Introduction to PPBE

What Is the Purpose of PPBE? Provide Civilian Control and Strategic Direction Centralizes decision-making in the Office of the Secretary of Defense Manages allocation of resources to meet the Secretary’s goals Create a joint (DoD-wide) program Integrates individual components’ inputs into a single defense program Ensures stakeholders have a voice; builds consensus Provide financial “checks and balances” Promotes efficient and effective allocation of funds Ensures the cost of defense programs are realistic / affordable Provide basis for justifying programs and budgets to the White House and Congress This slide identifies the objectives of PPBE The system is a tool used by the Secretary of Defense to ensure that his goals--and that of the President--are implemented PPBE is also used to create a joint Defense Program -- one that balances the capabilities of the Army, Navy, Air Force, and Marine Corps The system provides financial checks and balances -- and an opportunity for programs and Services to compete for resources Finally, the decision making process is designed to be transparent --internal justifications are used to justify programs to Congress PPBE is the principal tool used by the Secretary and the Deputy Secretary in managing the Department of Defense

The Objective of PPBE PPBE’s main objective is to establish, justify, and acquire the fiscal and manpower resources needed to accomplish missions in executing the Defense Strategy PLANNING PROGRAMMING & BUDGETING One important thing to keep in mind is the difference between DoD’s PPBE process and the Army’s PPBE process. DoD’s is the overarching system that rationalizes and attempts to ultimately integrate the submissions from the Services and Defense Agencies into one defense budget. The overarching objective of the Army PPBE process is to establish, justify, and acquire the fiscal and manpower resources needed to accomplish its specifically assigned missions according to the National Military Strategy. During each phase of the PPBE process the objectives are: • During all phases of the PPBES, to provide essential focus on Departmental policy and priorities for Army functional activities. • Through planning, to size, structure, man, equip, and train the Army force to support the national military strategy. • Through programming, to distribute projected manpower, dollars, and materiel among competing requirements per Army resource allocation policy and priorities. • Through budgeting, to convert program decisions on dollars and manpower into requests for congressional authorization and appropriations. • Through program execution, to — • Apply resources to achieve approved program objectives. • Adjust resource requirements based on execution feedback. • Through budget execution, manage and account for funds to carry out approved programs. PROGRAM EXECUTION BUDGET EXECUTION PPBE is the process through which DoD takes a long term perspective of its needs and prioritizes operational requirements within given fiscal constraints

Notional FY10-15 PPBE Cycle Components Today Assessment & Resource Allocation & Budget Formulation Presentation, Justification & Approval Strategy & Goals/ Objectives Management & Apportionment Planning Programming & Budget Congress Execution FY10-15 Army planning for the FY 10 budget and program submission began in CY 2006 culminating with the publication of the Army Plan (TAP) that is sort of the capstone of Army planning documents. We are now in the programming phase where we decide what programs need to be resourced in order to accomplish the goals of the planning process. This effort includes taking those decisions and converting them to the language congress uses, appropriations and budget activities. The conversion is necessary because while programs are output oriented, congressional taxonomy for budgeting is input oriented. After we complete this process for the POM/BES (Change Proposals in an “on year”), OSD and OMB will review our decisions and our budget submission becomes part of the President’s Budget that will go to congress in Feb of CY 09. Assuming congress passes the appropriation on 1 Oct 2009 we then will execute our financial plans. As indicated by the arrow, some annual appropriations such as procurement actually execute over multiple years. JAN 07 JAN 08 JAN 09 JAN 10 JAN 11

