Resource Management

3 r d Q u a r t e r 2 0 0 4

INSIDE

This Issue

Capability Based 

Resourcing

Page 4

The Army 

Management Control 

Program

Page 21

National Defense 

Program and 

Budget

Transformation

Page 13
Resource Management is an official professional Bulletin published 

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By order of the Secretary of 

the Army:

Peter J. Schoomaker

General, United States 

Army

Chief of Staff

Administrative Assistant to 

the Secretary of the Army

Joel B. Hudson

Distribution: Special 

Assistant Secretary 

of the Army

Financial Management

and Comptroller

Valerie Lynn Baldwin

Managing Editor,

the Pentagon

Wilett Bunton
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

3 r d Q u a r t e r 2 0 0 4 1

Contents

Resource Management

3rd Quarter 2004 “Professional Development” PB48–04–3 
R E S O U R C E M A N A G E M E N T

A Message from the

Principal Deputy

Assistant Secretary of the Army

(Financial Management 

and Comptroller)

I have a vision for transforming financial management in the Army. That vision 

is to establish one accounting system, 

which will form the financial management 

backbone for all business areas within 

the Army. It will be constructed as an 

Enterprise Resource Planning (ERP) system 

that will provide entry and exit points for 

other business areas, such as logistics and 

contracting, to send and retrieve required 

financial data. 

We are on the way to making this 

vision a reality. The key is to adopt new, 

modern business processes supported 

by an enabling system — not to adapt a 

new enabling system so that it looks and 

feels like our old processes and system. 

Implementation of one general fund (versus revolving fund) accounting system 

for the Army will be the first step. With 

the adoption of modern, proven business practices embedded in a commercial 

off-the-shelf (COTS) ERP system — the 

General Fund Enterprise Business System 

Mr. Ernest J. Gregory

2 3 r d Q u a r t e r 2 0 0 4

 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 current duties as the Assistant Secretary of the Army for Financial Management 

and Comptroller, Ms Baldwin was a member of the Appropriations Committee 

staff of the United States House of Representatives, serving most recently as 

the Staff Director of the Military Construction Appropriations Subcommittee. 

From 1996 until moving to the Military Construction Appropriations 

Subcommittee in 2001, she was a Staff Assistant on the Veterans Affairs, 

Housing and Urban Development and Independent Agencies Appropriations 

Subcommittee. She also served as the Legislative Counsel to the Housing 

Subcommittee of the Financial Services Committee from 1993 to 1996. Prior to 

1993, she served as a Trial Attorney at the Department of Housing and Urban 

Development, and as a Legislative Assistant on the staffs of Senator Nancy 

Landon Kassebaum and Senator John Glenn. 

 Ms Baldwin received her juris doctorate degree from the University 

of Kansas School of Law, her master’s degree from the London School of 

Economics and Political Science, her bachelor’s degree from Wichita State 

University, and her associate’s degree from Seward County 

Community College.
(GFEBS) — we will bring Army accounting into the 21st century. 

Why do we need a modern business 

system? The Standard Finance System 

(STANFINS), its business processes and 

technology are more than 30 years old! 

STANFINS does not provide you and Army 

decision-makers with the timely, reliable 

and accurate financial information needed 

to make informed decisions. Further, the 

lack of a modern system results in wasting 

resources on data calls, work-arounds and 

data reconciliations. In addition, because 

our accounting system was built more than 

three decades ago, it does not meet today’s 

legal and management control requirements for public financial management.

The Army established the GFEBS 

Executive Steering Committee (ESC) in 

March 2004 to provide the governance 

process for our developmental effort. 

Membership includes Army major command resource managers, as well as 

representatives from the Army Audit 

Agency, select Headquarters staff agencies, OSD, the Air Force and the Navy. 

The Principal Deputy ASA (FM&C) is 

the executive sponsor and chair, and the 

Deputy Assistant Secretary of the Army 

(Financial Operations) serves as the ESC 

executive secretary.

Several working groups already have 

met to document “as is” requirements; to 

identify “trigger” points for accounting 

transactions; and to crosswalk requirements to the “Blue Book,” the consolidated list of federal government and DoD 

accounting requirements.

This fall, we plan to release a contracting vehicle to select a systems integrator, 

who will identify an appropriate COTS 

product and an application service provider to implement GFEBS. That COTS 

product will include core financial management tools, such as a general ledger, 

funds management, payment management, 

receivable management, cost management and reporting. We intend for GFEBS 

to replace completely multiple, aging 

3 r d Q u a r t e r 2 0 0 4 3

legacy systems: STANFINS, the Standard 

Operation and Maintenance Army Research 

and Development System, the Defense 

Joint Accounting System, the Database 

Commitment Accounting System and the 

Computerized Accounts Payable System.

Along the way, the Army will reengineer 

all business areas — not just back-room 

finance and accounting processes — around 

the commercial Enterprise Resource 

Planning system. According to the project office, the GFEBS end state will be: “a 

CFO-compliant General Fund Finance and 

Accounting System, on a Joint Financial 

Management Improvement Program 

(JFMIP)-certified COTS ERP product, that 

is capable of supporting the Department of 

Defense (not just the Army) with accurate, 

reliable, and timely financial information, in 

peacetime and in war.” 

Why do I believe our current plan will 

succeed where other attempts have failed? 

I believe the key is early “buy-in” from the 

highest levels. At the very top, President 

Bush established his management agenda 

(the President’s Management Agenda) to 

improve management and performance 

within the federal government. The 

Executive Branch Management Scorecard 

tracks how well the departments and major 

agencies execute PMA initiatives, and the 

scorecard will monitor improvements in 

financial performance. This will help us to 

fine-tune our efforts. Within our immediate community, the Acting Secretary of the 

Army has set firm financial goals. According 

to Secretary Brownlee, “Earning an unqualified opinion on our financial statements 

will attest to the quality of the financial 

information we provide managers. Thus, 

an unqualified opinion remains a priority 

across the Army.”

Additionally, the Army’s Program 

Executive Officer Enterprise Information 

Systems (PEO EIS) has assigned a full-time, 

experienced, Acquisition Corps-certified, 

Level III project manager to lead us through 

the acquisition process. Our Defense 

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 

with design and implementation also 

includes ASA (FM&C) and it will incorporate input from the Army at large, as well as 

from the Air Force and the Navy.

A considerable amount of planning and 

documentation already has been accomplished, but we are looking forward to 

release of the contracting vehicle to move 

this program into high gear. Even with all of 

this progress and a framework in place, the 

Army’s financial transformation will work 

only with your buy-in, assistance, cooperation and willingness to advance beyond 

the present. Help the Army build our new 

Army/DoD Financial Backbone!!
4 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

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 provide Program Analysis and Evaluation 

Directorate (PAED) and the (Planning 

Evaluation Groups) PEGs with the detailed 

guidance required for programming during the Program Objective Memorandum 

Resourcing

We do indeed live in interesting times, full of 

unprecedented challenges and change: We are heavily 

involved in the Global War on Terrorism (GWOT), nine 

of 10 active divisions have seen action in Afghanistan 

or Iraq; we are in the midst of the largest troop rotation 

since WWII; we are radically transforming ourselves 

into a modular, brigade (or Unit of Action) based Army 

and streamlining the field command structure—all 

at the same time. We also are fulfilling the various 

peacetime missions and roles assigned to the Army 

under Title X and other laws and regulations.

Capability 

Based

by Mr. Joe Dailey, CGFM

(POM). POM data does not easily translate 

into the budget exhibits used to justify 

resources to the Office of Management and 

Budget (OMB) and the Congress. Finally, 

the difficulty of accurately forecasting 

requirements two years in advance (FY05 

example below) ensures that we don’t 

execute as we budget. As a result, the HQDA 

staff expends material amounts of effort 

working around the system to keep the process moving.

One solution is to integrate the pieces of 

PPBE. We need to reorganize our mindset, 

thought processes and the data elements 

in our resource management databases so 

that we resource capabilities, NOT programs or systems. The linkage of strategy 

and resources across the phases of PPBE 

provides the opportunity to consider 

resource tradeoffs among priorities, emerging requirements and constraints while 

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 “peacetime” program and budget. Supplemental 

budgets are outside the scope of this article; 

however, the impact of growing GWOTrelated requirements is the primary catalyst 

for changing how we execute PPBE.

R e s o u r c e M a n a g e m e n t
3 r d Q u a r t e r 2 0 0 4 5

Background

PPBE has been a work in progress ever 

since it was implemented under Secretary 

of Defense Robert McNamara in the 1960s. 

The current Army programming system 

has a materiel solution or hardware mindset at its heart and is a legacy of the Cold 

War. The Army makes POM or programming funding decisions at the Management 

Decision Package (MDEP) level. The MDEP 

is an Army-unique tool, which evolved from 

the need to track the development and procurement of equipment (through its lifecycle and across appropriations). Over time, 

the MDEP has been expanded to manage all 

Army programs. The MDEP has served the 

Army well but its programmatic nature is a 

handicap in today’s current chaotic environment. Replacing PPBE’s program/hardware 

focus with a capability focus will correct 

many of its problems.

Planning

The Army’s planning process1is capabilities-based, providing priorities and risk 

management guidance through The Army 

Plan (TAP). Part one of the TAP, Army 

Strategic Planning Guidance (ASPG), contains the vision of Army leadership along 

with priorities for available resources. Part 

two, Army Planning Priorities Guidance 

(APPG), translates part one’s strategic 

direction into operational, priorities and 

risk-management guidance. The APPG is 

intended to provide a bridge from the ASPG 

to part three, Army Program Guidance 

Memorandum (APGM). The APGM offers 

detailed programming guidance, at the program and MDEP levels, to the PEGs for the 

current POM cycle. Unfortunately, this is 

where the process breaks down. 

Repeated efforts to crosswalk Army capabilities to the current MDEPs have never 

been satisfactorily completed. The mappings resulted in a myriad of many relationships between the capabilities and MDEPs2

. 

As a result, there is no direct link between 

strategy and programming. The TAP cannot provide detailed guidance to the PEGs 

as they validate requirements and make 

funding recommendations during the POM 

build. The needed details are not available 

The FY05 Budget in 2-Year Lead-Time

Normal budget timelines do not permit quick reaction to emerging fiscal needs

Command Development Program/Budget Build OSO/OMB Budget Review Congressional Review

FY02

CY02 CY03 CY04

4th 1st 2nd

FY04 Supplemental Build

3rd 4th 1st 2nd 3rd 4th

FY03

Battle Loss/Damage

Interceptor Body Armor

 UAH/ Add-on-Armor

 Theater C4ISR

 Aviation Reset

 Modularity (AC/RC)

 OIF3/OEF 6

 Other

Requirements continue to

evolve that impact FY05

CSA PBD Amended Budget

Comanche Cancellation

+ Requirement to cashflow CPA

FY04

{

Section II, Army Planning Priorities Guidance

Producing Capabilities-Based Planning Guidance

Begin with 

Army Strategic

Objectives (CC’s)

Some tasks will be

subordinate objectives

from SRS

1

Identify 

Tasks

2

Identify 

Capabilities

3

Identify 

Metrics

(future)

4

Prioritize

Capabilities

5

6

Strategic

Objectives

Army Planning

Priorities Guidance

Task 1 Task 2

Shape the 

Security Environment

Forcible Entry

Operations

Sustained Land

Dominance

Support Civil

Authorities

Mobilize The

Army

Prompt

Response

Capability

1

Capability

2

Metric 1 Metric 2

Link with 

programming
6 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

until the Technical Guidance Memorandum 

is published, prior to POM File 1.0 (PF 

1.0) and near the end of the PEG’s POM 

build. The result is a process that could be 

depicted as “pPBe,” with programmers in 

PAED/G8 providing the bridge between 

planning and budget phases. Additionally, 

PAED must solicit POM guidance directly 

from senior leadership, instead of it flowing 

naturally from the planning process.

