1. DoN Update PB16 Overview; Fiscal Update Director, Fiscal Management Division, N82 3 March 2015 Rear Admiral William K. Lescher, USN Deputy Assistant Secretary of the Navy for Budget

2. Office of Budget Agenda President’s Budget 2016 – Overview Fiscal Landscape – FY15; PB16; POM 17 Working with FMB – Principles 2

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4. Office of Budget The Foundation – Strategic Guidance CNO CMC Guidance DoD Strategic Guidance Quad. Defense Rvw SECNAV People; Platforms Power; Partnerships National Security; Defense; and Military Strategies CNO CMC CS21R, EF21 4

5. Office of Budget 5

6. Executing the Strategy – Operational Trends CY 13 – Operational Employment CY 14 – Operational Employment Planned Deployed Ships * *Planned deployments historically address 45% of COCOM demand Planned Deployed Ships * 6

7. Office of Budget 7

8. Billions of Dollars Numbers may not add due to rounding Total Funding (TY) Baseline Funding (TY ) Executing the Strategy – Resources Department of the Navy Topline FY 2002-2020 (TY) 8

9. Office of Budget 9

10. Infrastructure: $2.2B MILCON$1.7 BRAC$0.2 Family Housing $0.3 Procurement: $44.4B Ships $16.6 Aircraft $16.1 Weapons $3.2 Marine Corps $1.1 Ammunition $0.8 Other Navy Procurement $6.6 Summary by Appropriation Group FY 2016 DoN Base Budget Numbers may not add due to rounding R&D: $17.9B Basic Research$0.6 Applied Research $0.9 Advance Tech Dev$0.7 Adv Component Dev $5.0 System Dev & Demo $6.3 Management Support $1.0 Ops Systems Dev $3.4 FY16: $161.0B MilPers: $46.0B Basic Pays $19.2 Housing Allowance $7.7 Retired Pay Accrual $6.0 Health Accrual $2.0 Reserve Personnel $2.6 Subsistence $2.3 Allowances $1.2 Special Pays $1.6 Other $3.4 O&M: $50.4B Ship Ops & Maint$12.6 Aviation Ops & Maint $8.8 Base Ops & Support $7.6 Marine Corps O&M $6.2 Combat/Weapons Support $5.6 Service Wide Support $4.9 Training and Education $1.8 Reserve O&M $1.3 Environmental Restoration $0.3 Mobilization $1.3 Navy: 32%Marine Corps: 27% Navy: 23%Marine Corps: 61% Navy: 1%Marine Corps: 3% Navy: 31%Marine Corps: 6% Navy: 13%Marine Corps: 3% = The percentage of each Service’s total budget applied to each appropriation group 10

11. 11 17 Hard Choices  High-end aviation  Weapons procurement  Facilities sustainment Hard Choices  High-end aviation  Weapons procurement  Facilities sustainment Innovation and Reform  Optimized Fleet Response Plan  Crisis Response - SPMAGTF  Energy security and resiliency  Innovation Task Force  Headquarters Reductions  Pay and Compensation Innovation and Reform  Optimized Fleet Response Plan  Crisis Response - SPMAGTF  Energy security and resiliency  Innovation Task Force  Headquarters Reductions  Pay and Compensation Balancing Focused Investment  Capacity; Capability; Readiness  Quality of Service  Nuclear Enterprise Review  Cyber Capabilities  Audit Readiness Focused Investment  Capacity; Capability; Readiness  Quality of Service  Nuclear Enterprise Review  Cyber Capabilities  Audit Readiness

12. Office of Budget Fiscal Landscape  FY15 Funds Execution Civilian Personnel Hiring Execution Working Capital Fund Execution to Plan Mid-Year Review  FY16 FMB Rollout Briefings Posture Hearings Budget Engagement Process Improvement Engagement Going Forward – Impact Statements  POM 17 Process – Moving toward Sequential POM/BES PPBE Reset Teams – Data Reduction – Timelines 12 Budget Execution Budget Formulation Budget Defense

13. Office of Budget Working with FMB – FMB Principles  FMB Role:  Enforce High Standards in Budget Formulation and, working with FMO, in Execution Process Discipline Content Discipline Message Discipline  Strive to say ‘Yes’ Within Standards  Transparency; Fearless Communication  Strong Coordination/Communication across all key stakeholders 13

14. Office of Budget Back Up

15. Office of Budget Budget Review Issue Adjudication (PBCG Process Discipline) FY16 Budget Hearings – aka Program Budget Coordination Groups (PBCGs) – will each build on prior efforts to resolve issues at the SES Division Director level and lower As such, PBCGs are not general discussion or exploratory discussion venues PBCG’s are limited attendance Flag/SES-level decision forums that occur in the final stage of budget development. Absent the presentation of specific and compelling data to the contrary, the program mark will stand Appealable to SECNAV (Large Group) Places a premium on Principal attendee preparation. Be well-versed on the issue and prior resolution discussions Strongly held opinions absent specific and compelling data are not the standard and will not be supported Budget Hearing issue resolution is based on principles, not positions: Outcome: Maximize executable budgetary support to SECNAV, CNO and Commandant priorities Realistic and balanced funding profiles and program schedules reflecting execution history. Cost. Schedule. Performance. Controls risk to DON TOA from OSD/OMB and congressional marks. Requirements-driven... but the requirement itself is not the whole focus. If the program as structured is not fully executable, the discussion emphasis is not the requirement – it’s the executability of the requirement as budgeted. Fair. Not fair-shared. Consistent with DON Leadership testimony. Supports clear and credible budget rollout testimony with integrity. Process: Focused: Agenda-driven Fact-based: Provide compelling new exhibits, revised calculations, updated obligation data for FMB to consider Transparent and candid: Small nature of the PBCG forum allows frank and unencumbered discussion Long-term perspective prevails over short-term focus 15

16. 16 PROFESSIONAL DEVELOPMENT ASMC National Capital Region: Professional Development Institute TRAINING EDUCATION 16 Speed Mentoring Polaris Room 16:30