NAVY PPBE PROCESS 2010 Department of the Navy Human

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 Department of the Navy

Today’s Discussion – The PPBE Process Captain Drew Flavell - [email protected] 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, 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 Navy PPBE Process - HR Conference Slide 2 Department of the Navy 2

The Federal Budget Over the Long Run in B 6000 5000 4000 Net Interest Welfare & Other Services Medicare 3000 2000 t en m s e l t ti ram n E rog P Other Retirement & Disability Social Security y ar n io et ams r sc ogr i D Pr Medicaid 1000 Defense Other Discretionary 0 1970 1980 1990 2000 2010 2020 2030 DoD competes for Navy PPBE Process - HR Conference Slide 3 Department of the Navy 3

Combatant Commanders SECDEF Robert Gates CJCS VCJCS ADM Mullen Gen Cartwright SOUTHCOM PACOM EUCOM CENTCOM GEN Fraser ADM Keating ADM Stavridis GEN Petraeus JFCOM NORTHCOM SOCOM STRATCOM GEN Mattis GEN Renuart ADM Olson GEN Chilton AFRICOM AFRICOM GEN Navy PPBE Process Ward - HR Conference Slide 4 TRANSCOM GEN McNabb Department of the Navy 4

Navy Secretariat Organization Secretaryof ofthe theNavy Navy Secretary DoNChief Chief DoN Information Information Officer Officer Undersecretary Undersecretary ofthe theNavy Navy of JudgeAdvocate Advocate Judge General General theNavy Navy ofofthe Chiefofof Chief Information Information Chief of Chief of Legislative Legislative Affairs Affairs Auditor General Auditor General Naval Naval Inspector Inspector General General Assistant for Assistant for Administration* Administration* Director Director Program Program Appraisal Appraisal Director Director Small & Disadv Small & Disadv Bus. Utilization Bus. Utilization Asst Secretary Asst Secretary Of the Navy Of the Navy (Research, Dev (Research, Dev & Acq) & Acq) AsstSecretary Secretary Asst Of the Navy Of the Navy (Manpower & (Manpower & Resv Affairs) Resv Affairs) Chiefofof Chief Naval Naval Research Research Navy PPBE Process - HR Conference Asst Secretary Asst Secretary Of the Navy Of the Navy (Fin Mgmt & (Fin Mgmt & Comptroller) Comptroller) Chief of Chief of Naval Naval Operations Operations Slide 5 AsstSecretary Secretary Asst Of the Navy Of the Navy (Installations & (Installations & Environment) Environment) General General Counsel of the Counsel of the Dept of Dept of the Navy the Navy Commandant Commandant of the of the Marine Corps Marine Corps Department of the Navy 5

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

CNO OPNAV Chief of Navy Reserve VADM Debbink ADM Roughead MCPON MCPON(SS/SW) West ADM Greenert QDR NGEN DNS RADM Goodwin RADM Burke Chief of Chaplains Dir, Test & Evaluation RADM Burt RDML Dunaway VADM Locklear N4 N2/N6 N1 VADM Ferguson ADM Donald VCNO Surgeon General VADM Robinson Dir. Nuclear Propulsion VADM Loose VADM Dorsett Navy PPBE Process - HR Conference Slide 7 N3/N5 VADM Crowder N8 VADM McCullough Department of the Navy 7

Joint Military Community (JMC) – Reporting Relationships President of the United States Other Defense Agencies Secretary of Defense CJCS JCS Joint Staff Delegated Oversight Responsibility Functional and Geographic Combatant Commanders Military Departments/Services Component Commands Navy PPBE Process - HR Conference Slide 8 Department of the Navy 8

Linking to External Partners: OSD and JCS DJS J1 J2 J3 J5 J4 J6 J7 J8 Capability (JCS) DNS N1 N2 N3 N5 N4 N6 N8 Specificity (OPNAV) OPA ASN (M&RA) ASN (RD&A) ASN (I&E) ASN (RD&A) ASN (RD&A) DON CIO ASN (FM&C) DIR ADMIN & MGMT USD (Pers & Red) USD (I) USD (P) USD (AT&L) ASD (NII/CIO) USD (AT&L) USD (Comp/ CFO) Stability (SECNAV) Affordability (OSD) CAPE Navy PPBE Process - HR Conference Slide 9 Department of the Navy 9

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

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

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

PPBE Timeframes To Congress Spring 2010 POM12 (‘On Year’) Every Year 06 07 08 09 10 11 Execution 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Programming 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 Navy PPBE Process - HR Conference Slide 13 Department of the Navy 13

POM-12 Timeline Navy PPBE Process - HR Conference Slide 14 Department of the Navy 14

