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					U.S. Defense Budget Forecast




The Defense Budget - A Primer
Introduction
Not generally known is the relative youth of the formal budget process for the U.S. national budget. While the
Budget and Accounting Act of 1921 established a federal budget process requiring the President to submit a
proposed federal budget to the Congress for the forthcoming fiscal year, there was still no formal budgeting system.
Only in 1974 did one finally come about, when a Congressional Budget Act created the congressional budget
process and established October 1 through September 30 as the federal fiscal year.
The U.S. Defense Budget itself for decades has been implemented via an interdepartmental process known as the
Planning, Programming and Budgeting System (PPBS). This system was introduced by Secretary of Defense
Robert McNamara in the early 1960s (a time of greatly increased emphasis on the role of numbers-crunching in
defense planning), and for the most part has remained intact until very recently. The Fiscal Year (FY) 1986
Department of Defense (DoD) Authorization Act requires the DoD to submit a two-year budget. Although the DoD
must perform its budgeting functions on a biennial basis, Congress continues to authorize and appropriate DoD
funds on a yearly basis.

Major Change in 2003
In 2003 the DoD began implementing a major change in its longtime process for implementing defense budgets. In
May 2003, Under Secretary of Defense (Comptroller) Dov Zakheim announced changes to streamline the
department’s planning, programming and budgeting system. This improved Planning, Programming, Budgeting and
Execution (PPBE) process will supersede the old PPBS process and is expected to revolutionize internal DoD
budget efforts, increase effectiveness, and add emphasis to execution. Zakheim noted that no legislative changes
are required and that the Congress will see the same budget justification as it has in the past.
The DoD will evolve from an annual program objective memorandum and budget estimate submission (BES) cycle
to a biennial (two-year) cycle starting with an abbreviated review and amendment cycle for FY05. The department
will formulate two-year budgets and use the off-year to focus on fiscal execution and program performance.
The two-year cycle will guide the department’s strategy development, identification of needs for military
capabilities, program planning, resource estimation and allocation, acquisition, and other decision processes. This
change will more closely align the DoD’s internal cycle with external requirements embedded in statute and
administration policy.
The Quadrennial Defense Review (QDR) will continue to serve as the department’s major statement of defense
strategy and business policy. It also will continue to be the single link throughout the DoD that integrates and
influences all internal decision processes. Section 922 of Public Law 107-314, the Bob Stump National Defense
Authorization Act for FY03, amended section 118 of Title 10 of the United States Code to align the QDR
submission date with that of the President’s budget in the second year of an administration.
The off-year Defense Planning Guidance (DPG) will be issued at the discretion of the Secretary of Defense. The off-
year DPG will not introduce major changes to the defense program, except as specifically directed by the Secretary
or Deputy Secretary of Defense. There will be no DPG for FY05.
Rather than issuing a program objective memorandum during the off-year, the department will use program change
proposals to accommodate real-world changes, and to meet the continuing need to align the defense program with
the defense strategy.
The department will use budget change proposals (BCPs) instead of a budget estimate submission during the off-
year. BCPs will accommodate fact-of-life changes (e.g., cost increases, schedule delays, management reform
savings, workload changes, etc.) as well as changes resulting from congressional actions.
The FY05 execution reviews will provide the opportunity to make assessments concerning current and previous
resource allocations and whether the department achieved its planned performance goals. Performance metrics,
including the program assessment rating tool, will be the analytical underpinning to ascertain whether resources
have been appropriately allocated in current budgets. To the extent the performance goals of an existing program




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are not being met, recommendations may be made to replace that program with alternative solutions or to make
appropriate funding adjustments to correct resource imbalances.
Although these changes are now being implemented, details are still lacking. Thus. we still provide our broad
overview of how the Defense Department budget is formulated and enacted under the traditional PPBS cycle, and
who the key players are. Even this brief overview may result in “acronym overload.” The U.S. Department of
Defense most definitely shows an inclination to go overboard in terms of acronyms, with an acronym often having
several meanings, further complicating an already confusing situation. To assist the reader, a glossary of the more
common and important terms and acronyms is located at the end of this section. The section begins with a review of
the budget cycle and timing, then looks at the key players in U.S. Defense Budget process, and finally tracks the
budget process through the PPBS and enactment process. We make notes at certain points as to the potential
changes that the PPBE will bring to the PPBS cycle.

