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Link
Programming Funds Summary
The following learning objectives
are covered in this lesson:
2. The PPBE process is a calendar-driven process that helps DoD determine how to allocate resources. This process is divided into four phases:
3. The most important products of the Programming phase are the Program Objectives Memorandum (POM) and the Program Decision Memorandum (PDM):
5.Funding policies are used to govern the PPBE process, and different policies apply to different appropriation categories:
- Identify the basic flow of the financial management
process, to include cost analysis, the Planning, Programming, Budgeting
and Execution (PPBE) process, Congressional enactment, and program
execution.
- Relate the following building blocks to the PPBE
process: Future Year Defense Program (FYDP); Major Program (MP); and
Program Element (PE).
- Identify the key events in the programming phase,
including the preparation, review and decision process associated with the
two primary documents of the phase: the Program Objectives Memorandum
(POM) and the Program Decision Memorandum (PDM).
- Given programming and budgeting documents, relate the
applicable funding policies to each of the six DoD appropriation
categories of greatest interest to acquisition programs.
- Identify two exceptions to the full funding policy.
- Identify the concept of escalation in submitting
program and budget documents.
- It begins with the operational user's capability need,
first documented in the Initial Capabilities Document (ICD) and
later in the Capability Development Document (CDD) and Capability
Production Document (CPD).
- Following ICD approval, an Analysis of Alternatives
(AoA) is conducted, Cost as an Independent Variable (CAIV)
trade-offs are made, and a program cost estimate is prepared to project
resource requirements.
- Cost, schedule and performance targets are identified
in the Acquisition Program Baseline.
- The PPBE process is then used to translate plans
and programs into a budget that the President submits to Congress.
- Congress in turn authorizes programs and appropriates
funds.
- Finally, budget authority is allocated through a series
of steps to the services and defense agencies, enabling them to execute
their missions.
2. The PPBE process is a calendar-driven process that helps DoD determine how to allocate resources. This process is divided into four phases:
- Planning phase
- Planning examines national defense from a broad perspective in terms of
long-term strategies, policies, and objectives. The end product of
planning is Joint Programming Guidance, which provides input for the
Programming phase.
- Programming phase
- Programming translates planning decisions and congressional guidance
into time-phased resource requirements. Through programming, military
departments and defense agencies allocate resources to support their roles
and missions for the next six years in terms of money and next nine years
in terms of manpower. They submit their requirements in a Program
Objectives Memorandum (POM), which is amended and approved by OSD in the
Program Decision Memorandum (PDM). In turn, programming decisions provide
input during the Budgeting phase.
- Budgeting phase
- Budgeting translates programming decisions into detailed resource
requirements for the next fiscal year or two. Each Military Department and
Defense Agency produces a Budget Estimate Submission (BES) during the
Budgeting phase, which ultimately provides input for the DoD portion of
the President's Budget.
- Execution Review Phase : Execution review is accomplished concurrently with
the program and budget review. Performance metrics are developed and used
to assess actual output against planned performance. These metrics are
used to adjust resources to achieve goals.
3. The most important products of the Programming phase are the Program Objectives Memorandum (POM) and the Program Decision Memorandum (PDM):
- Program Objectives Memorandum (POM) - In even-numbered years, each military department and
defense agency submits a combined POM and BES to OSD. The POM proposes a
six year allocation of resources to satisfy the Joint Programming Guidance
(JPG). The POM is reviewed by the Joint Staff, who issue the Chairman's
Program Assessment (CPA), and by the OSD staff, who recommend program
changes through POM Issue Papers. The military departments and agencies
can comment on or reclama the issues raised by OSD. In the odd years, or
"off years", changes to the previous President's Budget are
submitted in the form of Program Change Proposals (PCPs).
- Program Decision Memorandum (PDM) - The Deputy Secretary of Defense (DEPSECDEF) makes a
decision on the POM and documents his decision in a PDM. The DEPSECDEF
receives advice in this process from the Senior Level Review Group (SLRG),
a group of senior representatives from OSD and each military department.
The PDM, along with changes that occur during budgeting, will be reflected
in the President's Budget submission.
- Future Years Defense Program (FYDP) - The FYDP is a single database that summarizes all
forces, resources, and equipment associated with programs approved by the
Secretary of Defense. In addition to showing past and current funding and
manpower levels, it shows funding requirements for the next six years, as
well as manpower requirements for the next nine years.
