NAVY PPBE PROCESS 2010 DEPARTMENT OF THE NAVY

NAVY PPBE PROCESS 2010 DEPARTMENT OF THE NAVY HUMAN RESOURCES CONFERENCE APRIL 28 TH, 2010 CAPTAIN DREW FLAVELL - OFFICE OF THE CHIEF Department OF THEof the Navy

Today’s Discussion – The PPBE Process Captain Drew Flavell - drew. flavell@navy. mil • PPBE is Do. D’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 Other Retirement & Disability Social Security ry a ion s t re ram c s g Di Pro Medicaid 1000 Defense 0 1970 t en m s e l t ti ram n E rog P 1980 1990 Other Discretionary 2000 2010 2020 2030 … Do. D 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 GEN Navy PPBE Process Ward - HR Conference Slide 4 TRANSCOM GEN Mc. Nabb Department of the Navy 4

Navy Secretariat Organization Secretary of the Navy Do. N Chief Information Officer Undersecretary of the Navy Judge Advocate General of the Navy Chief of Information 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 (Manpower & Resv Affairs) Chief of Naval Research Navy PPBE Process - HR Conference Asst Secretary Of the Navy (Fin Mgmt & Comptroller) Chief of Naval Operations Slide 5 Asst Secretary Of the Navy (Installations & Environment) General Counsel of the Dept of the Navy Commandant of the Marine Corps Department of the Navy 5

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

CNO OPNAV Chief of Navy Reserve VADM Debbink ADM Roughead 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 N 4 N 2/N 6 N 1 VADM Ferguson ADM Donald VCNO Surgeon General VADM Robinson Dir. Nuclear Propulsion VADM Loose VADM Dorsett Navy PPBE Process - HR Conference Slide 7 N 3/N 5 VADM Crowder N 8 VADM Mc. Cullough Department of the Navy 7

Joint Military Community (JMC) – Reporting Relationships President of the United States Other Defense Agencies Secretary of Defense CJCS 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 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) N 8/ ASN (FMB) PROVIDERS RESOURCES – Common Metrics – Integrated Capabilities – Transparency of Information Department of the Navy 10

PPBE Overlapping ‘Cycles’ POM 10 FY 10 PB POM: Program Objective Memorandum PB: President’s Budget PR: Program Review Programming Budgeting Execution Planning PR 11 FY 11 PB Programming Budgeting Execution • Perform the plan Planning POM 12 FY 12 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 Sec. Def Guidance for the Development of the Force (GDF) Sec. Def 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 Sec. Def 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 POM 12 (‘On Year’) Every Year 06 07 08 09 10 Execution 11 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 POM 12 FY 12 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 - N 3/N 5 (N 51) • Develop/refine military & business strategies • Capabilities assessment - N 8 (N 81) • 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

N 81: Strategic Assessment N 81/QDR Director Assessments N 810 Joint Requirements & Acquisition N 81 F* FORCEnet N 811 Studies, Resources & Costing N 812 Warfighting Assessment N 81 G* Sea Shaping N 814 Warfighting Support Analysis N 81 M* Sea Basing N 81 P* Sea Shield N 816 Campaign Analysis N 81 T* 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 21 st century. • The Cooperative Strategy for 21 st Century Seapower (a. k. a. CS 21) 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 (N 81) Integrated Capability Plan (N 81) Warfighting Capability Plan (N 81) Integrated Readiness Capability Assessment (N 4) Integrated Sponsor Capability Plans (N 1 & N 6) Integrated Infrastructure Requirements (N 4/CNI) Integrated Program Assessment (N 81 April) CNO Investment Strategy (N 802) 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 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 $75, 000 K Subtotal $225, 000 K Navy PPBE Process - HR Conference Slide 23 Endstrength 25 $/each $120 K Subtotal $3, 000 K Flt Hours 3, 000 $/hour $5, 000 Subtotal $15, 000 K $243, 000 K Department of the Navy 23

Resource Integration (N 80) Integration for Resource Balance Program Development • Support balanced investment (warfighting) requirements • Monitor programs throughout POM Strategy • R 3 B Secretariat/Issue Coord • CNO Investment Strategy • Develop POM guidance, controls, timelines • Emergent OSD, Joint, Fleet, USMC Requirements Navy PPBE Process - HR Conference Slide 24 Department of the Navy 24