The PPBS Cycle
The PPBS is a closed-loop process in which the results of one circuit become constraints or opportunities for the
next. It is a lengthy undertaking, consuming about three years from the beginning of planning to the enactment of a
congressional bill for any fiscal year, probably no small factor in transforming the budget process to the PPBE. At
any given time, there may be four fiscal years in some stage of the PPBS process. For example, as the FY02 budget
was being executed, the FY03 budget was in congressional review, the FY04 budget was being reviewed by the
DoD, and the FY05 budget programming phase was well under way at the various major commands within each
military department.
The longest phase of the PPBS has been the first step: planning. It requires about a year and a half from the time the
Joint Chiefs of Staff begin the process of providing their recommendations to the Secretary of Defense to the time it
is completed with the Secretary’s Defense Planning Guidance.
Planning. The principal process at work during this phase is the Joint Strategic Planning System (JSPS). The JSPS
is kicked off with the Joint Strategy Review (JSR). That is followed by the Chairman’s Guidance (CG) document,
the Joint Strategic Planning Document (JSPD), the National Military Strategy Document (NMSD), and finally, the
Secretary’s Defense Planning Guidance (DPG) document. There are several other documents that overlap the PPBS
and serve more than one cycle. The Joint Intelligence Estimate Plan (JIEP) and the Joint Strategic Capabilities Plan
(JSCP) support the Planning and Programming phases and, therefore, are used in several phases simultaneously.
In brief, all these documents simply define the national security objectives, the obstacles (threats) to those
objectives, the strategies to counter the threats, and the resources essential to fulfilling those strategies. These
resources include manpower, equipment, money, and material. The action during this phase mostly occurs within
the Joint Chiefs and the Unified Commands. It is both a top-down and bottom-up process; guidance flows down and
planning issues rise up. While this military planning process is under way, the National Security Council develops
national security objectives and strategies for approval by the President. The presidential decisions are transmitted
as National Security Decision Directives (NSDD). Any major changes in objectives or strategy would be
incorporated into the military planning process. Armed with military advice and presidential direction, the Secretary
of Defense issues the DPG, a document that provides policy guidelines, strategies, force planning objectives,
resource planning, and fiscal guidance. The fiscal constraints of the Secretary of Defense’s DPG introduce the
programming phase of the PPBS.
Programming. Based on the Secretary’s guidance, the military departments and defense agencies begin the process
of developing their required resources to implement the planning objectives. These resources are often referred to as
the objective forces. The relative importance of these resources is measured by each service and agency and stacked
into a priority list to compete for inclusion in the Defense Budget. Programs that were previously approved in the
Future Years Defense Program (FYDP) are considered to be “baseline” and will be supported, under most
circumstances. However, any deviations from these baseline programs mean that new initiatives must be rank-
ordered on a priority list and must compete with other service and agency initiatives for available funding. The
principal players in this process are the military departments and defense agencies; however, many services have
elaborate organizations to allow this process to begin with their major commands and divisions. The resulting
document showing baseline and ranked programs is called the POM (Program Objective Memorandum). Each
department or agency submits its POM to the senior policy group in the Defense Department, the Defense Planning
and Resources Board (DPRB).




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Under the Goldwater-Nichols Act, the Joint Chiefs of Staff were given a stronger role in the budget process.
Previously, this process took place within the military departments, and the Unified Combat Commanders had no
formal role. Now, these commanders submit their own priority lists to the DPRB. Unlike the service lists, these
combat commander inputs are Integrated Priority Lists (IPL), covering all the services within their command. This
allows the Unified Commands to establish their specific needs to carry out the war and mobilization plans assigned
to them. The Joint Chiefs of Staff also play a key role on the DPRB.
The DPRB is chaired by the Deputy Secretary of Defense (Deputy SECDEF) and includes the service secretaries;
the Chairman of the JCS; the key Under Secretaries and Assistant Secretaries of Defense; and representatives from
the Office of Management and Budget (OMB), Ballistic Missile Defense Organization (BMDO), and Operational
Test and Evaluation (OT&E) group. The military chiefs also attend as non-members. Any member of the DPRB
may raise an issue dealing with the POMs, which have now been reorganized into Program Decision Packages
(PDPs). These packages contain the FYDP.
Program Decision Packages outline the resources required to implement the program (manpower, equipment, and
material) over each of the next six years. These packages are reviewed by the DPRB and their staffs and subjected
to challenges. The process of challenging program decision packages is called the Issue Cycle. Any member of the
DPRB or any Unified Commander may challenge a program by offering an Issue Paper that adjusts the PDP in some
manner. The military services and agencies have an opportunity to respond to the challenge offered by the Issue
Paper, but in the end, the Deputy Secretary of Defense makes a decision on what programs and what level of
funding will be included in the DoD’s budget. These decisions are issued as a Program Decision Memorandum
(PDM). They provide the basis for the next phase, budgeting. Meanwhile, the JCS issues its Joint Program
Assessment Memorandum (JPAM) which evaluates the risks in the military service POMs and offers risk reduction
measures.
Budgeting. The military services and defense agencies rework their POMs based on the Deputy Secretary’s
decisions and resubmit the POM as a Budget Estimate Submission (BES). This document includes the required
contractual obligation levels (Total Obligational Authority) and expenditures (Outlays) for each fiscal year. The
budget is subjected to review and the final decisions are conveyed by means of Program Budget Decisions (PBD).
The budget is then submitted to OMB and the President for approval. It then becomes part of the President’s Budget
and is submitted to Congress in January, nine months prior to the start of the fiscal year.
Changes with the PPBE. With the transformation to the PPBE, most of the work will be conducted in the first year
of the budget cycle, with the second year to be used to examine how well the DoD had been executing its programs
and funds.
The process of implementing the budget cycle transformation will operate on the premise that FY05 will be an off-
year in the cycle. As a result, the services will not prepare their usual POMs or budget estimates for FY05. The
Office of the Secretary of Defense (OSD) will instead use budget figures as they were estimated in the FY04 budget
and the FYDP, which encompasses FY04 through FY09. The FY06 budget will be the first to be prepared from
scratch under the tenets of the transformation process and will represent the first year of a new two-year cycle.
In another important change, the overall budget process is being tied to the four-year presidential term, with the
PPBE cycle to have two two-year iterations of the budget process. The idea is to create a more stable planning
process that reflects the changes in policy that often come with a change in administration. There would also be a
continuity flow for the four-year period.
Thus, the first year would see “review and refinement” of the previous administration’s strategy and plans. There
would be only limited changes in programs and budgets, an initial iteration of a modified national security strategy,
and an “off-year” DPG. The latter would see only minor changes to reflect any significant changes in world
realities, but would focus more on providing the planning and analysis needed to identify major program issues for
the second year’s DPG.
The second year would encompass a full PPBE review, a QDR, and a full one-year DPG designed to implement the
QDR results. Whereas the QDR had previously been due by September 30 in the first year of a new administration,
the difficulties associated with preparing such a major document in the initial months of a new administration
resulted in a congressional decision to put off the release of the QDR until the second year of a new administration.