- Major Programs (MP)
- The FYDP breaks data into eleven different major programs that contain
the total aggregation of resources necessary to achieve a mission
objective, such as General Purpose Forces or Research and Development.
Each MP is divided into program elements.
- Program Elements (PE)
- PEs are the primary units of data in the FYDP, the smallest aggregation
of resources controlled by OSD. Represented by an eight to ten digit code,
PEs give are considered to be the "building blocks" of the
programming and budgeting process.
5.Funding policies are used to govern the PPBE process, and different policies apply to different appropriation categories:
- Annual funding policy
- Governs Operations and Maintenance (O&M) and Military Personnel
(MILPERS) funds. Annual funding policy requires that we request only the
dollars that we need to spend in order to operate, maintain, or pay the
forces in a given fiscal year. This generally pertains to routine
expenses, for example equipment maintenance and labor costs.
- Incremental funding policy - Governs RDT&E funds and requires you to budget
only for the research and development effort that is needed during a given
fiscal year. Emphasis is on covering only those expenses to be incurred,
based on the work expected to be accomplished during that year.
- Full funding policy - Governs PROCUREMENT, MILCON, and SCN funds and provides
for the procurement of useable end items which must be delivered within a
12-month period after delivery of the first item. Full funding requires us
to budget sufficient funds to cover the total cost to deliver a quantity
of usable end items, such as aircraft, missiles, ships, or vehicles that
can be delivered in a future 12 month delivery period. Piecemeal
procurement of systems is not permitted.
- Advance procurement
funds are set aside to buy certain components, material, or effort before
an end item is procured in order to avoid a serious break of continuity.
For example, advanced procurement might be used to obtain a long- lead
time item to prevent a break in production, or to maintain critical skills
that might otherwise be lost between early and later stages of a
manufacturing process. Advance procurement funds are budgeted as a separate
line item, usually one fiscal year in advance of the funds budgeted for
the related end item.
- Multiyear procurement
can be used to acquire multiple years worth of equipment with a single
contract in order to reduce cost and maintain stability in the acquisition
process. The Government makes a commitment to the contractor to procure a
specific quantity of a weapon system over several years, thus giving the
contractor incentive to realize savings, particularly through economic
order quantity (EOQ) purchases and investment in productivity
enhancements. Congress must approve all multiyear procurements.
Since Program and Budget requests
are projections into the future, they must take into consideration possible
market forces that will influence the economy. Escalation allows us to make
predictions about expected inflation and outlay rates for each year of the
program. There are two types of dollars referred to when we talk about
escalation:
- Constant, or Base Year, dollars are tied to a specific
year with no inflation across the life of a program. Constant dollars are
usually used for cost estimates because it makes it easy to make changes
across the year without considering the impact on the cost of money over
time.
- Current, or Then Year, dollars include inflation and
outlay rates to account for when the money is actually supposed to be
outlayed from the Treasury. This type of dollars is used for program and
budget documents and is found in the FYDP.
There are two types of indices used
when we apply escalation:
- Compound, or Raw, indices relate price levels for each
year to a baseline year. This is annual compounding of inflation, similar
to the way interest is received on a savings account. The compound indices
are used to convert one Base Year to another Base Year dollars.
- Composite, or Weighted, indices factor in the
historical outlay pattern of the appropriation and inflation rates
associated with the fiscal years when cash flows out of the US Treasury.
Based on this rate of outlay, appropriation expenses can be loosely
predicted to provide a more accurate budgeting picture. The composite
indices are used to convert Base Year dollars to Then Year dollars.
DoD publishes escalation indices at
least twice a year for the services and defense agencies to use in preparing
PPBE input. Program and budget documentation is initially prepared in constant
or Base Year dollars and then escalated into current or Then Year dollars so
that the funding requested in those future years will be sufficient to pay for
expenses that will be incurred in those years.
Developing the Acquisition Strategy Summary
The following learning objectives
are covered in this unit:
2. The Acquisition Program Baseline (APB) establishes the cost, schedule and performance targets for an acquisition program. Specifically, the APB
- Identify the information required for a decision review
and recognize the significance of the Acquisition Program Baseline, Key
Performance Parameters, and Acquisition Strategy.
- Identify the advantages and disadvantages of
international armaments cooperative development in an acquisition
strategy.
1. Key Performance Parameters
(KPPs) are capabilities and characteristics considered by the user to be the
most essential in successfully accomplishing a capability need. KPPs:
- Should be a minimum number of Performance Parameters
necessary to adequately describe the required capability of the system
(generally eight or fewer).
