1. APEX Briefing Kathleen Conley Director, Projection Forces, Program Analysis and Evaluation1

2. Outline
Economic Outlook
Transforming
Current Analytic Efforts

3. U.S. Defense Priorities Defending America Today and Tomorrow
Deter potential adversaries and defend America and American interests
Counter asymmetric threats
Fight and win the global war on terror
Assure readiness of the Armed Forces
Mitigate surprise
Ensure U.S. leadership role in the world
Transform the Department of Defense
Reshaping military capability for the 21st Century
Changing culture, business practices, processes and organizations for sustained advantage

4. Compelling Need for Change The World Has Changed
This is a period of significant, discontinuous change with great uncertainty:
Globalization
Accelerating rate of technological change
Information age
Homeland security
Non-State as well as state actors
Asymmetric as well as conventional threats
Unrestricted by conventional rules
Falling barriers to competitive entry
Access to highly capable, low-cost and rapidly changing technologies
Access to capabilities in key domains – space, sea, cyberspace
Failure to transform risks losing our competitive advantage
Those who do not see the need to change are often those who need it the most.

5. Federal Spending by Category as a Percentage of GDP
25%
20%
Net Interest
15%
Mandatory
Percentage of GDP
10%
Non-Defense
Discretionary 5%
Defense Discretionary 0%
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008

6. Budget Deficit Remains Difficult Challenge

7. President's Budget FYDP Projections vs. Actual Defense Budget
$500
$500
$400
$400
TY$B
$300
$300
TY$B
ACTUAL
$200
$200
$100
$100
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Carter
Reagan I
Reagan II
G. Bush
Clinton I
Clinton II
G. W. Bush I
G. W. Bush II
Fiscal Year
President during Budget Submission

8. Personnel Costs* vs. DoD Topline
FOUO
Personnel Costs* vs. DoD Topline
* Source: OUSD(C) and WHS, excludes costs not on the DoD budget (e.g., VA)
** Source: WHS, which categorizes contracts as Procurement, RDT&E, or Services
*** Retirement, DHP, Family Housing
FOUO

9. Personnel Costs* vs. DoD Topline
FOUO
Personnel Costs* vs. DoD Topline
* Source: OUSD(C) and WHS, excludes costs not on the DoD budget (e.g., VA)
** Source: WHS, which categorizes contracts as Procurement, RDT&E, or Services
*** Retirement, DHP, Family Housing
FOUO

10. DoD Budget Authority by Appropriations Title

11. Transformation Principles
Culture
Balanced risk taking
Innovation
Superior speed
Joint information, content and awareness
Operations
Adaptive
Joint and combined
Tailored to specific need
Use all elements of national power
Information driven
Business Practice, Process and Organization
Streamlined
Greater flexibility
Timely, decision-quality information
Integrating processes
Reduced cycle times
Systems and Capabilities
Integrated
Networked systems
Faster to the point of need
Precision effects
Improvement needed in all areas to strengthen
joint and integrated performance

12. The Overall Framework for Change
Historical World View
Future Objectives
Central Planning To
Adaptive and Dynamic Planning
Fixed, Predictable Threat
Capabilities Against Shifting Threats
Mature Business and Organization
Mix of New and Mature Organizations
Inputs Based Management –
Focus on Programs
Output Based Management –
Focus on Results
Appropriated Funds – “Cost is Free”
More Market-like and price based
Segmented Information –
Closed Architecture
Networked Information –
Open Architectures
Stovepiped and Competitive Organizations – “Zero sum Enterprise”
Aligned Organizations with common and shared objectives

13. Historical World View
Future Objectives
Developing Tools
Central Planning
Adaptive and Dynamic Planning
Changes to War Planning and Support Tools
Fixed, Predictable Threat
Capabilities Against Shifting Threats
Capabilities Based Planning Joint Operational Concepts
New Modeling Approaches
Mature Business and Organization
Mix of New and Mature Organizations
SJTF, UCP realignment, OSD changes
Inputs Based Management –
Focus on Programs
Output Based Management
Focus on Results
Global Force Management
Balanced Risk Scorecard
Metrics
Appropriated Funds – “Cost is Free”
More Market-like and price based
Offsets Required
Portfolio Thinking
Segmented Information Closed Architecture
Networked Information –
Open Architectures
Horizontal Integration
GIG Standards
BMMP
Stovepiped and Competitive Organizations – “Zero sum Enterprise”
Aligned Organizations with common and shared objectives
Capabilities Equivalencies
Integrating Processes/JCIDS

14. Integrating Processes
Planning, Programming & Budgeting System
Strategic
Planning
Requirements
Acquisition

15. What Is the Purpose of PPBE?
Provide Civilian Control and Strategic Direction
Centralizes decisionmaking 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 PPBS
As I mentioned, the system is a tool used by the Secretary to ensure that his goals--and that of the President--are implemented
PPBS 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 decisionmaking 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

16. The PPBS: Six Principles
Decisions should be based on explicit criteria of national interest, not on compromises among institutional forces.
Requirements and costs must be considered simultaneously.
Major decisions should be made by choices among explicit, balanced, feasible alternatives.
The Secretary should have an active analytic staff to provide him with relevant data and unbiased perspectives.
Open and explicit analysis, available to all parties, must form the basis for major decisions.
A multiyear force and financial plan is required to project the consequences of present decisions into the future.