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Year three would then focus on execution of the QDR and the previous year’s DPG, and could include an “off-year”
DPG. The issuance of the off-year DPG would depend on circumstances, such as requirements for new studies, the
need to accommodate increased costs or schedule delays arising from acquisitions programs, or congressionally
mandated programs.
Year four is a little nebulous at this point, with the Rumsfeld-led DoD calling this the time for “ensuring the legacy”
of the administration. Another full DPG would be prepared during the year to refine the alignment between the
President’s strategy and the DoD’s programs.
However, “ensuring the legacy” seems to inject a political tone that calls into question just what the entire
Rumsfeld-led reform process is seeking to achieve.           Granted, U.S. national defense policy changes from
administration to administration. But the whole idea of a national strategic policy is to establish a framework that
maintains some continuity. If a process is set up that actually encourages major changes with each administration,
this could ultimately create unintended dislocations, especially if U.S. defense policy becomes even more of a
partisan issue than it already is. The idea of tying the budget process itself to the presidential four-year term does
have its merits: since changes will be made anyway from administration to administration, the new process should
provide for a smoother decision curve. Still, “ensuring the legacy” during the fourth year strikes somewhat of a
jarring partisan political tone, implying that succeeding administrations are suspect in their intentions.
The Budget Cycle Itself
There are four basic phases to the cycle: 1) executive budget formulation; 2) the congressional budget process; 3)
budget execution and control; and 4) audit and evaluation. Below are the steps and the supposed timetables
associated with the first two, which have fairly specific time frames. The last two follow from the first two.
Phase 1 has the following timetable (usually achieved more or less on time):
        April-June: the OMB and the President conduct reviews to establish policy for the next budget
        July-August: the OMB provides agencies with policy guidance for the upcoming budget
        September-October: the various agencies submit initial budget request materials
        November-December: OMB and presidential decisions
        By the first Monday in February: the President submits the budget (date set by law)
        January-February: the OMB sends allowance letters that include multiyear planning estimates that become
         the starting points in formulating the President’s next budget
        By July 15: the President submits a mid-session review document to Congress which provides data to aid in
         the evaluation of the President’s budget
Phase 2 is a little more complicated since it essentially involves two different, but related, streams of decision-
making, authorization and appropriation. Authorizations set up or continue the operation of a federal program or
agency either indefinitely or for a specific period of time, or sanction a particular type of obligation or expenditure
within a program. Authorizing legislation is normally a prerequisite for appropriations. It may place a limit on the
amount of budget authority to be included in appropriation acts or it may authorize the appropriation of “such sums
as necessary.” Appropriations basically entail legal authorizations for federal agencies to incur obligations and to
make payments out of Treasury funds (this withdrawal of Treasury funds is constricted by Constitutional
requirements) for specified purposes. Each fiscal year Congress provides both an authorization and appropriation
figure for each line item, with each house passing its own version, followed by a joint action by both houses
agreeing on a common figure.
It is important to point out that the Congress normally does not vote on direct expenditures (outlays) of federal funds
but rather on requests for budget authority. Budget authority allows federal agencies to incur obligations and hence
to spend federal funds. The Congress does not enact a congressional budget, but rather has a budget process that
yields legislation authorizing and appropriating funds within the guidelines of a budget resolution. Also important is
that the Constitution requires all revenue bills to originate in the House, and, by custom, the House also originates
appropriations measures.
The congressional review cycle is performed primarily by committees and subcommittees of the House and Senate.
The key committees in each house are the Budget Committee (HBC and SBC) and the Appropriations Committee



