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Resource Management
3rd Quarter 2004

This Issue
Capability Based
Page 4
The Army
Management Control
Page 21
National Defense
Program and
Page 13
This medium is approved for official
dissemination of material designed
to keep individuals within the Army
knowledgeable of current and
emerging developments within their
areas of expertise for the purpose of
professional development.

By order of the Secretary of

the Army:

Peter J. Schoomaker

General, United States

Chief of Staff

Resource Management is an official professional Bulletin published

Administrative Assistant to
quarterly and sponsored by the Assistant Secretary of the Army for
the Secretary of the Army
Financial Management and Comptroller. Unless otherwise noted, mate-
rial may be reprinted provided the author and RM are credited. Views
expressed herein are those of the authors and not necessarily those of
the Department of the Army or any element thereof. RM provides a
forum for expression of mature, professional ideas on the art and sci-
ence of Resource management. It is designed as a practical vehicle for Joel B. Hudson
the continuing education and professional development of resource
managers through thought-provoking articles. Send all correspondence
Distribution: Special
to: Managing Editor, Resource Management, Comptroller Proponency
Office, Office of the Assistant Secretary of the Army (Financial
Assistant Secretary
Management and Comptroller)
of the Army
ATTN: SAFM-PO, 109 Army Pentagon, Washington, DC 20310-0109.
Financial Management
Queries may be made by phone to DSN 222-7413 or commercial (703)
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Washington, DC 20310-0109.

POSTMASTER: Please send address changes to Managing Editor, Managing Editor,

Resource Management, Comptroller Proponency Office, Office of the Pentagon
the Assistant Secretary of the Army (Financial Management and
Wilett Bunton
Comptroller)ATTN: SAFM-PO, 109 Army Pentagon, Washington, DC
Resource Management
3rd Quarter 2004 “Professional Development” PB48–04–3

Welcome: The Assistant Secretary of the Army
(Financial Management and Comptroller) 2
Message from the Principal Deputy Assistant Secretary
of the Army (Financial Management and Comptroller) 2
Capability Based Resourcing 4
Productivity Management 10
National Defense Program and Budget Transformation 12
National Capital Region: Perspectives on Resourcing Army
Installation Management Operations 13
The Army Management Control Program 21
Guidelines for Federal Employees Under Hatch Act Amendments 26
Managing Resources–How Informed Are You? 27
Winning Hearts and Minds: Innovative Resource Mangement
in Mosul, Iraq 28
FY04-Fy05 Budget Overview 31
Transformation Resource Strategy–Relevant and Ready
Core Competencies 32

3rd Quarter 2004 1


A Message from the

Principal Deputy
Assistant Secretary of the Army
(Financial Management
and Comptroller)
Mr. Ernest J. Gregory

Ms. Valerie Lynn Baldwin serves on the Army Secretariat as the Assistant
Secretary of the Army for Financial Management and Comptroller. She was
appointed to this position on 23 July 2004. From 1996 until assuming her cur-
rent duties as the Assistant Secretary of the Army for Financial Management
and Comptroller, Ms Baldwin was a member of the Appropriations Committee
I have a vision for transforming finan-
staff of the United States House of Representatives, serving most recently as
cial management in the Army. That vision
the Staff Director of the Military Construction Appropriations Subcommittee.
is to establish one accounting system,
From 1996 until moving to the Military Construction Appropriations which will form the financial management
Subcommittee in 2001, she was a Staff Assistant on the Veterans Affairs, backbone for all business areas within
Housing and Urban Development and Independent Agencies Appropriations the Army. It will be constructed as an
Subcommittee. She also served as the Legislative Counsel to the Housing Enterprise Resource Planning (ERP) system
Subcommittee of the Financial Services Committee from 1993 to 1996. Prior to that will provide entry and exit points for
1993, she served as a Trial Attorney at the Department of Housing and Urban other business areas, such as logistics and
Development, and as a Legislative Assistant on the staffs of Senator Nancy contracting, to send and retrieve required
Landon Kassebaum and Senator John Glenn. financial data.
Ms Baldwin received her juris doctorate degree from the University We are on the way to making this
vision a reality. The key is to adopt new,
of Kansas School of Law, her master’s degree from the London School of
modern business processes supported
Economics and Political Science, her bachelor’s degree from Wichita State
by an enabling system — not to adapt a
University, and her associate’s degree from Seward County
new enabling system so that it looks and
Community College. feels like our old processes and system.
Implementation of one general fund (ver-
sus revolving fund) accounting system
for the Army will be the first step. With
the adoption of modern, proven busi-
ness practices embedded in a commercial
off-the-shelf (COTS) ERP system — the
General Fund Enterprise Business System

2 3rd Quarter 2004

(GFEBS) — we will bring Army account- legacy systems: STANFINS, the Standard with design and implementation also
ing into the 21st century. Operation and Maintenance Army Research includes ASA (FM&C) and it will incorpo-
Why do we need a modern business and Development System, the Defense rate input from the Army at large, as well as
system? The Standard Finance System Joint Accounting System, the Database from the Air Force and the Navy.
(STANFINS), its business processes and Commitment Accounting System and the A considerable amount of planning and
technology are more than 30 years old! Computerized Accounts Payable System. documentation already has been accom-
STANFINS does not provide you and Army Along the way, the Army will reengineer plished, but we are looking forward to
decision-makers with the timely, reliable all business areas — not just back-room release of the contracting vehicle to move
and accurate financial information needed finance and accounting processes — around this program into high gear. Even with all of
to make informed decisions. Further, the the commercial Enterprise Resource this progress and a framework in place, the
lack of a modern system results in wasting Planning system. According to the proj- Army’s financial transformation will work
resources on data calls, work-arounds and ect office, the GFEBS end state will be: “a only with your buy-in, assistance, coopera-
data reconciliations. In addition, because CFO-compliant General Fund Finance and tion and willingness to advance beyond
our accounting system was built more than Accounting System, on a Joint Financial the present. Help the Army build our new
three decades ago, it does not meet today’s Management Improvement Program Army/DoD Financial Backbone!!
legal and management control require- (JFMIP)-certified COTS ERP product, that
ments for public financial management. is capable of supporting the Department of
The Army established the GFEBS Defense (not just the Army) with accurate,
Executive Steering Committee (ESC) in reliable, and timely financial information, in
March 2004 to provide the governance peacetime and in war.”
process for our developmental effort. Why do I believe our current plan will
Membership includes Army major com- succeed where other attempts have failed?
mand resource managers, as well as I believe the key is early “buy-in” from the
representatives from the Army Audit highest levels. At the very top, President
Agency, select Headquarters staff agen- Bush established his management agenda
cies, OSD, the Air Force and the Navy. (the President’s Management Agenda) to
The Principal Deputy ASA (FM&C) is improve management and performance
the executive sponsor and chair, and the within the federal government. The
Deputy Assistant Secretary of the Army Executive Branch Management Scorecard
(Financial Operations) serves as the ESC tracks how well the departments and major
executive secretary. agencies execute PMA initiatives, and the
Several working groups already have scorecard will monitor improvements in
met to document “as is” requirements; to financial performance. This will help us to
identify “trigger” points for accounting fine-tune our efforts. Within our immedi-
transactions; and to crosswalk require- ate community, the Acting Secretary of the
ments to the “Blue Book,” the consoli- Army has set firm financial goals. According
dated list of federal government and DoD to Secretary Brownlee, “Earning an unquali-
accounting requirements. fied opinion on our financial statements
This fall, we plan to release a contract- will attest to the quality of the financial
ing vehicle to select a systems integrator, information we provide managers. Thus,
who will identify an appropriate COTS an unqualified opinion remains a priority
product and an application service pro- across the Army.”
vider to implement GFEBS. That COTS Additionally, the Army’s Program
product will include core financial man- Executive Officer Enterprise Information
agement tools, such as a general ledger, Systems (PEO EIS) has assigned a full-time,
funds management, payment management, experienced, Acquisition Corps-certified,
receivable management, cost manage- Level III project manager to lead us through
ment and reporting. We intend for GFEBS the acquisition process. Our Defense
to replace completely multiple, aging Finance and Accounting Service (DFAS)
partner is fulfilling the “combat developer”
role or, as we would call it, the accounting
requirements role. The quality team charged

3rd Quarter 2004 3

RR Ee Ss O
o uU rRcCeE MMaAnNaAgGeEmMeEnNtT

The problem that resource managers

at HQDA are confronted with is how to
resource the Army’s changing requirements
using the current Planning, Programming
Budget and Execution system (PPBE)
process. Today, PPBE is executed as four
distinct processes, which do not concretely
link to each other. Planning does not pro-
vide Program Analysis and Evaluation

Directorate (PAED) and the (Planning
Evaluation Groups) PEGs with the detailed
guidance required for programming dur-
ing the Program Objective Memorandum

Based Resourcing
(POM). POM data does not easily translate
into the budget exhibits used to justify
resources to the Office of Management and
by Mr. Joe Dailey, CGFM Budget (OMB) and the Congress. Finally,
the difficulty of accurately forecasting
requirements two years in advance (FY05
example below) ensures that we don’t
We do indeed live in interesting times, full of execute as we budget. As a result, the HQDA
staff expends material amounts of effort
unprecedented challenges and change: We are heavily working around the system to keep the pro-
involved in the Global War on Terrorism (GWOT), nine cess moving.
of 10 active divisions have seen action in Afghanistan One solution is to integrate the pieces of
PPBE. We need to reorganize our mindset,
or Iraq; we are in the midst of the largest troop rotation thought processes and the data elements
since WWII; we are radically transforming ourselves in our resource management databases so
that we resource capabilities, NOT pro-
into a modular, brigade (or Unit of Action) based Army grams or systems. The linkage of strategy
and streamlining the field command structure—all and resources across the phases of PPBE
provides the opportunity to consider
at the same time. We also are fulfilling the various resource tradeoffs among priorities, emerg-
peacetime missions and roles assigned to the Army ing requirements and constraints while
under Title X and other laws and regulations. balancing strategy, force structure and
resources. While effort will also facilitate
the addressing of emerging requirements
(GWOT and other contingency operations,
etc.) normally funded via Supplemental
Appropriations, it is important to note that
we are discussing how we build the “peace-
time” program and budget. Supplemental
budgets are outside the scope of this article;
however, the impact of growing GWOT-
related requirements is the primary catalyst
for changing how we execute PPBE.
4 3rd Quarter 2004
PPBE has been a work in progress ever
The FY05 Budget in 2-Year Lead-Time
since it was implemented under Secretary
Normal budget timelines do not permit quick reaction to emerging fiscal needs
of Defense Robert McNamara in the 1960s.
The current Army programming system
Amended Budget
CSA PBD Comanche Cancellation has a materiel solution or hardware mind-
Command Development Program/Budget Build OSO/OMB Budget Review Congressional Review set at its heart and is a legacy of the Cold
War. The Army makes POM or program-
FY02 FY03 FY04 ming funding decisions at the Management
4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th Decision Package (MDEP) level. The MDEP
CY02 CY03 CY04 is an Army-unique tool, which evolved from
FY04 Supplemental Build the need to track the development and pro-
curement of equipment (through its life-
cycle and across appropriations). Over time,
Battle Loss/Damage
the MDEP has been expanded to manage all
Interceptor Body Armor Army programs. The MDEP has served the
Requirements continue to
evolve that impact FY05 UAH/ Add-on-Armor Army well but its programmatic nature is a
Theater C4ISR handicap in today’s current chaotic environ-
Aviation Reset ment. Replacing PPBE’s program/hardware
Modularity (AC/RC) focus with a capability focus will correct
+ Requirement to cashflow CPA
OIF3/OEF 6 many of its problems.
The Army’s planning process1is capabili-
ties-based, providing priorities and risk
management guidance through The Army
Plan (TAP). Part one of the TAP, Army
Section II, Army Planning Priorities Guidance Strategic Planning Guidance (ASPG), con-
tains the vision of Army leadership along
Producing Capabilities-Based Planning Guidance
with priorities for available resources. Part
two, Army Planning Priorities Guidance
1 Begin with Army Planning
Army Strategic Priorities Guidance (APPG), translates part one’s strategic
Objectives (CC’s) direction into operational, priorities and
risk-management guidance. The APPG is
intended to provide a bridge from the ASPG
Shape the Forcible Entry Sustained Land to part three, Army Program Guidance

Security Environment Operations Dominance Memorandum (APGM). The APGM offers

detailed programming guidance, at the pro-
Prompt Mobilize The Support Civil
Response Army Authorities
gram and MDEP levels, to the PEGs for the
current POM cycle. Unfortunately, this is
where the process breaks down.
2 Some tasks will be 5 Repeated efforts to crosswalk Army capa-
subordinate objectives
Identify from SRS Prioritize bilities to the current MDEPs have never
Tasks Task 1 Task 2 Capabilities been satisfactorily completed. The map-
pings resulted in a myriad of many relation-
3 6
Capability Capability
ships between the capabilities and MDEPs2.
Identify Link with As a result, there is no direct link between
1 2 programming
Capabilities strategy and programming. The TAP can-
4 not provide detailed guidance to the PEGs
Identify Metric 1 Metric 2 as they validate requirements and make
Metrics funding recommendations during the POM
build. The needed details are not available

3rd Quarter 2004 5


The Army budget process successfully

produces budget exhibits and justification
Mapping MDEPs to Capabilities materials required by OSD, OMB and the
Snapshot as of Feb 2004 Congress. However, not maintaining a pro-
grammatic level of detail forces us to trans-
late budget decisions into the higher level of
Strategic detail required by the PEGs prior to the start
MDEP Capability Task Objective of the next POM cycle – and effort that, by
and large, is redundant.