Programming

 The MDEP-centric programming process is able to produce a POM, a Program of 

Record and a Future Year Defense Program 

that satisfy the requirements of the Office 

of the Secretary of Defense (OSD). Our 

programming process has evolved over the 

past few POMs into tracking large amounts 

of data on various initiatives by Major Force 

Program so that incremental costs can be 

tracked and reported to OSD. However, this 

level of detail, useful in the programming 

process, does not translate well into the 

development of budget exhibits and justification materials.

Budget

 Budget materials discuss the percentage 

of change between budget years in terms 

of discrete categories, such as program and 

price growth3, instead of the long term, 

detailed programmatic view of the POM. 

Budget exhibits and justification materials are built around Budget Activity (BA) 

and Sub Activity levels for Operations and 

Support Appropriations, BA and Standard 

Study Number (SSN), or project level 

for the Investment Appropriations. The 

requirements vary by appropriation and 

category4, requiring reorganization and 

aggregation of the POM data into the formats appropriate to the Budget Estimate 

Submission and the President’s Budget. 

The Army budget process successfully 

produces budget exhibits and justification 

materials required by OSD, OMB and the 

Congress. However, not maintaining a programmatic level of detail forces us to translate budget decisions into the higher level of 

detail required by the PEGs prior to the start 

of the next POM cycle – and effort that, by 

and large, is redundant.

Execution 

 At the end of the process, we actually 

spend the money that we have planned, 

programmed and budgeted across a twoyear period. Federal law governs budget 

execution and its data requirements 

do not match the existing program or 

budget formats due to our increased 

focus on Major Command rather than 

Appropriation, MDEP or Program 

Element. (The Army executes Operations 

and Support (O&M and MILPERS) 

budgets by BA and Sub Activity Group 

(SAG), not by Program Element or 

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 

to the SSN used during the Program and 

Budget phases. The MDEP is not used 

consistently in any appropriation during 

execution, breaking the connection once 

initial guidance is issued.

Need for Change?

If the Army has operated this way for 

years, is there a need for change? For all of 

its faults, PPBE still is one of the best constructs to tie long- and short-term planning, 

annual budgets and execution together. In 

1993, the Congress passed the Government 

Performance and Results Act (GPRA), 

which encouraged other government 

departments and agencies to adopt a PPBElike strategic planning process5

. During the 

Cold War, the process was adequate, as the 

major threat to national interests was confined to a single, large, well-armed military 

power and a few smaller potential adversaries. The environment was fairly stable, 

Mapping MDEPs to Capabilities

Snapshot as of Feb 2004

MDEP

A2AA

PC008 PT001

PT001

PT001

PT001

SSE1

SSE1

PRR1

SSE1

PC008

PC1010

PC5397

Capability Task

Strategic

Objective

A2AP

A2AA

DFFE

One MDEP (DMCS) maps to 10 Capabilities

One Capability (PC4388) that maps to 31 MDEPs
3 r d Q u a r t e r 2 0 0 4 7

and changes in threat capabilities could be 

anticipated6. Since the fall of the Soviet 

regime, the geopolitical environment has 

been anything but predictable. The United 

States may be without peer as the world’s 

sole superpower, but we are confronted by 

a bewildering variety of adversaries and 

threats. This environment calls for a system 

that can tie plans, programs and budgetary resources together while responding to 

constantly changing or emerging threats 

and requirements.

Another reason to adopt a capabilities-centric process is that OSD already has 

moved in this direction. On October 31, 

2003, even before the final results of the 

Aldridge Study were published, Secretary 

of Defense Donald Rumsfeld signed a 

memorandum, titled “Initiation of a Joint 

Capabilities Development Process”. This 

document established as a goal “development of a streamlined and collaborative, yet 

competitive process that produces fully integrated joint warfighting capabilities”7

. This 

new process would be based on the Defense 

Secretary’s and Combatant Commanders’ 

priorities, with the center of effort moving 

upwards from the Services to OSD. We in 

the Army have a choice: we can embrace 

this change and attempt to work within 

its construct; or, we can fight it. General 

Schoomaker, since his arrival, has challenged us to become “A Campaign Quality 

Army with a Joint and Expeditionary 

Mindset.”8, with this statement; I believe 

that our vote has been cast. Adoption of 

ning risk guidance into language that programmers and PEGs can use. The APGM 

would have to be reorganized around 

CDEPs (initially with a crosswalk from the 

old MDEP structure) in order to provide 

detailed guidance to the PEGs at the beginning of the POM. This level of detail also 

would assist in building future editions of 

the new Part IV, the Army Campaign Plan. 

The ACP is a strategic–level, yet detailed, 

Operations Order that supplies direction for 

detailed planning, preparation and execution of senior leader strategy.

Programming (revised) 

The existing PEG structure would 

remain, as it facilitates a balance between 

the strategic goals of the Army and its Title 

X responsibilities. POM requirements and 

funding decisions would be reorganized 

around the CDEP, and CDEPs would 

replace MDEPs, once PEGs crosswalk 

requirements and funding (building on the 

results of G3’s mapping efforts) to the new 

CDEP structure during the FY 07-11 offyear cycle. Except for this change, the Army 

would continue to use its current database 

structure during the off-year cycle and 

POM 08-13. Full integration would require 

a programming process and database 

redesign that balance the details required 

by OSD’s programmers and facilitate the 

building of budget exhibits and materials, 

while still being mindful of budget execution requirements. The upcoming FY 07-11 

off-year cycle provides a test of this new 

process prior to the full POM 08-13 cycle. 

The linkage between the planning and budget phases would have a side benefit: allowing Army PAED to achieve the goals set for 

the Army Resource Framework (ARF) in 

terms of tracking dollars throughout the 

Planning, Programming and Budget phases 

of the process10. The current ARF is not tied 

to capabilities as a result of the MDEP mapping problem; however, the conversion to 

CDEPs would connect the ARF to all three 

phases of PPBE.

PPBE

is still is one of the best 

constructs to tie 

long-and short-term 

planning, annual budgets 

and execution together.

a capabilities centric process is key for the 

Army’s leadership to remain “a player” in 

future OSD resource decisions. Early adoption of a capabilities centric process that 

satisfies Army requirements could also work 

to our favor since OSD is still struggling 

with implementation9.

Road Map to Capability Based 

Resourcing 

For all of these reasons, the current way 

in which we execute the PPBE system is not 

adequate to the task. But, a drastic reengineering effort won’t help us today. The solution isn’t to throw out the current system 

but to realign its parts to work in concert, 

with each other. To put it another way: This 

realignment would refocus PPBE so that it 

“begins with the end in mind.” The concept 

behind PPBE is sound, and we should build 

upon its strengths so that information 

flows and resources can be tracked from the 

planning phase through the programming 

and budget phases into execution. We can 

get to a Capability-Based Resourcing process with just a few fundamental modifications to the existing structure during the 

“off year” FY 07-11 cycle. Implementation 

would be completed during the full FY 08-

13 POM cycle.

Planning (revised)

 The methodology for constructing The 

Army Plan would remain the same, except 

that we would keep in mind the need to 

translate its products through the programming phase into a budget that can be both 

justified and executed. This would require 

detailed planning to cover not only the 

strategic and operational component but 

also the sustaining base and institutional 

component. As the ASPG is crafted, we 

could map capabilities to a new equivalent 

data element, a Capability Decision Package 

CDEP) instead of trying to map capabilities 

to MDEPs. This would allow for a one-toone or one-to-many data element relationship for each capability. This fundamental 

change would enable the APPG to achieve 

its purpose: providing a link between the 

ASPG and the APGM, and translating plan-
8 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

Budget (revised) 

The budget justification process would 

be strengthened because we would be able 

to link the resource displays in our budget 

exhibits to the capabilities and strategy 

articulated by Army leadership. Army 

Program Elements probably will require 

reorganization to ensure the capability 

linkage, support the programming database 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 

resource decisions during future program 

and budget cycles. This enables achievement of a key requirement of DoD’s 

Management Initiative Decision (MID) 

913, that execution data inform budget 

and program decisions during the second, 

or off–year of the cycle.

Execution (revised)

 In the near term, there would be minimal 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 

execution as a decision tool for future 

budget and programming decisions, as 

required by MID 913. 

To complete the transition to 

Capabilities-Based Resourcing, the procedures and systems used to distribute funding and to account for the expenditure of 

resources must also change. The new systems and processes should embrace capabilities, enhance data exchange and visibility 

at all levels and implement cost accounting. 

This part will take much longer than changing the other three pieces because the Army 

does not own these processes. Funds control policy and regulation begins with the 

Treasury Department and OSD providing 

guidance for specific defense requirements. 

OSD is responsible for accounting policy. 

The Business Management Modernization 

Program (BMMP12) monitors changes to 

existing or planned systems that are operated by the Defense Finance and Accounting 

Service (DFAS).

The new systems should be easy to 

operate, as well as, provide adequate management controls necessary to prevent 

fraud, waste and abuse of public resources. 

Financial management systems which support DoD accounting needs are essential 

to achieving the improvement in financial management envisioned by the Chief 

Financial Officers Act of 1990 (P.L. 101-576) 

and contribute to the goal of producing 

auditable financial statements. 

The Army’s performance metrics also 

must be modified to embrace a capabilitybased structure. This enables leadership 

to know how much we spent on capability 

X, and to evaluate “if ” the Army achieved 

its goals. 

Maximum Level of Army Support

 

 Percent of 

Percent of

 Force $8 Annual Army Army 

Operation Fiscal Year Structure Funding Base TOA O&S

Somalia 93 26K $0.5 1% 1%

Haiti 95 15K $0.4 1% 1%

Bosnia 97 6.5K $1.8 3% 4%

Kosovo 00 7.2K $1.6 2% 3%

GWOT 04 216K $40.1 42% 58%

Current MDEP Centric Process

Capabilities Centric Process

Ends

Capabilities

Vision &

Strategy

Capabilities

& Priorities

Resource

Tasks

Floors, Levels

& Ceilings

Critical

UFRs Justification Execution

Ways

Priorities

Means

Resource

Tasks

Missing Links 

between parts

Floors, 

Levels

& Ceilings

Critical

UFRs Justification

TAP 1

TAP 1

TAP II

TAP II

TAP III

TAP III

TGM

TGM

1-N

1-N

J-Books

J-Books Acct Rpts
3 r d Q u a r t e r 2 0 0 4 9

Summary 

The integration of the parts of the PPBE 

process is long overdue. Our wakeup call 

came on September 11. The old system was 

adequate during the 1990s era of Stability 

and Support Operations13, also known as 

Operations Other Than War. However, in 

the post 9/11 world, the Global War on 

Terrorism (GWOT) carries new fiscal realities. The exponential jump in emerging 

requirements that must be funded out of 

the Army’s base and supplemental budgets 

provide the stimulus for change. Although 

the Capability Based Resourcing is a peacetime or base program/budget tool, it also 

facilitates resource-informed consideration of modifications to Army priorities; 

resources can be tracked back to strategic 

goals and supporting capabilities, even if 

not included in the original base program 

or budget.

