1

O&M,N OverviewPresented by

FMB-1

2

Overview

• Midyear wrap up

• Preparation of the OP-5 Exhibit

- Budget Responsibilities

- Anatomy of an OP-5

- Improving Increase/Decrease Statements

33

• Unfunded Submissions - $551M. Scrubbed: $130M - Non emergent requests or programmatic revisits $ 89M - Items Contained in Submitted Reprogrammings $ 68M - Items Contained in PY Upward Obligation Package $ 24M - Requirements Scrub $ 59M - Low Priority Emergent Issues

• Remaining Unfunded Submissions - $181M $ 54M - Administrative Must Fund (PSI) $ 46M - Post FY Administrative Must Fund (NMCI Incentives) $ 38M - Emergent Issues (Enterprise Inact, COCOMs, PASS/ID)

• ($6M of which funded in FY11 and out)

$ 24M - CNO Reserve Candidates (LCS Early Deploy, Winter Storm Damage, etc) $ 19M – BSO Source Issues per PBCG (Prompt Pay, HR Support, Mass Transit)

Recommend• Fund Admin Must Funds on OMNIBUS• Defer Post FY Must Funds• Fund Emergent Requirements from FMB Reserve• Refer BSO’s to CNO Reserve Process for CNO Reserve Candidates• Fund PBCG-directed Issues via BSO Sources

FY10 Midyear - Baseline Issues

44

Based on Historical Data, $46M of Risk is Manageable• FY06 accommodated transfers out of $243M• FY07 funding of $16M for NMCI Incentives and transfers out of $189M• FY08 experienced over $130M in upward obligations for USS Enterprise, $66M in NMCI & PSI risk• FY09 carried $16M in NMCI Incentive risk• At no point in any of the last four fiscal years have unobligated funds dipped below $68M – even after

funding the risk and transfers above

Historical Unobligated Blances

-

50

100

150

200

250

300

350

400

450

500

Oct

Dec Feb Apr Jun

Aug Oct

Dec Feb Apr Jun

Aug Oct

Dec Feb Apr Jun

Aug Oct

Dec Feb

Month

$M

FY06

FY07

FY08

FY09

5th Qtr Risk

Foreign Currency Transfers

FY06 243FY07 16 189FY08 66FY09 16

Deferred Issues – Funding Risk

5

Budget Responsibilities

•Financial Management and Budget Office (FMB)- Present the most defendable budget as possible to both the Secretary

of Defense and to Congress - Prepares briefs and answers Congressional inquiries throughout the

budget cycle.

•Budget Submitting Offices (BSOs)- Prepare budget exhibits that defend their programs- Maintain good working relationships with their Program Executive

Offices and Program Managers- Understand programs, and be prepared to answer FMB inquiries as

needed

GoodBSO

Exhibits

Thorough FMB Review

and Preparation

A Sound Budget

Submission

6

Anatomy of an OP-5

• The OP-5 is comprised of six sections:

I. Description of Operations Financed

II. Force Structure Summary

III. Financial Summary

IV. Performance Criteria and Evaluation Summary

V. Personnel Summary

VI. OP-32 Line Items as Applicable

• OP-5 requirements are located in DoD Financial Management Regulation (FMR) Volume 2A, Chapter 3. The FMR can be linked to from the FMB webpage.

7

Section I: Description of Operations Financed

•This section should contain a detailed description of the programs funded in the line item.

•BSOs can (and are encouraged) to provide complete descriptions of each program. FMB will revise the descriptions to an appropriate size before submitting to OSD or Congress.

•Important! Be sure to review this section with each submission as programs begin and end every year. There is nothing worse than to get a Congressional question regarding a program that ended years ago but is still described in the OP-5.

8

Section I: Description of Operations Financed (continued):

•Examples of program descriptions:

Physical Security Program (4B2N/25): The Physical Security program provides funding to develop and update Anti-Terrorism and Force Protection (AT/FP) planning and design criteria for Naval facilities. The program provides resources for physical security design guides and studies are geared toward the Department of Defense lock program (Navy is DoD's Executive Agent for this program), electronic security systems, protection against forced entry and direct fire weapons, development of safe havens, design to resist acoustic emanations, design and shielding against electronic emanations, etc. The criteria developed will reduce the vulnerability of personnel and assets to increasing worldwide terrorist threats. Products developed will include Unified Facilities Criteria (UFC) and Unified Facilities Guide Specifications (UFGS). The program also provides training and information management tools to assist facility engineers in the application of the criteria and in keeping abreast of changing requirements, tools, and products. All DOD agencies, Department of Homeland Security personnel, and government contractors will use the products and services developed.

9

Section II: Force Structure Summary

•This section should contain an explanation of the force structure supported by funding in this line item.