A2AP PC008 PT001 SSE1 Execution

At the end of the process, we actually
DFFE spend the money that we have planned,
programmed and budgeted across a two-
PC008 PT001 SSE1 year period. Federal law governs budget
execution and its data requirements
do not match the existing program or
A2AA PC1010 PT001 PRR1 budget formats due to our increased
focus on Major Command rather than
SSE1 Appropriation, MDEP or Program
PC5397 PT001
Element. (The Army executes Operations
and Support (O&M and MILPERS)
budgets by BA and Sub Activity Group
One MDEP (DMCS) maps to 10 Capabilities
(SAG), not by Program Element or
One Capability (PC4388) that maps to 31 MDEPs
MDEP.) The process does connect for the
Research, Development and Acquisition
(RDA) and Investment Appropriations,
which execute at the Budget Line Item
Number (BLIN) and can be tracked back
until the Technical Guidance Memorandum level of detail, useful in the programming to the SSN used during the Program and
is published, prior to POM File 1.0 (PF process, does not translate well into the Budget phases. The MDEP is not used
1.0) and near the end of the PEG’s POM development of budget exhibits and justifi- consistently in any appropriation during
build. The result is a process that could be cation materials. execution, breaking the connection once
depicted as “pPBe,” with programmers in initial guidance is issued.
PAED/G8 providing the bridge between
planning and budget phases. Additionally,
PAED must solicit POM guidance directly
Budget materials discuss the percentage Need for Change?
of change between budget years in terms If the Army has operated this way for
from senior leadership, instead of it flowing
of discrete categories, such as program and years, is there a need for change? For all of
naturally from the planning process.
price growth3, instead of the long term, its faults, PPBE still is one of the best con-
detailed programmatic view of the POM. structs to tie long- and short-term planning,
Programming Budget exhibits and justification materi- annual budgets and execution together. In
The MDEP-centric programming pro- als are built around Budget Activity (BA) 1993, the Congress passed the Government
cess is able to produce a POM, a Program of and Sub Activity levels for Operations and Performance and Results Act (GPRA),
Record and a Future Year Defense Program Support Appropriations, BA and Standard which encouraged other government
that satisfy the requirements of the Office Study Number (SSN), or project level departments and agencies to adopt a PPBE-
of the Secretary of Defense (OSD). Our for the Investment Appropriations. The like strategic planning process5. During the
programming process has evolved over the requirements vary by appropriation and Cold War, the process was adequate, as the
past few POMs into tracking large amounts category4, requiring reorganization and major threat to national interests was con-
of data on various initiatives by Major Force aggregation of the POM data into the for- fined to a single, large, well-armed military
Program so that incremental costs can be mats appropriate to the Budget Estimate power and a few smaller potential adver-
tracked and reported to OSD. However, this Submission and the President’s Budget. saries. The environment was fairly stable,

6 3rd Quarter 2004

and changes in threat capabilities could be a capabilities centric process is key for the ning risk guidance into language that pro-
anticipated6. Since the fall of the Soviet Army’s leadership to remain “a player” in grammers and PEGs can use. The APGM
regime, the geopolitical environment has future OSD resource decisions. Early adop- would have to be reorganized around
been anything but predictable. The United tion of a capabilities centric process that CDEPs (initially with a crosswalk from the
States may be without peer as the world’s satisfies Army requirements could also work old MDEP structure) in order to provide
sole superpower, but we are confronted by to our favor since OSD is still struggling detailed guidance to the PEGs at the begin-
a bewildering variety of adversaries and with implementation9. ning of the POM. This level of detail also
threats. This environment calls for a system would assist in building future editions of
that can tie plans, programs and budget- the new Part IV, the Army Campaign Plan.
ary resources together while responding to Road Map to Capability Based The ACP is a strategic–level, yet detailed,
constantly changing or emerging threats Resourcing Operations Order that supplies direction for
and requirements. For all of these reasons, the current way detailed planning, preparation and execu-
Another reason to adopt a capabili- in which we execute the PPBE system is not tion of senior leader strategy.
ties-centric process is that OSD already has adequate to the task. But, a drastic reengi-
moved in this direction. On October 31, neering effort won’t help us today. The solu- Programming (revised)
2003, even before the final results of the tion isn’t to throw out the current system The existing PEG structure would
Aldridge Study were published, Secretary but to realign its parts to work in concert, remain, as it facilitates a balance between
with each other. To put it another way: This the strategic goals of the Army and its Title
realignment would refocus PPBE so that it X responsibilities. POM requirements and
“begins with the end in mind.” The concept funding decisions would be reorganized
behind PPBE is sound, and we should build around the CDEP, and CDEPs would
upon its strengths so that information
PPBE flows and resources can be tracked from the
replace MDEPs, once PEGs crosswalk
requirements and funding (building on the
is still is one of the best planning phase through the programming results of G3’s mapping efforts) to the new
and budget phases into execution. We can
constructs to tie get to a Capability-Based Resourcing pro-
CDEP structure during the FY 07-11 off-
year cycle. Except for this change, the Army
long-and short-term cess with just a few fundamental modifica- would continue to use its current database
planning, annual budgets tions to the existing structure during the structure during the off-year cycle and
“off year” FY 07-11 cycle. Implementation
and execution together. would be completed during the full FY 08-
POM 08-13. Full integration would require
a programming process and database
13 POM cycle. redesign that balance the details required
by OSD’s programmers and facilitate the
Planning (revised) building of budget exhibits and materials,
of Defense Donald Rumsfeld signed a The methodology for constructing The while still being mindful of budget execu-
memorandum, titled “Initiation of a Joint Army Plan would remain the same, except tion requirements. The upcoming FY 07-11
Capabilities Development Process”. This that we would keep in mind the need to off-year cycle provides a test of this new
document established as a goal “develop- translate its products through the program- process prior to the full POM 08-13 cycle.
ment of a streamlined and collaborative, yet ming phase into a budget that can be both The linkage between the planning and bud-
competitive process that produces fully inte- justified and executed. This would require get phases would have a side benefit: allow-
grated joint warfighting capabilities”7. This detailed planning to cover not only the ing Army PAED to achieve the goals set for
new process would be based on the Defense strategic and operational component but the Army Resource Framework (ARF) in
Secretary’s and Combatant Commanders’ also the sustaining base and institutional terms of tracking dollars throughout the
priorities, with the center of effort moving component. As the ASPG is crafted, we Planning, Programming and Budget phases
upwards from the Services to OSD. We in could map capabilities to a new equivalent of the process10. The current ARF is not tied
the Army have a choice: we can embrace data element, a Capability Decision Package to capabilities as a result of the MDEP map-
this change and attempt to work within CDEP) instead of trying to map capabilities ping problem; however, the conversion to
its construct; or, we can fight it. General to MDEPs. This would allow for a one-to- CDEPs would connect the ARF to all three
Schoomaker, since his arrival, has chal- one or one-to-many data element relation- phases of PPBE.
lenged us to become “A Campaign Quality ship for each capability. This fundamental
Army with a Joint and Expeditionary change would enable the APPG to achieve
Mindset.”8, with this statement; I believe its purpose: providing a link between the
that our vote has been cast. Adoption of ASPG and the APGM, and translating plan-

3rd Quarter 2004 7


Budget (revised)
The budget justification process would
be strengthened because we would be able Missing Links
to link the resource displays in our budget between parts
exhibits to the capabilities and strategy
articulated by Army leadership. Army
Means Floors,
Program Elements probably will require Ends Ways Resource Levels Critical
reorganization to ensure the capability Capabilities Priorities Tasks & Ceilings UFRs Justification
linkage, support the programming data-
base redesign, and execution requirements.
This bridge to execution is important
because it bolsters the use of current and
prior-year execution data as input for
Current MDEP Centric Process
resource decisions during future program
and budget cycles. This enables achieve-
Vision & Capabilities Resource Floors, Levels Critical
ment of a key requirement of DoD’s Strategy & Priorities Tasks & Ceilings UFRs Justification Execution
Management Initiative Decision (MID)
913, that execution data inform budget TAP 1 TAP II TAP III TGM 1-N J-Books Acct Rpts
and program decisions during the second,
or off–year of the cycle.

Capabilities Centric Process

Execution (revised)
In the near term, there would be mini-
mal change to the way the Army executes
its budgets. However, the alignment of
capabilities to budget and program data
would facilitate the use of actual budget Maximum Level of Army Support
execution as a decision tool for future
budget and programming decisions, as Percent of
required by MID 913. Percent of
To complete the transition to Force $8 Annual Army Army
Capabilities-Based Resourcing, the proce- Operation Fiscal Year Structure Funding Base TOA O&S
dures and systems used to distribute fund-
Somalia 93 26K $0.5 1% 1%
ing and to account for the expenditure of
Haiti 95 15K $0.4 1% 1%
resources must also change. The new sys-
tems and processes should embrace capa- Bosnia 97 6.5K $1.83% 4%
bilities, enhance data exchange and visibility Kosovo 00 7.2K $1.62% 3%
at all levels and implement cost accounting. GWOT 04 216K $40.1 42% 58%
This part will take much longer than chang-
ing the other three pieces because the Army
does not own these processes. Funds con-
trol policy and regulation begins with the
Treasury Department and OSD providing
guidance for specific defense requirements. agement controls necessary to prevent The Army’s performance metrics also
OSD is responsible for accounting policy. fraud, waste and abuse of public resources. must be modified to embrace a capability-
The Business Management Modernization Financial management systems which sup- based structure. This enables leadership
Program (BMMP12) monitors changes to port DoD accounting needs are essential to know how much we spent on capability
existing or planned systems that are oper- to achieving the improvement in finan- X, and to evaluate “if ” the Army achieved
ated by the Defense Finance and Accounting cial management envisioned by the Chief its goals.
Service (DFAS). Financial Officers Act of 1990 (P.L. 101-576)
The new systems should be easy to and contribute to the goal of producing
operate, as well as, provide adequate man- auditable financial statements.

8 3rd Quarter 2004

Summary 2. Auditing Data Relationships or The Power of Program. Actions Needed to Improve Transparancy
Join (Part 1) By Douglas Rogers, F.C.A., I.S.P. and of DoD’s Projected Resource Needs. Dated 7 May
The integration of the parts of the PPBE
James Strong , B.Sc. E. E., P.Eng. IT Audit Vol Vol. 2004. OSD’s response non-concurred with GAO’s
process is long overdue. Our wakeup call 4, June 1, 2001 The Institute of Internal Auditors. recommendation to align program elements in
came on September 11. The old system was the FYDP to 1) defense capabilities… and 2) the
adequate during the 1990s era of Stability =forum&fid=71 Relational Database terminology dimensions of the risk management framework.
and Support Operations13, also known as used when linking different datasets to each other. Pg 29.
Ideal joins between different tables are called one to 10. Binning and the Resource Framework, LTC Mike
Operations Other Than War. However, in
one relationships i.e. one element in the first table Boller, Resource Management, 1st Quarter 2003,
the post 9/11 world, the Global War on relates to only one element in the second. Joins pg 26-33.
Terrorism (GWOT) carries new fiscal reali- using one-to-many or many-to-one relationships
11. DoD’s Management Initiative Decision (MID)
ties. The exponential jump in emerging may produce unclear results.
913 — Implementation of a Two-Year Planning,
requirements that must be funded out of 3 7000.14-R DOD, FINANCIAL MANAGEMENT Programming, Budgeting and Execution Process,
the Army’s base and supplemental budgets REGULATION Volume 2A & 2B BUDGET dated 22 May 2002.
provide the stimulus for change. Although FORMULATION AND PRESENTATION http://
12. The Business Management Modernization
the Capability Based Resourcing is a peace- Program (BMMP) is a DoD effort to develop,
time or base program/budget tool, it also coordinate and manage a systematic approach to
facilitates resource-informed consider- transforming DoD business operations. The goals
of BMMP are to provide timely, accurate and reli-
ation of modifications to Army priorities; able information for Business Management and to
resources can be tracked back to strategic enable improved business operations. Draft DoD
goals and supporting capabilities, even if Our current Management Initiative Decision (MID) — 920 U.S.
not included in the original base program environment demands a Standard General Ledger Financial Management
or budget. Systems dated 4 April 2004.
flexible PPBE system 13. FM 3-07: Stability operations and Support
Large bureaucracies are loathe to
reform themselves. However, the cur- that can provide timely and Operations, Feb 2003, Chap 1. “Stability operations
and Support Operations predominate in MOOTW
rent situation requires the Army to adapt accurate resource that may include certain smaller scale contingencies
quickly, if it is to provide senior leaders and peacetime military engagements….”
the financial information they need to “Stability operations promote and protect U.S.
make informed decisions on the realloca- national interests by influencing the threat, politi-
tion of limited resources in response to cal, and information dimensions of the operational
rapidly changing strategic and operational environment through a combination of peacetime
developmental, cooperative activities and coercive
requirements. Our current environment actions in response to crisis (FM 3-0). Army forces
4. Appropriations fall into Operations and
demands a flexible PPBE system that can Support (Military Personnel and Operations accomplish stability goals through engagement and
provide timely and accurate resource and Maintenance); Investment (Procurement response. The military activities that support stabil-
information and is adaptable to sustained Appropriations (Aircraft, Ammunition, Missiles, ity operations are diverse, continuous, and often
wartime operations. The realignment of Weapons and Tracked Combat Vehicles, Other long-term. Their purpose is to promote and sustain
Procurement)); Research, Development, Testing regional and global stability.
PPBE phases into an integrated capabil-
and Evaluation (RDTE); Military Construction; and “Support operations employ Army forces to assist
ity-based (CDEP)-process is an executable Family Housing. civil authorities, foreign or domestic, as they pre-
solution well within our reach. 5. Implementing Instructions can be found in pare for or respond to crisis and relieve suffering
OMB Circular. A–11 PART 6 PREPARATION (FM 3-0). The primary role of support operations
AND SUBMISSION OF STRATEGIC PLANS, is to meet the immediate needs of designated
About the Author: ANNUAL PERFORMANCE PLANS, AND groups, for a limited time, until civil authorities can
ANNUAL PROGRAM PERFORMANCE REPORTS accomplish these tasks without military assistance.
Mr. Joe Dailey, is the Executive for Budget, Support operations also have two subordinate
to the Planning, Programming and Budget rent_year/s200.pdf types: domestic support operations and foreign
Committee Headquarters Department of humanitarian assistance.”
6. A New PPBS Process to Advance Transformation,
the Army, Office of the Assistant Secretary Stewart E. Johnson, Defense Horizons #32, Sept.
of the Army for Financial Management 2003, Center for Technology and National Security
and Comptroller and member of the Army Policy, National Defense University
Comptroller Program Class of 1999. 7. Joint Defense Capabilities Study, final report,
January 2004, Joint Defense Capabilities Study
References: Team. Appendix A pg A-2

1. Army Regulation AR 1-1 Army Planning, 8. The Way Ahead Our Army At War – Relevant
Programming, Budgeting and Execution System, and Ready
30 January 1994. Chapter 3. and The Army Plan FY word.html
2006 –2023. 9. GAO Report 04-514, Future Year Defense