Large bureaucracies are loathe to 

reform themselves. However, the current situation requires the Army to adapt 

quickly, if it is to provide senior leaders 

the financial information they need to 

make informed decisions on the reallocation of limited resources in response to 

rapidly changing strategic and operational 

requirements. Our current environment 

demands a flexible PPBE system that can 

provide timely and accurate resource 

information and is adaptable to sustained 

wartime operations. The realignment of 

PPBE phases into an integrated capability-based (CDEP)-process is an executable 

solution well within our reach. 

About the Author:

Mr. Joe Dailey, is the Executive for Budget, 

to the Planning, Programming and Budget 

Committee Headquarters Department of 

the Army, Office of the Assistant Secretary 

of the Army for Financial Management 

and Comptroller and member of the Army 

Comptroller Program Class of 1999.

References:

1. Army Regulation AR 1-1 Army Planning, 

Programming, Budgeting and Execution System, 

30 January 1994. Chapter 3. and The Army Plan FY 

2006 –2023.

2. Auditing Data Relationships or The Power of 

Join (Part 1) By Douglas Rogers, F.C.A., I.S.P. and 

James Strong , B.Sc. E. E., P.Eng. IT Audit Vol Vol. 

4, June 1, 2001 The Institute of Internal Auditors. 

http://www.theiia.org/itaudit/index.cfm?fuseaction

=forum&fid=71 Relational Database terminology 

used when linking different datasets to each other. 

Ideal joins between different tables are called one to 

one relationships i.e. one element in the first table 

relates to only one element in the second. Joins 

using one-to-many or many-to-one relationships 

may produce unclear results.

3 7000.14-R DOD, FINANCIAL MANAGEMENT 

REGULATION Volume 2A & 2B BUDGET 

FORMULATION AND PRESENTATION http://

www.dod.mil/comptroller/fmr/

4. Appropriations fall into Operations and 

Support (Military Personnel and Operations 

and Maintenance); Investment (Procurement 

Appropriations (Aircraft, Ammunition, Missiles, 

Weapons and Tracked Combat Vehicles, Other 

Procurement)); Research, Development, Testing 

and Evaluation (RDTE); Military Construction; and 

Family Housing. 

5. Implementing Instructions can be found in 

OMB Circular. A–11 PART 6 PREPARATION 

AND SUBMISSION OF STRATEGIC PLANS, 

ANNUAL PERFORMANCE PLANS, AND 

ANNUAL PROGRAM PERFORMANCE REPORTS 

http://www.whitehouse.gov/omb/circulars/a11/current_year/s200.pdf

6. A New PPBS Process to Advance Transformation, 

Stewart E. Johnson, Defense Horizons #32, Sept. 

2003, Center for Technology and National Security 

Policy, National Defense University

7. Joint Defense Capabilities Study, final report, 

January 2004, Joint Defense Capabilities Study 

Team. Appendix A pg A-2

8. The Way Ahead Our Army At War – Relevant 

and Ready http://www.army.mil/thewayahead/foreword.html

9. GAO Report 04-514, Future Year Defense 

Program. Actions Needed to Improve Transparancy 

of DoD’s Projected Resource Needs. Dated 7 May 

2004. OSD’s response non-concurred with GAO’s 

recommendation to align program elements in 

the FYDP to 1) defense capabilities... and 2) the 

dimensions of the risk management framework. 

Pg 29. 

10. Binning and the Resource Framework, LTC Mike 

Boller, Resource Management, 1st Quarter 2003, 

pg 26-33.

11. DoD’s Management Initiative Decision (MID) 

913 — Implementation of a Two-Year Planning, 

Programming, Budgeting and Execution Process, 

dated 22 May 2002.

12. The Business Management Modernization 

Program (BMMP) is a DoD effort to develop, 

coordinate and manage a systematic approach to 

transforming DoD business operations. The goals 

of BMMP are to provide timely, accurate and reliable information for Business Management and to 

enable improved business operations. Draft DoD 

Management Initiative Decision (MID) — 920 U.S. 

Standard General Ledger Financial Management 

Systems dated 4 April 2004.

13. FM 3-07: Stability operations and Support 

Operations, Feb 2003, Chap 1. “Stability operations 

and Support Operations predominate in MOOTW 

that may include certain smaller scale contingencies 

and peacetime military engagements....”

“Stability operations promote and protect U.S. 

national interests by influencing the threat, political, and information dimensions of the operational 

environment through a combination of peacetime 

developmental, cooperative activities and coercive 

actions in response to crisis (FM 3-0). Army forces 

accomplish stability goals through engagement and 

response. The military activities that support stability operations are diverse, continuous, and often 

long-term. Their purpose is to promote and sustain 

regional and global stability. 

“Support operations employ Army forces to assist 

civil authorities, foreign or domestic, as they prepare for or respond to crisis and relieve suffering 

(FM 3-0). The primary role of support operations 

is to meet the immediate needs of designated 

groups, for a limited time, until civil authorities can 

accomplish these tasks without military assistance. 

Support operations also have two subordinate 

types: domestic support operations and foreign 

humanitarian assistance.”

Our current 

environment demands a 

flexible PPBE system 

that can provide timely and 

accurate resource 

information... 
10 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

The Six Sigma Digital Journey 

at Motorola

Motorola doesn’t use the term productivity management to describe its overarching 

business process improvement methodology; it refers instead to the term, “Design 

for Six Sigma” (DFSS) which has many of 

the same objectives as the military’s productivity management. DFSS is designed for 

technology and product development and 

is primarily in the manufacturing arena. 

Mike Fenger, Corporate Vice President and 

Director of Motorola’s Corporate Initiative’s 

Group (CIG) states, “DFSS is not just an 

initiative, but the way we work.” In other 

words, it is a mindset and deliberate tenet 

of the Motorola corporate culture based 

on continuous improvement. He adds, “It 

(DFSS) needs to be elevated to everything 

we do, as much a part of our daily routine as 

anything else.” 

Having observed DFSS in practice, I 

see how it can apply to any organization 

seeking process improvement. This is the 

prescription the Army seeks in looking at 

The Army Way Ahead, an overview of the 

Army Strategic Planning Guidance (ASPG). 

The ASPG represents the Army senior 

leadership’s vision of how the organization 

will fulfill its mission to provide necessary 

forces and capabilities to the Combatant 

Commanders supporting national security 

and defense strategies. 

At Motorola, an established framework 

exists to advocate and accelerate change. 

DFSS is coupled with effective program 

management and the rigorous M-gates process for product development1

. 

One of the foundations of Six Sigma 

is DMAIC (“dee-may-ik”), an acronym 

which stands for Define, Measure, Analyze, 

Improve and Control. General Electric 

adopted Six Sigma and made it and the 

DMAIC process famous. The 1st Quarter, 

2002 RM Journal featured an interesting article on the subject, “The Six Sigma 

Strategy at General Electric.” Today, 

Motorola has its associates working to 

deliver the next generation of Six Sigma, 

“Digital Six Sigma® .”

Old vs.New

Digital Six Sigma (DSS) takes the lessons 

learned from all companies that adopted 

Six Sigma, good and bad, and incorporates them into the process. At the same 

time, the speed with which the organization achieves its stated Six Sigma project 

goals is significantly increased throught the 

application of IT solutions, hence the term, 

“digital.” E-tracking, e-analysis, e-training 

and e-compliance tools are applied to the 

improvement methodology at Motorola. 

Ron Kozoman, a “Blackbelt”2 expert within 

the Third Generation Cellular Technology 

(3G) Team stated it elegantly of Design 

For Six Sigma, “It’s changing the mindset 

from only using DFSS in a manufacturing environment and applying it to all 

functions, human resource management, 

supply chain management, etc. It is spending time on added value processes and 

eliminating redundancies.” DFSS adopters throw another acronym around in 

daily conversation. BHAG, or “Big Hairy 

Productivity Management

by Major Ryan Saw

Audacious Goals” sounds wise-cracking, 

but the corporate humor belies the serious 

principle that drives Motorola’s resource 

allocation. The setting of goals and objectives in this private sector organization 

is not to be trifled with; its managers are 

dead serious about the aggressiveness they 

demand in all disciplines. Figure 4 shows 

how Motorola will bring about this change. 

The scores were left blank for a specific 

purpose. In the equation, Q*A = E, quality 

multiplied by acceptance leads to greater 

effectiveness. The scores are insignificant 

if senior management does not support 

the process and change management is not 

emphasized. Highly trained statistical and 

analytical “blackbelts” are a cornerstone 

of Six Sigma and execution of DFSS. DSS 

emerged as a concept in 2002 for the corporation to build upon a solid foundation 

to establish a revolutionary new Business 

Process Management Systems (BPMS). This 

evolution to a new Six Sigma paradigm, one 

in which IT tools supercharged processes, 

where portal and Web technology enabled 

the corporation to apply business improvement more broadly and rapidly is today 

at the heart of the most aggressive goal, to 

realize cost reductions of as much as $3 billion. It is changing the way the company 

does business, from one end to the other. 

DSS no longer strains to simply reduce 

the number of defects, but instead strives 

toward the broader goal of reducing all variation around accomplishing business goals 

and objectives. The question, “How did we 

do this before?” or “What is the best design 

for the next cellular phone?” is no longer 

articulated, but questions like “What does 

the customer want?” and “How do I regain 

lost market share?” drive projects.

Digital Six Sigma cannot function without a supportive, committed infrastructure, 

a lesson the US Army can benefit from. The 

infrastructure DSS thrives upon BPMS. The 

BPMS provides the foundation upon which 

to build a collaborative, consolidated, enterprise-wide environment for the implementation of systematic Six Sigma initiatives. 

Think of BPMS as an engine to analyze the 

behavior of the processes, not how each 

operates independently, but in terms of how 
3 r d Q u a r t e r 2 0 0 4 11

they behave collaboratively and interactively 

at all levels of the organization.5

The key components include people, 

systems, machines, Six Sigma processes 

and new initiatives that function across the 

value chain, in an end-to-end fashion. A 

World class organization, Motorola is working to develop and institutionalize Digital 

Six Sigma throughout its culture. 