PPBE Focus of the decision Aircraft Program view Ships Battlespace Awareness Base Support Capabilities view Manpower Spare Parts Planning Fuel Communications RDTEN Medical Procurement Intelligence Property Repair Programming Space Construction Facilities Depot Maintenance Force Application Force Support Budgeting Commodities/Appropriations view Navy PPBE Process - HR Conference Slide 15 Department of the Navy 15

Achieving Resource Balance The right level of resources Manpower The right program prioritization The right amount of risk The right program tradeoffs Integration for Resource Balance Readiness Investment among and between MANPOWER, INVESTMENTS, and READINESS Navy PPBE Process - HR Conference Slide 16 Department of the Navy 16

PPBE - (Planning) POM: Program Objective Memorandum PB: President’s Budget POM12 FY12 PB Planning Develop the strategy Capability assessment Programming Budgeting Allocate resources Fiscal constraints Detail & accuracy Program balance Justification Develop the plan Execution 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 Navy PPBE Process - HR Conference JAN 10 Slide 17 JAN 11 JAN 12 Department of the Navy 17

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

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 21 st 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 Navy PPBE Process - HR Conference Slide 19 Department of the Navy 19

Navy Planning: Assessing Capability POM 12 PB 12 JAN 09 Planning Programming Budgeting JAN 10 JAN 11 Execution 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) JUL 09 SEP Navy PPBE Process - HR Conference Slide 20 NOV JAN 10 MAR Department of the Navy 20

PPBE Programming POM: Program Objectives Memorandum PB: President’s Budget PR: Program Review Planning Develop the strategy Capability assessment Programming Budgeting Allocate resources Fiscal constraints Detail & accuracy Program balance Justification Develop the plan Execution 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 Navy PPBE Process - HR Conference JAN Slide 21 JAN JAN Department of the Navy 21

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 Navy PPBE Process - HR Conference Slide 22 Department of the Navy 22

‘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) Qty 3 /each Navy PPBE Process - HR Conference Endstrength 25 /each 120K Subtotal 3,000K Slide 23 Flt Hours 3,000 /hour 5,000 Subtotal 15,000K 243,000K Department of the Navy 23

Resource Integration (N80) Integration for Resource Balance Dir, Programming N80 Program Development Support balanced investment (warfighting) requirements Dep Director Monitor programs throughout Head, Program Planning and Development Readiness Head, POM Strategy, R3B Sea Shield POM Strategy MPT&E Sea Strike FORCEnet Sea Shaping Sea Basing Database Mgmt N80 “Pillar Leads” Navy PPBE Process - HR Conference Slide 24 R3B Secretariat/Issue Coord CNO Investment Strategy Develop POM guidance, controls, timelines Emergent OSD, Joint, Fleet, USMC Requirements Department of the Navy 24

Manpower, Personnel, Training & Education (N1) Manpower N1 Manpower, Personnel, Education & Training Chief of Naval Personnel N10 MPN Financial Management N12 Total Force Programming Manpower & Information Resources Management N11 Civilian Community Management N13 Military Personnel Plans & Policy N16 Chief Information Officer MPT&E Information Management 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 Navy PPBE Process - HR Conference Slide 25 Department of the Navy 25

Readiness & Logistics (N4) Readiness N4 Fleet Readiness & Logistics N41 Supply, Ordnance & Logistics Operations N42 Strategic Mobility & Combat Logistics N40 Logistics, Planning & Innovation N43 Fleet Readiness N45 Environmental Protection & Readiness N46 Ashore Readiness 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 Navy PPBE Process - HR Conference Slide 26 Department of the Navy 26

Investments (N8F, N8(x)) Investment Dir, Warfare Integration N8F Dep Director Warfare Integration (N6F/N83) Oceanographer /Navigator of the Navy (N84) Expeditionary Warfare (N85) Surface Warfare (N86) Submarine Warfare (N87) Air Warfare (N88) Special Programs (N89) 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 Navy PPBE Process - HR Conference Slide 27 Department of the Navy 27

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 CNO SECNAV: AAUSN Manpower DNS Readiness Investment N8(0) CNIC SYSCOMS COMUSFFC Other Ech 2 Wears the “hat” Process Coordinator Navy PPBE Process - HR Conference Slide 28 Department of the Navy 28

Resource Sponsor Actions Programmatic options to “fix” disconnects 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 Navy PPBE Process - HR Conference Slide 29 Department of the Navy 29