•Examples:

This sub-activity group provides for the operation or support of various logistic and technical programs. Specific organizations that are funded include the Navy International Programs Office, the Department of Navy Chief Information Officer organization, and the Naval Acquisition Career Center. Naval Air Systems Headquarters, which manages and supports approximately 500 aviation programs/projects, is funded in this sub-activity group as well as related Program Executive Offices. The Naval Supply Systems Command funds the Naval Operational Logistics Support Center, the Navy Exchange Service Command, and the Fleet and Industrial Supply Centers which provide automated logistics systems development. (4B3N)

This sub-activity group supports the Recruit Training Command located at Great Lakes, IL. (3A2J)

10

Section III: Financial SummaryThe Financial Summary justifies funding from the current year through the budget year. This section consists of three subsections:

A. Sub-Activity Group Total• Summary of funding from Prior Year to Budget Year

B. Reconciliation Summary• Summary of changes within the current year and between the current year and budget year

C. Reconciliation of Increases and Decreases

• Itemize and justify the major program changes in each year.

• Justification should clearly explain programmatic changes in resource levels including why increases are required or decreases occur.

• Justification should relate cost to force structure changes, performance criteria, workload and manpower data, as well as identify the impact if requested changes are not funded

• Each statement should end with a baseline amount in parenthesis for that program. Baseline amounts for Fact-of-Life Changes should equal the amount of the change. If a line item contains only one program, use the entire line item amount for the baseline.

11

Improving Increase/Decrease Statements

Original needing improvement:

Submarine Operations and Safety - Fast Attack Submarine Fleet Support - PR 05 Issue 19047 (PMW VA System Support), PR 05 Issue 19886 (Technical Correction for VA Class), PR 07 Issue 60393 (BRAC Create Naval Int. Weapons and Arm Res) - Increase support the Operations and Maintenence Support, Acoustic trials, Technical Authority Support, Environmental, ILS product Maintenance, ILS COTS VLS PSE, Modernization, technology Upgrades.

Well written:

Increase to reach and sustain required inventory levels for submarine propellers and refurbishment of Submarine Advanced Equipment Repair Program items as a result of increased equipment failure rate due to aging equipment and submarine operational tempo; increase in USS VIRGINIA (SSN 774) Class technical and logistics support is required to establish and bolster technical authority and technical product changes for unique systems as SSN 774 Class submarines are delivered to the Fleet.

12

Improving Increase/Decrease Statements (continued)

Original:

POM 11 Issue 74508 (OSD Contract Services Adjustment). This issue, a part of RMD 802, represents OSD directed adjustments to BOCs. The Command does not have a final strategy for in-sourcing.

Well written:

The Department of the Navy (DON) continues to implement the FY 2010 plan to improve the oversight of contractor services, acquire those services more effectively, and in-source contractor services where it is more appropriate and efficient to do so. This reflects the change to contractor support.

13

Section IV: Performance Criteria and Evaluation Summary

• The Performance Criteria and Evaluation Summary (OP-5, Part IV) must provide supporting detail sufficient to demonstrate how the budgeted resources for each sub-activity group contribute to the Department’s mission Performance Criteria should be divided by programs when possible.

• Example showing dollars and units (4B6N):

• Changes in the Performance Criteria, whether by dollar or by unit cost, should reflect changes in the OP-32 as well as changes shown in the Reconciliation of Increases and Decreases.

14

Section V: Personnel Summary

• Personnel Summary provides the Military End Strength (E/S) and Civilian Full Time Equivalent (FTE) information for the line item. The following items are included:- Active Military End Strength (E/S)

- Reserve Drill Strength (E/S)

- Reservist on Full Time Active Duty (E/S)

- Civilian End Strength

- Direct Hire (US/Foreign National)

- Indirect Hire

- Active Military Average Strength (A/S)

- Reserve Drill Strength (A/S)

- Reservist on Full Time Active Duty (A/S)

- Civilian FTE

- Direct Hire (US/Foreign National)

- Indirect Hire

- Annual Civilian Salary Cost

15

Section VI: OP-32 Line Items as Applicable

• The OP-32 summarizes BOCS data. PBIS Controls and BOCS totals should match.

• As a reminder, program growth in the OP-32 should tie directly to the Performance Criteria and to the Reconciliation of Increases and Decreases.

• In recent years FMB has undergone increased Congressional scrutiny to justify growth in particular ICCs. BSOs should therefore understand why they are using an ICC and be prepared to answer inquiries.

• Example (4B1N):

16

Section VI: Outyear Summary

•For the OSD submission, an additional section of the OP-5 is required

•This section becomes Section VI and the OP-32 becomes Section VII

•The Outyear Summary shows data for the remainder of the FYDP

•Example (4B2N):VI. Outyear Summary FY 2010 FY 2011 FY 2012 FY 2013O&M ($ in Thousands) 240,095 258,749 275,263 283,888Officers (USN) 840 840 840 840Enlisted (USN) 202 202 202 202Direct Hire, U.S. 954 954 954 954

17

The OP-5

Questions?