Toward the close of 2003, a cross-functional team worked on solutions to deliver 

the “digital” in Digital Six Sigma, IT tools 

such as e-tracking and e-visibility, capabilities incorporated into what’s called 

the “digital cockpit,” a real-time project 

tracking solution. It’s called a digital 

cockpit because like an aircraft’s cockpit, 

this desktop view provides us a look at 

all the critical, real-time instrumentation 

and measurements necessary to navigate 

a program, project, or activity through 

to successful, on-time completion.6 The 

digital cockpit brings yet more culture 

change to Motorola, with businesses, 

operations, functions and even suppliers 

being tracked and accountable for information and progress-to-plan. All is shared 

collectively and updated in real time, leaving no room for “fudge factor.” Motorola 

leverages information technology and 

web-based applications so that timely, 

responsive and accurate information can 

be converted into increased productivity and effectiveness. The philosophy and 

approach of the digital cockpit can be 

readily tailored to suit the Army’s purposes, but the challenge of culture change 

and adoption is an obstacle multiplied 

many times over that of Motorola. 

Why Productivity Management 

Will Work Well at Motorola 

Productivity management works well 

at Motorola because senior leadership supports the program and is totally committed. 

Motorola attacks non-productivity at every 

opportunity. One of its leading change advocates, Mike Fenger, Corporate Vice President 

for Personal Communications Sector (PCS) 

Business, Operations and Planning, is a 

“dual-hatted” leader at Motorola, serving 

as corporate vice president and director of 

the Corporate Initiatives Group, or CIG, 

and within the PCS. As CIG lead, he is 

charged with implementing DSS throughout 

the entire Motorola organization. At the 

same time, he currently attends to process 

improvement within PCS, a business facing perhaps one of the most aggressive 

and challenging markets in the world; 

wireless phones and the former General 

Electric executive’s presence is making a 

difference; Program Management, Project 

Management, and DSS prosper. His insight, 

motivation and direction provide Motorola 

with a BHAG such as DSS that is now a part 

of the Motorola culture instead of a flavorof-the-day initiative. 

Every Motorola employee is exposed 

to productivity management within the 

organization. At a Digital Six Sigma kickoff 

luncheon at PCS, instead of a “sales pitch” 

on the benefits of DSS, it immediately 

became clear that the event in fact would be 

a working lunch with clear, focused objectives facilitated by a certified “blackbelt.” All 

senior managers throughout the 3G Cellular 

Technology Team attended and represented 

every function: product management, program management, hardware engineers, 

software engineers, resource management, 

human resource management, marketing, 

business operations, quality, and “blackbelts”. 

This team was to figure out how to increase 

operating earnings by $100 million; this 

involved looking at every process within the 

3G Cellular Technology Team. After eight 

hours being locked in a room, the assembled 

group figured it out and established a plan 

using the DSS principles. In hindsight, the 

luncheon was a training opportunity as 

well as an approach to regain focus, realign 

efforts and select projects that offer the 

greatest financial returns. When the meeting 

adjourned, every person had a clear direction 

and was assigned responsibility for the projects. This was a great way to hold managers 

“feet to the fire” and make them accountable. 

Once a project is approved, the sponsor 

selects the team members. I was selected 

as a team member on two teams because 

they impacted financial performance. The 

first team’s charter was to develop a reduction, reuse and commonality strategy for 

3G Technology cellular phones. The second 

team’s charter was to balance resources 

across development cycle. This approach 

provided a systematic process for projects to 

be pursued. 

Finally, product management is effective 

because of the initiatives that are generated throughout the life of the selected 

project. Two of these initiatives are “Close 

the Gap Initiative” and Project Accounting. 

“Close-the-Gap” is Motorola’s primary costimprovement process. The concept, which 

is probably the most readily transferable to 

the Army of all Motorola’s cost control ideas 

and tools, is simply looking at cost drivers 

and comparing them to our competition. 

Some of the areas of focus at Motorola 

are development labor, travel, engineering 

How Can We Make It More Effective?

x

x

SLT Commitment

New Training

Full Time Resources

Digital Solutions

=

=

Q x A = E

Today’s Score

Goal

Digital 

Six Sigma

Enhancements

New Tools

Digitalized Processes

DFSS

M-Gates

�

�

Motorola
12 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

materials, discretionary spending (comparing to Commander’s Reserve in the Army), 

and telephone usage. This is just a few of 

the items. Over the course of the year, 3G 

presents the results of its efforts each month 

to PCS allowing sector the opportunity to 

track the progress made. Project Accounting 

is another initiative Motorola is actively 

pursuing which is similar to ABC in the 

Army. The big difference between the two is 

that Motorola financials systems will have 

connectivity to program management tools 

such as Teamplay8 so forecasted budgets 

and actual budgets can be compared. A unified budgeting and execution database that 

has data pulls from forecasted data such as 

Teamplay offers huge potential payoffs to the 

Army as a tool to gain timely control over 

costs and selection of activities to monitor. 

Army is on the Right Track

Despite their disconnected, segmented 

resource processes that exist today, the Army 

has plans to turn things around. The fiscal 

challenges facing the Army are necessitating changes in the way we do business. The 

eleven business areas are being encouraged 

and mandated to begin implementation 

of the productivity management program. Assistant Secretary of the Army for 

Financial Management and Comptrollership 

(ASA(FM&C) is even offering a $100,000 

cash award to the best Cost Management/

Activity Based Costing (CM/ABC) cost initiatives submitted for each of the 11 business 

areas for fiscal year (FY) 2004. CM/ABC 

initiatives may result from cost savings, productivity or performance improvement, or 

increased efficiency in each command. 

The United States Installation 

Management Activity, (IMA) one of the 

eleven business areas, has a charter and 

vision that will be a catalyst for this activity 

to get on the same path as Motorola. IMA’s 

key objectives for the upcoming year are: 

implementing installation design standards 

(IDS), Army Baseline Services (ABS) and 

performance measures; streamlining garrison organizations and functions; implement 

CM/ABC; and initiating business process 

redesign. The next step will be to connect all 

these objectives into one overall methodology such as DSS with the purpose of institutionalizing a productivity management 

culture throughout IMA using CM/ABC to 

drive continuous cost reduction and clear 

evidence of productivity improvement. IMA 

has an aggressive approach to productivity 

management in 2004, but the implementation plan still has to be executed. The 

Army has not had a very good track record. 

Efforts to streamline processes and centralize management to the Army are threatening because it could mean reductions in the 

workforce. Consequently, implementation 

plans are delayed. Something of this sort 

happens at Motorola also, but the impacts 

are lessened because processes are more 

integrated across all functions than in the 

Army. For example, a failure to meet a milestone on a project or program could mean 

a slippage in ship dates of product resulting 

in customer dissatisfaction, reduced profit 

margins and poor quality. 

The intent of this article was not to paint 

a picture of perfection at Motorola in productivity management and all their related 

business processes. Motorola is just getting 

started and has a long way to go before they 

change the hearts and minds of all employees within the organization. There are definitely areas for improvement such as the 

establishment of budgets for all programs 

and projects and reducing the number of 

defects. But the real questions that should 

have been answered are “Can their business 

processes be benchmarked by the Army?” 

or “How can Motorola deliver products 

on-time, below cost, and within quality 

standards?”. The answers to these questions 

should spur your interest and arouse your 

curiosity as a comptroller or financial manager. They did during my first 6 months. 

Conclusion

The details of the process may be different, but the methodology for the process, 

the rigor and discipline will remain the 

same. It goes without saying; Corporate 

America is significantly different than the 

United States Army. 

Motorola operates in a fiercely competitive, 

economic environment which forces them 

to operate as efficiently and productively 

as possible since its very survival is threatened. As both organizations are fond of noting, fear of death focuses the mind. Motorola 

can not get behind its competition. Success 

often depends upon which company has 

the most sound practices and processes and 

who can execute faster with lesser errors. 

Motorola moved too slowly to transition 

from analog to digital cellular phones in the 

early 1990’s and remains today chasing its 

competition. It failed to improve its processes 

and decision-making faster. The Army will 

suffer the same fate if it fails to streamline 

its resource processes and insist on making 

them complimentary, integrated and productive. But the good news is both Motorola 

through Digital Six Sigma and the Army 

through productivity management can overcome the challenges before them. 

About the Author:

Major Ryan Saw is one of five Functional 

Area 45 officers participating in the Training 

With Industry program, in his case with the 

Motorola Corporation.

References:

1. M-Gates is a process management concept adopted 

by Motorola for making and validating significant 

business decisions at key points in the Market and 

Product Line Planning (MPP) and System and Product 

Development (SPD) Business Lifecycle phases.

2. Six Sigma black belts are skilled in precisely defining DMAIC processes and then developing effective 

ways to apply them so that they work in practice across 

an organization. They work alongside Six Sigma team 

members, many are which employees involved in the 

process to be improved.

5. Smith, Howard & Fingar, Peter. “The Third Wave 

of Business Process Improvement: Digital Six Sigma.” 

Business Process Management Library (2003): 14pp. 

Online. Internet. Jan.6, 2004;http://www.bpmi.org/

bpmi-library/87799c1690.Digital_Six_Sigma.pdf

6. “Digital Cockpit Cleared for Take-off.” Feature 

Stories Archive: Digital Six Sigma: n.pag. Online. 

Intranet. Jan.7, 2004; http://dss.mot.com/

DSSFeature01.htm

7 Motorola has 16 gates that must be met before end 

of life of a product. They include: 15) Idea Accepted 

14) Concept Accepted 13) Solution Accepted 12) 

Portfolio Accepted 11) Solution Lockdown 10) 

Project Initiation 9) System Requirements Baselined 

8) System Requirements Allocated 7) Contract Book 

Baselined & Approved 6) Design Readiness 5) System 

Test Readiness 4) Ready for Field Test 3) Ready for 

Controlled Introduction 2) Volume Deployment 1) 

Retirement Plan Approved 0) End of Life

8. Teamplay is an abbreviated name for the Primavera 

Enterprise Program Management Tool which is used at 

Motorola. It is a software database that manages and computes program resources, schedules and program status.
3 r d Q u a r t e r 2 0 0 4 13

Book contents: 

Chapter 1 National Defense Policy and Resource Decision 

Making: Unique Challenges; Chapter 2 The Federal 

Government Budget Process; Chapter 3 Budgeting for National 

Defense: Complicated But Workable; Chapter 4 The Planning, 

Programming, Budgeting, Execution System; Chapter 5

Congress and the Defense Budget: From the Cold War to the 

War on Terrorism; Chapter 6 Supplemental Appropriations for 

National Defense; Chapter 7Defense Budget Execution; Chapter 8

Budget Process Participants - The Pentagon; Chapter 9 Budget 

Process Participants - The Claimants; Chapter 10 Financial 

Management and Defense Budgeting; Chapter 11 Budgeting 

and Management of Defense Weapons Acquisition; Chapter 12 

National Defense and Federal Government Budgeting and 

Management Reform: History, Transformation and the Future

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 discretionary account in the federal budget, that of the 

Department of Health and Human Services. 