Programming Process Most Dear Funded New Requirements RS Unfundeds Unfundeds MostDear Dear Most Most Dear FY12 Most Dear FY09 FY09 New Funded FY12/17 FY09 NewFunded Funded New Content New New Funded Funded Content Content Content Least Dear Content Most Dear Most Dear FY12/17 FY06/07 Existing Funded Funded Content Content Least Dear Dear Least Least Dear Least Dear Least Dear Least Dear Unfundeds (Risk) Offsets 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 Navy PPBE Process - HR Conference Slide 30 Department of the Navy 30

Sources of Offsets 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 Navy PPBE Process - HR Conference Slide 31 Department of the Navy 31

Programming - Fiscal Guidance DoD DoN Air Force 143B USN N4 27B USN 120B DoN 148B Army 139B N1 30B Other 81B N6 5B USMC 25B SRB 2B N8F 54B 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. Navy PPBE Process - HR Conference Slide 32 Department of the Navy 32

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

POM/PR ‘Endgame’ Iterative, Fast-Paced ‘End Game’ 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 NOV JAN MAR 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 Navy PPBE Process - HR Conference Slide 34 Department of the Navy 34

Program Review Concurrent with Budget PR12 FY12 PB JAN 09 Planning Programming Budgeting JAN 10 JAN 11 Execution 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) MAY Navy PPBE Process - HR Conference JUL Slide 35 SEP NOV JAN Department of the Navy 35

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

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

Applying Fiscal Granularity Asst Secretary of the Navy (Financial Mgmt & Comptroller) Dir, Fiscal Mgmt FMB/N82 FMBB/N82B: Asso. Director Operations Division FMB1/N821 Investment & Development Division FMB2/N822 Navy PPBE Process - HR Conference Slide 38 Program/ Budget Coord Division FMB3/N823 FMBE Asst for Appropriation Matters Civ Resources & Business Affairs Division FMB4/N824 Budget Policy & Procedures Division FMB5/N825 Department of the Navy 38

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 CNO DNS Manpower Readiness Wears the “hat” Investment FMB/N82 CNIC SYSCOMS COMUSFFC Other Ech 2 Process Coordinator Navy PPBE Process - HR Conference Slide 39 Department of the Navy 39

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 CNO DNS Manpower Readiness Investment FMB CNIC SYSCOMS COMUSFFC Other Ech 2 Wears the “hat” Process Coordinator Navy PPBE Process - HR Conference Slide 40 Department of the Navy 40

How to Build a Budget 1. Budget guidance is issued Navy BSO 2. Current/prior fiscal year execution is reviewed 3. Disconnects between guidance and execution are identified 4. Exhibits are prepared and submitted (BSO) 5. Exhibits are reviewed and analyzed; adjustments are recommended (FMB) via Issue Papers 6. Appeals are submitted (BSO) 7. Meetings are held to resolve outstanding issues 8. Approved budget is submitted to next level 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! Navy PPBE Process - HR Conference Slide 41 Department of the Navy 41

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) APR 10 Navy PPBE Process - HR Conference JUN Slide 42 AUG NOV JAN 11 Department of the Navy 42

What’s an “Exhibit”? Additional detail beyond database numbers Walks from year to year with explanation Examples: Appropriation Exhibit Title Broken Down To: MILCON C-1 BA, State, Base, Project MILPERS M-1 Budget Activity and project O&M OP-5 BA and AG/SAG Procurement P-5 BA and Budget Line Item (BLI) RDT&E R-2 BA and Program Element (PE) Three key exhibit formats: Horizontal” (fiscal years from left to right) “Vertical” (like a checkbook register) “ Hybrid” (fiscal data at top; written justification below) Navy PPBE Process - HR Conference Slide 43 Department of the Navy 43

What Do Budgets Look Like? Let’s look at part of the DoN FY11 O&M Budget (758 pages total) http://www.finance.hq.navy.mil/fmb/11pres/BOOKS.htm Navy PPBE Process - HR Conference Slide 44 Department of the Navy 44

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 Navy PPBE Process - HR Conference Slide 45 Department of the Navy 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 Navy PPBE Process - HR Conference Slide 46 Department of the Navy 46

Leading Players in the Process Congressional Oversight Committees 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 Navy PPBE Process - HR Conference Slide 48 Department of the Navy 48

Congressional Budget Timeline 4 MAR FEB APR MAY PB To Hill House Concurrent Budget Resolution Senate Defense Authorization Bill AUG SEP 1 OCT Markup HBC Hearings NOV 4 FY Begins House CompletionTarget for FY09 Approps Bills Floor Floor CONF SBC Hearings Floor Floor Markup House JUN 30 JUL HASC Hearings Senate House Defense / Milcon Appropriation Bills Senate Public Law CONF SASC Hearings HAC Hearings Markup Floor Floor Floor Markup Floor CONF SAC Hearings Navy PPBE Process - HR Conference Note: All timeframes projected/approximate Markup Floor Floor Slide 49 Markup Floor Public Law Floor Department of the Navy 49