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(HAC and SAC), as well as the House Armed Services Committee (HASC) – which was renamed in FY96 as the
House National Security Committee and returned to its old name in FY2000 – and the Senate Armed Services
Committee (SASC). Theoretically, the process begins with the HBC and SBC setting a budget ceiling, called the
Budget Resolution. Their individual actions are supposed to be completed in March, with a conference committee
agreement in May. Almost simultaneously, the HASC and SASC, and the HAC and SAC, begin the “mark up”
process. During this process, extensive hearings are held by the various subcommittees. At the end of the process,
the President’s defense budget request is modified or confirmed and then offered to the House or Senate for
approval. Theoretically, this process should be completed by late April, with a conference resolution by June.
However, this rarely occurs. More often than not, Congress has been forced to use a Continuing Resolution to keep
the government operating – again, not at all unusual. The Continuing Resolution authorizes the government to meet
payroll. It sets specific budget and time limits and allows continued operation of agencies and previously authorized
programs.
The HASC, SASC, HAC, and SAC markups are very specific. For RDT&E and Procurement accounts, they
address each individual line item in the budget. In some cases, Congress will add line items that were not requested
by the administration. The end results of the congressional process are two joint bills: the Authorization Bill for
FYXX and the Appropriations Bill for FYXX. These are sent to the President for signature. Again, theoretically,
these bills are supposed to reach the President in the August-September period.
The specific timetable for Phase 2 follows, although keeping to this schedule is much more elastic in practice,
especially toward the end of the process as debate swells on controversial issues.
        January-February (after the first Monday in January but no later than the first Monday in February): receipt
         of the President’s budget request
        February 15: the Congressional Budget Office submits its annual report on fiscal policy to the Congress.
         This details the budgetary impact of alternative revenue levels and spending patterns, and also includes the
         CBO’s analysis of the economy and the anticipated impact of the economy on the budget
        Within six weeks of the President’s submission of the budget: the authorization and appropriation
         committees transmit their “views and estimates” on appropriate spending or revenue levels for programs
         under their jurisdiction to the Budget Committees
        March-April: the Congress drafts and passes a budget resolution. This budget resolution establishes the
         appropriate levels of: 1) budget authority; 2) outlays; 3) budget surplus or deficit; 4) federal revenues; and
         5) the increase in the debt subject to statutory limit
        May-September: spending and revenue bills and reconciliation
        August 15-20: CBO’s and OMB’s deficit estimates and initial reports
        October 1: fiscal year begins
        After the end of the annual congressional session: the CBO and OMB issue their final sequestration reports
         and the GAO issues the compliance report. These actions are required following the end of a congressional
         session under the Budget Enforcement Act

Money Terminology
A number of terms are used when referring to money requests in the budget The following three terms are used to
define the level of money that can be promised or spent.
    Budget Authority (BA): Authority provided by law to enter into obligations that will result in immediate or
    future outlays. It may be classified by the period of availability, by the timing of congressional action, or by the
    manner of determining the amount available.
    Outlays: These are actual expenditures. Checks issued, interest incurred on the public debt, or other payments
    net of refunds and reimbursements. Total budget outlays consist of the sum of the outlays from appropriations
    and funds in the budget, less receipts.
    Total Obligational Authority (TOA): This is a DoD financial term that expresses the value of the direct
    program for a given fiscal year. It is based on the congressionally approved budget authority for the program,
    plus or minus financing and receipts adjustments determined by the DoD.



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Budget Authority and Outlays get complex as they cover more than one fiscal year. Sometimes the money cannot
be obligated due to constraints placed on spending. For example, Congress may require that a study be completed
prior to obligating funds. Or, there may be a problem in the competition of the contract that delays obligation.
There are any number of reasons that can cause authorized funds to be unobligated in the approved fiscal year.
Outlays may also be delayed or extended for numerous reasons, including congressional investigations of
contractors or contracts.

The U.S. Defense Budget
The Defense Budget is one of 20 different major budget functions in the President’s Budget. Sometimes people
refer to the Defense Budget by its major function code, “050.” Included within the defense budget is funding for
matters such as atomic energy, federal emergency management, military housing, and intelligence as they pertain to
defense. Each of these defense-related functions is coded under “050,” under such subcategories as “053” (atomic
energy defense activities) and “054” (defense-related activities such as selected service expenses and defense
stockpiles outside the DoD and DoE). The purely military portion of the DoD budget is coded “051” and accounts
for over 95 percent of all national defense expenditures.
The Defense Budget funds are segmented by different “titles.” The five major titles are Military Personnel;
Operations and Maintenance; Research, Development, Test and Evaluation; Procurement; and Other. The U.S.
Defense Budget Forecast service provided by Forecast International addresses the RDT&E (R1) and Procurement
(P1) titles only, which are sometimes lumped together as Acquisition accounts. Overall, these two titles have
historically accounted for 30-40 percent of total DoD budget authority.

Gramm-Rudman-Hollings Act (GRH)
This act is formally called the Balanced Budget and Emergency Deficit Reduction Act of 1985. The act mandates
automatic spending cuts if prescribed federal deficit targets are not met. The purpose was to reduce the deficit to the
point that a balanced budget was achieved by Fiscal Year 1991. In August, the Congressional Budget Office (CBO)
and Office of Management and Budget submit to the General Accounting Office (GAO) their independent estimates
of the budget deficit for the next fiscal year. On September 1, the President issues an order imposing mandatory
cuts if the target is not met by October 15. The GRH Act results in across-the-board cuts, half from defense and half
from the remainder of the budget. Certain programs are exempt from these automatic cuts: social security,
Medicaid, other welfare programs, veteran’s compensation, and pensions. The across-the-board cuts mandated by
this act fly in the face of the PPBS system. The Defense Department’s process is based on a strategic planning
technique. The GRH is based on operating budget levels, not results. Until Gramm-Rudman, Congress was not
forced to hold spending to affordable levels. Since Gramm-Rudman, Congress has tended to allow this act to be
blamed for budget cuts or tax increases Congress was unwilling to make.