3rd Quarter 2004 9


Productivity Management Audacious Goals” sounds wise-cracking,

but the corporate humor belies the serious
principle that drives Motorola’s resource
by Major Ryan Saw allocation. The setting of goals and objec-
tives in this private sector organization
is not to be trifled with; its managers are
The Six Sigma Digital Journey dead serious about the aggressiveness they
at Motorola demand in all disciplines. Figure 4 shows
Motorola doesn’t use the term productiv- how Motorola will bring about this change.
ity management to describe its overarching The scores were left blank for a specific
business process improvement methodol- purpose. In the equation, Q*A = E, quality
ogy; it refers instead to the term, “Design multiplied by acceptance leads to greater
for Six Sigma” (DFSS) which has many of effectiveness. The scores are insignificant
the same objectives as the military’s produc- if senior management does not support
tivity management. DFSS is designed for the process and change management is not
technology and product development and emphasized. Highly trained statistical and
is primarily in the manufacturing arena.
analytical “blackbelts” are a cornerstone
Mike Fenger, Corporate Vice President and
of Six Sigma and execution of DFSS. DSS
Director of Motorola’s Corporate Initiative’s
emerged as a concept in 2002 for the cor-
Group (CIG) states, “DFSS is not just an
poration to build upon a solid foundation
initiative, but the way we work.” In other
to establish a revolutionary new Business
words, it is a mindset and deliberate tenet
Process Management Systems (BPMS). This
of the Motorola corporate culture based
evolution to a new Six Sigma paradigm, one
on continuous improvement. He adds, “It
in which IT tools supercharged processes,
(DFSS) needs to be elevated to everything
Motorola has its associates working to where portal and Web technology enabled
we do, as much a part of our daily routine as
deliver the next generation of Six Sigma, the corporation to apply business improve-
anything else.”
“Digital Six Sigma® .” ment more broadly and rapidly is today
Having observed DFSS in practice, I
at the heart of the most aggressive goal, to
see how it can apply to any organization
seeking process improvement. This is the Old vs.New realize cost reductions of as much as $3 bil-
prescription the Army seeks in looking at Digital Six Sigma (DSS) takes the lessons lion. It is changing the way the company
The Army Way Ahead, an overview of the learned from all companies that adopted does business, from one end to the other.
Army Strategic Planning Guidance (ASPG). Six Sigma, good and bad, and incorpo- DSS no longer strains to simply reduce
The ASPG represents the Army senior rates them into the process. At the same the number of defects, but instead strives
leadership’s vision of how the organization time, the speed with which the organiza- toward the broader goal of reducing all vari-
will fulfill its mission to provide necessary tion achieves its stated Six Sigma project ation around accomplishing business goals
forces and capabilities to the Combatant goals is significantly increased throught the and objectives. The question, “How did we
Commanders supporting national security application of IT solutions, hence the term, do this before?” or “What is the best design
and defense strategies. “digital.” E-tracking, e-analysis, e-training for the next cellular phone?” is no longer
At Motorola, an established framework and e-compliance tools are applied to the articulated, but questions like “What does
exists to advocate and accelerate change. improvement methodology at Motorola. the customer want?” and “How do I regain
DFSS is coupled with effective program Ron Kozoman, a “Blackbelt”2 expert within lost market share?” drive projects.
management and the rigorous M-gates pro- the Third Generation Cellular Technology Digital Six Sigma cannot function with-
cess for product development1. (3G) Team stated it elegantly of Design out a supportive, committed infrastructure,
One of the foundations of Six Sigma For Six Sigma, “It’s changing the mindset a lesson the US Army can benefit from. The
is DMAIC (“dee-may-ik”), an acronym from only using DFSS in a manufactur- infrastructure DSS thrives upon BPMS. The
which stands for Define, Measure, Analyze, ing environment and applying it to all BPMS provides the foundation upon which
Improve and Control. General Electric functions, human resource management, to build a collaborative, consolidated, enter-
adopted Six Sigma and made it and the supply chain management, etc. It is spend- prise-wide environment for the implemen-
DMAIC process famous. The 1st Quarter, ing time on added value processes and tation of systematic Six Sigma initiatives.
2002 RM Journal featured an interest- eliminating redundancies.” DFSS adopt- Think of BPMS as an engine to analyze the
ing article on the subject, “The Six Sigma ers throw another acronym around in behavior of the processes, not how each
Strategy at General Electric.” Today, daily conversation. BHAG, or “Big Hairy operates independently, but in terms of how

10 3rd Quarter 2004

organization. At a Digital Six Sigma kickoff
How Can We Make It More Effective? luncheon at PCS, instead of a “sales pitch”
on the benefits of DSS, it immediately
Q x A = E became clear that the event in fact would be
a working lunch with clear, focused objec-
Today’s Score � x = tives facilitated by a certified “blackbelt.” All
senior managers throughout the 3G Cellular
New Tools SLT Commitment Technology Team attended and represented
Digitalized Processes New Training
Six Sigma every function: product management, pro-
DFSS Full Time Resources
Enhancements M-Gates Digital Solutions gram management, hardware engineers,
software engineers, resource management,
Goal � x = human resource management, marketing,
business operations, quality, and “blackbelts”.
This team was to figure out how to increase
Motorola operating earnings by $100 million; this
involved looking at every process within the
3G Cellular Technology Team. After eight
they behave collaboratively and interactively readily tailored to suit the Army’s pur-
hours being locked in a room, the assembled
at all levels of the organization.5 poses, but the challenge of culture change
group figured it out and established a plan
The key components include people, and adoption is an obstacle multiplied
using the DSS principles. In hindsight, the
systems, machines, Six Sigma processes many times over that of Motorola.
luncheon was a training opportunity as
and new initiatives that function across the
well as an approach to regain focus, realign
value chain, in an end-to-end fashion. A Why Productivity Management efforts and select projects that offer the
World class organization, Motorola is work- Will Work Well at Motorola greatest financial returns. When the meeting
ing to develop and institutionalize Digital Productivity management works well adjourned, every person had a clear direction
Six Sigma throughout its culture. at Motorola because senior leadership sup- and was assigned responsibility for the proj-
Toward the close of 2003, a cross-func- ports the program and is totally committed. ects. This was a great way to hold managers
tional team worked on solutions to deliver Motorola attacks non-productivity at every “feet to the fire” and make them accountable.
the “digital” in Digital Six Sigma, IT tools opportunity. One of its leading change advo- Once a project is approved, the sponsor
such as e-tracking and e-visibility, capa- cates, Mike Fenger, Corporate Vice President selects the team members. I was selected
bilities incorporated into what’s called for Personal Communications Sector (PCS) as a team member on two teams because
the “digital cockpit,” a real-time project Business, Operations and Planning, is a they impacted financial performance. The
tracking solution. It’s called a digital “dual-hatted” leader at Motorola, serving first team’s charter was to develop a reduc-
cockpit because like an aircraft’s cockpit, as corporate vice president and director of tion, reuse and commonality strategy for
this desktop view provides us a look at the Corporate Initiatives Group, or CIG, 3G Technology cellular phones. The second
all the critical, real-time instrumentation and within the PCS. As CIG lead, he is team’s charter was to balance resources
and measurements necessary to navigate charged with implementing DSS throughout across development cycle. This approach
a program, project, or activity through the entire Motorola organization. At the provided a systematic process for projects to
to successful, on-time completion.6 The same time, he currently attends to process be pursued.
digital cockpit brings yet more culture improvement within PCS, a business fac- Finally, product management is effective
change to Motorola, with businesses, ing perhaps one of the most aggressive because of the initiatives that are gener-
operations, functions and even suppliers and challenging markets in the world; ated throughout the life of the selected
being tracked and accountable for infor- wireless phones and the former General project. Two of these initiatives are “Close
mation and progress-to-plan. All is shared Electric executive’s presence is making a the Gap Initiative” and Project Accounting.
collectively and updated in real time, leav- difference; Program Management, Project “Close-the-Gap” is Motorola’s primary cost-
ing no room for “fudge factor.” Motorola Management, and DSS prosper. His insight, improvement process. The concept, which
leverages information technology and motivation and direction provide Motorola is probably the most readily transferable to
web-based applications so that timely, with a BHAG such as DSS that is now a part the Army of all Motorola’s cost control ideas
responsive and accurate information can of the Motorola culture instead of a flavor- and tools, is simply looking at cost drivers
be converted into increased productiv- of-the-day initiative. and comparing them to our competition.
ity and effectiveness. The philosophy and Every Motorola employee is exposed Some of the areas of focus at Motorola
approach of the digital cockpit can be to productivity management within the are development labor, travel, engineering

3rd Quarter 2004 11


materials, discretionary spending (compar- ogy such as DSS with the purpose of insti- as possible since its very survival is threat-
ing to Commander’s Reserve in the Army), tutionalizing a productivity management ened. As both organizations are fond of not-
and telephone usage. This is just a few of culture throughout IMA using CM/ABC to ing, fear of death focuses the mind. Motorola
the items. Over the course of the year, 3G drive continuous cost reduction and clear can not get behind its competition. Success
presents the results of its efforts each month evidence of productivity improvement. IMA often depends upon which company has
to PCS allowing sector the opportunity to has an aggressive approach to productivity the most sound practices and processes and
track the progress made. Project Accounting management in 2004, but the implemen- who can execute faster with lesser errors.
is another initiative Motorola is actively tation plan still has to be executed. The Motorola moved too slowly to transition
pursuing which is similar to ABC in the Army has not had a very good track record. from analog to digital cellular phones in the
Army. The big difference between the two is Efforts to streamline processes and central- early 1990’s and remains today chasing its
that Motorola financials systems will have ize management to the Army are threaten- competition. It failed to improve its processes
connectivity to program management tools ing because it could mean reductions in the and decision-making faster. The Army will
such as Teamplay8 so forecasted budgets workforce. Consequently, implementation suffer the same fate if it fails to streamline
and actual budgets can be compared. A uni- plans are delayed. Something of this sort its resource processes and insist on making
fied budgeting and execution database that happens at Motorola also, but the impacts them complimentary, integrated and pro-
has data pulls from forecasted data such as are lessened because processes are more ductive. But the good news is both Motorola
Teamplay offers huge potential payoffs to the integrated across all functions than in the through Digital Six Sigma and the Army
Army as a tool to gain timely control over Army. For example, a failure to meet a mile- through productivity management can over-
costs and selection of activities to monitor. stone on a project or program could mean come the challenges before them.
a slippage in ship dates of product resulting
Army is on the Right Track in customer dissatisfaction, reduced profit
Despite their disconnected, segmented margins and poor quality. About the Author:
resource processes that exist today, the Army The intent of this article was not to paint Major Ryan Saw is one of five Functional
has plans to turn things around. The fiscal a picture of perfection at Motorola in pro- Area 45 officers participating in the Training
challenges facing the Army are necessitat- ductivity management and all their related With Industry program, in his case with the
ing changes in the way we do business. The business processes. Motorola is just getting Motorola Corporation.
eleven business areas are being encouraged started and has a long way to go before they
and mandated to begin implementation change the hearts and minds of all employ- References:
of the productivity management pro- ees within the organization. There are defi- 1. M-Gates is a process management concept adopted
nitely areas for improvement such as the by Motorola for making and validating significant
gram. Assistant Secretary of the Army for business decisions at key points in the Market and
Financial Management and Comptrollership establishment of budgets for all programs Product Line Planning (MPP) and System and Product
(ASA(FM&C) is even offering a $100,000 and projects and reducing the number of Development (SPD) Business Lifecycle phases.
cash award to the best Cost Management/ defects. But the real questions that should 2. Six Sigma black belts are skilled in precisely defin-
ing DMAIC processes and then developing effective
Activity Based Costing (CM/ABC) cost ini- have been answered are “Can their business ways to apply them so that they work in practice across
tiatives submitted for each of the 11 business processes be benchmarked by the Army?” an organization. They work alongside Six Sigma team
or “How can Motorola deliver products members, many are which employees involved in the
areas for fiscal year (FY) 2004. CM/ABC process to be improved.
initiatives may result from cost savings, pro- on-time, below cost, and within quality
5. Smith, Howard & Fingar, Peter. “The Third Wave
ductivity or performance improvement, or standards?”. The answers to these questions of Business Process Improvement: Digital Six Sigma.”
should spur your interest and arouse your Business Process Management Library (2003): 14pp.
increased efficiency in each command. Online. Internet. Jan.6, 2004;
The United States Installation curiosity as a comptroller or financial man- bpmi-library/87799c1690.Digital_Six_Sigma.pdf
Management Activity, (IMA) one of the ager. They did during my first 6 months. 6. “Digital Cockpit Cleared for Take-off.” Feature
eleven business areas, has a charter and Stories Archive: Digital Six Sigma: n.pag. Online.
Intranet. Jan.7, 2004;
vision that will be a catalyst for this activity Conclusion DSSFeature01.htm
to get on the same path as Motorola. IMA’s The details of the process may be differ- 7 Motorola has 16 gates that must be met before end
key objectives for the upcoming year are: ent, but the methodology for the process, of life of a product. They include: 15) Idea Accepted
14) Concept Accepted 13) Solution Accepted 12)
implementing installation design standards the rigor and discipline will remain the Portfolio Accepted 11) Solution Lockdown 10)
(IDS), Army Baseline Services (ABS) and same. It goes without saying; Corporate Project Initiation 9) System Requirements Baselined
8) System Requirements Allocated 7) Contract Book
performance measures; streamlining garri- America is significantly different than the Baselined & Approved 6) Design Readiness 5) System
son organizations and functions; implement United States Army. Test Readiness 4) Ready for Field Test 3) Ready for
CM/ABC; and initiating business process Motorola operates in a fiercely competitive, Controlled Introduction 2) Volume Deployment 1)
Retirement Plan Approved 0) End of Life
redesign. The next step will be to connect all economic environment which forces them
8. Teamplay is an abbreviated name for the Primavera
these objectives into one overall methodol- to operate as efficiently and productively Enterprise Program Management Tool which is used at
Motorola. It is a software database that manages and com-
putes program resources, schedules and program status.

12 3rd Quarter 2004

For four decades the Department of
Defense has prepared its resource plan and
budget using the Planning, Programming,
Budgeting System, or PPBS, renamed by
reform in 2003 to PPBES with the added E
for execution. As a decision process PPBES
is important for many reasons, not the least
of which is that through it commitments
are made for spending that represents about
48% of the discretionary portion of the
federal budget in FY 2004, and $2.1 trillion
from 2004 through 2008. This is almost six
times the size of the next largest discretion-

National Defense Program ary account in the federal budget, that of the
Department of Health and Human Services.
Despite spending of this magnitude, the

and Budget Transformation

news media generally pay little attention to
the defense budget decision process.
PPBS has been deployed in DoD since
1964. Despite its persistence, important
changes have been made to it on occasion.
While the basic structure of PPBS remains,
Excerpted From The New Book:

Budgeting And Financial Management

for National Defense1
by Mr. Jerry L. McCaffery and Mr. Lawrence R. Jones

it has been changed in several important

ways. First, the reform merged separate pro-
Book contents: gram and budget review into a single review
National Defense Policy and Resource Decision
Chapter 1
cycle performed simultaneously rather than
sequentially. Second, it incorporated a bien-
Making: Unique Challenges; Chapter 2 The Federal nial budget process matched to national
Government Budget Process; Chapter 3 Budgeting for National electoral cycles with major strategic changes
slated for the second and fourth year of a
Defense: Complicated But Workable; Chapter 4 The Planning, Presidential term with minimal updating to
Programming, Budgeting, Execution System; Chapter 5 be done in the first and third years. Third, it
fixed timing of the process so that planning
Congress and the Defense Budget: From the Cold War to the and budgeting were clearly derivative pro-
War on Terrorism; Chapter 6 Supplemental Appropriations for cesses driven by the Quadrennial Defense
National Defense; Chapter 7 Defense Budget Execution; Chapter 8 Review (QDR) and the National Military
Strategy. Fourth, it changed the cycle for
Budget Process Participants - The Pentagon; Chapter 9 Budget Office of the Secretary of Defense (OSD)
Process Participants - The Claimants; Chapter 10 Financial provision of top level planning information
to the military departments and services
Management and Defense Budgeting; Chapter 11 Budgeting from annual to biennial.
and Management of Defense Weapons Acquisition; Chapter 12 These changes have created a two-year
National Defense and Federal Government Budgeting and decision cycle with a complete review in
year one followed by limited incremen-
Management Reform: History, Transformation and the Future tal review in year two. This is meant to

