Spring Program Review & Investment Budget Review

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Vernon Blankenship
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1 Spring Program Review & Investment Budget Review Sean Duffy 23 Jan

2 Overview Purpose, Players Focus SPR/IBR Preparation Lessons Learned Examples (Funding Slides) Recommendations FY13 SPR (postponed) Slide 2

3 Purpose & Players Purpose: Maximize delivery of capability while preserving Air Force TOA Are current-year investment funds executing according to plan? If not, what funding adjustments are necessary? Key Players: SAF/AQX (Mr. Lombardi) SPR interest to optimize execution (realign poorly executing funds) Help AF identify sources for Omnibus reprogramming SAF/FMBI (Ms. Schwenke) IBR interest to influence AF s PPBE deliberations OSD mid-year review Solidifies budgets by accurately phasing resources & requirements Program Manager Accountable for delivery of capability Slide 3

4 SPR/IBR Focus Focus: Investment appropriations (RDT&E, Procurement) Prior-year SPR/IBR adjustments and/or recent RMDs Fact-of-Life changes or programmatic issues (as reported via MAR) Large dollar value pgms and/or special interest/congressional Perspective for the reviews: Air Staff is not looking to cut programs, but must ensure funding is timephased properly (i.e., matches program requirements/schedule) FY13 execution affects: Corporate AF trade space for sourcing known FY13 bills (HHQ priorities) FY14 PB: Staffers frequently cite poor execution for marks, rescissions Credibility for outyear disconnects (FY15-19 POM ) Opportunity to influence corporate AF perspective: If your program needs budgetary help ask for it! If you have excess funds identify them for HHQ priorities If your funding profile is front-loaded ask Air Staff to re-phase Only ask for paybacks if you really need it (and in correct FY) Slide 4

5 SPR/IBR Preparation Consistent message of program status builds credibility SPR/IBR brief vs EOM Feb 2013 MAR data FY14PB: review of R/P Docs What was briefed at last SPR/IBR? What is your PMA baseline? Attend Town Hall briefing Sets the tone of the reviews; shows interest to Air Staff Additional insights about Air Staff objectives Greatest tool for SPR/IBR briefer to understand his/her audience Dry run SPR/IBR brief with PEO Discuss final draft SPR/IBR brief with PEM Review PMA details with budget analyst Don t make last-minute changes w/o informing PEO Slide 5

6 SPR/IBR Historical Lessons Learned Schedule slide: Viewed as baseline for program requirements Compared to cost estimate and to Unconstrained 1537 Funded content (use color codes from template) Gray-out unfunded content (documented requirement but no funding) Get-well forecast viewed with skepticism if contracting details not known/understood MAR status match SPR/IBR brief (or can explain why story differs) Multiple obligation events; be able to explain Relationship of 3600 to 3080 concurrency Know prime contract types & how they affect execution FFP (with milestone billing?) Term Liabilities? Contingent Liabilities (i.e., CPAF award fees) Earned Value (EV) data Paybacks are subject to validation of need in current year Defend program requirements, not the budget! Slide 6

7 Examples 7

8 AWACS Schedule

9 AWACS 3600 UN-Constrained 1537 AWACS Prior FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Total Integrated DAMA/GATM (IDG) Support to the Warfighter Block 40/ ,157.1 NGIFF NAVWAR DRAGON Net-Centric Capabilities 0.0 TS-3 & Integration Labs/TSI TS-3 & Integration Labs TSI Interoperability & C2ISR Sys Dev Interop & C2ISR Sys Dev Comm Projects Operations Electronic Protection Flight Performance Software OTHER 1, ,534.2 Total 3, ,255.3 APPROVED FUNDING (FY13 PB) 3, ,268.4 Delta (34.1) FY11 $21.2M Block 40/45 ETN FY12 $6.2M Block 40/45 ETN FY13 shortfall is for Block 40/45 required payback ($27.4M) and NGIFF 40/45 EMD contract ($6.7M) $6.7M is a required payback from the 2011 SPR, pushed from FY12 to FY13 due to execution FY M is for EP and is being reprogrammed to 3010 With SAF/AQ help to implement COA, AWACS 3600 is fully funded