Budget Enforcement Act of 1990
This five-year budget agreement between the President and Congress was focused on controlling the amount of
federal spending in the future. This agreement was to be enforced by two sequestration requirements. Sequestration
in this context involved the cancellation of budgetary funds with automatic across-the-board cuts in order to meet
previously established spending or deficit limits.
The first sequester requirement involved discretionary spending. Discretionary spending includes appropriations for
domestic, defense and international budget categories. The second sequester requirement involved a pay-as-you-go
process that was applied to entitlement programs. The key provision of this act was the fiscal control measures
within these three discretionary spending accounts. Under this format, previously agreed-upon limits for each
account could not be breached; an increase in any specific discretionary spending account had to be offset by a like
decrease within that specific account. Thus, the previous practice of shifting funds from one account to another (for
example, shifting money from a defense program to a domestic spending program) was not allowed under this act.
However, this provision was only valid until FY93. Starting in FY94, the funds in the three discretionary accounts
could be shifted, with the only requirement being that all funding remained within an overall budgetary cap. The
budget agreement did not allow for emergency spending measures that were exempt from the discretionary spending
limits. Such emergency programs fell under the pay-as-you-go process previously mentioned.
With the start of FY96 and the expiration of the 1990 agreement, a new balanced budget controversy began, this
time focused more specifically on achieving a balanced budget, either in seven years (Congress), or 10 years
(President Bill Clinton). Now the idea was to establish the kinds of funding cuts that would ensure a balanced
budget at the end of the period and guarantee its maintenance. The only problem was that Congress and the


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President disagreed most strenuously over how this goal was to be achieved. A balanced budget agreement was
finally reached in FY98, and FY99 was the first year of implementation. However, Congress added substantially
more money for defense in FY99, theoretically, at least, violating the tenets of the budget agreement. What made
this additional funding possible was the unexpected U.S. budget surplus that ballooned over the course of the year.
Another factor in providing additional funding was the heavy costs of contingency operations not budgeted for. The
attacks of September 11, 2001, and the subsequent emergency funding needs further eroded the sanctity of the
balanced budget agreement. Even though the budget surplus has now also disappeared, there does not seem to be
much movement in Congress to impose a balanced budget, but it probably will not be a priority, at least in regard to
the defense budget, so long as the war on terrorism is being waged.

Glossary of Budget Process Terminology
ASD - See Assistant Secretary of Defense.
Assistant Secretary of Defense (ASD) - There are eight ASDs reporting either to the Secretary of Defense or an
Under Secretary of Defense. They are: Command, Control, Communications and Intelligence; Force Management
Policy; Health Affairs; International Security Affairs; Legislative Affairs; Public Affairs; Reserve Affairs; and
Special Operations/Low Intensity Conflict.
BA - See Budget Authority.
Balanced Budget and Emergency Deficit Control Act of 1985 - An act that mandates automatic across-the-board
spending cuts if budget deficit targets are not met. The act was the work of Senators Phil Gramm (R-Texas),
Warren Rudman (R-New Hampshire), and Ernest Hollings (D-South Carolina). It is also called the Gramm-Rudman
Act, Gramm-Rudman-Hollings Act, or GRH.
BES - See Budget Estimate Submission.
Biennial Budget - The FY86 DoD Authorization Act required the submission of two-year budgets for the DoD
beginning with the FY88/89 budget. The department has institutionalized a biennial cycle for the Planning,
Programming and Budget System (PPBS). A biennial budget, as currently structured, represents program budget
estimates for a two-year period, in which fiscal year requirements remain separate and distinct.
Budget Authority (BA) - Authority provided by law to enter into obligations that will result in immediate or future
outlays. It may be classified by the period of availability, by the timing of congressional action, or by the manner of
determining the amount available.
Budget Enforcement Act of 1990 - Five-year budget agreement between the President and the Congress that
focused on controlling the rate of federal spending in the future. This agreement broke the budget into discretionary
and entitlement programs. Discretionary programs fell into three distinct categories: domestic, defense and
international. Through FY93 these three categories had previously agreed upon spending limits that could not be
breached. Previous budget practices of shifting money between accounts (defense to domestic) were not allowed
under this act. In FY94/95 only an overall cap in funding for these three categories had to be met, allowing for
future shifts in funding among these categories.
Budget Estimate Submission (BES) - The service budget submission to OSD showing budget requirements for
inclusion in the DoD budget – every other fall (even years) for a two-year budget, every fall (odd years) for
amendment to the second year of the previously submitted two-year budget.
Budget Resolution - See Concurrent Budget Resolution.
Chairman’s Program Assessment - Summarizes views of the Chairman, Joint Chiefs of Staff, on the balance and
capabilities of the POM force and the support levels necessary to attain national security objectives. It is an
assessment of the POM force to assist the Secretary of Defense in decisions on the FYDP subsequent to receipt of
the POMs.
CINC - see Commander in Chief.
Commander in Chief (CINC) - The traditional title for combat commanders. However, in October 2002 Secretary
of Defense Donald Rumsfeld issued a directive that there is only one Commander-in-Chief, the President, and that
henceforth CINC could no longer be used when referring to commanders. Instead, Rumsfeld had already been using
the term “combatant commander” for months when referring to a regional organization such as the U.S. Central