3rd Quarter 2004 13


decrease turbulence and reduce unnecessary (Puritano, 1981; Korb, 1977; Korb, 1979; programmatic objectives. Additional
re-making of decisions. Further, changes Joint DoD/GAO Working Group on PPBS, reforms beyond PPBS were to be proposed
made in each on-year cycle are intended 1983). Until this time, the Secretary of by DoD under the Johnson administration.
to have quicker effect by compressing the Defense (SECDEF) had played a lim- Charles Hitch was followed as DoD
programming and budgeting cycles while ited role in budget review as each mili- Comptroller by Robert N. Anthony, a
still preserving the decisions made in the tary service developed and defended its professor of management control on
on-year cycle through the off-year by limit- own budget. McNamara had used PPBS loan from Harvard University’s School of
ing reconsideration of decisions to only when he was the President of the Ford Business, who proposed an ambitious set
the most necessary updates. In essence, Motors Corporation and he and Hitch, of changes to DoD budgeting and account-
decisions are to be made more quickly but his Comptroller, had confidence that the ing in 1966 in what was termed Project
should last longer. system would be valuable for long-range Prime. Among other things, Project Prime
PPBS has provided DoD a roughly ratio- resource planning and allocation in DoD. would have divided all parts of DoD into
nal mechanism for coordinating a number McNamara wanted PPBS to become the mission, revenue, expense and service cen-
of semiautonomous and individually com- primary resource decision and allocation ters, consistent with management control
plex decision processes related meting war mechanism used by the DoD. McNamara theory according to Anthony, and required
preparedness, fighting and support resource implemented the system after President accrual accounting with reimbursable
requirements. PPBS has applied relatively John F. Kennedy tasked him to establish fee-for-service internal transactional pay-
neutral expertise from the civilian and mili- tighter control by the Secretary of Defense, ments (using negotiated or shadow prices)
tary parts of the organization within a deci- a civilian, over the military departments throughout DoD (Thompson and Jones,
sion process that is inevitably political on and services. As a former member of 1994: 66-68). What Anthony envisioned was
its own and also is driven by politics. PPBS Congress, Kennedy was highly distrust- a reimbursable accounting process similar
has embraced a variety of political agendas ful of the military service planning and to what was implemented in much of DoD
across a number of Presidential admin- budgeting. He ordered McNamara to take by Comptroller Sean O’Keefe and Deputy
istrations to project and enable resource control of DoD planning and budgeting Comptroller Donald Shycoff as part of the
management over an extended planning away from the military and put it in the Defense Management Report initiatives
and budgeting horizon. A relevant question hands of civilian leadership. Consequently, of 1989-1992 under the Bush administra-
presently is the extent to which the recently the initial motivation for establishing tion and Defense Secretary Dick Cheney
revised PPBE system will assist in meeting PPBS had as much to do with control and (Jones and Bixler, 1992). Project Prime also
the resource decision demands of a world politics as it did with rational resource included accrual accounting and budgeting
changed by the events of 11 September 2001 planning and budgeting. By June 30, 1964, for DoD. Accrual accounting is required now
and thereafter. PPBS was fully operational within the under the Chief Financial Officers Act of
In this book excerpt we review the his- Department of Defense (Thompson and 1990, which DoD has been unable to imple-
tory of PPBS and indicate how the reforms Jones, 1994; Feltes, 1976; Korb, 1977; ment successfully. Clearly, Anthony was
of 2003 have changed it. We also specu- Korb, 1979). ahead of his time in his vision of how DoD
late about the limits to change within the Hitch implemented PPBS and sys- accounting and budgeting should be orga-
Department of Defense and at the political tems analysis throughout DoD, but most nized (Thompson and Jones, 1994: 67-68).
interface between DoD and Congress given of the program analysis was done by his Congress did not support Anthony’s
the expectation that the latter will give up “whiz kids” in the Office of the Secretary proposed changes. Key members of the
little of its legislative prerogatives regardless of Defense (OSD) under the Comptroller appropriations committees refused to
of what DoD does in planning, program- and the office of Program Analysis and allow the change to accrual accounting and
ming, budgeting and execution. Evaluation. The military departments were rejected Project Prime, probably because
not anxious to implement PPBS, but had to they thought it would reduce their leverage
PPBS History and Development do so eventually to play in the new planning to micromanage DoD through the budget.
PPBS was implemented in DoD and budgeting game run and orchestrated Opposition was so strong that it was sug-
originally by Defense Secretary Robert by Hitch and his staff. After a few years, the gested Anthony should be asked to resign.
McNamara and by Charles Hitch, Robert military departments were fully engaged Anthony was not asked to do so, but chose
Anthony, and others during the admin- in learning how to compete in the new to return to Harvard and the experiment
istrations of Presidents Kennedy and PPBS process. However, as noted, PPBS was ended (Jones, 2001b).
Johnson in the 1960s (Thompson and was not just budget reform – it was a new While the manner in which PPBS oper-
Jones, 1994). Prior to 1962, the DoD approach to analysis and competition ates has varied to some extent under differ-
did not have a top-down coordinated between alternative programs, weapons ent Presidents and Secretaries of Defense,
approach for planning and budgeting systems and, ultimately, multi-year the basic characteristics of the system have

14 3rd Quarter 2004

remained in place for more than 40 years. In guidances for defense strategy and resource and could include an “off-year” DPG if so
2003, changes were made in the venerable allocation. Also in year one, the new admin- desired by the Secretary of Defense. This
PPB system, driven by Secretary of Defense istration may take steps to insert its defense off-year guidance could task new studies, or
Rumsfeld who felt the process was too slow policy priorities in the budget submitted to incorporate fact-of-life changes in acquisi-
and cumbersome and did not deliver the Congress and to make changes caused by tion programs including increased costs or
“right stuff ” on a timely basis. Changes were fact-of-life events in acquisition programs. schedule delays as well as congressionally
intended to accelerate the cycle to avoid Congress may also make changes in this mandated changes. Year three and year one
unnecessary remaking of decisions and to year that have consequences for the follow- are not quite the same, in that an incoming
deliver the right stuff more quickly. ing years. administration may have changes it wishes
to make to its predecessor’s budget. It is
Year Two: Full PPBE Cycle- Formalizing
The Reformed PPBES Cycle possible that Congressional elections prior
the Agenda to Year three may convince an administra-
DoD Management Initiative Decision
Year two in the new four-year framework tion to change its course in ways it had not
(MID) 913 set out a two-year budget and
is more intense in that the military depart- expected. Additionally, in any year a sig-
planning cycle within the framework of the
ments and services and OSD will conduct nificant change in the threat situation may
four years in a Presidential administration
full program, planning, budget and execu- result in a full PPBE cycle. In May 2003,
(Secretary of Defense, 2003a: 3-4).
tion reviews to formalize the President’s Dr. Dov Zakheim, former under Secretary
Year One: Review and Refinement defense posture and strategy, including the of Defense (Comptroller/Chief Financial
Year one requires “review and refine- resource portion of the strategy. In addi- Officer) indicated that no 2005 DPG was to
ment” of the previous President’s strategy tion to a QDR issued early in the year, the be prepared under the Bush administration
and plans, including only limited changes second year will include a full, “on-year” and Rumsfeld. However, the Presidential
in programs and budgets, an early national Defense Planning Guidance (DPG), issued elections of 2004 could change this plan.
security strategy, and an “off-year Defense in May and designed to implement the Year three is a year of refinement of objec-
Planning Guidance (DPG).” As stated QDR results. Previously, the QDR had been tives and metrics with only the most neces-
in MID-913, “The off-year DPG will be issued on 30 September in the first year of sary program or budget change proposals
issued at the discretion of the Secretary a Presidential administration. However, in considered.
of Defense…The off-year DPG will not the FY 2003 Defense Authorization Act,
Congress changed the QDR reporting Year Four: Full PPBE Cycle – Ensuring
introduce major changes to the defense
program, except as specifically directed requirement to the second year to provide the Legacy
by the Secretary or Deputy Secretary of new DoD leadership more time for analysis Year four in the budget and planning
Defense…However, a small and discrete and preparation. Senior defense officials cycle is characterized in MID-913 as the
number of programming changes will be had argued to Congress that the require- point where the achievements of a four-year
required to reflect real world changes and ment to submit a QDR in the first year was Presidential administration are assessed.
as part of the continuing need to align the too much to ask of a new administration This year will include preparation of a
defense program with the defense strategy,” barely through the rigorous congressional full DPG to refine the alignment between
(Secretary of Defense, 2003a: 5). A major process for confirmation of presidential Presidential strategy and the DoD program
objective of the off-year guidance will be appointees to head the DoD and military and budget. As usual, the DPG will initiate
to provide the planning and analysis neces- departments. Year two will see then a full and guide the cycle of military department
sary to identify major program issues for Program Objective Memorandum (POM) and service POM and budget preparation,
the next DPG. One of the benefits of the and a full budget build. These will result review and submission (for FY 2006). Then,
new four-year cycle is that it fits the PPB in a full Future Year Defense Plan (FYDP) the next full PPBES cycle will encompass
process into the electoral cycle. Incoming build. A full execution review is also sched- Fiscal Years 2006 to 2011.
administrations usually struggle to get uled for years two and four. Giving this the
their people on board in the first year and same emphasis as the POM/Budget build Increased Emphasis on Budget
significant defense policy changes usually is new. Execution
do not come until later. The new cycle rec- Budget execution is an important part
Year Three: Execution of Guidance
ognizes this reality. Significant events do of the new PPBE system. Normally execu-
The new planning and budget process
happen in year one. The National Security tion consists of first gaining permission to
specifies that year three be used for “execu-
Strategy is issued at about mid-year and the spend appropriations approved by Congress
tion” of the President’s defense plan and
Quadrennial Defense review begins shortly through a separate budget submission pro-
budget agenda as provided in the QDR and
thereafter (June) and is issued early in Year cess referred to as the allotment process. In
the previous year’s DPG. Year three cor-
Two (February). These are significant allotment review, DoD must show how it
responds with FY 2005 in the budget cycle

3rd Quarter 2004 15


intends to spend what has been appropri- how money is being spent, if it should be proposals the offsets were intended to
ated, by quarter, month, or fiscal year for moved to other areas and accounts, and fund might not be. In such cases, the offset
multiple year appropriations. This is always what results have been achieved. reveals a pot of money for a lower priority
somewhat different than what was proposed A federal budget process change initiated item that might be directed to another area.
in the President’s budget since appropria- by the Bush administration, announced The budget change proposals were expected
tions must now be attributed to programs in February 2003 and subsequently by the to be more numerous but smaller. They too
and allocated into the months they will be DoD Comptroller, is implementation of would be largely fact of life changes (e.g.
obligated (usually by quarters). After allot- “performance-based budgeting,” to focus cost increases, schedule delays, new con-
ment approval is received from Office of more on the costs of achieving desired gressional directives) and would have to be
Management and Budget (OMB) and the military and programmatic outcomes, paid for by offsets. Although the individual
Treasury, DoD begins the process of sepa- rather than concentrating budget review BCP need not be offset, the package of
rating and distributing shares of the DoD on the details of program administration offsets provided by a military department
budget to the military departments and ser- and production. The driving military con- has to be offset and provide a zero balance
vices and other DoD commands and agen- cept behind performance-based-budgeting change. The FY 2006 budget request will be
cies. After they have received their spending (PBB) is the concept of “effects-based capa- prepared completely anew, marking the first
allotment authority, these resource claim- bilities” for war fighting. The effects-based biennial POM and budget in the new two-
ants begin to incur obligations to spend, approach focuses on desired end results year cycle. A Defense Planning Guidance
and then liquidate their obligations through from a military action rather than the will be prepared by OSD to guide the FY
outlay of money. military action itself. Under this concept, 2006 process.
During this process, comptrollers and military commanders specify the results, From our view, the PPBES cycle tim-
budget officials at all levels of DoD moni- such as capture of territory, in addition to ing changes were sensible given that new
tor and control execution of programs and the amounts and types of forces needed to administrations often do not have the
funding. At the mid point of the spending achieve the outcome. people in place or the insights necessary
year, the military departments and ser- In the revised PPBES process, mili- to put new DoD programs in place and
vices typically conduct a mid-year review tary department officials and Combatant prepare budget initiatives in the first year.
to facilitate shifting of money to areas of Commanders (COCOM) may create Thus, designating the first year for review
highest need. At the end of the fiscal year Program Change Proposals (PCPs) to affect of national security strategy and the work
(September), all DoD accounts must be the POM and Budget Change Proposals on the Quadrennial Defense Review sets
reconciled with appropriations and spend- (BCPs) to speak to new budget needs. The the scene for a complete budget build in
ing must be accounted for prior to closing PCPs allow for fact of life changes to the the second year. Designating the off years
the accounts from further obligation and previous year’s POM; they are meant to be as years of minimal change, but allowing
outlay (for annual accounts). Financial and few and of relatively large size. Guidance for mechanisms for changes that do need to be
management audits by military depart- 2003 indicated the PCPs had to exceed a set made separately in program change propos-
ment audit agencies, the DoD Inspectors dollar threshold or have serious policy and als and budget change proposals also seems
Generals, the General Accountability programmatic implications. For example, sensible and should cut down the turmoil
Office (GAO) and other entities follow the in 2003 the Navy submitted only three involved in a complete POM-Budget rebuild
conclusion of execution and reporting. PCPs, one worth $100 million that involved each year.
Traditionally, budget execution has been 450 line items. For all of DoD the num-
left primarily to the military departments. ber of PCPs numbered about 120. For the Conclusions
However, the revised process provides OSD COCOMs, the PCPs are a new tool but, as Important changes have been made in
with greater opportunity to examine and for the military departments, they have to the DoD planning and budgeting process.
critique the budget execution decisions suggest offsets. For example, if a COCOM The simultaneous execution of the POM
of the military departments and services. wants to increase force protection in one and budget review and its consolidation
Comptroller official Dr. Dov Zakheim area at a certain cost, he has to suggest into one database is an important change.
reported in February 2003 a widespread weakening force protection in another area In the old system, a good POM could still
agreement in DoD not to return to a com- as an offset for the increase. This is meant be lost on the way to the final budget.
prehensive annual budget and program to be a zero-sum game. Changes have to be Doing the POM and budget simultane-
review; rather the intent was to use the off accompanied by offsets or billpayers. ously should result in fewer surprises and
year to measure the “burn rate” (rate of As is usual with any offset procedure, less re-programming of changes to the
spending) in an execution review. To this those who submit either PCPs or BCPs take POM in the budget process than before,
end, comptroller staff indicated the review the risk that the offsets they suggest will and the review process should be quicker
would include asking questions such as be accepted, but the accompanying change