Despite spending of this magnitude, the 

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, 

it has been changed in several important 

ways. First, the reform merged separate program and budget review into a single review 

cycle performed simultaneously rather than 

sequentially. Second, it incorporated a biennial budget process matched to national 

electoral cycles with major strategic changes 

slated for the second and fourth year of a 

Presidential term with minimal updating to 

be done in the first and third years. Third, it 

fixed timing of the process so that planning 

and budgeting were clearly derivative processes driven by the Quadrennial Defense 

Review (QDR) and the National Military 

Strategy. Fourth, it changed the cycle for 

Office of the Secretary of Defense (OSD) 

provision of top level planning information 

to the military departments and services 

from annual to biennial. 

These changes have created a two-year 

decision cycle with a complete review in 

year one followed by limited incremental review in year two. This is meant to 

National Defense Program 

Excerpted From The New Book:

Budgeting And Financial Management 

for National Defense1

by Mr. Jerry L. McCaffery and Mr. Lawrence R. Jones

and Budget Transformation
14 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

decrease turbulence and reduce unnecessary 

re-making of decisions. Further, changes 

made in each on-year cycle are intended 

to have quicker effect by compressing the 

programming and budgeting cycles while 

still preserving the decisions made in the 

on-year cycle through the off-year by limiting reconsideration of decisions to only 

the most necessary updates. In essence, 

decisions are to be made more quickly but 

should last longer. 

PPBS has provided DoD a roughly rational mechanism for coordinating a number 

of semiautonomous and individually complex decision processes related meting war 

preparedness, fighting and support resource 

requirements. PPBS has applied relatively 

neutral expertise from the civilian and military parts of the organization within a decision process that is inevitably political on 

its own and also is driven by politics. PPBS 

has embraced a variety of political agendas 

across a number of Presidential administrations to project and enable resource 

management over an extended planning 

and budgeting horizon. A relevant question 

presently is the extent to which the recently 

revised PPBE system will assist in meeting 

the resource decision demands of a world 

changed by the events of 11 September 2001 

and thereafter.

In this book excerpt we review the history of PPBS and indicate how the reforms 

of 2003 have changed it. We also speculate about the limits to change within the 

Department of Defense and at the political 

interface between DoD and Congress given 

the expectation that the latter will give up 

little of its legislative prerogatives regardless 

of what DoD does in planning, programming, budgeting and execution. 

PPBS History and Development

PPBS was implemented in DoD 

originally by Defense Secretary Robert 

McNamara and by Charles Hitch, Robert 

Anthony, and others during the administrations of Presidents Kennedy and 

Johnson in the 1960s (Thompson and 

Jones, 1994). Prior to 1962, the DoD 

did not have a top-down coordinated 

approach for planning and budgeting 

(Puritano, 1981; Korb, 1977; Korb, 1979; 

Joint DoD/GAO Working Group on PPBS, 

1983). Until this time, the Secretary of 

Defense (SECDEF) had played a limited role in budget review as each military service developed and defended its 

own budget. McNamara had used PPBS 

when he was the President of the Ford 

Motors Corporation and he and Hitch, 

his Comptroller, had confidence that the 

system would be valuable for long-range 

resource planning and allocation in DoD. 

McNamara wanted PPBS to become the 

primary resource decision and allocation 

mechanism used by the DoD. McNamara 

implemented the system after President 

John F. Kennedy tasked him to establish 

tighter control by the Secretary of Defense, 

a civilian, over the military departments 

and services. As a former member of 

Congress, Kennedy was highly distrustful of the military service planning and 

budgeting. He ordered McNamara to take 

control of DoD planning and budgeting 

away from the military and put it in the 

hands of civilian leadership. Consequently, 

the initial motivation for establishing 

PPBS had as much to do with control and 

politics as it did with rational resource 

planning and budgeting. By June 30, 1964, 

PPBS was fully operational within the 

Department of Defense (Thompson and 

Jones, 1994; Feltes, 1976; Korb, 1977; 

Korb, 1979).

Hitch implemented PPBS and systems analysis throughout DoD, but most 

of the program analysis was done by his 

“whiz kids” in the Office of the Secretary 

of Defense (OSD) under the Comptroller 

and the office of Program Analysis and 

Evaluation. The military departments were 

not anxious to implement PPBS, but had to 

do so eventually to play in the new planning 

and budgeting game run and orchestrated 

by Hitch and his staff. After a few years, the 

military departments were fully engaged 

in learning how to compete in the new 

PPBS process. However, as noted, PPBS 

was not just budget reform – it was a new 

approach to analysis and competition 

between alternative programs, weapons 

systems and, ultimately, multi-year 

programmatic objectives. Additional 

reforms beyond PPBS were to be proposed 

by DoD under the Johnson administration.

Charles Hitch was followed as DoD 

Comptroller by Robert N. Anthony, a 

professor of management control on 

loan from Harvard University’s School of 

Business, who proposed an ambitious set 

of changes to DoD budgeting and accounting in 1966 in what was termed Project 

Prime. Among other things, Project Prime 

would have divided all parts of DoD into 

mission, revenue, expense and service centers, consistent with management control 

theory according to Anthony, and required 

accrual accounting with reimbursable 

fee-for-service internal transactional payments (using negotiated or shadow prices) 

throughout DoD (Thompson and Jones, 

1994: 66-68). What Anthony envisioned was 

a reimbursable accounting process similar 

to what was implemented in much of DoD 

by Comptroller Sean O’Keefe and Deputy 

Comptroller Donald Shycoff as part of the 

Defense Management Report initiatives 

of 1989-1992 under the Bush administration and Defense Secretary Dick Cheney 

(Jones and Bixler, 1992). Project Prime also 

included accrual accounting and budgeting 

for DoD. Accrual accounting is required now 

under the Chief Financial Officers Act of 

1990, which DoD has been unable to implement successfully. Clearly, Anthony was 

ahead of his time in his vision of how DoD 

accounting and budgeting should be organized (Thompson and Jones, 1994: 67-68). 

Congress did not support Anthony’s 

proposed changes. Key members of the 

appropriations committees refused to 

allow the change to accrual accounting and 

rejected Project Prime, probably because 

they thought it would reduce their leverage 

to micromanage DoD through the budget. 

Opposition was so strong that it was suggested Anthony should be asked to resign. 

Anthony was not asked to do so, but chose 

to return to Harvard and the experiment 

was ended (Jones, 2001b). 

While the manner in which PPBS operates has varied to some extent under different Presidents and Secretaries of Defense, 

the basic characteristics of the system have 
3 r d Q u a r t e r 2 0 0 4 15

remained in place for more than 40 years. In 

2003, changes were made in the venerable 

PPB system, driven by Secretary of Defense 

Rumsfeld who felt the process was too slow 

and cumbersome and did not deliver the 

“right stuff” on a timely basis. Changes were 

intended to accelerate the cycle to avoid 

unnecessary remaking of decisions and to 

deliver the right stuff more quickly. 

The Reformed PPBES Cycle

DoD Management Initiative Decision 

(MID) 913 set out a two-year budget and 

planning cycle within the framework of the 

four years in a Presidential administration 

(Secretary of Defense, 2003a: 3-4).

Year One: Review and Refinement

Year one requires “review and refinement” of the previous President’s strategy 

and plans, including only limited changes 

in programs and budgets, an early national 

security strategy, and an “off-year Defense 

Planning Guidance (DPG).” As stated 

in MID-913, “The off-year DPG will be 

issued at the discretion of the Secretary 

of Defense...The off-year DPG will not 

introduce major changes to the defense 

program, except as specifically directed 

by the Secretary or Deputy Secretary of 

Defense...However, a small and discrete 

number of programming changes will be 

required to reflect real world changes and 

as part of the continuing need to align the 

defense program with the defense strategy,” 

(Secretary of Defense, 2003a: 5). A major 

objective of the off-year guidance will be 

to provide the planning and analysis necessary to identify major program issues for 

the next DPG. One of the benefits of the 

new four-year cycle is that it fits the PPB 

process into the electoral cycle. Incoming 

administrations usually struggle to get 

their people on board in the first year and 

significant defense policy changes usually 

do not come until later. The new cycle recognizes this reality. Significant events do 

happen in year one. The National Security 

Strategy is issued at about mid-year and the 

Quadrennial Defense review begins shortly 

thereafter (June) and is issued early in Year 

Two (February). These are significant 

guidances for defense strategy and resource 

allocation. Also in year one, the new administration may take steps to insert its defense 

policy priorities in the budget submitted to 

Congress and to make changes caused by 

fact-of-life events in acquisition programs. 

Congress may also make changes in this 

year that have consequences for the following years.

Year Two: Full PPBE Cycle- Formalizing 

the Agenda 

Year two in the new four-year framework 

is more intense in that the military departments and services and OSD will conduct 

full program, planning, budget and execution reviews to formalize the President’s 

defense posture and strategy, including the 

resource portion of the strategy. In addition to a QDR issued early in the year, the 

second year will include a full, “on-year” 

Defense Planning Guidance (DPG), issued 

in May and designed to implement the 

QDR results. Previously, the QDR had been 

issued on 30 September in the first year of 

a Presidential administration. However, in 

the FY 2003 Defense Authorization Act, 

Congress changed the QDR reporting 

requirement to the second year to provide 

new DoD leadership more time for analysis 

and preparation. Senior defense officials 

had argued to Congress that the requirement to submit a QDR in the first year was 

too much to ask of a new administration 

barely through the rigorous congressional 

process for confirmation of presidential 

appointees to head the DoD and military 

departments. Year two will see then a full 

Program Objective Memorandum (POM) 

and a full budget build. These will result 

in a full Future Year Defense Plan (FYDP) 

build. A full execution review is also scheduled for years two and four. Giving this the 

same emphasis as the POM/Budget build 

is new.

Year Three: Execution of Guidance

The new planning and budget process 

specifies that year three be used for “execution” of the President’s defense plan and 

budget agenda as provided in the QDR and 

the previous year’s DPG. Year three corresponds with FY 2005 in the budget cycle 

and could include an “off-year” DPG if so 

desired by the Secretary of Defense. This 

off-year guidance could task new studies, or 

incorporate fact-of-life changes in acquisition programs including increased costs or 

schedule delays as well as congressionally 

mandated changes. Year three and year one 

are not quite the same, in that an incoming 

administration may have changes it wishes 

to make to its predecessor’s budget. It is 

possible that Congressional elections prior 

to Year three may convince an administration to change its course in ways it had not 

expected. Additionally, in any year a significant change in the threat situation may 

result in a full PPBE cycle. In May 2003, 

Dr. Dov Zakheim, former under Secretary 

of Defense (Comptroller/Chief Financial 

Officer) indicated that no 2005 DPG was to 

be prepared under the Bush administration 

and Rumsfeld. However, the Presidential 

elections of 2004 could change this plan. 

Year three is a year of refinement of objectives and metrics with only the most necessary program or budget change proposals 

considered.

Year Four: Full PPBE Cycle – Ensuring 

the Legacy

Year four in the budget and planning 

cycle is characterized in MID-913 as the 

point where the achievements of a four-year 

Presidential administration are assessed. 

This year will include preparation of a 

full DPG to refine the alignment between 

Presidential strategy and the DoD program 

and budget. As usual, the DPG will initiate 

and guide the cycle of military department 

and service POM and budget preparation, 

review and submission (for FY 2006). Then, 

the next full PPBES cycle will encompass 

Fiscal Years 2006 to 2011.