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Command, and “commander” when talking about a specified unit such as the U.S. Strategic Command. There are
nine unified commands: Central Command, European Command, Joint Forces Command, Northern Command,
Pacific Command, Southern Command, Special Operations Command, Strategic Command, and Transportation
Command.
Concurrent Budget Resolution - Resolution passed by both Houses of Congress, but not requiring the signature of
the President, setting forth, reaffirming, or revising the congressional budget for a fiscal year. Must be adopted
before legislation providing new budget authority, new spending authority, or new credit authority is considered,
and prior to changes in revenues or in the public debt limit.
Conference - The joint conference committees are responsible for reconciling the differences in the authorization
and appropriation bills as passed by the individual house committees. Following the joint actions, the respective
bills are sent to the floor of Congress for final approval (no amendments are allowed to these versions).
Constant Dollar - A dollar value adjusted for changes in the average price level. A constant dollar is derived by
dividing a current dollar amount by a price index. The resulting constant dollar value is that which would exist if
prices had remained at the same average level as in the base period. Any changes in such constant dollar values
would therefore reflect only changes in the real volume of goods and services, not changes in the price level.
Constant dollar figures are commonly used to compute the real value of the gross domestic product and its
components and to estimate the real level of federal receipts and outlays.
Continuing Resolution Authority (CRA) - Legislation enacted by Congress to provide budget authority for
specific ongoing activities in cases where the regular fiscal year appropriation has not been exacted by the beginning
of the fiscal year. A CRA usually specifies a maximum rate at which the agency may incur obligations, based on the
rate of the prior year, the President’s budget request, or an appropriations bill passed by either or both Houses of
Congress. Normally, new programs cannot be started under a CRA, and the CRA is for a designated time period. In
the 1990s, CRAs almost became a fixture of each budget-year transition. The FY99 process became so bogged
down that an enormous “Omnibus” bill had to be passed that combined funding for a number of major governmental
entities. FY2000 required several continuing resolutions to keep the government going while the Congress and the
President wrangled over the imposition of an across-the-board budget cut. FY2001 required even more continuing
resolutions as the contentious November 2000 elections interfered with the process, extending the budget process
into December. In FY2002, continuing resolutions were needed to cope with the aftermath of the September 11,
2001, terrorist attacks.
Contract Authority - Budget authority in an authorization bill that allows agencies in need of funds to enter a
contract whose funding would come from money not yet appropriated, but which is likely to be granted in the
upcoming appropriations legislation.
CRA - see Continuing Resolution Authority.
Defense Planning and Resource Board (DPRB) - A board chaired by the Deputy Secretary of Defense, established
to facilitate decision-making during all phases of the planning, programming and budgeting process. Board
members include the Secretaries of the Military Departments; the Chairman of the Joint Chiefs of Staff; the Under
Secretaries of Defense for Acquisition and Technology, and of Policy; the Assistant Secretary of Defense for
Program Analysis and Evaluation; and the Comptroller of the DoD.
Defense Planning Guidance (DPG) - Document issued by the SECDEF to DoD components providing strategic
framework for developing the armed services POMs. It results from a planning effort by the OJCS (Office of the
Joint Chiefs of Staff), OSD, and services. In connection with the two-year budget process, it was issued every other
(even) year in October. With the new PPBE, the DPG will be issued in the second year of the two-year cycle.
DPG - See Defense Planning Guidance.
DPRB - See Defense Planning and Resource Board.
Fiscal Year (FY) - The U.S. government fiscal year runs from October 1 through September 30. FY2003 went into
effect on October 1, 2002.
Future Years Defense Plan (FYDP) - This was formerly the Five-Year Defense Program. It is the official DoD
document that summarizes forces and resources associated with programs approved by SECDEF, and is a spending
blueprint that includes the current fiscal year and the following five years. Its three main components are the
organizations affected, appropriations accounts (RDT&E, Operations & Maintenance, etc.), and the 11 major force



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programs (strategic forces, airlift/sealift, R&D, etc.). For example, R&D is Program 06. Under the biennial PPBS
cycle, FYDP was updated in even years in April (POM) and October (budget), and then in January (President’s
budget) of odd years. The primary data element in the FYDP is the Program Element (PE).
FY - See Fiscal Year.
FYDP - See Future Years Defense Program.
Gramm-Rudman-Hollings Act - See Balanced Budget and Emergency Deficit Control Act of 1985.
GRH - Gramm-Rudman-Hollings Act. See Balanced Budget and Emergency Deficit Control Act of 1985.
HAC - See House Appropriations Committee.
HASC - See House Armed Services Committee.
HBC - See House Budget Committee.
House Appropriations Committee (HAC) - Develops the House version of the Appropriations Bill. Its Defense
Subcommittee marks up individual line items in the President’s Budget to arrive at recommended budget authority
for approved programs. The HAC is chaired by Representative C.W. Bill Young (R-Florida). The Defense
Subcommittee is led by Representative Jerry Lewis (R-CA).
House Armed Services Committee (HASC) - The title was changed from House Armed Services Committee in
early 1995 to House National Security Committee. The name was changed back to the original in time for the
FY2000 budget process. This is the principal committee in the House of Representatives responsible for developing
the House Defense Authorization Bill. The committee has seven functional or mission-oriented subcommittees that
“mark up” the President’s defense budget submission. Currently, the committee is chaired by Representative
Duncan Hunter (R-California).
House Budget Committee (HBC) - The principal committee in the House of Representatives for establishing
budget goals. It operates through six Task Forces that set targets for each of the 20 budget functions in the
President’s Budget. The HBC is currently chaired by Representative John Nussle (R-Iowa).
Integrated Priority List (IPL) - A list of program priorities integrating all services and submitted by each of the
CINCs to the DPRB as part of the PPBS process. It is similar to the service POMs.
Investment Accounts - These are three categories in the defense budget referred to as investment: procurement;
military construction; and research, development, test and evaluation.
IPL - See Integrated Priority List.
Issue Cycle - A process followed during OSD review of the POM. It begins in early June and extends into July.
JCS - See Joint Chiefs of Staff.
Joint Chiefs of Staff (JCS) - A planning and advisory body composed of a chairman, a vice chairman, and the four
service chiefs. The current chairman is General Richard Myers (Air Force).
Joint Program Assessment Memorandum (JPAM) - JCS risk assessment of service POMs and recommended risk
reduction measures.
Joint Strategic Capabilities Plan (JSCP) - This plan provides JCS near-term strategy guidance to the CINCs as
well as planning guidance, and also apportions forces to war and prepares for mobilization.
Joint Strategic Planning Document (JSPD) - JCS advice to the Secretary of Defense on policy, strategy, forces,
risk, and risk reduction measures.
Joint Strategic Planning System (JSPS) - The name for the system that encompasses a number of documents that
state objectives, evaluate threats, recommend strategies, determine resource requirements, and assess risks under
different levels of funding.
Joint Strategy Review (JSR) - This document initiates the JCS planning cycle. It estimates changes in the
international environment, assesses threats, assigns strategic priorities, and evaluates risks.
JPAM - See Joint Program Assessment Memorandum.