- Are defined using threshold and objective
values as a way to describe performance capabilities.
While trade-offs among cost,
schedule, and performance might have to be made during the program's life
cycle, KPP thresholds are typically non-negotiable.
- Threshold values can
be lower or higher than objective values, depending on the parameter
involved. For example, for a lighter and faster vehicle, the threshold
speed would be lower, and the weight higher, than the
objective values.
- Threshold values establish the minimum acceptable
operational value of a given parameter, below which the utility of the
system becomes questionable.
- Unless otherwise specified, the objective value for
performance is the same as the threshold value. For schedule, the
threshold is the objective value plus six months, while the threshold cost
is the objective value plus 10 percent.
- Objective values
are the ideal performance parameters desired for the acquisition program,
and are usually defined in operationally meaningful, time-critical, and
cost-effective increments above the threshold values. Ideally, the
difference between the threshold and objective values should diminish as
the acquisition program advances.
2. The Acquisition Program Baseline (APB) establishes the cost, schedule and performance targets for an acquisition program. Specifically, the APB
- Serves as a formal agreement between the Program
Manager (PM) and the Milestone Decision Authority (MDA)
- Defines the space between the KPP objectives and
thresholds in which trade-offs can be made between cost, schedule and
performance without requiring MDA approval
- Can only be changed at milestone reviews, program
reviews, or in the event of an unrecoverable APB breach
3. The APB: Performance Criteria
- Key system design specs should be added at the start of
the production, fielding and support phases
- Only those performance criteria that influence
operational effectiveness, suitability, cost and schedule should be
included
4. The APB: Schedule Parameters
- Should include program initiation, major milestone
decision points, initial operating capability (IOC) and other critical
program dates
5. The APB: Cost Constraints
- This section of the APB shows program-related costs in
base year dollars, based on careful risk assessment and cost estimating
6. Development
of an Acquisition Strategy is usually done by an Acquisition Strategy IPT,
which includes representation from all functional areas, end users, and key
stakeholders. A well-defined acquisition strategy will include information on:
Contracting:number and types of
contracts, timing, competition, potential sources, source selection approach,
and Unique Identification (UID) implementation
Funding :Type and year of
appropriations, funding source agreements, and affordability analysis
Cost :CAIV objectives, cost estimates,
and identifying
Systems Engineering : Technology and
product solutions, including commercial and non-developmental items; open
systems architectures; modeling and simulation; and environmental, safety and
occupational health considerations; baseline system performance thresholds and
objectives; corrosion prevention and control; and interoperability
Test & Evaluation :Types of
testing, timing of testing, test articles including quantities and sources,
modeling and simulation, and resources such as test ranges
Software development :System
integration, sources, re-use, open systems architecture, data rights, and
computer resource life cycle management
Support Strategy :life cycle
sustainment addressing design for supportability, all applicable support requirements,
and Performance Based Logistics (PBL) approach.
Production :Design for
producibility; low-rate initial production (LRIP) schedule; and production
quantities, including long lead procurement items
Management :Risk management,
including planning, assessment, handling, and monitoring of cost, schedule and
performance risk; earned value management reports, if required, to track
contractor progress; and any international considerations related to the
program.
Much of this functional information
can be found in the Program Structure Chart, used to show specific dates
for critical events, including acquisition program phases, decision milestones,
program and technical reviews, major deliveries, T&E periods, RFP/contract
information, and other important scheduling information. The sequence and
interrelationship of activities as the team progresses through the acquisition
program is of significant importance in the program structure chart. The
program structure chart should be consistent with the schedule parameters in
the APB. The demonstration of program interrelationships is at the heart of the
IPT approach, where the actions and expertise of each team member can either
help or hinder the team's overall ability to deliver a successful end product.
Remember, as in any IPT-based
program, the team can be made up of different members depending on the nature
of the acquisition program itself, and the expertise needed to make it
successful. Because the Firebird is an ACAT II program, the management chain will
include the Program Executive Office, while the Army Service Acquisition
Executive (SAE) will be acting as the MDA.