Increased Emphasis on Budget 

Execution

Budget execution is an important part 

of the new PPBE system. Normally execution consists of first gaining permission to 

spend appropriations approved by Congress 

through a separate budget submission process referred to as the allotment process. In 

allotment review, DoD must show how it 
16 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

intends to spend what has been appropriated, by quarter, month, or fiscal year for 

multiple year appropriations. This is always 

somewhat different than what was proposed 

in the President’s budget since appropriations must now be attributed to programs 

and allocated into the months they will be 

obligated (usually by quarters). After allotment approval is received from Office of 

Management and Budget (OMB) and the 

Treasury, DoD begins the process of separating and distributing shares of the DoD 

budget to the military departments and services and other DoD commands and agencies. After they have received their spending 

allotment authority, these resource claimants begin to incur obligations to spend, 

and then liquidate their obligations through 

outlay of money. 

During this process, comptrollers and 

budget officials at all levels of DoD monitor and control execution of programs and 

funding. At the mid point of the spending 

year, the military departments and services typically conduct a mid-year review 

to facilitate shifting of money to areas of 

highest need. At the end of the fiscal year 

(September), all DoD accounts must be 

reconciled with appropriations and spending must be accounted for prior to closing 

the accounts from further obligation and 

outlay (for annual accounts). Financial and 

management audits by military department audit agencies, the DoD Inspectors 

Generals, the General Accountability 

Office (GAO) and other entities follow the 

conclusion of execution and reporting. 

Traditionally, budget execution has been 

left primarily to the military departments. 

However, the revised process provides OSD 

with greater opportunity to examine and 

critique the budget execution decisions 

of the military departments and services. 

Comptroller official Dr. Dov Zakheim 

reported in February 2003 a widespread 

agreement in DoD not to return to a comprehensive annual budget and program 

review; rather the intent was to use the off 

year to measure the “burn rate” (rate of 

spending) in an execution review. To this 

end, comptroller staff indicated the review 

would include asking questions such as 

how money is being spent, if it should be 

moved to other areas and accounts, and 

what results have been achieved.

A federal budget process change initiated 

by the Bush administration, announced 

in February 2003 and subsequently by the 

DoD Comptroller, is implementation of 

“performance-based budgeting,” to focus 

more on the costs of achieving desired 

military and programmatic outcomes, 

rather than concentrating budget review 

on the details of program administration 

and production. The driving military concept behind performance-based-budgeting 

(PBB) is the concept of “effects-based capabilities” for war fighting. The effects-based 

approach focuses on desired end results 

from a military action rather than the 

military action itself. Under this concept, 

military commanders specify the results, 

such as capture of territory, in addition to 

the amounts and types of forces needed to 

achieve the outcome.

In the revised PPBES process, military department officials and Combatant 

Commanders (COCOM) may create 

Program Change Proposals (PCPs) to affect 

the POM and Budget Change Proposals 

(BCPs) to speak to new budget needs. The 

PCPs allow for fact of life changes to the 

previous year’s POM; they are meant to be 

few and of relatively large size. Guidance for 

2003 indicated the PCPs had to exceed a set 

dollar threshold or have serious policy and 

programmatic implications. For example, 

in 2003 the Navy submitted only three 

PCPs, one worth $100 million that involved 

450 line items. For all of DoD the number of PCPs numbered about 120. For the 

COCOMs, the PCPs are a new tool but, as 

for the military departments, they have to 

suggest offsets. For example, if a COCOM 

wants to increase force protection in one 

area at a certain cost, he has to suggest 

weakening force protection in another area 

as an offset for the increase. This is meant 

to be a zero-sum game. Changes have to be 

accompanied by offsets or billpayers. 

As is usual with any offset procedure, 

those who submit either PCPs or BCPs take 

the risk that the offsets they suggest will 

be accepted, but the accompanying change 

proposals the offsets were intended to 

fund might not be. In such cases, the offset 

reveals a pot of money for a lower priority 

item that might be directed to another area. 

The budget change proposals were expected 

to be more numerous but smaller. They too 

would be largely fact of life changes (e.g. 

cost increases, schedule delays, new congressional directives) and would have to be 

paid for by offsets. Although the individual 

BCP need not be offset, the package of 

offsets provided by a military department 

has to be offset and provide a zero balance 

change. The FY 2006 budget request will be 

prepared completely anew, marking the first 

biennial POM and budget in the new twoyear cycle. A Defense Planning Guidance 

will be prepared by OSD to guide the FY 

2006 process.

From our view, the PPBES cycle timing changes were sensible given that new 

administrations often do not have the 

people in place or the insights necessary 

to put new DoD programs in place and 

prepare budget initiatives in the first year. 

Thus, designating the first year for review 

of national security strategy and the work 

on the Quadrennial Defense Review sets 

the scene for a complete budget build in 

the second year. Designating the off years 

as years of minimal change, but allowing 

mechanisms for changes that do need to be 

made separately in program change proposals and budget change proposals also seems 

sensible and should cut down the turmoil 

involved in a complete POM-Budget rebuild 

each year. 

Conclusions

Important changes have been made in 

the DoD planning and budgeting process. 

The simultaneous execution of the POM 

and budget review and its consolidation 

into one database is an important change. 

In the old system, a good POM could still 

be lost on the way to the final budget. 

Doing the POM and budget simultaneously should result in fewer surprises and 

less re-programming of changes to the 

POM in the budget process than before, 

and the review process should be quicker 
3 r d Q u a r t e r 2 0 0 4 17

and less linear, i.e., a layered process 

rather than a sequential process. 

Secondly, the outcome focus of the 

process is an important change. Secretary 

of Defense Rumsfeld has emphasized 

outcomes and in one service, the Navy, 

the implementation approach illustrates 

this concern in two ways. Procurement 

accounts now are focused around the outcomes that each weapon system bought 

will provide. The performance models 

for steaming hours and flying hours also 

are outcome focused. This covers almost 

90% of the Navy budget. Nevertheless, 

Congress still appropriates by line item 

and DoD has to be able to translate 

capabilities-based resource requests into 

budget items and make winning arguments for these translations. The fact is 

that appropriation line-items make it 

easier for Congress to buy things -- and 

what has not changed is where the power 

of the purse is located. In the words of 

one DoD budget player, “...there are a 

lot of changes, but what has not been 

changed is the Constitution. Changes will 

end when they bump into things that are 

Constitutional. The appropriation process 

is still a congressional process and changes 

in the Pentagon process have to be responsive to the needs of Congress. The menu 

of changes the Pentagon can pursue is 

not unlimited.”

Thirdly, the new process appears to puts 

the Secretary of Defense and staff into the 

process at early stages. Proposed decisions 

in the new PPBES are intended to reach the 

Secretary before they have been made, while 

options are still open, and while important 

and large-scale changes still may be made. 

When Secretary of Defense inputs came at 

the end of the stream of decisions, some 

alternatives that could have been pursued 

were pre-empted simply because they 

would cause too much breakage in other 

programs or because everyone had already 

become committed to the likely outcomes 

of the decision. Veteran observers see these 

changes as an evolving process, cautioning 

officers bound for the Pentagon in a couple 

of years not to memorize the new process 

until they get there, since it has changed 

significantly since 2001 and probably will 

continue to change. 

Lastly, the new emphasis on execution 

seems to be an important change, but it is 

too early to tell how this will turn out. It 

seems clear that no one wants to be viewed 

as decreasing military effectiveness in the 

name of saving dollars. If the new emphasis on execution becomes a code word for 

efficiency and this is translated into “doing 

things on the cheap,” then execution review 

will become known for what it is – a budget 

reduction drill with increased oversight 

from the DoD level.

The lag time for full and satisfactory 

implementation of DoD-level macro 

changes in planning, programming, budgeting and execution probably is two to 

four years, although many wrinkles will be 

worked out by the military departments 

after the first new cycle has been completed. 

However, it is understood by seasoned 

observers of such changes that the solutions 

and new processes developed by the military departments and services are likely to 

differ – this would appear to be inevitable, 

given the highly differentiated resource 

management systems and program/budget 

processes used by the respective military 

departments and services. Overall, cautious 

optimism about the new process has been 

voiced from many quarters. 

References:

Burkhead, Jesse, 1959. Government Budgeting. New 

York: John Wiley and Sons: 340-356.

Feltes, Lorentz A., 1976. “Planning, Programming, 

and Budgeting: A Search for a Management 

Philosopher’s Stone,” Air University Review, 

January-February.

Hinricks, Harley, and Taylor, Graeme, eds.,1969. 

Program Budgeting and Benefit-Cost Analysis. 

Pacific Palisades, CA: Goodyear.

Joint DoD/GAO Working Group on PPBS, 

1983. “The Department of Defense Planning, 

Programming and Budgeting System,” Washington 

DC: DoD/GAO, May 26.

Jones, L R., and Bixler, G. C., 1992. Mission 

Budgeting to Realign National Defense. Greenwich, 

CT: JAI Publishers.

Jones, L. R., 2001b. “Management Control Origins,” 

Interview with Robert Anthony, North Conway, 

New Hampshire, November 17.

Jones, L. R., and Thompson, F., 1999. Public 

Management: Institutional Renewal for the 21st 

Century. New York: Elsevier Science.

Korb, Lawrence, 1977. “Department of Defense 

Budget Process: 1947-1977,” Public Administration 

Review, 37/4 July/August: 247-264.

Korb, Lawrence, 1979. The Rise and Fall of the 

Pentagon. Westport, CT: Greenwood Press.

Lee Robert D., and Johnson, Ronald, 1983. Public 

Budgeting Systems. Baltimore: University Park Press.

McCaffery, Jerry L., and Jones, L. R., 2001. 

Budgeting and Financial Management in the 

Federal Government. Greenwich, CT: Information 

Age Publishers.

Merewitz, Leonard, and Sosnick, Stephen H., 1972. 

The Budget’s New Clothes. Chicago: Markham.

Mosher, Frederick C., 1954. Program Budgeting: 

Theory and Practice. New York: Public 

Administration Service.

Novick, David., ed., 1969. Program Budgeting. New 

York: Holt.

Puritano, Vincent, 1981. “Streamlining PPBS,” 

Defense, August: 20-28.

Schick, Allen, 1966. “The Road to PPB: The Stages 

of Budget Reform,” Public Administration Review, 

26: 243-258.

Schick, Allen, 1973. “A Death in the Bureaucracy: 

The Demise of Federal PPB,” Public Administration 

Review, 33: 146-156.

Secretary of Defense, 2003a. “Management Initiative 

Decision 913,” Washington, DC: DoD, May 22.

Thompson, F., and Jones, L. R., 1994. Reinventing 

the Pentagon. San Francisco: Jossey-Bass.

Wildavsky, A., and Hammann, A., 1956. 

“Comprehensive versus Incremental Budgeting in 

the Department of Agriculture,” Administrative 

Sciences Quarterly, 10: 321-346. 

Wildavsky, Aaron, 1988. The New Politics of the 

Budgetary Process. Glenview, IL: Scott, Foresman.