Manpower, Personnel, Training & Education (N 1) Manpower N 1 Manpower, Personnel, Education & Training Chief of Naval Personnel N 10 MPN Financial Management N 12 Total Force Programming Manpower & Information Resources Management N 11 Civilian Community Management N 13 Military Personnel Plans & Policy N 16 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 (N 4) Readiness N 4 Fleet Readiness & Logistics N 41 Supply, Ordnance & Logistics Operations N 42 Strategic Mobility & Combat Logistics N 40 Logistics, Planning & Innovation N 43 Fleet Readiness N 45 Environmental Protection & Readiness N 46 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 (N 8 F, N 8(x)) Investment • 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 SECNAV: AAUSN 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 New Requirements RS Unfundeds Funded Unfundeds Most Dear FY 12 Most Dear FY 09 New Funded FY 12/17 FY 09 New. Funded New Content New Funded Content Least Dear Content Most Dear FY 12/17 FY 06/07 Existing Funded Content 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 Do. D Do. N Air Force $143 B USN N 4 $27 B USN $120 B Do. N $148 B Army $139 B N 1 $30 B Other $81 B N 6 $5 B USMC $25 B SRB $2 B N 8 F $54 B Other $4 B • OSD issues Service TOA controls across the FYDP • SECNAV approves Do. N ‘Blue – Green’ split • N 8 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 N 80 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 N 8 Program Guidance Navy PPBE Process - HR Conference Each Sponsor has an internal process to: Explore options • Capabilities balance • Program balance • Resource balance N 81 Invest Strategy COCOM IPLs FY 09 FY 11 Slide 33 1. . p Priority 1. . w …. FY 15 Core Issues (Funded) FY 09 FY 11 …. FY 15 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 (N 8) Pre T-POM Assessment (N 8 with USMC) Revise SPPs and build T-POM (N 8) CNO approve Navy POM NOV JAN MAR MAY JUL AUG • N 8 -led ‘process’ to balance the Navy POM • N 80 compiles SPPs to create the Tentative-POM (T-POM) • N 81 assesses degree the T-POM achieves the Investment Strategy • N 80 assesses for resource and program balance across the FYDP, and compliance with other guidance • R 3 B/Bo. D 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 PR 12 FY 12 PB JAN 09 Planning Programming Budgeting JAN 10 JAN 11 Execution JAN 12 POM to BSOs POM to OSD/CAPE POM Issues Do. D Senior Level Review (SLRG, DAWG) Dep. Sec. Def Resource Management Decisions BSO Budget submits FMB review and markup Sec. Nav budget decisions BSOs & FMB develop BES Budget Estimate Submission to OSD/C review and Resource Mgmt Decisions Major Budget Issues Dep. Sec. Def 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 OSD Issue Team (w/ Do. N member(s)) Pre SLRG or DAWG (SECDEF) SECNAV/CNO (DEPSECDEF) 3 -Star Out-of-Court Navy PPBE Process - HR Conference CAPE/ 3 -Star Meeting N 8 Attends Issue Papers or Briefing CAPE/ N 8/N 80 negotiate issues Slide 36 attends briefings Courses of Action CAPE Comptroller VCJCS SECDEF Courses of Action Department of the Navy 36

PPBE: Budgeting Planning Programming POM 10 FY 10 PB Budgeting Execution • Program balance • Detail & accuracy • Fiscal constraints • Performing as appropriated • Prior year execution • Justification and defense PR 11 FY 11 PB Planning Programming Budgeting Execution POM 12 FY 12 PB Planning POM: PR: PB: Program Objectives Memorandum Program Review President’s Budget JAN 08 Navy PPBE Process - HR Conference JAN 09 Slide 37 Programming JAN 10 Budgeting JAN 11 Department of the Navy 37

Applying Fiscal Granularity Navy PPBE Process - HR Conference Slide 38 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 Wears the “hat” 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 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 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 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 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! 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) Do. D Senior Level Review Group Review (Sep-Oct) Dep. Sec. Def Resource Management Decisions (Sep – Dec) BSO Budget submits (6 Jul) FMB review and markup (2 Jul – 12 Aug) Sec. Nav budget decisions (12 Aug) Budget Estimate Submission to OSD/C (14 Aug) OSD/C review (Aug 14 – Sep 14) Dep. Sec. Def 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 Do. N FY 11 O&M Budget (758 pages total) http: //www. finance. hq. navy. mil/fmb/11 pres/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 A “horizontal” exhibit example (OP-32) – see handout Navy PPBE Process - HR Conference Slide 45 If quantity changes, that’s PROGRAM 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 A “horizontal” exhibit example (OP-32) – see handout Navy PPBE Process - HR Conference Slide 46 If quantity changes, that’s PROGRAM 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 Completion. Target for FY 09 Approps Bills Floor CONF SBC Hearings Floor Markup House JUN 30 JUL HASC Hearings Senate House Defense / Milcon Appropriation Bills Senate Floor Public Law CONF SASC Hearings HAC Hearings Markup Floor Markup Floor CONF SAC Hearings Navy PPBE Process - HR Conference Note: All timeframes projected/approximate Markup 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 Do. D 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 • Do. D 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 Do. NPIC • Department of Navy Program Information Center REMEMBER: • Whenever you deal with Congress or Congressional Staff, ALWAYS adhere to the coordinated Do. N, Do. D, and Administration position Navy PPBE Process - HR Conference Slide 54 Department of the Navy 54

FY 10 Budget Execution POM 10 FY 10 PB JAN 07 Planning Programming Budgeting JAN 08 JAN 09 Execution JAN 10 Auth/ Appn Laws CRA Funds Apportioned BSO Execution N 82 Midyear Review Supplemental/Omnibus Reprogramming N 82 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 +) Oblig. 1 De-Obl. Expend 2 Outlay 3 ü ü X ü ü ü Cancelled Navy PPBE Process - HR Conference X 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 > $10 M MILPERS • Shift > $15 M O&M • Shift > $20 M or 20% Procurement • Shift > $10 M or 20% RDT&E • Begin any new start > $20 M • Terminate procurement ($20 M) or RDT&E ($10 M) Must notify Congress to… • • • Begin a new start Shift < $20 M Procurement Shift < $10 M RDT&E Execute safety mod < $20 M Terminate RDT&E < $10 M 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 • 4 th quarter intense effort to pull back unobligated funds and reissue to other unfunded requirements • Funds not obligated cannot be restored 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 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, JS, Combatant Commanders (COCOMs) • Services/Military Departments Function/Purpose: • Advise President and Sec. Def 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 Navy PPBE Process - HR Conference Slide 66 Department of the Navy 66

HQMC Organization • 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 N 88 N 85 N 43 FHP Lead (O-5) N 8 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

Do. N Budget as a Share of Do. D ~5% * PB 08 Increase experienced from Grow-the-Force Do. D TOA Navy 72% Marine Corps 17% Navy PPBE Process - HR Conference Slide 69 Direct 7% Indirect 4% Department of the Navy 69