16 3rd Quarter 2004

and less linear, i.e., a layered process significantly since 2001 and probably will Jones, L. R., and Thompson, F., 1999. Public
rather than a sequential process. continue to change. Management: Institutional Renewal for the 21st
Century. New York: Elsevier Science.
Secondly, the outcome focus of the Lastly, the new emphasis on execution
Korb, Lawrence, 1977. “Department of Defense
process is an important change. Secretary seems to be an important change, but it is
Budget Process: 1947-1977,” Public Administration
of Defense Rumsfeld has emphasized too early to tell how this will turn out. It Review, 37/4 July/August: 247-264.
outcomes and in one service, the Navy, seems clear that no one wants to be viewed
Korb, Lawrence, 1979. The Rise and Fall of the
the implementation approach illustrates as decreasing military effectiveness in the Pentagon. Westport, CT: Greenwood Press.
this concern in two ways. Procurement name of saving dollars. If the new empha- Lee Robert D., and Johnson, Ronald, 1983. Public
accounts now are focused around the out- sis on execution becomes a code word for Budgeting Systems. Baltimore: University Park Press.
comes that each weapon system bought efficiency and this is translated into “doing McCaffery, Jerry L., and Jones, L. R., 2001.
will provide. The performance models things on the cheap,” then execution review Budgeting and Financial Management in the
for steaming hours and flying hours also will become known for what it is – a budget Federal Government. Greenwich, CT: Information
are outcome focused. This covers almost reduction drill with increased oversight Age Publishers.
90% of the Navy budget. Nevertheless, from the DoD level. Merewitz, Leonard, and Sosnick, Stephen H., 1972.
The Budget’s New Clothes. Chicago: Markham.
Congress still appropriates by line item The lag time for full and satisfactory
and DoD has to be able to translate implementation of DoD-level macro Mosher, Frederick C., 1954. Program Budgeting:
Theory and Practice. New York: Public
capabilities-based resource requests into changes in planning, programming, bud-
Administration Service.
budget items and make winning argu- geting and execution probably is two to
Novick, David., ed., 1969. Program Budgeting. New
ments for these translations. The fact is four years, although many wrinkles will be York: Holt.
that appropriation line-items make it worked out by the military departments
Puritano, Vincent, 1981. “Streamlining PPBS,”
easier for Congress to buy things -- and after the first new cycle has been completed. Defense, August: 20-28.
what has not changed is where the power However, it is understood by seasoned Schick, Allen, 1966. “The Road to PPB: The Stages
of the purse is located. In the words of observers of such changes that the solutions of Budget Reform,” Public Administration Review,
one DoD budget player, “…there are a and new processes developed by the mili- 26: 243-258.
lot of changes, but what has not been tary departments and services are likely to Schick, Allen, 1973. “A Death in the Bureaucracy:
changed is the Constitution. Changes will differ – this would appear to be inevitable, The Demise of Federal PPB,” Public Administration
end when they bump into things that are given the highly differentiated resource Review, 33: 146-156.
Constitutional. The appropriation process management systems and program/budget Secretary of Defense, 2003a. “Management Initiative
Decision 913,” Washington, DC: DoD, May 22.
is still a congressional process and changes processes used by the respective military
in the Pentagon process have to be respon- departments and services. Overall, cautious Thompson, F., and Jones, L. R., 1994. Reinventing
the Pentagon. San Francisco: Jossey-Bass.
sive to the needs of Congress. The menu optimism about the new process has been
Wildavsky, A., and Hammann, A., 1956.
of changes the Pentagon can pursue is voiced from many quarters.
“Comprehensive versus Incremental Budgeting in
not unlimited.” the Department of Agriculture,” Administrative
Thirdly, the new process appears to puts References: Sciences Quarterly, 10: 321-346.
the Secretary of Defense and staff into the Burkhead, Jesse, 1959. Government Budgeting. New Wildavsky, Aaron, 1988. The New Politics of the
process at early stages. Proposed decisions York: John Wiley and Sons: 340-356. Budgetary Process. Glenview, IL: Scott, Foresman.
in the new PPBES are intended to reach the Feltes, Lorentz A., 1976. “Planning, Programming,
Secretary before they have been made, while and Budgeting: A Search for a Management
options are still open, and while important Philosopher’s Stone,” Air University Review,
About the Authors:
and large-scale changes still may be made. January-February.
Hinricks, Harley, and Taylor, Graeme, eds.,1969. Mr. Jerry L. McCaffery is a Professor of
When Secretary of Defense inputs came at
Program Budgeting and Benefit-Cost Analysis. Financial Management at the Graduate
the end of the stream of decisions, some
Pacific Palisades, CA: Goodyear. School of Business and Public Policy, Naval
alternatives that could have been pursued Postgraduate School in Monterey, CA.
Joint DoD/GAO Working Group on PPBS,
were pre-empted simply because they
1983. “The Department of Defense Planning, Mr. Lawrence R. Jones is a Professor of
would cause too much breakage in other Programming and Budgeting System,” Washington Financial Management at the Graduate
programs or because everyone had already DC: DoD/GAO, May 26. School of Business and Public Policy, Naval
become committed to the likely outcomes Jones, L R., and Bixler, G. C., 1992. Mission Postgraduate School in Monterey, CA.
of the decision. Veteran observers see these Budgeting to Realign National Defense. Greenwich,
changes as an evolving process, cautioning CT: JAI Publishers.
officers bound for the Pentagon in a couple Jones, L. R., 2001b. “Management Control Origins,”
of years not to memorize the new process Interview with Robert Anthony, North Conway, 1 Excerpted from chapters 4 and 12, 2004.
New Hampshire, November 17.
until they get there, since it has changed

3rd Quarter 2004 17


National Capital Region

Perspectives on Resourcing
Army Installation Management
Colonel Douglas C. Bonner

omeland defense has caused a Capital Region (NCR) severely constrains
revolutionary response in the the critical new role of the U. S. Army
aftermath of September 11, 2001 Military District of Washington (MDW) as
where America no longer vests Army Service Component for Joint Forces
its security in vast oceans, landmass, and Headquarters-National Capital Region
air space as natural features that discourage (JFHQ-NCR). The doctrinal foundation
intrusion. This new initiative within our for theater logistical support, control
government created the Department of of resources, and IMA directions and
Homeland Security and the Department initiatives pose significant hurdles to the
of Defense’s U. S. Northern Command success of a critical joint mission that must
(NORTHCOM) through realignment of succeed in future operations. The goal is to
military forces. NORTHCOM’s natural examine these three hurdles and how each
concern became how to protect the affects the relevancy of joint operations.
nation’s capital as a key center of gravity First, doctrine for critical theater
for our government. Many resources are logistical support is essential to success of
available in the National Capital Region; Joint Task Force (JTF) operations in the
however, there was no single element NCR, a national center of gravity (3:3-6,
responsible for command and control. 12-22). Control of key installations is an
Thus NORTHCOM organized Joint Forces essential component for executing theater
Headquarters-National Capital Region logistics. Joint and Army doctrine as pub-
by direction of Secretary of Defense as lished within Joint Publication 4-0 and
its immediate element for all home land Army Field Manual 4-0 both delineate
security and civil support requirements in joint logistics as a key multiplier for Joint
the NCR (14:-). U. S. Army Military District Task Force operations (11:Exec Summary,
of Washington forms the nucleus of this Chapter 3; 13: I-3, I-5, I-17). Tactics tech-
element along with augmentation from niques, and procedures for sustainment all
Navy, Marine, and Air Force elements in the pinpoint control of key bases from which
NCR (4:9). The essence of this effort is to service components of the JTF perform
bring to bear all resources in the NCR for vital reception, security, preparation, and
crisis response. A key resource for success onward movement of critical forces (12:
exists in installations each service use in Chapter 1). The traditional mantra of
executing respective Title 10 functions. deployed JTF operations presupposes that
The U. S. Army’s recent transformation of forces would move into and secure an area
installation management presents challenges of operations to carry out these critical
for command and control where technical tasks. However, a transformation in how
control of NCR installations fall under we define deployed forces is necessary as
the purview of the Director, Installation a foundation for understanding how we
Management Agency. The U. S. Army execute logistical support in the context of
Installation Management Agencyʼs (IMA) the Global War on Terrorism.
control of Army installations in the National

18 3rd Quarter 2004

Office of the Secretary of Defense engineering, housing, training resources, functions is an important pillar in the con-
(OSD,) NORTHCOM, and the Services personnel and community activities, text of JFHQ-NCR’s role as NORTHCOM’s
recognized the need to establish a joint force revitalization, modernization, security, focal point for homeland defense and civil
element in the NCR as an outgrowth of the law enforcement, tenant support, and a support roles in the NCR. They are equally
fact that joint military operations provide host of others. This is drastically differ- important in MDW’s role as the Army
the greatest good to our nation. This defined ent from operating an installation as an Service Component Command to JFHQ-
the NCR as a Joint Operations Area (JOA) immediate source of sustaining power as NCR. MDW brings these critical elements
as articulated in Joint Publication 5-0 (4: a forward base within an existing JOA. to bear daily in its Army MACOM role that
GL3). As such, JFHQ-NCR operates daily as MDW’s prior ownership and control of support a three pronged mission for con-
a deployed force in its assigned JOA (10: 1.1- installation resources were arguably more tingency operations, ceremonial operations,
2.3). Traditional settings for JOAs are often effective in ensuring balance and effec- and a full range of legal support operations
in foreign theaters where establishment and tiveness of resources. commensurate with General Court Martial
refinement, and of key bases are prime con- In a pre-transformation environment, Convening Authority for the NCR (3: 7-29).
cerns before operations can progress through MDW controlled seven installations both Aviation support, military police operations,
key phases. JFHQ-NCR and MDW operate inside and outside the NCR covering four force protection, and anti-terrorism are key
within a JOA that supersedes norms (10: 2.1). states from New York to Virginia. This ingredients to the success of the three mis-
Army installations in and adjacent to the included resources totaling 2912 soldiers, sion drivers. IMA has published policies or
NCR are a vital resource from which Army 2689 civilians, and an annual operating undertaken initiatives that challenge joint
Forces (ARFOR) assets must be prepared to budget over $356M (7:-). Installation fund- and MACOM roles with each ingredient.
support joint operations daily (3: 13, 16, 19). ing profiles averaged 90% when measuring MDW’s contingency profile uses its
The Army’s published focus areas pinpoint base requirements to actual funds received aviation element the 12th Aviation Battalion
installations as flagships from which to project (8:-). Since the beginning of FY04, profiles to be prepared to execute important
Army forces to JTF operations (18:-; 21: 15); have averaged much lesser rates given Army operations plans with joint linkages (3:
however, this appears to suggest a traditional fiscal challenges. The MDW Commander’s 37). JFHQ-NCR will likely infuse some
perspective where Army deploys forces from role concerning installations is that of a growth in the joint effort. Current DA and
home bases to foreign theaters. Technical newly defined term called Senior Mission IMA policies mandate a transfer of Davis
control of Army installations by IMA does not Commander which transcends to an advi- Army Airfield at Fort Belvoir, Virginia and
easily support this construct given IMA’s focus sory and oversight capacity with necessary the Pentagon Helipad from MDW to IMA
for efficient base operations for the entire interaction with Director, IMA on key control for base operations efficiencies
Army. Efficiency in base operations provided resource decisions (2: Exec Summary). Thus, (6:-). Currently, the 12th Aviation Battalion
the means for giving IMA total control of all MDW Commander who duals as JFHQ- performs airfield operations and support
resources vice mission commanders (17: -). NCR Commander has an NCR operational along with it primary aviation operations
The second hurdle challenging MDW mission focus that will heavily impact instal- that provides operational efficiency with
as Army Service Component is evident lation resources in a JTF operation whereas unity of control and effort (20: Chapter
in lack of control for manpower or fiscal the Director, IMA has an Army-wide base 28). Execution of the Army and IMA plan
resources for installations. The Army’s operations focus that seeks the best standard for transfer of control and operation of
intent to free mission commanders of of support for all Army installations world- Davis Army Airfield and the Pentagon
installation management and focus only wide. Exploration of this fundamental dif- Helipad essentially breaks unity of control.
on wartime missions actually complicates ference in missions in further detail should Aviation operations in the NCR will require
JFHQ-NCR and MDW operations. Again lead to an optimal solution that accom- three different entities vice one where the
the traditional medium dictates strategic plishes both missions. The writer offers MDW Commander now only looks to
thinking and policy where mission com- readers further evidence of this difference Commander, 12th Aviation on any aviation
manders control units that deploy to key with key examples of current policies and matter. Likewise, IMA initiatives involving
theaters away from home station. This initiatives germane only to the installation military police operations potentially cause
appropriately casts the installation as a management perspective. an erosion of capability for MDW.
power projection platform for Army forces Thus the third and final hurdle to the The Army’s mandate to meet Program
and home base for support to forward new operational mission shows current IMA Budget Decision 712 targets for military
operations, daily garrison needs, and policy and initiatives provide guidelines to civilian conversions imposed a target of
families (21:-; 22:-). Thus Army priorities counterproductive in planning resources 4000 positions on IMA (15:-; 16:-). IMA
for resources will lean more to deploying for critical mission areas such as aviation as technical owners of staffing documents
forces and sustaining daily base operations operations, military police operations, force with military police assets at Fort Myer,
functions such as base logistics, facilities protection, and anti-terrorism. Each of these Virginia, a key force essential to MDW