7. International
Cooperation involves the collaboration of foreign governments and related
organizations during any stage of the acquisition cycle. Congress requires DoD
to determine if there are allied or other friendly nations with whom we can
cooperate on major systems development. Also, the acquisition strategy
should address the potential for international cooperative research, development,
production, logistics support, or sale. Some of the possible attractions of
international involvement include:
- A foreign government sharing in the cost of development
- An opportunity to incorporate emerging technology from
abroad
- Possible lower production costs through increased
foreign competition, by encouraging international producers to compete
with domestic sources
- Promoting interoperability of our systems with those of
our allies, providing a warfighting advantage in multi-national
warfighting coalitions
Some of the possible problems with
international involvement include:
- Political differences or economic problems with
partners that can delay programs
- Possible dependency on foreign sources
- Security issues associated with technology transfer
between countries can take a long time to resolve, which can lead to
program delays
- Economic considerations for the US industrial base when
foreign competition is introduced
- Legal and administrative requirements for international
participation including coordination with the State Department
The type of contract decision is based upon which of the following?
Answer:
- Allocation of cost risk between the parties
Which one of the following organizations would evaluate measures of effectiveness (MOEs) to determine how well a munitions system can perform its mission?
Answer:
- Marine Corps Operational Test and Evaluation Activity (MCOTEA)
- The Answer is Not: Joint Interoperability Test Command (JITC)
Which of the following describes DoD's policy on acquiring data rights?
Answer:
- Acquire only those data rights that are essential to meeting minimum government needs
- Acquire the maximum data rights possible within the scope of the contract
- Acquire restricted data rights to protect the contractor's right to use, modify, reproduce, release or disclose data to the general public
- Acquire unlimited data rights unless there is compelling justification to do otherwise.
Link:
Budgeting Process Summary
The following learning objectives
are covered in this lesson:
1. The budgeting phase of the PPBE process focuses on program execution to determine near-term funding requirements. Budgeting is a calendar-driven process, resulting in the DoD portion of the President's Budget, which is submitted to Congress in February each year.
2. The services, in the even years, prepare their combined Program Objectives Memorandum (POM) and Budget Estimate Submission (BES). The POM and BES update the Future Years Defense Program (FYDP). The BES covers two years (such as FY 02 and FY 03). During the odd years, services only submit changes to the previous year's combined POM and BES. Changes to the POM are known as Program Change Proposals (PCPs), while changes to the BES are known as Budget Change Proposals (BCPs).
3. The BES is submitted to the OSD Comptroller. Occasionally the OSD Comptroller will send a list of "Advance Questions" about specific areas of the budget. In the Fall, after receiving responses to the advance questions, analysts from the OSD Comptroller and the Office of Management and Budget (OMB) hold hearings to review appropriations or specific programs. The analysts typically examine program pricing and phasing, compliance with funding policies, and budget execution. After reviewing these areas, the OSD Comptroller analyst may prepare a draft Program Budget Decision (PBD). The draft PBD is used to make adjustments to the BES, generally reducing the amount of funding.
- Relate the following building blocks to the PPBE process: Future Year Defense Program (FYDP), Major Program (MP), Program Element (PE).
- Identify the key events in the budgeting phase, including the preparation, review and decision process associated with the three major documents of the phase: Budget Estimate Submission (BES), Program Budget Decision (PBD), Reclamas.
1. The budgeting phase of the PPBE process focuses on program execution to determine near-term funding requirements. Budgeting is a calendar-driven process, resulting in the DoD portion of the President's Budget, which is submitted to Congress in February each year.
2. The services, in the even years, prepare their combined Program Objectives Memorandum (POM) and Budget Estimate Submission (BES). The POM and BES update the Future Years Defense Program (FYDP). The BES covers two years (such as FY 02 and FY 03). During the odd years, services only submit changes to the previous year's combined POM and BES. Changes to the POM are known as Program Change Proposals (PCPs), while changes to the BES are known as Budget Change Proposals (BCPs).
3. The BES is submitted to the OSD Comptroller. Occasionally the OSD Comptroller will send a list of "Advance Questions" about specific areas of the budget. In the Fall, after receiving responses to the advance questions, analysts from the OSD Comptroller and the Office of Management and Budget (OMB) hold hearings to review appropriations or specific programs. The analysts typically examine program pricing and phasing, compliance with funding policies, and budget execution. After reviewing these areas, the OSD Comptroller analyst may prepare a draft Program Budget Decision (PBD). The draft PBD is used to make adjustments to the BES, generally reducing the amount of funding.
The draft PBD is provided to the
services and defense agencies for comment, at which point they are allowed to
provide an alternate position, known as a reclama.
A reclama provides an opportunity to explain problematic areas in the budget and refute proposed budget cuts. Reclamas should always be based on fact and provide an objective evaluation of the implications of the proposed cuts.