302(b) Allocations (and Appropriations) 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 Navy PPBE Process - HR Conference Slide 50 Department of the Navy 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 Navy PPBE Process - HR Conference Slide 51 Department of the Navy 51

Appropriation Process (Appropriation Committees) Provides authority to DoD to obligate funds for defense programs Usually approved at the “account” level, e.g. Combat Training Ranges Obligation authority usually for a specified period “Policy” language not permitted Bulk of defense funding provided by three appropriations acts DoD Appropriations Military Construction Appropriations Energy and Water Appropriations Navy PPBE Process - HR Conference Slide 52 Department of the Navy 52

Types of Appropriations Acts Regular Appropriations Acts 12 individual bills Provides budget/obligation authority for the next FY Continuing Resolutions (CR/CRA) Enacted when 1 or more of the 12 regular bills have not become law by Oct 1 Provides stop-gap funding at level usually no higher than lowest of levels approved by HAC, SAC or prior fiscal year Restricts authority to current programs only - no new starts Supplemental Appropriations Acts Provides funds for emergency or unforeseen expenses for current fiscal year Navy PPBE Process - HR Conference Slide 53 Department of the Navy 53

Coordination is Key OLA Liaison for authorization matters FMBE Liaison for appropriation matters DoNPIC Department of Navy Program Information Center REMEMBER: Whenever you deal with Congress or Congressional Staff, ALWAYS adhere to the coordinated DoN, DoD, and Administration position Navy PPBE Process - HR Conference Slide 54 Department of the Navy 54

FY10 Budget Execution POM10 FY10 PB JAN 07 Planning Programming Budgeting JAN 08 JAN 09 Execution JAN 10 Auth/ Appn Laws CRA Funds Apportioned BSO Execution N82 Midyear Review Supplemental/Omnibus Reprogramming N82 Year-end Reapportionment SEP 09 DEC 09 Navy PPBE Process - HR Conference Slide 55 MAR 10 JUN 10 SEP 10 Department of the Navy 55

Three (and ½) Execution Phases: Summary 1 Obligation: Legal encumbrance; Specified amount for purpose or product when an order is placed 1½ 2 Expenditure: Authorization for funds from Treasury resulting from presentation of a voucher or claim 3 Outlay: Cash paid by the Treasury Deobligation: reversal of an obligation due to contract mod, order cancellation, completion of task. etc Navy PPBE Process - HR Conference Slide 56 Department of the Navy 56

Three Execution Timeframes Phase Current (1 yr ) Expired (5 yr ) Cancelled Oblig. 1 De-Obl. Expend 2 Outlay 3 X X Navy PPBE Process - HR Conference Slide 57 X X X Department of the Navy 57

Execution Activities: External Reprogramming APN O&MN Moving funds from one appropriation to another Cannot be done without approval of Congress (all 4 committees) Annual “Omnibus” reprogramming falls into this category Also some limits prohibiting reprogramming within an appropriation Difficult way to increase program value Navy PPBE Process - HR Conference Slide 58 Department of the Navy 58

Congressional Reprogramming Guidelines Must ask Congress to Move funds between any appropriations Increase any “major procurement” quantity Affect a Congress Interest Program Shift 10M MILPERS Shift 15M O&M Shift 20M or 20% Procurement Shift 10M or 20% RDT&E Begin any new start 20M Terminate procurement ( 20M) or RDT&E ( 10M) Must notify Congress to Begin a new start Shift 20M Procurement Shift 10M RDT&E Execute safety mod 20M Terminate RDT&E 10M Via Prior-Approval Reprogramming Request (a.k.a. “Above Threshold Reprogramming”) www.dod.mil/comptroller/execution/Final Budget Execution.pdf All requests are submitted and approved by USD(C) before transmittal to Congress Navy PPBE Process - HR Conference Slide 59 Department of the Navy 59

Funds Usage Expectations: Stay Within The Law Public Law says 31 USC 1301: Appropriated funds may be used only for the purposes for which the appropriation is made 31 USC 1517: No officer or employee may authorize an obligation in excess of the amount available in an appropriation or subdivision thereof In any given year you cannot exceed either the authorized Outlay amount or Total Obligation Authority “fiduciary responsibility” Navy PPBE Process - HR Conference Slide 60 Department of the Navy 60