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JSCP - See Joint Strategic Capabilities Plan.
JSPD - See Joint Strategic Planning Document.
JSPS - See Joint Strategic Planning System.
JSR - See Joint Strategy Review.
Major Force Program (MFP) - Classifies Defense Department resources into mission groups for combat and
support. These classifications are used in the Program Element numbering system as well as other PPBS
documents. There are 11 MFPs: 1) Strategic Forces, 2) General Purpose Forces, 3) Intelligence and
Communications, 4) Mobility Forces, 5) Guard and Reserve Forces, 6) Research and Development, 7) Central
Supply and Maintenance, 8) Training, Medical and Other, 9) Administration and Associated Activities, 10) Support
of Other Nations, and 11) Special Operations Forces.
Markup - The process of altering or confirming each line item in the President’s budget. This action is usually
performed by subcommittees of the House and Senate National Security/Armed Services and Appropriations
Committees (HAC, SAC, HASC, SASC).
MFP - See Major Force Program.
National Command Authority (NCA) - The combat command of United States military forces flows from the
President to the Secretary of Defense and then to the CINCs. The President and Secretary are the NCA.
National Military Strategy Document (NMSD) - Joint Strategic Planning System (JSPS) document developed by
the Joint Staff. Provides the advice of the Chairman, Joint Chiefs of Staff, in consultation with the other members of
the JCS and the CINCs, to the President, the National Security Council, and the Secretary of Defense on national
military strategy. It is designed to assist the Secretary of Defense in preparing the DPG document. Functional
annexes to the NMSD contain items of special interest to the acquisition community, such as Annex D, Research
and Development. These annexes address, by mission area, deficiencies in current and projected operational
capabilities that will require an R&D effort to correct.
National Security Decisions Directives (NSDD) - Used to convey the President’s decision on National Security
Council recommendations for objectives, strategies and forces.
NCA - See National Command Authority.
NMSD - See National Military Strategy Document.
NSDD - See National Security Decision Directives.
OSD - Office of the Secretary of Defense.
Outlays - Actual expenditures: checks issued, interest incurred on the public debt, or other payments, net of refunds
and reimbursements. Total budget outlays consist of the sum of the outlays from appropriations and funds in the
budget less receipts.
P1 - Common abbreviation for the defense budget procurement account.
PBD - See Program Budget Decision.
PDM - See Program Decision Memorandum.
PE - See Program Element.
PEDS - See Program Element Descriptive Summaries.
Planning, Programming and Budgeting System (PPBS) - This has been the primary resource allocation process
of the DoD. It is one of the three major decision-making support systems for defense acquisition. The PPBS is a
formal, systematic structure for making decisions on policy, strategy, and the development of forces and capabilities
to accomplish anticipated missions. The PPBS is a cyclic process containing three distinct but interrelated phases:
planning, which produces the Defense Planning Guidance (DPG); programming, which produces approved Program
Objective Memorandums (POM) for the Military Department and Defense Agencies; and budgeting, which
produces the DoD portion of the President’s national budget. The DoD PPBS is a biennial process starting in
January of each odd-numbered year with national security guidance to initiate the planning phase, and ending in