3rd Quarter 2004 19


operations, plans to convert 170 military defense and civil support needs. Joint and 6.Deputy Chief of Staff, G-3, memorandum of agree-
ment with Assistant Chief of Staff for Installation
police positions to civilians. Such a conver- Army doctrine as a departure point for
Management, subject: Training Support and
sion would severely affect contingency and executing theater logistics and sustainment Airfield/Heliport Operations under the Installation
ceremonial operations in the NCR, particu- requires control of key Army installations Management Agency, 7 April 2003.
larly at an installation that houses the most for MDW as Army Service Component 7.Deputy Chief of Staff, Resource Management, U. S.
army Military District of Washington, memorandum
senior military leadership to the security for JFHQ-NCR. IMA’s control of resources
to Commander, subject: MDW Resource Profile
plans supporting execution of high profile required to operate key NCR installations Before and After Transformation of Installation
events in the NCR such as routine arrival does not provide relevancy and situational Management, 7 June 2002.
ceremonies for foreign dignitaries, military awareness to a joint mission as efficiency for 8. Deputy Chief of Staff, Resource Management, U.
S. Army Military District of Washington, memoran-
support to inauguration activities, state base operations support supersedes a criti-
dum to Garrison Commanders, subject: Funding
funerals, and others. Given these points, one cal mission requirement. Specific evidence Authorization Documents to Installations, 19
can deduce the importance of force protec- concerning current IMA policies and initia- December 2002.
tion and anti-terrorism needs in the vital tives shows adverse affects on MDW critical 9.Director Operations and Support, Assistant
Secretary of the Army, Financial Management
NCR; however, IMA ownership of resources mission components for aviation, military
and Comptroller, memorandum to Army Major
provides an overarching challenge. police, force protection, and anti-terrorism Commands, subject: FY 2004 Operations and
IMA’s Organization and Operations operations. Solutions lie within the context Maintenance, Army (OMA) Funding Letter, 31
October 2003.
Plans published during the height of of a very informed dialogue where IMA
10.Joint Forces Headquarters-National Capital
Army’s Transformation of Installation must recognize the primacy of homeland
Region, JFHQ Implementation Plan, 27 May 2003.
Management in FYs 02 and 03 designated defense and civil support in the NCR in
11. Joint Publication 4-0. Doctrine for Logistic
MACOM Commanders and Senior Mission keeping with the Army’s focus for a joint Support of Joint Operations, 6 April 2000.
Commanders as the primary owners and and expeditionary mindset. Support to a 12. Joint Publication 4-01.8. Joint Tactics,
proponents for force protection and anti- forward deployed JTF is vital and represents Techniques, and Procedures for Joint Reception,
Staging, Onward Movement, and Integration, 13
terrorism operations at installations (1: no a shift in the fundamental application of
June 2000.
#). Responsibility without actual control of where installations as flagships usually sup-
13. Joint Publication 5-0. Doctrine for Planning Joint
resources was the key edict. Prior to transfor- port mobilization and deployment efforts Operations, 13 April 1995.
mation, such efforts totaled approximately primarily as a base of embarkation. 14. Message, 202330Z JUN 03. Chairman Joint Chiefs
$30M in MDW (8:-). Given new constructs of Staff (CJCS). CJCS Execute Order with Secretary
About the Author: of Defense Approval to Commander, Northern
for resources MACOM and Senior Mission
Command establishing Joint Forces Headquarters-
Commanders only received opportunities to Colonel Doug Bonner is the Director of National Capital Region (JFHQ-NCR), 20 June 2003.
validate requirements prior to submission of Resource Management for HQ, U. S. Army 15. Office of Assistant Secretary of Defense
program and budget requests to DA (1: no #). Military District of Washington located at (Comptroller) Program Budget Decision 712,
Fort McNair in the District of Columbia. Subject: Military to Civilian Conversions Supporting
DA distributes actual funding when approved
Transformation, 21 November 2003.
to IMA. The key problem lies in using a fund-
16. Secretary of the Army and Chief of Staff, Army,
ing structure that was conducive to pre-trans- References: memorandum to Army Major Commands and
formation operations. Clearly, the basic axiom 1.Assistant Chief of Staff for Installation
Agencies, subject: Military-Civilian Conversion
Targets to Support Transformation, 11 March 2004.
that gave commanders control via ownership Management, Installation Management Agency
Organization and Operations Plans, Army 17. Secretary of the Army, Headquarters Department
of all manpower and fiscal resources is out of
Knowledge Online, n. p. On-line. Internet, 16 April of Army General Order Number 4 to Assistant
balance. Such policy forms the realistic chal- 2004. Available from Chief of Staff for Installation Management, subject:
lenges to a very important role for homeland jhtml/ArmyKCC/Army Communities/ACSIM/IMA/ Establishment of Installation Management Agency,
Operations/Validated OO Plans, 11 August 2003. 11 July 2002.
defense and civil support in the NCR.
2.Assistant Chief of Staff for Installation 18. Triggs, SFC Maria, “Focus: Installations to Serve
Conclusively, advocates of opposing
Management, memorandum to Army Major as Flagships.” Army News Service, 3 February 2004,
positions on the value of IMA would all Commands, subject: Interim Implementation Plan 19. U S Army Field Manual 4-0. Combat Service
agree that protection of the NCR is criti- for Installation Management Agency, 30 May 2002. Support (CSS). Chapter 3, CSS in Full Spectrum
cal to our nation’s security posture as our 3.Briefing, Commander, U S Army Military District Operations, Combined Arms Support Command, 29
of Washington. Subject: MDW Mission Brief to August 2003.
center of governance. More importantly, it is
Director Army Staff, 3 December 2003. 20. U S Army Military District of Washington
paramount to conclude Army’s IMA opera-
4.Briefing, Deputy Commander, U S Northern Regulation 10-87. Organization, Mission and
tion does not provide immediate continuity Command and Commander, U. S. Army Military Functions of U S Army Military District of
required in JFHQ-NCR’s vital role despite District of Washington. Subject: JFHQ-NCR Concept Washington (Draft Revision), 31 March 2003.
Army intent to free mission commanders of Brief to JCS Operations Deputies, 6 October 2003. 21. U S Army. The Way Ahead Our Army – Relevant
5.Deputy Assistant Secretary of the Army, Financial and Ready, Focus Areas. Washington, D.C.: Chief
base operations responsibilities. JFHQ-NCR
Management and Comptroller, memorandum of Staff, Army, Army Strategic Communications,
is a forward deployed JTF charged to take to Army Major Commands, subject: IMA Fund January 2004.
immediate action in the event of homeland Controls and Fiduciary Responsibilities, 19 22. Whittington, Beau, “OIF Validates Installation
November 2002. Management Concept.” Army News Service, 21
October 2003.

20 3rd Quarter 2004

So it is for us, the members of the
resource management community. With
time we become masters of the basics of our
profession like forecasting requirements and
allocating budgets. But we too are called to
learn control. In this case it is management
control that we must master. Management

The Army
control, which for the purpose of this article
is synonymous with internal control, is the
set of actions taken by managers to ensure
not only good stewardship, but also their

organization’s ongoing compliance with all
applicable laws, regulations, and policies.
These basic tenants of management control
apply to leaders at all levels of the Army.

Control Program
The Assistant Secretary of the Army
“Control, Control! You Must Learn Control!” (Financial Management and Comptroller)
(ASA(FM&C)) has overall responsibility
Major Karl M. Kraus for implementing the Army Management
Control Program (MCP). Commanders in
turn often look to their resource manage-
Remember the movie The Empire Strikes Back? The hero ment leaders to be subject matter experts
on the development and implementation
of the Star Wars movie series Luke Skywalker and his of effective MCPs. Intuitively, management
trusty side-kick R2D2 travel to Dagobah, the bog planet, control does not seem difficult to under-
in search of Yoda. Once there Yoda, the physically stand. Indeed, promotion through the man-
agement ranks requires mastering many
unimpressive Jedi Master, begins to train the young of the same skills prescribed for the imple-
Skywalker on the skills necessary to become a Jedi. Just mentation of successful MCPs. However, the
military services’ inability to achieve a clean
as Luke begins to succeed at focusing his own mind to audit of their financial statements indicates
leverage “the force”, he begins to experience visions of that there is still work to be done in this
the future that cause him to lose his focus. It is at this field. The intent of this article is to review
and illustrate the fundamental components
point that Yoda chastises Luke saying, “Control, Control. of effective MCPs using examples from pri-
You Must Learn Control!” vate industry.
It is important to recognize the differ-
ence between management controls and
MCPs. Management controls are the indi-
vidual measures that are collectively imple-
mented and administered in an overarching
MCP. Employed haphazardly, even the most
robust individual management controls can
be ineffective. The goal for managers is to

3rd Quarter 2004 21


“The goal for managers is to identify and implement complimentary control measures in
an orchestrated fashion to achieve a comprehensive control program.”

identify and implement complimentary con- monitor performance in these areas. Once the Program Management System as the
trol measures in an orchestrated fashion to established, the program needs to be con- Boeing Program Management Best Practices
achieve a comprehensive control program. stantly monitored to ensure desired results. (PMBP). The PMBP are designed to enable
Army Regulation 11-2, Management An important facilitator of the MCP is the coordinated actions and provide visibility
Control, provides direct guidance for ability to communicate information about into program health to support timely deci-
the implementation of MCPs within the the control program throughout the orga- sion-making for implementing corrective
Army. It specifies that heads of reporting nization. When collectively implemented, action3. The Boeing Program Management
organizations and assessable unit man- these five components provide a structure System provides a working example of the
agers are responsible for understanding to develop and implement an effective, sus- implementation of the GAO Standards
and applying the Comptroller General tainable MCP. frameworks for an MCP. Many similari-
Standards for Internal Control in the Many illustrations of the principles asso- ties are evident between the frameworks.
Federal Government1. In November 1999, ciated with the standards for internal con-
the General Accountability Office (GAO) trol are in practice at the Boeing Company. Figure 2
updated its original list of standards. The I had the opportunity to witness firsthand Boeing’s Program Management
GAO’s 1999 version reorganizes the stan- an application of one facet of Boeing’s System
dards for internal control into five mutually MCP during my Training with Industry
supportive areas represented in figure 1. assignment with the company. Boeing is Deliver
the world’s largest manufacturer of satel-
Plan Execute
lites, commercial jetliners, and military
Figure 1
aircraft and a global market leader in mis-
GAO’s Standards for Internal Control sile defense, human space flight, and launch Communicate
services.2 It is well known for its history of
producing commercial jetliners and military Correct Measure
fighters, bombers, transports, rotorcraft, Improve
missiles and munitions. The company’s suc-

cess is directly related to the success of the


Control Source: Boeing Team Leader



individual programs like the 7#7 series of
Training Graphic, Copyright © 2003


jets, the Army’s Apache helicopter, the Air


Risk Assessment Force’s F-15 Eagle or the Navy’s F/A-18E/F

Super Hornet. Each of these programs is
t The remainder of this article illustrates the
Con men
trol nviron unique in its own particular way, so Boeing
five components of the GAO Standards
created a Program Management Process
with examples from the Boeing Program
Council to standardize the administration
Management System.
of the various programs.
The GAO Standards for Internal Control Boeing’s Program Management Process
Council established a set of key practices Control Environment
provide guidance to managers as they
that are used by program managers during The basis of a successful MCP is
develop a comprehensive MCP. This repre-
the day-to-day execution of their programs. directly related to the control environment
sents an evolution from simply implement-
Collectively these practices are integrated established within the organization. The
ing management controls in isolation. The
into a MCP that Boeing calls its Program control environment as identified in the
pyramid structure shows that an effective
Management System. Figure 2 diagrams the GAO Standards is commonly referred to
controls program is built upon a foundation
relationships of the Program Management in military circles as the command climate.
referred to as the control environment. At
System. Individual program managers use When considering the control environ-
the heart of the program is the risk assess-
this system to implement the business plans ment the manager must assess how the
ment process that determines where man-
for their respective programs. The Council members of the organization are doing
agement must focus its attention and the
refers to the key management activities of at observing proper procedures and their
control activities that are implemented to
overall standards of performance. The art

22 3rd Quarter 2004

of establishing an effective control envi- associated with achieving objectives… and
ronment involves leading from the front. forming a basis for determining how risks Figure 3
Senior level leaders and managers must should be managed.”5 Fundamental to
demonstrate that their own performance is assessing the risk for any organization is the

Manager’s Ability to
Influence Outcome
beyond reproach. They need to recognize need to have a comprehensive understand-
and observe regulatory guidance and ensure ing of the organization and its particular
Point at which
that the subordinate members of the orga- operating environment. While these specific Management
nization adopt the same standards in their organizational characteristics are para- can no Longer
performance. The organization should have mount there are some common areas that Recover
an inviolable code of ethics like the Army any organization will need to consider when
Values (Loyalty, Duty, Respect, Selfless- assessing its risk. These areas include com-
Service, Honor, Integrity and Personal pliance with the law, accomplishment of Effort Required to Correct the Issue
Courage). Particular attention should be objectives and the fostering of an effective Ability to Influence Outcome
given to the amount of emphasis placed on control environment.
operational performance. A myopic view of Managers have an inherent responsibil-
Net Profit as the only material performance ity to ensure that the operations that they
metric is an example of a flawed control oversee perform within the bounds of all
environment. Excessive pressure to improve applicable laws and regulations. Although for customers within a contractual time-
operations can push subordinates to com- ignorance of the law is never a legitimate line requires schedule risk management.
promise organizational ethics to meet per- excuse it can present plausible risk. Job Effectively managing technical risk results in
formance objectives. experience and professional development the delivery of quality products that possess
The Boeing Company recognizes the studies help familiarize individual manag- the functionality desired by the customer.
importance of its pledge to ethical behavior ers with legal requirements associated with There are seemingly endless numbers of
in sustaining an effective control environ- their organization. In addition to regulatory risks present in Boeing’s many programs.
ment. Within the past year Boeing has requirements, managers need to understand But just as all colors on the color wheel
engaged in a “Recommitment to Ethics” the purpose, the processes and the products are a derivative of the three primary col-
campaign throughout the organization. The that collectively constitute their organiza- ors, most if not all of the risks present in
campaign includes a variety of ethics train- tion’s operations. The effective manager has Boeing’s individual programs are a deriva-
ing and awareness programs for both new to be able to envision the desired endstate tive of the primary program risks to cost,
and seasoned employees. Results of inde- for the organization and articulate how this schedule and technical performance.
pendent reviews of the company’s ethics endstate can be achieved. Then the manager
program released in December 2003, were can begin to assess the risk pertinent to Control Activities
widely published both internally and exter- the envisioned operational objectives. The After assessing the risks that the organi-
nally. “We found Boeing’s ethics program importance of an effective control environ- zation is subject to, managers can identify
to be well above average,” said Steve Priest, ment has already been recognized. Risks to actions appropriate to mitigate these risks.
president of Ethical Leadership Group, a the control environment include influences “Control activities are the policies, pro-
leading business ethics consulting firm. that sidetrack employees from understand- cedures, techniques and mechanisms that
“More importantly, we note that Boeing’s ing the organizational standards for behav- enforce management’s directives.”6 The con-
culture supports ethical, responsible behav- ior and accepting the fact that they are indi- trol activities that managers select become
ior.”4 Boeing’s emphasis on integrity in vidually as well as collectively responsible the alert sensors that indicate the organiza-
their corporate climate demonstrates the for meeting these standards. tion is operating in accordance with pre-
importance of the control environment in The Boeing Company Program scribed policies and procedures to achieve
establishing a successful MCP. Management Process Council has per- intended results. They constitute the regular
formed a high-level risk assessment interface between managers and their orga-
Risk Assessment designed to be universally applicable to the nization’s day-to-day operations.
There is little that is accomplished in Company’s widely varied programs. Cost, Control activities, when properly
today’s Army that does not involve risk schedule and technical risks are common selected, allow management to identify
assessment. Managers use risk assessment challenges that every program manager deviations from expected performance
to determine what key areas require atten- has to balance. Managing cost is essential early enough to respond in a timely man-
tion as they develop their MCPs. The GAO to ensuring the availability of sufficient ner. Figure 3 demonstrates the relationship
Standards defines risk assessment as, “the resources to meet contractual specifications between early problem identification and
identification and analysis of relevant risks and earning a profit. Producing products management’s ability to intervene to resolve

3rd Quarter 2004 23


Company: a) achieve bottom-line perfor-

Figure 4 mance, meeting customer and shareholder
Program Management Best Practices expectations; b) attain top-line growth by
attracting new contracts based on their
demonstrated performance7.
Plan Execute Deliver