Multiple PPBE Cycles Ongoing Each Year Today FY06-11 Congress Execution FY07-11 Change Prop Congress Execution FY08-13 Planning POM/BES Congress Execution FY09-13 Planning Change Prop Congress Execution Because the Army receives annual appropriations, any given PPBE cycle will overlap with other PPBE cycles for other years. From this chart and the previous two charts, we can see that at any given moment in the Army Staff there are multiple years being managed in one of the PPBE phases. Important. You should always be specific as to which budget cycle you are working on or asking questions about because changes are made for each cycle. Notice that in the odd year budget submissions, we use vehicle called Program Change Proposals (PCPs) and Budget Change Proposals (BCPs) (Collectively known as Change Proposals) to update our financial decisions. This was a direct result of Management Initiative Decision (MID) 913. FY10-15 Planning POM/BES Congress Execution JAN 05 JAN 06 JAN 07 JAN 08 JAN 09 JAN 10

PPBE Process -- 4-Year Flow (FY 09 – FY 12 example ) New Admin Program/Budget/Execution Review FY09 Year 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec QDR Modify Budget Submission (Prev Admin) Change Proposals On-year GDF On-year JPG Program/Budget/Execution Review FY 10 Year 2 TAA 12-17 TAP 12-17 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec QDR POM/BES Submissions Budget Submission (Year 1) Program/Budget/Execution Review FY 11 Year 3 This chart is designed to show how the PPBE process has a 4-year flow that corresponds with the election of a new President and changing Administration. Starting at the bottom of the chart you will see the last few months of FY 08 (Current POM 10-15 POM build) – the fourth year in the current four-year PPBE Cycle. The outgoing administration produces a full POM and the incoming administration submits it (usually with some changes) in Feb. 09 (shown at top of chart) Moving back to the top of the chart Year 1 FY 09 (Off Year) Review and Refinement. The first phase of the cycle implements an early National Security Strategy, with limited changes to the baseline program via Program Change Proposals (PCP) or Budget Change Proposals (BCP). Needed Capabilities are identified and prioritized. The Quadrennial Defense Review (QDR) is published every four years (timed for new administrations) by OSD and functions as DoD’s strategic business plan. The QDR also identifies geopolitical trends, international security trends, and transformational requirements facing the US military. The QDR, along with a National Defense Strategy (NDS), National Military Strategy (NMS) and Guidance for the Development of the Force (GDF) Total Army Analysis (TAA) and The Army Plan (TAP) are started in year one for conclusion in year 2. Year 2 FY 10 (On Year) A Quadrennial Defense Review is finalized and aligned with the President's Budget submission in the second year of an administration, and the SecDef GDF and Joint Programming Guidance (JPG) are issued. Program Objective Memorandums (POM) and Budget Estimate (BES) are submitted. Year 3 (Off Year) Execution of Guidance. Off Year changes are limited to the baseline program via Change Proposals. Year 4 (On Year) SecDef National Defense Strategy (NDS), National Military Strategy (NMS) and Guidance for the Development of the Force (GDF) are issued. POMs and a BES are submitted. NOTE: - the GDF is being produced for the first time in FY08 for POM/BES 10-15 and replaces the Strategic Planning Guidance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Change Proposals Budget Submission (Year 2) Program/Budget/Execution Review On-year GDF On-year JPG FY08 and FY 12 ’08 Election Year 4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec POM/BES Submissions Budget Submission (Year 3) Now FY 08

Summary PPBE is DoD’s resource allocation decision support system Processes are overlapping and iterative PPBE is impacted by both internal and external factors; players have differing agendas Strategic planning sets overarching direction and priorities for the PPBE process Programming assigns resources to achieve direction Budgeting works cost details PPBE is the SecDef’s system; he provides the strategic direction and reviews and often changes the service inputs The process is overlapping; participants can never afford to concentrate exclusively on a single year The key innovations of PPBE were programming, the horizontal look at military capabilities, and the FYDP which forces programmers to face the long term consequences of short term choices There are many participants in the process, both within and outside DoD and each is likely to have a slightly different agenda The importance of strategic planning is often underrated Remember the importance of following your programs into the execution years OSD is requiring Services to prepare for future security through transformation efforts and capability-based planning and programming Always be aware of what is going on around you and where you are in the process