Other Execution Activities: Mid-Year Review Budget performance is monitored against plans developed during the budget formulation process Program performance Obligation and outlay phasing O&M accounts required to perform an execution review and submit the results for approval Realignment of funds made in accordance with urgent “unfunded” requirements Remaining reserve may be released to help finance approved unfunded requirements Navy PPBE Process - HR Conference Slide 61 Department of the Navy 61

Execution Activities: Fiscal Year Closeout Annual appropriations must be fully obligated by 30 September each year 4th quarter intense effort to pull back unobligated funds and reissue to other unfunded requirements Funds not obligated cannot be restored and any underexecution will cause reductions in the following fiscal year level of available funding Obligation adjustment can be made during the 5 year expired status After that period, adjustments must be financed with an appropriation currently available for the same purpose Navy PPBE Process - HR Conference Slide 62 Department of the Navy 62

Joint Process - Combat Commands – Reporting Relationships President of the United States Secretary of Defense CJCS JCS Joint Staff Delegated Oversight Responsibility Geographic Combatant Commanders USAFRICOM USJFCOM USCENTCOM USSOCOM Navy PPBE Process - HR Conference USEUCOM USSTRATCOM Slide 63 USPACOM USTRANSCOM USSOUTHCOM USNORTHCOM Functional Combatant Commanders Department of the Navy 63

Different Responsibilities: Warfighters vs Resource Providers Warfighters Resource Providers CJCS, JCS, JS, Combatant Commanders (COCOMs) Services/Military Departments Function/Purpose: Advise President and SecDef on strategic direction of armed forces Fight and win nation’s wars Advocate for warfighting (program and resource) requirements to enable that outcome Submit budget proposals for combatant command activities Function/Purpose: Organize, train, and equip Prepare and submit budgets Prepare and provide forces to employ in time of war Serve as “executive agent” for combatant commands Navy PPBE Process - HR Conference Slide 64 Department of the Navy 64

Balancing Competing Objectives: Combatant Commanders and Services Combatant Command Priority Near term warfighting requirements Service Priorities Near term readiness Longer-term modernization Creates tension in the resource allocation process Can be healthy promotes balance between near-term/unconstrained COCOM focus and long-term/constrained Service focus Navy PPBE Process - HR Conference Slide 65 Department of the Navy 65

USMC - HQMC Organization Commandant, USMC Counsel for the Commndant Chaplain of the Marine Corps Sergeant Major of the Marine Corps Marine Corps Systems Command ACMC Marine Corps National Capital Region Command Marine Corps Combat Development Command Director, Safety Division Marine Corps Recruiting Command DMCS Marine Barracks Washington, DC Special Projects Directorate Dir, Public Affairs Staff Judge Advocate Legislative Assistant Inspector General Marine Corps Logistics Command DC, Manpower & Reserve Affairs DC, Plans, Policies & Operations DC, Programs & Resources Navy PPBE Process - HR Conference DC, Aviation Command, Control, Comm & Computers Slide 66 DC, Installation & Logistics Dir, Health Services DC, Combat Development Dir, Intelligence Department of the Navy 66

HQMC Organization Commandant CMC Asst. Commandant ACMC Programs & Resources Aviation Installations & Logistics Plans, Policy & Operations Manpower & Reserve Affairs Command, Control, Comms & Computers Legislative Assistant Inspector General Intelligence Health Affairs Public Affairs Judge Advocate Admin & Resource Mgmt Historical HQMC/P&R coordinates USMC PPBE Principal participants build the USMC program Navy PPBE Process - HR Conference Slide 67 Department of the Navy 67

USN and USMC Intersections P&R Blue Cell N88 N85 N43 FHP Lead (O-5) N8 Liaison (O-4) Shared Resources: Blue/Green Split Jointly predetermined funding ratio between Services “BISOG” – Blue in Support of Green Funds held at USN level that support USMC programs Navy PPBE Process - HR Conference Slide 68 Department of the Navy 68

DoN Budget as a Share of DoD TOA TY B POM08 USMC POM08 DoN POM08 B-G Split POM10 USMC POM10 DoN POM10 B-G Split 5% Change FY10 20.6 124.1 14.2% 27.2 133.3 17.0% 2.8% FY11 21.2 127.4 14.3% 28.0 138.1 16.9% FY12 21.7 130.1 14.3% 28.7 141.6 16.8% FY13 22.3 132.4 14.4% 28.6 144.3 16.5% 2.6% 2.5% 2.1% FY14 FY15 29.2 149.7 16.3% 30.0 152.3 16.5% - - * PB 08 Increase experienced from Grow-the-Force DoD TOA Navy 72% Marine Corps 17% Navy PPBE Process - HR Conference Slide 69 Direct 7% Indirect 4% Department of the Navy 69