10 Example: RDT&E Obligations Baseline Forecast ($M) Current Forecast ($M) Program Actuals ($M) DFAS Actuals ($M) OSD Goals ($M) BA Released ($M) Obligations are slow so far. Obligations forecast continues behind goal What is the impact to the program if BA is reduced? FY2013 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY11+ Baseline Forecast ($M) Current Forecast ($M) Program Actuals ($M) DFAS Actuals ($M) OSD Goals ($M) Goal Color Indicator G G G Y G Current Forecast (%) 7.3% 15.5% 18.2% 18.2% 34.3% 48.2% 53.3% 53.3% 59.9% 61.3% 61.3% 62.0% 100.0% Program Actuals (%) 7.3% 15.5% 18.2% 18.2% 34.3% DFAS Actuals (%) 0.9% 1.8% 3.6% 4.4% 7.3% OSD Goals (%) 7.5% 15.0% 22.5% 30.0% 37.5% 45.0% 52.5% 60.0% 67.5% 75.0% 82.5% 90.0% BA Released ($M) Slide 10

11 Example: RDT&E Expenditures Baseline Forecast ($M) Current Forecast ($M) Program Actuals ($M) DFAS Actuals ($M) OSD Goals ($M) BA Released ($M) What explains jump in expenditures? FY2013 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY11+ Baseline Forecast ($M) Current Forecast ($M) Program Actuals ($M) Is there a pgm impact if $5M DFAS Actuals ($M) is realigned to outyear? OSD Goals ($M) Goal Color Indicator R R R R R Current Forecast (%) 0.9% 1.8% 2.7% 3.6% 4.4% 25.5% 30.7% 35.8% 40.9% 46.0% 53.3% 57.7% 100.0% Program Actuals (%) 0.9% 1.8% 2.7% 3.6% 4.4% Expenditures below OSD min goals. DFAS Actuals (%) 0.0% 0.9% 1.8% 2.2% 3.6% OSD Goals (%) 5.5% 10.0% 14.5% 19.0% 23.5% 28.0% 32.5% 37.0% 41.5% 46.0% 50.5% 55.0% 100.0% BA Released ($M) Slide 11

12 Do: Don t: Recommendations Identify, up front, funding not required to meet FY12 s acquisition objectives Ask for payback in correct year corresponding with your 1537 Ask for help if your program has a funding issue outside PEO s control Understand your program office PMA requirements (especially FFRDC, A&AS support) Justify using A&AS contract vehicles for DMS requirements Blame poor execution on CRA Back into burn rates to meet OSD goals (justify by citing data source(s) for forecast) Brief get well dates in April/May w/o credible details Assume audience will understand breaks in expenditures or anomalous trends Advocate program disconnects (advocacy is operational user s responsibility) PMs should address acquisition of capability against documented & funded requirements OK to factually state impacts of funding disconnects for user/customer Don t state program is user s top priority unless advocacy/attribution is documented Slide 12

13 SPR/IBR for FY13? FY13 SPR/IBR schedule remains TBD due to budget uncertainties AF currently formulating sequestration plan IAW DepSecDef guidance Effective date deferred from 2 Jan to 1 March Tentative implementation date: 27 March FY14 President s Budget submission deferred from 4 Feb to? CR authority expires 27 March Year-long CR authority is a possibility according to Air Staff Recommend treating interim data calls as part of the SPR/IBR process During this era of budget uncertainty, FM Support to decision makers becomes more critical than ever! Slide 13

DEFENSE ACQUISITION UNIVERSITY BCF Fundamentals of Business Financial Management

DEFENSE ACQUISITION UNIVERSITY BCF Fundamentals of Business Financial Management 1 Recognize the statutory and regulatory requirements that impact program budget planning and formulation. Identify how OMB Circulars (No. A-11 and A-123) provide instruction on the preparation and submission