A New PPBS Process To Advance Transformation

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A New PPBS Process To Advance Transformation

• Prepared for the Office of Force Transformation,
  December 2002

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Outline

• Objective
• Background How did we get here?
• Obstacles to innovation and transformation
  initiatives
• Actionable recommendations

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Objective

• Identify elements of a new PPBS process that
  would encourage innovation and force
  transformation
• Recommend high leverage, actionable steps to make
  the PPBS process more responsive to
  transformation initiatives

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Background
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PPBS was designed to permit the SECDEF to manage
DoDs programs and resources

• Key aim Produce a program that reflects
  defense-wide needs, not three department budgets
  that reflect their own (differing) perspectives.
• Establish output metrics to measure fulfillment
  of defense requirements.
• Make the full lifetime cost of a program visible.
• Link force programming decisions to strategic
  assessments.

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SECDEF McNamara sought a means to link strategy
to force structure and to allocate resources
accordingly

• Service program inputs to be evaluated in output
  rather than input terms
• FYDP created with 10 (now 11) major force
  programs that cut across service competencies.
  Aim allow the SECDEF to give strategic guidance
  (and measure the service responses) in
  programmatic terms.
• Alternative ways of fulfilling requirements would
  be developed, analyzed, and costed to allow
  SECDEF to make high leverage choices.

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Obstacles to transformation initiatives
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A Symptom of a Sick Company
Ability to influence a Business Process
Personal time devoted to the Process, by
Corporate Leadership
Calendar Time
Source McKinsey Company
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PPBS has shortcomings beyond the control of
participants

• PPBS is an industrial age management tool it is
  not suited to information age planning.
• It is designed for a stable strategic environment
  that evolves only gradually.
• The weight of repetitive process squeezes out
  room for strategic planning and oversight and
  discourages innovation.

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1. The PPBS is an industrial age management tool
that is not structured take advantage of
information age planning.

• SECDEF McNamara, in the early 60s sought to
  centralize control of DoDs planning. He
  configured the PPBS based on the best management
  practices of a large industrial corporation at
  the time. Thus the focus on
• Cost effectiveness
• Elimination of redundancy
• Process management
• By contrast, successful information age
  management looks for and cultivates the
  breakthrough concept, product, or process.

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2. PPBS works best when the strategic environment
is stable.

• Because the process carries a default option of
  no change (there are many players and any player
  can obstruct change) it cannot respond to a
  dynamic strategic environment.
• The focus on large platforms encourages
  evolutionary change of the last system.
• There is a bias in the system to preserve
  constant budget shares for each service and
  program.
• The PPBS does not help the SECDEF get DoD to
  respond to a changing strategic environment.

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3. The PPBS is weighted down by repetitive
process

• The sheer number of reports due every year means
  most staff time is spent preparing mandated
  reports.
• There is little time for analysis of strategic
  options.
• There is inadequate time to introduce and adapt
  the process to accommodate substantial changes.
• The programming and budgeting phase has come to
  dominate at the expense of the planning phase.

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The guidance and review process has limited
impact on service plans.

• The DPG does not have the impact it could
• It is typically issued too late to affect the
  service POM preparation.
• Much of it is broad in scope too broad to
  provide a directive framework for service
  programming or a metric against which service
  POMs can be judged.
• Most of the energy and attention of the senior
  leadership comes too late in the game to provide
  a sharp strategic change in direction.

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Result the process has lost its strategic agility

• FYDP has become a data base that keeps track of
  programs and the resources applied to them, not a
  tool that tees up strategic decisions for the
  senior leadership.
• It has changed only marginally in structure since
  forty years ago despite dramatic change in the
  strategic environment.
• The OSD review process tends to make changes at
  the margins of the service POM submissions.
• Its structure discourages joint planning
  especially for todays joint expeditionary
  warfare.

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Actionable Recommendations
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Framework for Change

• Shift senior level attention from the back end to
  the front end of the process.
• Make the DPG reflect the SECDEFs commanders
  intent in programmatic terms.
• Recast the FYDP to reflect todays strategic
  environment.

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Framework for Change (Cont.)

• 4. Make OM growth a target of review.
• 5. Integrate jointness into key parts of the
  program submission.
• 6. Reward transformation initiatives.

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1. Shift senior level attention from the back end
to the front end of the process.

• Small senior level teams could focus on the
  planning phase in PPBS.
• They could define a small number of high impact
  initiatives.
• The staff could then spend its time monitoring
  execution.
• This would give the senior leadership far more
  leverage than trying to make big changes at the
  end of the review process when the budget
  submission deadline is pressing.

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A Symptom of a Sick Company
Ability to influence a Business Process
Personal time devoted to the Process, by
Corporate Leadership
Calendar Time
Source McKinsey Company
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2. Make the DPG more directive, more strategic
and more selective

• Issue the DPG every two years
• In the off year, OSD staff can develop broad
  strategic options for senior decision makers to
  include.
• Gives the services plenty of time in the off year
  to configure their POM submission to DPG
  guidance.
• The DPG could express the SECDEFs commanders
  intent in programmatic terms.
• This gives services a framework to program
  against and the OSD staff a clear standard in
  evaluating the POMs.
• Reduce the number of core strategy/guidance
  reports to the DPG and NMS (issue each every two
  years).

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3. Recast the FYDP to reflect todays strategic
environment.

• Redefine the Major Force Programs (MFPs) to
  reflect the present national security challenges.
• Configure the DPG so it can be mapped to the
  MFPs.
• Separate warfighting from general support
  functions.

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Candidate MFP Reconfiguration

• MFP 1. Joint Expeditionary Forces
• MFP 2. Major Theater War Forces
• MFP 3. Special Operations Forces
• MFP 4. Mobility Forces
• MFP 5. Forward Presence International
  Activities
• MFP 5. Strategic Nuclear Forces
• MFP 6. C4ISR Programs
• MFP 7. Research and Development
• MFP 8. Medical Programs
• MFP 9. Central Supply, Maintenance
  Installations
• MFP 10. Personnel, Training Development

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4. Integrate jointness into key parts of the
program submission.

• Example
• Require an integrated Joint POM submission first
  for the C5ISR MFP.
• Next, extend to Mobility Forces MFP.
• Next, extend to Forward Presence and
  International Activities MFP.
• Finally, extend to Expeditionary Forces MFP.

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5. Single out OM growth for review.

• OM cost per troop is growing at twice the rate,
  and more than other accounts.
• This is a critical source of funding for
  transformation.
• Example allow services to keep any savings in
  OM and shift them to fund transformation.

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6. Provide incentives for transformation
initiatives

• Give substantial budget authority to OFT (1 of
  the defense budget) to transition
  transformational systems and processes into the
  force.
• Integrate transformation guidance into the DPG.
• Fund in priority those programs that accelerate
  transformation.

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Integrate Programming of the RDTE and
Procurement Budgets

• Historically programmed by different staffs and
  reviewed separately
• Today, the transitioning of systems in RDTE into
  to force is key to transformation.
• Programmatic trade-offs should be analyzed
  explicitly.

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Accelerate Incorporation of IT Systems

• Establish discretionary fund for Combatant
  Commanders to do rapid transition of prototype
  systems into the forces.
• Key target would be accelerating systems with
  substantial IT component into the forces.

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Parting Thought

• A windmill worth tilting at
• Seek Congressional authority (again) for a two
  year planning cycle.
• Last House vote (1998) came close 202-219.