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January of the odd-numbered year with the President’s budget submission to Congress. The PPBS is now being
modified into the PPBE, which puts more emphasis on execution, thus the E instead of the S in the acronym.
Planning, Programming, Budgeting and Execution (PPBE) - With 2003, the PPBS is being modified into the
PPBE. The PPBE puts more emphasis on “execution,” but retains much of the underlying PPBS structure. The
major changes are in time frames, with the two-year cycle being formalized even further. The basic thrust now is
doing full program reviews only every two years, rather than every year, making the second year of the cycle now
the “heavy hitter.” The PPBE also establishes the four-year presidential term as the basis for a flow of two two-year
cycles, with the second year of the first cycle being the most active.
POM - See Program Objective Memorandum.
PPBE - See Planning, Programming, Budgeting and Execution.
PPBS - See Planning, Programming and Budgeting System.
Program Budget Decision (PBD) - SECDEF decision documents that affirm or change dollar amounts or
manpower allowances in the services’ budget estimate submissions.
Program Decision Memorandum (PDM) - SECDEF’s approval of Military Department or Defense Agency POM
with tentative specific guidance. Issued every other July during biennial PPBS.
Program Element (PE) - The 11 major force programs are subdivided into Program Elements. The Program
Element is the basic building block of the FYDP. It is defined as “an integrated combination of men, equipment and
facilities, which together constitute an identifiable military capability or support activity.” The PE identifies the
mission to be undertaken and the organizational entities that will perform the mission. Elements may consist of
forces, manpower, materials, services, and/or associated costs as applicable. The PE consists of seven digits ending
with a letter, indicating the appropriate service.
Program Element Descriptive Summaries (PEDS) - These are the justification documents that correlate to each
Program Element. The PEDS provide detailed descriptions of specific projects and their costs. There is a separate
PEDS for each service, combined ones for some of the Defense Agencies, and separate ones for other Defense
Agencies such as the Missile Defense Agency.
Program Objective Memorandum (POM) - A biennial memorandum in prescribed format submitted to the
SECDEF in April by the DoD components head who recommends the total resource requirements and programs
within the parameters of SECDEF’s final guidance document. A major document in the PPBS, it ultimately
becomes the service’s budget. The POM is the principal programming document that details how a Service/Agency
proposes to respond to assignments in the DPG and satisfy its functions as assigned in the FYDP. The POM shows
its programmed needs for two years hence (i.e., in FY2003, POM 2005-2009 was submitted); it includes manpower,
force levels, procurement, facilities, personnel issues, and research and development.
Public Law 99-177 - See Balanced Budget and Emergency Deficit Reduction Act of 1985.
R1 - Common abbreviation for the Research, Development, Test and Evaluation (RDT&E) account.
Reconciliation - Process whereby differences between current law and budget resolutions are reconciled.
Reconciliation instructions require the various authorizing committees with jurisdiction over direct spending
programs or revenues to issue recommended amendments that would achieve the level of spending called for in the
budget resolution. Also refers to the process where the differences between the authorization and appropriation bills
as issued by the individual houses are reconciled in order to provide a joint version that the whole Congress votes
upon.
Rescission - Legislation enacted by Congress that cancels the availability of budgetary resources previously
provided by law before the authority would otherwise lapse. Rescissions may be made to existing funding in order
to provide funding needed elsewhere on an emergency basis, to cancel a program unexpectedly, or to reallocate
funding from unneeded programs to more pressing needs.
SAC - See Senate Appropriations Committee.
SASC - See Senate Armed Services Committee.
SBC - See Senate Budget Committee.




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SECDEF - Secretary of Defense. The current Secretary of Defense is Donald Rumsfeld.
Senate Appropriations Committee (SAC) - Develops the Senate version of the Appropriations Bill. Its Defense
Subcommittee marks up individual line items in the President’s Budget to arrive at recommended budget authority
for approved programs. The SAC is chaired by Ted Stevens (R-Arkansas), who also leads the Defense
Subcommittee.
Senate Armed Services Committee (SASC) - The principal committee in the Senate for developing the Senate
Defense Authorization Bill. The committee has six functional or mission-oriented subcommittees that “mark up”
the President’s defense budget submission. Currently, the committee is chaired by Senator John Warner (R-
Virginia).
Senate Budget Committee (SBC) -The principal committee in the Senate for establishing budget goals. Unlike its
House or Senate counterparts, the SBC does not have any standing subcommittees. It operates as a committee of the
whole on all matters. The product of the SBC is a budget resolution. The SBC is currently chaired by Senator Don
Nickles (R-Oklahoma).
Supplemental Bill - Provides for additional funding beyond that originally authorized or appropriated. Of late, this
funding avenue has been needed to fund readiness accounts in the waning months of the fiscal year.
TOA - See Total Obligational Authority.
Total Obligational Authority (TOA) - A DoD financial term that expresses the value of a direct program for a
given fiscal year. It is based on the congressionally approved budget authority for the program, plus or minus
financing and receipts adjustments made by the DoD.
Under Secretary of Defense (USD) - In the Defense Department, the USD is the highest functional organizational
level. Under secretaries report to the Secretary of Defense or Deputy and may have several assistant secretaries and
directors reporting to them. There are three Under Secretaries of Defense: Acquisition and Technology, Personnel
and Readiness, and Policy.
USD - See Under Secretary of Defense.




Glossary Sources:
   “Glossary, Defense Acquisition Acronyms & Terms,” Defense Systems Management College, Acquisition
    Policy Department, Fort Belvoir, Virginia (Fifth Edition - September 1991)
   “A Glossary of Terms Used in the Federal Budget Process,” U.S. General Accounting Office, Washington, DC.
   “The Capital Source,” Spring 2003, National Journal Inc, Washington, DC
   U.S. Department of Defense WWW sites
   U.S. House of Representatives/U.S. Senate WWW sites




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