The Historical Context: In the early part of the 20th century, the federal budget process emphasized the control of actual expenditures. Budget estimates were totals of expenses for items such as salaries, spare parts, or office supplies. DoD lacked a mission or functional structure to classify costs. In addition, the DoD system was highly decentralized, and resource formulation and allocation processes across the services were duplicative, inequitable, and limited to consideration of a single budget year. In the 1940s and 50s, a number of reforms shifted the focus from budget estimates to performance measurement. Performance measures of effectiveness were developed (for example, "miles of road paved per day"), and the budget was based upon functions, activities, and projects. However, there still did not exist a systematic way to ensure that the budget supported the mission or plans of DoD. Consequently, when the budget changed hands or when new issues were given precedence, objectives or planned courses of action changed also, thwarting continuity from year to year. PPBS Introduced to Improve the Budgeting Process: The Planning, Programming, and Budgeting System (PPBS) had its birth in 1962 under then Secretary of Defense Robert McNamara. Proponents of PPBS believed that efficiencies and improvements in government operations could be achieved through a common approach for: (1) Establishing long-range planning objectives (2) Analyzing the costs and benefits of alternative programs that would meet those objectives (3) Translating programs into budget and legislative proposals and long-term projections. PPBS differed from the traditional budgeting process that preceded it in two significant ways. (4) Emphasized objectives-PPBS focused less on the existing base and annual incremental improvements to it, and more on the objectives and long-term alternative means for achieving them. As a result of this shift in focus, PPBS was elevated to a level on par with budgetary management and control. (5) Linked planning and budgeting-by means of programming, PPBS instilled a process that essentially defines a procedure for distributing available resources equitably among the many competing or possible programs. PPBS Becomes PPBE-A Focus on Execution: PPBS imposed financial discipline, integrated the information necessary to develop effective programs to address existing and emerging needs, and established a disciplined review and approval process. However, DoD's processes for strategic planning, identifying needs for military capabilities, developing and acquiring systems, and developing programs and budgets continued to exist as disparate systems. The strategic planning process did not explicitly drive the identification of needs for military capabilities. Also, the program and budget development processes, while imposing fiscal discipline, often have failed to integrate strategic decisions into a coherent defense program. In addition, more time was being spent on deciding how much to spend on a program rather than evaluating what was received for the investment. In 2003, Defense Planning Guidance (DPG) tasked the Senior Executive Council to lead a study and identify improvements that could be made to DoD decision-making and budgeting process. Known as the DPG 20 Streamlining Decision Process, the study recommended a process that became known as Planning, Programming, Budgeting, and Execution (PPBE). Concurrent with the new planning, programming, and budgeting processes, PPBE set forth a two-year budget cycle, which allows DoD to formulate two-year budgets and use the Off-Budget year to focus on budget execution and evaluate program performance. PPBE provides a vehicle for decision makers to examine and analyze decisions by taking into consideration influencing environmental factors such as threats, political and economic climates, technological developments, and resource availability. The processes within PPBE are based on and are consistent with the objectives, policies, priorities, and strategies derived from National Security Decision directives, and shift DoD's focus from straight financial discipline to increased attention and emphasis on program performance and results. With the introduction of PPBE, a major thrust of DoD moving forward is to increase the effectiveness of the programming and budgeting process and to place significant importance on budget execution. Specific emphasis is on linking any major decision both to the Defense Planning Guide and to program and budget development, and then evaluating the performance results. The new PPBE process guides DoD in developing strategy; identifying needs for military capabilities; planning programs; estimating, allocating, and acquiring resources; and other decision processes. In addition, the change more closely aligns DoD's internal cycle with external requirements embedded in statutes and administration policy. PPBE The Bridge Between Military Planning and Budgeting: PPBE is the primary vehicle for identifying mission requirements and translating them into budget and personnel resources required to accomplish that mission. Through the evaluation of alternatives, PPBE ensures the highest priority requirements are funded. Thorough reviews during each phase of the process ensure that major issues (mission-readiness, quality-of-life for military personnel, modernization, Administration priorities, and legislative initiatives) have been addressed within the constraints of total DoD resources. The process itself is flexible enough to reflect the political priorities and management focus of the Secretary and Deputy Secretary of Defense while still providing a rigorous and comprehensive means to ensure that all essential issues are considered in the resource allocation process. Because of the new two-year cycle, PPBE allows the budget to be adapted to each Administration's priorities and policies, while still providing for review, refinement, execution, and continuation of the Administration's programs. The ultimate objective of PPBE is to provide Operational Commanders with the best mix of forces, equipment, and support attainable within fiscal constraints. Based on the anticipated threat, a strategy is developed. Requirements of that strategy are then estimated and programs are developed to execute the strategy. Finally, a budget is developed to pay for the programs. (DOD, OSD Comptroller iCenter, PPBE). Note: Noted and detailed in that FEMA in FY 2008 and 2009 is adopting the PPBE process