About the Authors: 

Mr. Jerry L. McCaffery is a Professor of 

Financial Management at the Graduate 

School of Business and Public Policy, Naval 

Postgraduate School in Monterey, CA. 

Mr. Lawrence R. Jones is a Professor of 

Financial Management at the Graduate 

School of Business and Public Policy, Naval 

Postgraduate School in Monterey, CA. 

Notes

1 Excerpted from chapters 4 and 12, 2004. 
R E S O U R C E M A N A G E M E N T

Colonel Douglas C. Bonner

Homeland defense has caused a 

revolutionary response in the 

aftermath of September 11, 2001 

where America no longer vests 

its security in vast oceans, landmass, and 

air space as natural features that discourage 

intrusion. This new initiative within our 

government created the Department of 

Homeland Security and the Department 

of Defense’s U. S. Northern Command 

(NORTHCOM) through realignment of 

military forces. NORTHCOM’s natural 

concern became how to protect the 

nation’s capital as a key center of gravity 

for our government. Many resources are 

available in the National Capital Region; 

however, there was no single element 

responsible for command and control. 

Thus NORTHCOM organized Joint Forces 

Headquarters-National Capital Region 

by direction of Secretary of Defense as 

its immediate element for all home land 

security and civil support requirements in 

the NCR (14:-). U. S. Army Military District 

of Washington forms the nucleus of this 

element along with augmentation from 

Navy, Marine, and Air Force elements in the 

NCR (4:9). The essence of this effort is to 

bring to bear all resources in the NCR for 

crisis response. A key resource for success 

exists in installations each service use in 

executing respective Title 10 functions. 

The U. S. Army’s recent transformation of 

installation management presents challenges 

for command and control where technical 

control of NCR installations fall under 

the purview of the Director, Installation 

Management Agency. The U. S. Army 

Installation Management Agencyʼs (IMA) 

control of Army installations in the National 

Capital Region (NCR) severely constrains 

the critical new role of the U. S. Army 

Military District of Washington (MDW) as 

Army Service Component for Joint Forces 

Headquarters-National Capital Region 

(JFHQ-NCR). The doctrinal foundation 

for theater logistical support, control 

of resources, and IMA directions and 

initiatives pose significant hurdles to the 

success of a critical joint mission that must 

succeed in future operations. The goal is to 

examine these three hurdles and how each 

affects the relevancy of joint operations.

First, doctrine for critical theater 

logistical support is essential to success of 

Joint Task Force (JTF) operations in the 

NCR, a national center of gravity (3:3-6, 

12-22). Control of key installations is an 

essential component for executing theater 

logistics. Joint and Army doctrine as published within Joint Publication 4-0 and 

Army Field Manual 4-0 both delineate 

joint logistics as a key multiplier for Joint 

Task Force operations (11:Exec Summary, 

Chapter 3; 13: I-3, I-5, I-17). Tactics techniques, and procedures for sustainment all 

pinpoint control of key bases from which 

service components of the JTF perform 

vital reception, security, preparation, and 

onward movement of critical forces (12: 

Chapter 1). The traditional mantra of 

deployed JTF operations presupposes that 

forces would move into and secure an area 

of operations to carry out these critical 

tasks. However, a transformation in how 

we define deployed forces is necessary as 

a foundation for understanding how we 

execute logistical support in the context of 

the Global War on Terrorism.

National Capital Region 

Perspectives on Resourcing 

Army Installation Management 

Operations

R E S O U R C E M A N A G E M E N T

18 3 r d Q u a r t e r 2 0 0 4
3 r d Q u a r t e r 2 0 0 4 19

Office of the Secretary of Defense 

(OSD,) NORTHCOM, and the Services 

recognized the need to establish a joint force 

element in the NCR as an outgrowth of the 

fact that joint military operations provide 

the greatest good to our nation. This defined 

the NCR as a Joint Operations Area (JOA) 

as articulated in Joint Publication 5-0 (4: 

GL3). As such, JFHQ-NCR operates daily as 

a deployed force in its assigned JOA (10: 1.1-

2.3). Traditional settings for JOAs are often 

in foreign theaters where establishment and 

refinement, and of key bases are prime concerns before operations can progress through 

key phases. JFHQ-NCR and MDW operate 

within a JOA that supersedes norms (10: 2.1). 

Army installations in and adjacent to the 

NCR are a vital resource from which Army 

Forces (ARFOR) assets must be prepared to 

support joint operations daily (3: 13, 16, 19). 

The Army’s published focus areas pinpoint 

installations as flagships from which to project 

Army forces to JTF operations (18:-; 21: 15); 

however, this appears to suggest a traditional 

perspective where Army deploys forces from 

home bases to foreign theaters. Technical 

control of Army installations by IMA does not 

easily support this construct given IMA’s focus 

for efficient base operations for the entire 

Army. Efficiency in base operations provided 

the means for giving IMA total control of all 

resources vice mission commanders (17: -).

The second hurdle challenging MDW 

as Army Service Component is evident 

in lack of control for manpower or fiscal 

resources for installations. The Army’s 

intent to free mission commanders of 

installation management and focus only 

on wartime missions actually complicates 

JFHQ-NCR and MDW operations. Again 

the traditional medium dictates strategic 

thinking and policy where mission commanders control units that deploy to key 

theaters away from home station. This 

appropriately casts the installation as a 

power projection platform for Army forces 

and home base for support to forward 

operations, daily garrison needs, and 

families (21:-; 22:-). Thus Army priorities 

for resources will lean more to deploying 

forces and sustaining daily base operations 

functions such as base logistics, facilities 

engineering, housing, training resources, 

personnel and community activities, 

revitalization, modernization, security, 

law enforcement, tenant support, and a 

host of others. This is drastically different from operating an installation as an 

immediate source of sustaining power as 

a forward base within an existing JOA. 

MDW’s prior ownership and control of 

installation resources were arguably more 

effective in ensuring balance and effectiveness of resources.

In a pre-transformation environment, 

MDW controlled seven installations both 

inside and outside the NCR covering four 

states from New York to Virginia. This 

included resources totaling 2912 soldiers, 

2689 civilians, and an annual operating 

budget over $356M (7:-). Installation funding profiles averaged 90% when measuring 

base requirements to actual funds received 

(8:-). Since the beginning of FY04, profiles 

have averaged much lesser rates given Army 

fiscal challenges. The MDW Commander’s 

role concerning installations is that of a 

newly defined term called Senior Mission 

Commander which transcends to an advisory and oversight capacity with necessary 

interaction with Director, IMA on key 

resource decisions (2: Exec Summary). Thus, 

MDW Commander who duals as JFHQNCR Commander has an NCR operational 

mission focus that will heavily impact installation resources in a JTF operation whereas 

the Director, IMA has an Army-wide base 

operations focus that seeks the best standard 

of support for all Army installations worldwide. Exploration of this fundamental difference in missions in further detail should 

lead to an optimal solution that accomplishes both missions. The writer offers 

readers further evidence of this difference 

with key examples of current policies and 

initiatives germane only to the installation 

management perspective. 

Thus the third and final hurdle to the 

new operational mission shows current IMA 

policy and initiatives provide guidelines 

counterproductive in planning resources 

for critical mission areas such as aviation 

operations, military police operations, force 

protection, and anti-terrorism. Each of these 

functions is an important pillar in the context of JFHQ-NCR’s role as NORTHCOM’s 

focal point for homeland defense and civil 

support roles in the NCR. They are equally 

important in MDW’s role as the Army 

Service Component Command to JFHQNCR. MDW brings these critical elements 

to bear daily in its Army MACOM role that 

support a three pronged mission for contingency operations, ceremonial operations, 

and a full range of legal support operations 

commensurate with General Court Martial 

Convening Authority for the NCR (3: 7-29). 

Aviation support, military police operations, 

force protection, and anti-terrorism are key 

ingredients to the success of the three mission drivers. IMA has published policies or 

undertaken initiatives that challenge joint 

and MACOM roles with each ingredient.

MDW’s contingency profile uses its 

aviation element the 12th Aviation Battalion 

to be prepared to execute important 

operations plans with joint linkages (3: 

37). JFHQ-NCR will likely infuse some 

growth in the joint effort. Current DA and 

IMA policies mandate a transfer of Davis 

Army Airfield at Fort Belvoir, Virginia and 

the Pentagon Helipad from MDW to IMA 

control for base operations efficiencies 

(6:-). Currently, the 12th Aviation Battalion 

performs airfield operations and support 

along with it primary aviation operations 

that provides operational efficiency with 

unity of control and effort (20: Chapter 

28). Execution of the Army and IMA plan 

for transfer of control and operation of 

Davis Army Airfield and the Pentagon 

Helipad essentially breaks unity of control. 

Aviation operations in the NCR will require 

three different entities vice one where the 

MDW Commander now only looks to 

Commander, 12th Aviation on any aviation 

matter. Likewise, IMA initiatives involving 

military police operations potentially cause 

an erosion of capability for MDW.

The Army’s mandate to meet Program 

Budget Decision 712 targets for military 

to civilian conversions imposed a target of 

4000 positions on IMA (15:-; 16:-). IMA 

as technical owners of staffing documents 

with military police assets at Fort Myer, 

Virginia, a key force essential to MDW 
20 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

operations, plans to convert 170 military 

police positions to civilians. Such a conversion would severely affect contingency and 

ceremonial operations in the NCR, particularly at an installation that houses the most 

senior military leadership to the security 

plans supporting execution of high profile 

events in the NCR such as routine arrival 

ceremonies for foreign dignitaries, military 

support to inauguration activities, state 

funerals, and others. Given these points, one 

can deduce the importance of force protection and anti-terrorism needs in the vital 

NCR; however, IMA ownership of resources 

provides an overarching challenge.

IMA’s Organization and Operations 

Plans published during the height of 

Army’s Transformation of Installation 

Management in FYs 02 and 03 designated 

MACOM Commanders and Senior Mission 

Commanders as the primary owners and 

proponents for force protection and antiterrorism operations at installations (1: no 

#). Responsibility without actual control of 

resources was the key edict. Prior to transformation, such efforts totaled approximately 

$30M in MDW (8:-). Given new constructs 

for resources MACOM and Senior Mission 

Commanders only received opportunities to 

validate requirements prior to submission of 

program and budget requests to DA (1: no #). 

DA distributes actual funding when approved 

to IMA. The key problem lies in using a funding structure that was conducive to pre-transformation operations. Clearly, the basic axiom 

that gave commanders control via ownership 

of all manpower and fiscal resources is out of 

balance. Such policy forms the realistic challenges to a very important role for homeland 

defense and civil support in the NCR.