Integrated Planning Risk Management

Information and Communication
Customer Solutions The grease that lubricates an effective
Requirements Management Supplier Management
• Affordable
Baseline Management Integrated Schedules MCP is the information flow throughout
• Reliable
Organization Baseline Management
Independent Reviews
• Supportable the organization. All members must under-
stand the standards for their performance.
The control activities that are identified
Communicate effectively communicate what activities are
priorities for the management. They serve
Customer Communication/Contact Plan as a kind of beacon for everyone in the
Management Information System organization, providing a common focus
and a common language for talking about
it. In The Art of War, Sun Tzu stated that,
Correct & Improve Measure “Gongs and drums, banners and flags, are
means whereby the ears and eyes of the
Help Needed Technical Performance Measurement host may be focused on one particular
Issue & Action Earned Value Management
point.”8 Similar fanfare when advertising
Management Use of Independent Reviews
MCP results within an organization can
likewise establish a common focal point.
Communicating things like internal audit
reports or results of recurring reports or
management reviews effectively transmits
what particular activities are being mea-
an issue. If lip service only is given to the monitor approximately 80 percent of the sured and therefore highlights their impor-
MCP and the organization surges to meet risk to which the organization is subject. tance throughout the organization. It also
the regulatory requirements only when an Management will want to be most proac- lets the members know collectively where
annual statement is due or when an audit tive in their surveillance of these “critical they are meeting the standard and where
is pending, the MCP will not achieve its few” control activities while they in more of improvement is still necessary.
intended purpose. Management needs to be a management by exception mode for the Boeing’s Program Management System
constantly vigilant, always considering from remaining “trivial many”. is a well-advertised, integral part of
where the next challenge or risk to organi- In the Boeing Program Management Boeing’s corporate climate. The Program
zational success might come. System the control activities are the PMBP Management Process Council that moni-
Selecting the best control activities to established to address the cost, schedule and tors and improves the implementation of
ensure compliance with established poli- technical performance risk to programs. the PMBP is made up of CEOs and senior
cies and procedures should not necessarily The PMBP represent the control activities vice presidents from across Boeing’s seven
create a new burden on managers. Proper program managers use to manage their business units. They and many of their sub-
integration of the control activities into the programs. Each practice is aligned with one ordinate leaders have previous experience
overall operating environment will ensure or more of the major components of the directing Boeing programs and are strong
that the cost of the control activities selected Program Management System as identified supporters of the Program Management
is appropriate given the magnitude of the in Figure 4. A discussion of the individual System. There is a dedicated site on the
risk they are intended to monitor and the Best Practices themselves is beyond the Boeing intranet that describes the PMBP
probability of its occurrence. The goal scope of this article. The strength of the concept since its original implementation
should be to identify key control activities PMBP, however, lie in the ability of the in the company. The concepts are formally
whose failure will likely break or seriously individual program manager to understand, taught at Program Managers’ workshops
impair the system. Typically the Pareto adopt and implement each of these control and at Team Leader training sessions.
principle will apply to control activities. activities into a integrated MCP. Collectively Internal assessments and audits of pro-
This principle maintains that 20 percent of these management practices help the Boeing grams are highlighted events that bring key
the control activities selected will effectively

24 3rd Quarter 2004

team members from the programs together The Result of Control - Value management of our allocated resources will
with their corporate subject matter expert The fundamental purpose behind directly result in better support our sol-
counterparts for both feedback and evalu- management controls in the Army is to diers and thereby for our nation. So take a
ation of their performance. The Program provide reasonable assurance to Congress, moment. Consider the effectiveness of your
Management System provides a common DoD and the Army’s own leadership that control program. And may the force be with
frame of reference for communicating per- those actions that they expect to happen you.
formance priorities both within Boeing pro- are indeed happening. Local responsibility
grams and throughout the company. for administering an MCP is often assigned Any reprints of this article require prior per-
to the organization’s resource manage- mission from OASA (FM&C) The opinions in
this article are the author’s, and do not neces-
Monitoring ment directorate for administration. The
sarily reflect the official positions of the Boeing
Monitoring is the regular maintenance GAO’s Standards provides a framework for
Company or the Department of Defense.
required to keep the established MCP cur- organizations to consider as they develop
rent and effective. Effective monitoring and implement and their MCPs. Successful
should focus on ensuring that the controls MCPs should not be viewed as an admin-
established are being implemented as pre- istrative burden. Effectively integrated into 1 US Department of the Army Regulation 11-2,
Management Control, (Washington, DC: HQDA,
scribed and that they are effectively foster- the organization, MCPs provide leaders and
1994), p. 3.
ing desired performance within the organi- managers with a program that highlights
2 “Program Management Best Practices.” Team
zation. Boeing’s PMBP have evolved since procedural and operational standards that Leader Training Brochure © 2003, The Boeing
they were first formally introduced in 1998. when followed are likely to result in the Company
Then there were nine basic control activi- accomplishment of planned performance 3 The Boeing Program Management Process
ties. Now there are eighteen best practices, objectives. Additionally, a climate that com- Council, Program Management Guidelines, (The
four more under review to be added and municates and consistently assesses its MCP Boeing Company, 2002), p. 8.
one in development. Regular disciplined and key control activities will benefit from 4 “Boeing Releases Independent Reviews of
evaluation of the effectives of the MCP is enhanced abilities to identify the root cause Company Ethics Program.” Boeing News Features
(Dec 18, 2003): n. pag. Online. Intranet. Feb 24,
necessary to ensure that it remains a valu- of problems within the organization in a
able tool. timely fashion. This allows maximum flex- q4/nr_031218a.html
Implementation of Boeing’s Program ibility in correcting these shortcomings.
5 US General Accounting Office, Standards for
Management System is achieved through A call to understand the concept of Internal Control in the Federal Government,
scheduled series of assessments and audits. control is being made in the Army. Before (Washington, DC: GAO, 1999), p. 10.
The assessment process Boeing uses relies departing as the Assistant Secretary of 6 US General Accounting Office, Standards for
on a maturity model created to evaluate the Army for Financial Management and Internal Control in the Federal Government,
each of the PMBPs. The maturity model Comptroller (ASA(FM&C)), the Honorable (Washington, DC: GAO, 1999), p. 11.
is a matrix that describes key attributes of Sandra Pack commissioned a team to 7 “Boeing Program Management Best Practices –
each PMBP and establishes objective evalu- develop a roadmap to guide the resource History, Implementation, Assessment Process” (Feb
21, 2003): n. pag. Online. Intranet. Oct 19, 2003;
ation criteria to be used to assess program management community in their adminis-
management’s effectiveness in utilizing tration of management controls9. Boeing’s Overview_Current_New.ppt
the PMBP. Problem areas identified by the Program Management Council is an 8 Sun Tsu, The Art of War, ed. James Clavell (New
MCP should be thoroughly and expedi- example of a lead agent with a similar char- York, NY.: Dell Publishing, 1983), p. 33.
tiously resolved. Brutal honesty in the feed- ter. The Program Management Council’s 9 Ernest J. Gregory and LTG Jerry Sinn, “A
back process of any MCP is key to improv- PMBPs represent Boeing’s key control Renewed Emphasis on Controls.” Resource
ing its effectiveness. Continuous evaluation activities that collectively constitute their Management, 4th Quarter 2003, p. 5.
and improvement in an organization’s Program Management System. Both the
MCP will provide leaders with assurance Army and Boeing recognize the impor-
that their organizations are achieving tant role that management controls have About the Author:
intended results in accordance with estab- in providing assurance that the respective Major Karl Kraus is one of five Functional
lished policy and procedures. organizations are performing as intended. Area 45 officers participating in the Training
Management control is a concept that per- With Industry program, in his case with the
meates the entire structure of the Army. Boeing Company.
Even marginal improvements in our imple-
mentation of management control processes
can potentially achieve millions or billions
of dollars in savings. This more efficient

3rd Quarter 2004 25


Professional Development Institute

Election Year 2004

Guidelines For Federal Employees
Under Hatch Act Amendments
By Mr. Matt Reres, Deputy General Counsel (Ethics & Fiscal)

As you are aware, this is a Presidential election year. In addition to the election of our
President, we Americans will vote for those competing for seats in the House of
Representatives and the Senate, as well as for those competing for various elected posi-
tions at the state and local levels. As Americans, our right to vote for those who will rep-
resent us is sacred to each of us. Yet, our right as soldiers and Army civilian employees
to vote for our candidates is tempered with certain caveats. The following list contains
examples of permissible and prohibited activities for federal employees under Hatch Act
amendments. You should be aware that the U.S. Office of Special Counsel (OSC) provides advi-
sory opinions on Hatch Act issues, and investigates reports or complaints of Hatch Act violations.
1-800-85-HATCH (854-2824)

May be candidates for public office in nonpartisan May never use their official authority or influence to
elections interfere with an election

May register and vote as they choose May never solicit, accept or receive political contribu-
tions unless both individuals are members of the same
May assist in voter registration drives
federal labor organization or employee organization
May express opinions about candidates and issues and the one solicited is never a subordinate employee The rules that apply to our
activities associated with
May contribute money to political organizations May never knowingly solicit or discourage the politi-
the upcoming elections are
cal activity of any person who has business before the
May attend political fundraising functions easily understood.
May attend and be active at political rallies and For that reason, we may
May never engage in political activity while on duty
meetings participate in these elections
May never engage in political activity in any govern- to the degree that is
May join and be an active member of a political party ment office permitted. But whether we
or club participate or decline, we
May never engage in political activity while wearing an
May sign nominating petitions should always exercise our
official uniform
Constitutional right—We
May campaign for or against referendum questions, May never engage in political activity while using a gov- should VOTE!
constitutional amendments, municipal ordinances ernment vehicle
May campaign for or against candidates in partisan May never be candidates for public office in partisan
elections elections
May make campaign speeches for candidates in May never wear political buttons on duty
partisan elections

May distribute campaign literature in partisan elections

May hold office in political clubs or parties including

About the Author:
serving as a delegate to a convention Mr. Matt Reres is the Deputy General Counsel
(Ethics & Fiscal) in the Army’s Office of the
General Counsel.

26 3rd Quarter 2004

Army Day Professional Development Institute

Managing Resources LTG Sinn then presented an abbreviated

look at trends in the Federal deficit as pro-

How Informed Are You?

jected a year ago, and as projected in March
2004, and the impact of the deficit on the
Army FY05 budget.
In concluding his remarks, LTG Sinn
challenged the Army Resource Managers
to an Army resource quiz. He suggested
by Helen Tierney that all comptrollers everywhere need to

understand the numbers and policies that
he Army Day keynote speaker was impact on Army funding. It is a leader’s
Lieutenant Genearl (LTG) Jerry Sinn, job to ensure their staffs are knowledgeable
the Military Deputy for Budget, regarding the kind of resource management
Office of the Assistant Secretary of the Army, of information below.
Financial Management and Comptroller. LTG Sinn’s plenary remarks were fol-
LTG Jerry Sinn is the senior military lowed by three thought provoking breakout
resource manager in the Army, and advises sessions. Major General Lynn Hartsell, the
the political and senior military leadership Director of the Army Budget gave a timely
on all fiscal Army matters. presentation on Army FY04 and FY05
LTG Sinn warmly welcomed almost 800 budget. He touched on the complexities
Army resource management professionals of the FY04 mid year review, expectations
to the Professional Development Institute for closing out FY04, the FY05 President’s
(PDI) in the beautiful Cleveland Convention budget now being debated in Congress,
Center Little Theater. He opened his remarks time look towards the future to guarantee and the FY05 GWOT Supplemental.
by drawing a parallel between the turbulent there is funding for transformation, espe- Brigadier General Robert Durbin, Deputy
times when the theater was opened in the cially for the Future Combat System. Director, Program Analysis and Evaluation
1930s and the world environment today. LTG Sinn then looked at the Directorate/G8 gave an excellent perspec-
Following his brief welcoming remarks LTG demographics of the Army Resource tive of transformation and the future force
Sinn presented awards to many outstanding Management community. He noted that in his presentation “Army Focus Areas
Army Resource Managers Award program there are about 3,575 military comptrol- Progress to Date & Army Campaign Plan.”
selectees. Please see the 2nd Quarter 2004 lers with an average age of 31, and that Colonel Joseph Anderson, Commander of
“Resource Management” magazine for a the average age of the 9614 civilians in the the Second Brigade, 101st Air Assault gave
brief summary of the RM award winners Comptroller Civilian (CP 11) career field a fast paced multi-media presentation on
and their outstanding achievements. is 49. Additionally, LTG Sinn remarked operations in Mosul, the second largest city
In LTG Sinn’s plenary remarks he opened that there are 157 interns, and that about in Iraq. This presentaion provided a very
with the observation that the Army has suc- half of the CP 11 SES corps is eligible to postive and completely different perspective
cessfully transitioned to a campaign quality retire now. A good news aspect of being of the success of Operation Iraqi Freedom
force that is relevant and ready to prevail an Army comptroller is the outstanding than what is often portrayed in the media.
in the Global War on Terrorism (GWOT). training opportunities that are open to all. All three sessions are covered in more depth
He stated that demands on the Army have Education programs range from the highly in other articles in this magazine.
produced tremendous challenges for the prestigious Army Comptroller MBA and
Army Resource Management community. MaPA program at Syracuse University,
The Army comptrollers must continue to to training with industry, fellowships at About the Author:
manage the Army’s day to day wartime fiscal OMB and Brookings, and many other Ms. Helen Tierney is a Financial
requirements, ensure the Congressionally training opportunities. LTG Jerry Sinn Management Analyst in the Office of the
directed increase of 30,000 Soldiers is prop- urged all comptrollers to take advantage Assistant Secretary of the Army (Financial
erly and seamlessly funded, and at the same of these outstanding programs. Management and Comptroller.)

3rd Quarter 2004 27

RR Ee Ss O
ouU rRcCeE MMaAnNaAgGeEmMeEnNtT

Army Day
Professional Development Institute

Winning Hearts and Minds: The 101st Airborne Division had an

Area of Operation (AO) of about 75,000 sq

Innovative Resource Management km, with a total of 3 BCTs. Of that area, the
2d BCTs AO encompassed about 4,130 sq

in Mosul, Iraq
km, including Mosul. According to Colonel
Anderson, the town of Mosul is the second
largest city in Iraq and birthplace of the
Ba’ath Party. He said, “There are several very
different areas in Iraq. The north [Mosul]
and south are mirror images of each other.
They are more secure and developed. In the
north, you have the Sunni and in the south,
the Shiites. The central region [Baghdad] is
different, and has problems.”
Law and order was one of the high-
est priorities for Colonel Anderson’s team.
He said, “One of the biggest challenges we
faced was ordinary and continuous crime,
mostly looting”. Some Saddam loyalists
used mosques to gather and plan attacks,
store weapons and spread anti-American
propaganda. Colonel Anderson attributed
sixty-percent of the security problems to
Saddam loyalists and about ten-percent of
the problems to outsiders coming into Iraq,
one third of which were pure terrorists [Al
Qaeda and other groups].
To counter threats to law and order,
Colonel Anderson’s team established and
trained Facility Protection Security Forces,
who guarded critical sites such as banks,
government buildings and other national

he theme of the 2004 Professional Colonel Anderson’s BCT was deployed assets. They also trained the Iraqi Civil
Development Institute (PDI) to Northern Iraq from April 2003 through Defense Corps, who helped restore civil
Army Day in Cleveland, Ohio was February 2004. Recently back from this authority and protect citizens from foreign
Managing Resources During Wartime. This deployment, his perspective was an and domestic enemies.
theme was emphasized throughout the three enlightening look into operations in a Colonel Anderson’s presentation high-
information sessions that were presented. war zone. The Second BCT’s mission in lighted the daily challenges in managing
Colonel Joseph Anderson, Commander of Iraq was to conduct stability and support the city. The challenges included a language
the Second Brigade Combat Team (BCT) operations in the town of Mosul and its and cultural barrier, limited resources and
of the 101st Airborne Division, presented surrounding areas. This included main- competing priorities, contracting issues
a dynamic and interesting session about taining a secure and stable environment, and combat hazards. According to Colonel
recent operations in Iraq. The presentation identifying and detaining enemy combat- Anderson, running the city was “ten times
started with a stirring and patriotic video ants, facilitating the delivery of basic ser- harder than fighting a war on a day to day
entitled “The Fallen Comrade”, a compila- vices and promoting the establishment of basis”. It required a skilled and adaptive
tion of pictures and video, set to music, of government institutions. combat brigade team.
soldiers conducting operations in Iraq.