17. 5 Principles of PA&E
PA&E will provide independent and objective analysis.
PA&E’s analyses and advice will be fact based.
PA&E is committed to open thinking.
PA&E is people-centered. We treat people fairly and respectfully.
PA&E operates in an environment of trust and confidence.

18. Analytic Agenda
Department-wide agreement to make major, joint analysis efforts more effective, efficient, relevant
Building blocks include:
National Security Strategy and other strategic and planning guidance
Scenarios and Data (Defense Planning Scenarios and Multi-Service Force Deployment)
Studies and Wargames (e.g., OA-03, OA-04, OA-05, and MCS)
Results in a package comprising a scenario, concept of operations, and integrated data used by DoD Components as a foundation for strategic analysis (called an analytical baseline)
Highly collaborative and transparent: OSD, JS, Agencies, Services, and CoComs participate
FY 2004 – FY 2009 Defense Planning Guidance (DPG), (May 2002) directed development of an analytic agenda to support implementation of the Defense Strategy and DPG.
The Director for Program Analysis and Evaluation (DPA&E), the OUSD(P), and the Joint Staff (J-8) developed an Analytic Agenda that aligns major analytical efforts with annual SPG development and budget cycles (Department of Defense Directive (DoDD) , Data Collection, Development, and Management in Support of Strategic Analysis).

19. PA&E Proposals for Ongoing Analysis*
Joint Air Dominance
Ground Forces Capabilities
Future Combat System and Army Modularity
Medical Readiness Review and Health Care Benefit Costs
Compensation Review
Supply Chain Management
Manpower Submission Process
Space Industrial Base
Future Strategic Forces
Airborne/Area Moving Target Indication/Indicator (AMTI) and Ground Moving Target Indication/Indicator (GMTI) Tradeoffs
Airborne Intelligence, Surveillance, and Reconnaissance (ISR) Communications
Persistent ISR
Net Centric Ops
MILSATCOM Capabilities
Mobility Capabilities Study
Aerial Refueling
Tactical Airlift and & Aerial Refueling
*Subject to guidance from IPT heads

20. Biggest Challenges
Facts and Transparency
Linking Strategy, Plans, Resources and Execution
Raising decision level to capability and portfolio
Balancing Risk
Developing, Aligning and Motivating Talent

21. PA&E Organizational Chart
DIRECTOR
PROGRAM ANALYSIS & EVALUATION
Brad Berkson
PRINCIPAL DEPUTY DIRECTOR
VADM Stanley R. Szemborski, USN
DEPUTY DIRECTOR
(STRATEGIC AND SPACE PROGRAMS)
Michael L. Ioffredo
DEPUTY DIRECTOR
(THEATER ASSESSMENTS AND PLANNING)
Eric J. Coulter
DEPUTY DIRECTOR
(GENERAL PURPOSE PROGRAMS)
James L. Johnson
DEPUTY DIRECTOR
(RESOURCE ANALYSIS)
Richard P. Burke
Intelligence, Surveillance, and Reconnaissance Programs Division
Matthew Schaffer , Director
Study and Analytical Support Division
James N. Bexfield, Director
Force Planning Division
Joseph R. Nogueira, Director
Economic and Manpower Analysis Division
Jerome E. Pannullo, Director
Joint Data Support Office
James G. Stevens, Director
Land Forces Division
Mark F. Cancian, Director
Force and Infrastructure Cost Analysis Division
Krystyna M. Kolesar, Director
C4 and Information Programs Division
Scott A. Comes, Director
Joint Warfare Systems Office
Naval Forces Division
Charles P. Werchado, Director
Operations Analysis and Procurement Planning Division
Steven R. Miller, Director
Strategic Defensive and Space Programs Division
Dennis K. Evans, Director
Simulation Analysis Center
Al Sweetser, Director
Tactical Air Forces Division
James L. Johnson (Acting)
Programming and Fiscal Economics Division
Teresa W. Gerton, Director
Resource Management & Operations Division
Janet S. Felts, Director
Projection Forces Division
Kathleen M. Conley, Director
Weapon Systems Cost Analysis Division
Steven R. Miller (Acting)
Regional Assessment and Modeling Division
Timothy E. Bright, Director