCIPs Fact of Life Unfundeds SPP Briefing N8 Program Guidance

  34. POM/PR ‘Endgame’Iterative, Fast-Paced Resource Sponsors submit SPPs Integrate SPPs (N8) Pre T-POM Assessment (N8 with USMC) Revise SPPs and build T-POM (N8) CNO approve Navy POM ‘End Game’ MAR NOV JAN MAY JUL AUG • N8-led ‘process’ to balance the Navy POM • N80 compiles SPPs to create the Tentative-POM (T-POM) • N81 assesses degree the T-POM achieves the Investment Strategy • N80 assesses for resource and program balance across the FYDP, and compliance with other guidance • R3B/BoD reviews the T-POM • Identify guidance ‘busts’, recommend options to CNO • CNO involved early and often • CNO Guidance provides adjusted guidance to optimize T-POM balance

  35. Program Review Concurrent with Budget PR12 FY12 PB Planning Programming Budgeting Execution JAN 09 JAN 10 JAN 11 JAN 12 POM to BSOs POM to OSD OSD/CAPE POM Issues DoD Senior Level Review (SLRG, DAWG) DepSecDef Resource Management Decisions BSO Budget submits FMB review and markup SecNav budget decisions BSOs & FMB develop BES Budget Estimate Submission to OSD/C OSD/C review and Resource Mgmt Decisions Major Budget Issues DepSecDef decisions Develop & submit President’s Budget (Feb 1) SEP MAY JUL NOV JAN

  36. OSD Program Review Process OSD Issue Team - Analysis - Programmatics - Alternatives - Courses of Action Briefing and/or Paper RMD SLRG/DAWG OSD Issue Team (w/ DoN member(s)) Pre SLRG or DAWG (DEPSECDEF) SLRG/DAWG (SECDEF) SECNAV/CNO attends briefings Courses of Action CAPE Comptroller VCJCS SECDEF 3-Star CAPE/ 3-Star Meeting N8 Attends Issue Papers or Briefing Courses of Action Courses of Action CAPE/ N8/N80 negotiate issues Out-of-Court

  37. PPBE: Budgeting Planning Programming POM10 FY10 PB Budgeting Execution • Program balance • Fiscal constraints • Detail & accuracy • Prior year execution • Justification and defense • Performing as appropriated PR11 FY11PB Planning Programming Budgeting Execution POM12 FY12 PB Planning Programming POM: Program Objectives Memorandum PR: Program Review PB: President’s Budget Budgeting JAN 08 JAN11 JAN 09 JAN10

  38. Applying Fiscal Granularity

  39. Appropriation Sponsor The senior executive in the DON responsible for Supervisory control and broad decision-making authority over a designated appropriation Assisting in solving funding deficiencies during budget formulation Representing Navy before Congress preparing and reviewing witness statements responding to questions and briefing Congressional members or staff reviewing Committee reports and for preparing consolidated appeals Recommending the reprogramming of funds within the appropriation during budget execution Wears the “hat” Process Coordinator

  40. Budget Submitting Office A DON office responsible for Preparation, compilation, and submission of budget estimates and supporting materials Delivering prescribed exhibits and ensuring that subordinate offices submit materials on time Ensuring submissions are consistent with DON Review and OSD/OMB budget decisions During budget execution, ensuring budget plans are accomplished within available funding Wears the “hat” Process Coordinator

  41. Budget guidance is issued Current/prior fiscal year execution is reviewed Disconnects between guidance and execution are identified Exhibits are prepared and submitted (BSO) Exhibits are reviewed and analyzed; adjustments are recommended (FMB) via Issue Papers Appeals are submitted (BSO) Meetings are held to resolve outstanding issues Approved budget is submitted to next level How to Build a Budget Navy BSO Navy FMB OSD (C) OMB Congress Note budgeting is a bottom-up exercise. Planning and programming are top-down. And, this process repeats FOUR times!

  42. AUG APR 10 JUN NOV JAN 11 Concurrent Program & Budget Activities PR to OSD (ref: 14 Aug 2009) OSD/CAPE PR Issues (Aug 14 – Sep 14) DoD Senior Level Review Group Review (Sep-Oct) DepSecDef Resource Management Decisions (Sep – Dec) BSO Budget submits (6 Jul) FMB review and markup (2 Jul – 12 Aug) SecNav budget decisions (12 Aug) Budget Estimate Submission to OSD/C (14 Aug) OSD/C review (Aug 14 – Sep 14) DepSecDef decisions – RMDs (Sep – Dec) Develop & submit President’s Budget (Dec 4) President’s Budget Released (Feb 1)

  43. What’s an “Exhibit”? Additional detail beyond database numbers Walks from year to year with explanation Examples: Three key exhibit formats: Horizontal” (fiscal years from left to right) “Vertical” (like a checkbook register) “ Hybrid” (fiscal data at top; written justification below)

  44. What Do Budgets Look Like? Let’s look at part of the DoN FY11 O&M Budget (758 pages total)

  45. Reading Budget Exhibits:Price Growth vs Program Growth • If quantity stays the same but cost changes, that’s PRICE growth. Examples: • Inflation • Foreign currency • Utility rates • Fuel fluctuations • Pay raises • If quantity changes, that’s PROGRAM growth. A “horizontal” exhibit example (OP-32) – see handout

  46. Reading Budget Exhibits:Price Growth vs Program Growth • If quantity stays the same but cost changes, that’s PRICE growth. Examples: • Inflation • Foreign currency • Utility rates • Fuel fluctuations • Pay raises • If quantity changes, that’s PROGRAM growth. A “horizontal” exhibit example (OP-32) – see handout

  47. Leading Players in the Process House of Representatives Budget Committee (HBC) -- Budget Resolution Armed Services (HASC) -- Authorization Appropriations Committee (HAC) -- Appropriations Senate Budget Committee (SBC) -- Budget Resolution Armed Services (SASC) -- Authorization Appropriations Committee (SAC) -- Appropriations Congressional Oversight Committees

  48. MAR FEB APR MAY JUN JUL AUG SEP OCT NOV Floor HASC Hearings Floor House House House Markup Public Law CONF SASC Hearings Floor Markup Senate Senate Senate Floor Floor Public Law CONF Floor Congressional Budget Timeline 4 1 30 4 PB To Hill FY Begins House CompletionTarget for FY09 Approps Bills Markup HBC Hearings Floor Floor Concurrent Budget Resolution CONF SBC Hearings Floor Floor Markup Defense Authorization Bill Floor HAC Hearings Markup Defense / Milcon Appropriation Bills SAC Hearings Floor Markup Note: All timeframes projected/approximate

  49. Agriculture Commerce, Justice, Science Defense Energy and Water Financial Services Homeland Security Interior Labor, HHS Legislative Branch Military Construction / VA State / Foreign Operations Transportation / HUD 302(b) Allocations (and Appropriations)

  50. Authorization Process (Armed Services Committees) Defines the scope and content of programs and authorizes their appropriation level Provides statutory authority to establish or maintain a government program or agency Legislative vehicle for Congress to address policy issues and concerns and exert its oversight role Must have Authorization for: Pay Raise End Strength New Start Programs MILCON projects