28 3rd Quarter 2004

The culture and language barriers were when payments were made and forms were control of their own money and doing
significant in Iraq. Colonel Anderson said, filled out. Everything had to be documented things for themselves.
“We had 245 interpreters at the company for audit and accountability purposes. It was To thwart combat and security hazards,
level and I could have used twice that all in U.S. currency and was used to pay for the Second BCT spent a lot of time track-
many.” One of the counter-intelligence CERP projects and supplies. The civil ser- ing and analyzing the patterns and trends of
programs the Second BCT ran was a local vants and new police forces had to be paid. insurgent attacks. They developed sources
radio station. Colonel Anderson held CERP funds were also used to purchase to identify where the bad guys were hiding,
weekly Q & A sessions where local citizens weapons and information. such as hotels, cottages and safe houses.
could call in and ask about anything they Then they conducted raids to capture them.
wanted to. This was all facilitated through Other operations included checkpoints to
the use of skilled interpreters. screen Iraqi identification cards and identify
Cultural differences also created several possible bad guys. The Second BCT also
contracting challenges. The contract bid- Colonel Anderson’s team cleared more than 800 mines and 750 unex-
ding process had to be explained to locals established and trained ploded ordinance sites.
interested in bidding for reconstruction One factor that hurts the stability and
jobs. In Iraq culture, construction jobs are Facility Protection Security security of an area is the frequent rotation
typically given to friends of the foreman. Forces, who guarded of troops. Too many rotations hurt efforts
Iraqis were confused by the contract bid- critical sites such as banks, to build relationships, according to Colonel
ding process, especially western rules and Anderson. He said that the key to stability is
regulations. Additionally, the team only had government buildings and long-range rotations. Some regions have just
one contracting officer and contracts had to other national assets. begun to trust the troops and then they
be written for almost every local construc- are rotated out and a new relationship
tion job. of trust has to be established. The local
One of the main financial manage- population was confused and didn’t know
ment resource tools at Colonel Anderson’s One group of projects high on the prior- whom to trust.
disposal was the Commanders Emergency ity list was getting the schools back up and There were lots of questions at the end
Response Program (CERP) fund. This running, especially the elementary schools. of Colonel Anderson’s presentation. One
fund was used to facilitate the rebuilding Most Ba’ath party people are well educated person in the audience asked about women
of Mosul’s infrastructure, a critical mission and the schools are important to them. in the workforce and government. Colonel
for the Second BCT. The Commanders in The challenges in getting the schools back Anderson said that women represent a small
the field determined which projects and in working order included repairing the percentage of the workforce, but they are
in what order they would be completed. buildings, finding teachers and changing the beginning to play key roles, including poli-
Colonel Anderson felt that Commanders course curriculum. Many teachers left when tics. The Kurds are the most progressive on
were close to the situation and knew best the war started and so it was a challenge to this issue. Iraq is a tremendously different
where resources need to go. He said, “There find new teachers. The course material had culture. The United States has assessed the
tends to be concentration of resources to to be changed to a broad based education ongoing cultural changes and tried to rebal-
the major cities, but the outlying areas need curriculum. The secondary and technical ance the power, including putting women
assistance too. You can’t ignore the sub- schools needed rebuilding as well. There is into the workforce. The Second BCT helped
urbs.” Overall, there were many tasks to be still more to be done, but significant prog- build a women’s union hall for meeting and
accomplished and issues over who gets the ress has been made. social gatherings. There are roundtables
funding, but the money eventually gets to Financial resources are an important about women’s rights. Genuine progress is
the right places. issue everywhere in Iraq. The Iraqi govern- being made.
There were stories of people carrying ment was establishing a new currency and Some in the audience wanted to know
cash in suitcases or footlockers. Colonel replacing the old currency at the banks. how Army civilians could support the
Anderson confirmed that those stories were People were being encouraged to set up troops in Iraq and what if there were
true, but those individuals were designated individual bank accounts, sometimes for opportunities to serve over there. Colonel
to do so and the cash had to be signed for the first time. The Iraqi people are getting

3rd Quarter 2004 29


Anderson encouraged civilians to work tion. Colonel Anderson said he was “thrilled
with leadership to implement programs to serve”, and that “our retention is high in
such as Rapid Fielding of Equipment (RFE) the 101st Air Assault, Soldiers are not leav-
which helps increase Warfighter lethal- ing.” The Division met their recruiting goal
ity and survivability. Reactive Armor and one month early and the soldiers are happy.
Vehicle Hardening also increase surviv- In summary, it was very informative
ability. Intelligence tracking systems such and enlightening presentation. Colonel
as Blue Force Tracking increases situational Anderson brought the boots on the ground
awareness. Jamming devices help protect perspective to life for the Army financial
critical intelligence. Information sharing management community. His presentation
on the battlefield is crucial to success. As emphasized the importance of effectively
for opportunities to serve in Iraq, Colonel managing personnel, equipment and finan-
Anderson said the Army needs contracting cial resources to be successful in Operation
officers, ideally one for each Unit of Action. Iraqi Freedom. Resources, such as CERP
There is a shortage of contracting officers funds, are making a real difference in the
and finance people. Also, they need staff war and improving the daily lives of the
coordination people to organize adminis- Iraqi people. Colonel Anderson ended his
trative details. presentations by thanking everyone for their
Another major issue that came up service and support. In return, the Army
was the press coverage of Operation Iraq financial management community thanks
Freedom. A couple of people asked why Colonel Anderson for his tremendous ser-
Americans aren’t hearing about the prog- vice to the Nation.
ress being made in Iraq or any of the good
news stories. Colonel Anderson emphasized
the importance of the embedded media for About the Author:
fostering good news, both there and here. Mr. Ross Canton is a Program/Management
One of the major keys to success in Analyst in the Office of the Assistant
Iraq is passing on the lessons learned and Secretary of the Army (Financial
training our troops to be better prepared Management and Comptroller).
for whatever situations they may face there
and elsewhere. Since returning in February
2004, Colonel Anderson has been talking
with Commanders and troops, educat-
ing them on the challenges and needs
of the mission in terms of training and
resources. He shares the lessons he and
other Commanders learned over in Iraq
about what worked well and what didn’t. Resources, such as CERP
Colonel Anderson emphasized that the funds, are making a real
Army is modifying the training. The Army
is including role-playing of civil situations.
difference in the war and
Troops need to understand civic organiza- improving the daily lives of
tion and government. The Warfighter has the Iraqi people.
to be adaptable and flexible.
Lastly, people wanted to know when or
if the Brigade and Division were going back
to Iraq and the impact of the war on reten-

30 3rd Quarter 2004

Army Day
Professional Development Institute

FY04 & FY05 Budget Overview

By Kenneshia D.J. Murray

Force agreed to fund phrasing the Army Chief of Staff, General

some of the Logistics Schoomaker, and told the assembled
Civil Augmentation resource managers that he thought that
Program bill, which FY05 would be a year of “changing the
is one of the Army’s valves with the engine running.”
highest cost con- MG Hartsell said that it is clear that
tracts, there is still a FY05 supplemental funding will be neces-
significant funding sary to support FY05 challenges. Operations
shortfall. To manage in Iraq and Afghanistan, for example, are
this shortfall, the not funded in the President’s Budget, as
Army will have to DoD cannot predict the involvement or
push costs/work into costs of future contingency operations. MG
FY05 where it is “not Hartsell stated it was critical that the Army
illegal, immoral, or receive at least a portion of the required

where it would impact readiness.” This supplemental funding early in the fiscal
ajor General (MG) Lynn Hartsell includes deferring work in the depot reset year, so that work deferred in FY04 due to
presented the 2004 Army Day arena, annual facility maintenance, and the FY04 funding shortfall could be accom-
Fiscal Year 2004 (FY04) and Fiscal delaying some PCS moves until FY05. plished before there was an impact on
Year 2005 (FY05) Budget Session. The next topic of discussion was FY05 readiness.
MG Hartsell opened the presentation President’s Budget. MG Hartsell stated the MG Hartsell appreciatively closed
with a warm and sincere welcome to the FY05 budget themes centered around three the session by again thanking the Army
Army Resource Managers, “Thank you for focus areas: readiness, people and future resource managers for all of their efforts
who you are and what you do. It is what we force. In order for the Army to provide and he enthusiastically invited everyone
do that lets the soldiers do what they have ready land force capabilities to combat- to, “Put a smile on your face and be happy
to do.” MG Hartsell then quickly moved ant commanders, transformation of the about what you do.”
into sharing his recent experience with the Army into modular forces is essential to
mid year review, predictions on closing out meet the growing GWOT mission and
FY04, and what could be expected in the enhance warfighting readiness. Additionally, About the Author:
FY05 President’s Budget, and a FY05 Global Soldiers need the best available capabili- Ms. Kenneshia D.J. Murray is a Financial
War on Terrorism (GWOT) supplemental. ties and equipment to conduct operations. Management Analyst Intern in the Office
MG Hartsell promised the audience that he Maintaining the quality of life for Soldiers of the Assistant Secretary of the Army
would do his best to keep his presentation and their families is also essential. The (Financial Management and Comptroller).
simple-something that is difficult to do with requirement to sustain commitment for six
such a complex subject. Stryker brigade combat teams in another
MG Hartsell stated that the FY04 mid- FY05 budget focus. Possible budget esti-
year review was like no other he had ever mates for FY05 are about $98.5 billion.
experienced. Due to the GWOT OPTEMPO, Overall, MG Hartsell believes that from a
there was an Army funding shortfall of funding perspective, FY05 will be similar
$10.9 billion. Even though the Army did to FY04, except there will be even more
well gaining some additional funding in challenges. MG Hartsell concluded the
the OSD mid-year review, and the Air FY05 portion of his presentation by para-

3rd Quarter 2004 31


Army Day
Professional Development Institute

Transformation Resource period of 36 months, providing stability

and predictability. In structuring the force,

Strategy—Relevant and Ready he said the reserve component and the

active component must compliment each

Core Competencies
other. Restructuring the force resulted in
a decrease in field artillery and air defense
units and an increase in military police
By Ms. Monica Davis units and transformation units. As part of
the restructuring, the Army has to divest
cold war structures to better fight the war

on terrorism, relieve stress on high demand
n the Little Theater, of the Cleveland three parts: strategy, risk analysis, and pro-
units, improve readiness and deployability
Convention Center, people listened grammatic guidance. The ACP is product
of units, and execute military to civilian
attentively as Brigadier General (BG) oriented, not input focused. Its key out-
conversions. This is the most significant
Robert Durbin, Deputy Director, Program comes have to do with increased jointness,
Army restructuring in the last 50 years.
Analysis and Evaluation Directorate, campaign quality capabilities, and updated
In order to win the war on terrorism,
Headquarters, Department of the Army, processes and policies.
the Army must provide ready and capable
presented the “Army Focus Areas Progress to BG Durbin then discussed emerging
forces. The Active Component (AC) will
Date and Army Campaign Plan.” BG Durbin resource demands for the POM 06-11
operate on a 3-year cycle (1 year in 3). The
is responsible for analyzing and developing Unfunded Requirements. The Strategic
Army National Guard (ARNG) will oper-
the Army program, considering Defense and Planning Guidance (SPG) has a set of
ate on a 5-year cycle (1 year in 5) and the
Army objectives, costs, and resource con- funding of which sixty-two percent ($30B)
Reserve Component (RC) will operate on
straints. As Deputy Director, BG Durbin had of SPG bills are already identified within
a 6-year cycle (1 year in 6). The Army must
the opportunity to serve on the new Army Emerging and POM 05-09 Unfunded
manage readiness and availability of force.
Chief of Staff transformation team, working Requirements. The Joint Planning Guidance
BG Durbin concluded by discussing the
with General Peter Schoomaker. (JPG), focus areas, and Integrated Priority
POM FY 06-11 Strategy. He stated the strat-
BG Durbin opened the session by stat- Lists (IPL) requirements reflect DoD and
egy addresses fact of life changes and con-
ing the environment under which the Army Army priorities. The goal is to get all three
siders the JPG and Combatant Commander
operated had changed. Post 911, “We are an requirements to co-align so that all funding
Integrated Priotity Lists funding require-
Army at War.” provides the right capabilities in our Army
ments. In addition, modularity programs
BG Durbin stated the Army continuously for combatant commanders that support
will be resourced by supplemental fund-
changes and will continue to improve rel- our Army strategies.
ing. BG Durbin then discussed the Army
evance and readiness, however there is still a BG Durbin talked about the top three
resourcing status, in which it has an $11B
cloud of uncertainty. In order for the Army resourcing strategy decisions for POM/
resourcing shortfall. The goal is to eliminate
to remain “Relevant and Ready,” BG Durbin BES FY 06-11. He discussed the objectives
the shortfall and buy back the program risk.
said it must balance two core competencies of Army Transformation and the Army
and land power capabilities: Train and Equip Campaign Plan. The mission is to build
Solders and Grow Leaders; as well as Provide a campaign-quality Army with joint and Ms. Monica Davis is a Financial
Relevant and Ready Land Power Capability expeditionary capabilities now. BG Durbin Management Analyst Intern, in the Office
to the Combatant Commander and the Joint stated this is how we will achieve balance. of the Assistant Secretary of the Army,
Team. To balance these core competencies He said the Army is too resilient to break. (Financial Management and Comptroller).
the Army must concentrate on 17 immedi- The Army is going to stay with an all-vol-
ate focus areas. Integrating these focus areas unteer force. We will bring in a quality force
will be an ongoing effort. that makes the Army what it is today, which
BG Durbin stated the conceptual frame- is the bottom line in everything we do.
work for integrating these focus areas BG Durbin discussed force stabilization
included The Army Plan (TAP) and The initiatives, which will align soldier assign-
Army Campaign Plan (ACP). The TAP has ments with unit operational cycles for a

32 3rd Quarter 2004

Comptroller Proponency Office
Office of the Assistant Secretary of the Army
(Financial Management and Comptroller)

Resource Management
Professional development bulletin
ISSN 0893–1828

ATTN: SAFM–PO, 109 Army Pentagon,

Washington, DC 20310–0109.