A reclama provides an opportunity to explain problematic areas in the budget and refute proposed budget cuts. Reclamas should always be based on fact and provide an objective evaluation of the implications of the proposed cuts.
After considering the reclama, the
OSD analyst makes the decision whether to withdraw, amend, or submit the
original version of the PBD. If not withdrawn, this final draft version of the
PBD will include all information regarding the original PBD and the associated reclama.
It is then sent to the DEPSECDEF, who ultimately makes the decision to sign off
on : thus finalizing : the PBD.
While programming and budgeting are
ongoing, the Execution Review phase is also ongoing. The results of execution
review will be used to make decisions about how to best allocate resources.
The PBD and changes that occur
during programming will be incorporated as part of the DoD portion of the
President's Budget. The FYDP is then updated to reflect the President's Budget,
thus ending the budgeting phase of the PPBE process.
Which of the following tends to be a typical recurring deployment problem when effective deployment planning is not accomplished?
Answer:
- Modifications made to the system
The primary difference between the supervisory leader and the participative leader is the participative leader ____________.
Answer:
- Gets inputs for decisions
Which one of the following T&E products is required at the Full Rate Production Decision Review?
Answer:
- Beyond Low Rate Initial Production (LRIP) Report
To minimize software development risk, select a contractor who:
Answer:
- Can demonstrate process maturity and domain expertise
If a contractor is producing missiles for the Navy, and the contractor fails to deliver them on time, the Navy has the right to:
Answer:
- Terminate the contract for default
Contract Dispute Summary
The following learning objectives are covered in this lesson:
- Contrast the difference between termination for convenience, termination for default, and termination for cause.
- Identify the process for resolving disputes between parties of a contract.
- Given a funding shortfall, apply the rules governing the use of expired funds to resolve the problem.
Termination for Convenience: allows the Government the unilateral right to completely or partially terminate a contract if the work no longer needs to be done or there is no more funding available. If a contract is terminated for convenience, the government must reimburse the contractor for the cost of completed work, a reasonable profit for that work, and costs associated with termination settlement.
Termination for Default: allows the Government to completely or partially terminate a contract for non-commercial items because the contractor fails to deliver on time, endangers a timely delivery, or fails to comply with the terms or conditions of the contract. In this case, the government is only responsible for paying for products delivered and accepted. The government is also entitled to reimbursement for expenses incurred as a result of finding another contractor.
Termination for Cause: A type of termination for default that applies only to contracts using commercial item procurement procedures. Termination for cause allows the Government to completely or partially terminate a contract for commercial items because the contractor fails to deliver on time, endangers a timely delivery, or fails to comply with the terms or conditions of the contract.
2. There are two options for resolving contract disputes: Litigation and Alternative Dispute Resolution. Both parties of a contract can exercise these options. Disputes between the government and contractor can be very costly for both parties, especially if the dispute results in litigation. Alternative Dispute Resolution uses selected methods to resolve disputes without going to court, including the following:
- Mediation: A neutral third party listens to the issues, helps develop options, and works with the disputing parties to obtain a negotiated settlement. Mediation helps preserve relationships. The parties in the dispute maintain high level of control over the outcome.
- Fact-finding: A neutral technical expert renders an advisory decision to both parties based on the facts presented by the disputing parties.
- Mini-Trial: Senior-level management listens to both parties and renders a decision. A neutral third party can help in clarifying and identifying issues, but senior management is ultimately responsible for negotiating a settlement.
- Non-binding Arbitration: A neutral third party renders a non-binding decision based on evidence presented by disputing parties. Arbitration is closest to litigation.
The
purpose of ADR is to resolve disputes in an environment that is
collaborative, not competitive. Alternative Dispute Resolution (ADR)
should be the first resort to solve disputes when appropriate, but there
are circumstances where taking the dispute directly to court is
necessary. Court is most appropriate when:
- Dispute is over issues of law
- Full public record is required
- Fraud is suspected
- Other party is likely to falsely present their case
3.
Funds are considered "expired" when the obligation period for that fund
has expired. For example, RDT&E funds have a two-year obligation
period. After this two-year obligation period is over, RDT&E funds
are available for expenditure for five more years but are considered
expired. Expired funds still retain their original appropriation
category, year, line item and other accounting identifiers for the
expenditure time beyond the original obligation period. Expired funds
can only be used for payment or adjustments to the original obligations
during the expired period and cannot be re-assigned to new obligations.
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