Conclusively, advocates of opposing 

positions on the value of IMA would all 

agree that protection of the NCR is critical to our nation’s security posture as our 

center of governance. More importantly, it is 

paramount to conclude Army’s IMA operation does not provide immediate continuity 

required in JFHQ-NCR’s vital role despite 

Army intent to free mission commanders of 

base operations responsibilities. JFHQ-NCR 

is a forward deployed JTF charged to take 

immediate action in the event of homeland 

defense and civil support needs. Joint and 

Army doctrine as a departure point for 

executing theater logistics and sustainment 

requires control of key Army installations 

for MDW as Army Service Component 

for JFHQ-NCR. IMA’s control of resources 

required to operate key NCR installations 

does not provide relevancy and situational 

awareness to a joint mission as efficiency for 

base operations support supersedes a critical mission requirement. Specific evidence 

concerning current IMA policies and initiatives shows adverse affects on MDW critical 

mission components for aviation, military 

police, force protection, and anti-terrorism 

operations. Solutions lie within the context 

of a very informed dialogue where IMA 

must recognize the primacy of homeland 

defense and civil support in the NCR in 

keeping with the Army’s focus for a joint 

and expeditionary mindset. Support to a 

forward deployed JTF is vital and represents 

a shift in the fundamental application of 

where installations as flagships usually support mobilization and deployment efforts 

primarily as a base of embarkation.

About the Author: 

Colonel Doug Bonner is the Director of 

Resource Management for HQ, U. S. Army 

Military District of Washington located at 

Fort McNair in the District of Columbia. 

References:

1. Assistant Chief of Staff for Installation 

Management, Installation Management Agency 

Organization and Operations Plans, Army 

Knowledge Online, n. p. On-line. Internet, 16 April 

2004. Available from http://www.us.army.mil/portal/

jhtml/ArmyKCC/Army Communities/ACSIM/IMA/

Operations/Validated OO Plans, 11 August 2003.

2. Assistant Chief of Staff for Installation 

Management, memorandum to Army Major 

Commands, subject: Interim Implementation Plan 

for Installation Management Agency, 30 May 2002.

3. Briefing, Commander, U S Army Military District 

of Washington. Subject: MDW Mission Brief to 

Director Army Staff, 3 December 2003.

4. Briefing, Deputy Commander, U S Northern 

Command and Commander, U. S. Army Military 

District of Washington. Subject: JFHQ-NCR Concept 

Brief to JCS Operations Deputies, 6 October 2003.

5. Deputy Assistant Secretary of the Army, Financial 

Management and Comptroller, memorandum 

to Army Major Commands, subject: IMA Fund 

Controls and Fiduciary Responsibilities, 19 

November 2002.

6. Deputy Chief of Staff, G-3, memorandum of agreement with Assistant Chief of Staff for Installation 

Management, subject: Training Support and 

Airfield/Heliport Operations under the Installation 

Management Agency, 7 April 2003.

7. Deputy Chief of Staff, Resource Management, U. S. 

army Military District of Washington, memorandum 

to Commander, subject: MDW Resource Profile 

Before and After Transformation of Installation 

Management, 7 June 2002.

8. Deputy Chief of Staff, Resource Management, U. 

S. Army Military District of Washington, memorandum to Garrison Commanders, subject: Funding 

Authorization Documents to Installations, 19 

December 2002.

9. Director Operations and Support, Assistant 

Secretary of the Army, Financial Management 

and Comptroller, memorandum to Army Major 

Commands, subject: FY 2004 Operations and 

Maintenance, Army (OMA) Funding Letter, 31 

October 2003.

10. Joint Forces Headquarters-National Capital 

Region, JFHQ Implementation Plan, 27 May 2003.

11. Joint Publication 4-0. Doctrine for Logistic 

Support of Joint Operations, 6 April 2000.

12. Joint Publication 4-01.8. Joint Tactics, 

Techniques, and Procedures for Joint Reception, 

Staging, Onward Movement, and Integration, 13 

June 2000.

13. Joint Publication 5-0. Doctrine for Planning Joint 

Operations, 13 April 1995.

14. Message, 202330Z JUN 03. Chairman Joint Chiefs 

of Staff (CJCS). CJCS Execute Order with Secretary 

of Defense Approval to Commander, Northern 

Command establishing Joint Forces HeadquartersNational Capital Region (JFHQ-NCR), 20 June 2003.

15. Office of Assistant Secretary of Defense 

(Comptroller) Program Budget Decision 712, 

Subject: Military to Civilian Conversions Supporting 

Transformation, 21 November 2003.

16. Secretary of the Army and Chief of Staff, Army, 

memorandum to Army Major Commands and 

Agencies, subject: Military-Civilian Conversion 

Targets to Support Transformation, 11 March 2004.

17. Secretary of the Army, Headquarters Department 

of Army General Order Number 4 to Assistant 

Chief of Staff for Installation Management, subject: 

Establishment of Installation Management Agency, 

11 July 2002.

18. Triggs, SFC Maria, “Focus: Installations to Serve 

as Flagships.” Army News Service, 3 February 2004, 

19. U S Army Field Manual 4-0. Combat Service 

Support (CSS). Chapter 3, CSS in Full Spectrum 

Operations, Combined Arms Support Command, 29 

August 2003. 

20. U S Army Military District of Washington 

Regulation 10-87. Organization, Mission and 

Functions of U S Army Military District of 

Washington (Draft Revision), 31 March 2003.

21. U S Army. The Way Ahead Our Army – Relevant 

and Ready, Focus Areas. Washington, D.C.: Chief 

of Staff, Army, Army Strategic Communications, 

January 2004.

22. Whittington, Beau, “OIF Validates Installation 

Management Concept.” Army News Service, 21 

October 2003.
3 r d Q u a r t e r 2 0 0 4 21

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 

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.

The Assistant Secretary of the Army 

(Financial Management and Comptroller) 

(ASA(FM&C)) has overall responsibility 

for implementing the Army Management 

Control Program (MCP). Commanders in 

turn often look to their resource management leaders to be subject matter experts 

on the development and implementation 

of effective MCPs. Intuitively, management 

control does not seem difficult to understand. Indeed, promotion through the management ranks requires mastering many 

of the same skills prescribed for the implementation of successful MCPs. However, the 

military services’ inability to achieve a clean 

audit of their financial statements indicates 

that there is still work to be done in this 

field. The intent of this article is to review 

and illustrate the fundamental components 

of effective MCPs using examples from private industry.

It is important to recognize the difference between management controls and 

MCPs. Management controls are the individual measures that are collectively implemented and administered in an overarching 

MCP. Employed haphazardly, even the most 

robust individual management controls can 

be ineffective. The goal for managers is to 

“Control, Control! You Must Learn Control!”

Remember the movie The Empire Strikes Back? The hero 

of the Star Wars movie series Luke Skywalker and his 

trusty side-kick R2D2 travel to Dagobah, the bog planet, 

in search of Yoda. Once there Yoda, the physically 

unimpressive Jedi Master, begins to train the young 

Skywalker on the skills necessary to become a Jedi. Just 

as Luke begins to succeed at focusing his own mind to 

leverage “the force”, he begins to experience visions of 

the future that cause him to lose his focus. It is at this 

point that Yoda chastises Luke saying, “Control, Control. 

You Must Learn Control!”

Major Karl M. Kraus

The Army 

Management

Control Program
22 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

identify and implement complimentary control measures in an orchestrated fashion to 

achieve a comprehensive control program.

Army Regulation 11-2, Management 

Control, provides direct guidance for 

the implementation of MCPs within the 

Army. It specifies that heads of reporting 

organizations and assessable unit managers are responsible for understanding 

and applying the Comptroller General 

Standards for Internal Control in the 

Federal Government1. In November 1999, 

the General Accountability Office (GAO) 

updated its original list of standards. The 

GAO’s 1999 version reorganizes the standards for internal control into five mutually 

supportive areas represented in figure 1. 

The GAO Standards for Internal Control 

provide guidance to managers as they 

develop a comprehensive MCP. This represents an evolution from simply implementing management controls in isolation. The 

pyramid structure shows that an effective 

controls program is built upon a foundation 

referred to as the control environment. At 

the heart of the program is the risk assessment process that determines where management must focus its attention and the 

control activities that are implemented to 

monitor performance in these areas. Once 

established, the program needs to be constantly monitored to ensure desired results. 

An important facilitator of the MCP is the 

ability to communicate information about 

the control program throughout the organization. When collectively implemented, 

these five components provide a structure 

to develop and implement an effective, sustainable MCP.

Many illustrations of the principles associated with the standards for internal control are in practice at the Boeing Company. 

I had the opportunity to witness firsthand 

an application of one facet of Boeing’s 

MCP during my Training with Industry 

assignment with the company. Boeing is 

the world’s largest manufacturer of satellites, commercial jetliners, and military 

aircraft and a global market leader in missile defense, human space flight, and launch 

services.2 It is well known for its history of 

producing commercial jetliners and military 

fighters, bombers, transports, rotorcraft, 

missiles and munitions. The company’s success is directly related to the success of the 

individual programs like the 7#7 series of 

jets, the Army’s Apache helicopter, the Air 

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

Super Hornet. Each of these programs is 

unique in its own particular way, so Boeing 

created a Program Management Process 

Council to standardize the administration 

of the various programs.

Boeing’s Program Management Process 

Council established a set of key practices 

that are used by program managers during 

the day-to-day execution of their programs. 

Collectively these practices are integrated 

into a MCP that Boeing calls its Program 

Management System. Figure 2 diagrams the 

relationships of the Program Management 

System. Individual program managers use 

this system to implement the business plans 

for their respective programs. The Council 

refers to the key management activities of 

the Program Management System as the 

Boeing Program Management Best Practices 

(PMBP). The PMBP are designed to enable 

coordinated actions and provide visibility 

into program health to support timely decision-making for implementing corrective 

action3. The Boeing Program Management 

System provides a working example of the 

implementation of the GAO Standards 

frameworks for an MCP. Many similarities are evident between the frameworks. 

The remainder of this article illustrates the 

five components of the GAO Standards 

with examples from the Boeing Program 

Management System.

Control Environment

The basis of a successful MCP is 

directly related to the control environment 

established within the organization. The 

control environment as identified in the 

GAO Standards is commonly referred to 

in military circles as the command climate. 

When considering the control environment the manager must assess how the 

members of the organization are doing 

at observing proper procedures and their 

overall standards of performance. The art 

GAO’s Standards for Internal Control

Figure 1

Monitoring

Control

Activities

Risk Assessment

Environ

C

ment

ontrol

Information

Communication

Deliver

Plan

Correct

And

Improve

Measure

Execute

Communicate

Source: Boeing Team Leader 

Training Graphic, Copyright © 2003 

Boeing’s Program Management

System

Figure 2

“The goal for managers is to identify and implement complimentary control measures in 

an orchestrated fashion to achieve a comprehensive control program.”
3 r d Q u a r t e r 2 0 0 4 23

of establishing an effective control environment involves leading from the front. 

Senior level leaders and managers must 

demonstrate that their own performance is 

beyond reproach. They need to recognize 

and observe regulatory guidance and ensure 

that the subordinate members of the organization adopt the same standards in their 

performance. The organization should have 

an inviolable code of ethics like the Army 

Values (Loyalty, Duty, Respect, SelflessService, Honor, Integrity and Personal 

Courage). Particular attention should be 

given to the amount of emphasis placed on 

operational performance. A myopic view of 

Net Profit as the only material performance 

metric is an example of a flawed control 

environment. Excessive pressure to improve 

operations can push subordinates to compromise organizational ethics to meet performance objectives.

The Boeing Company recognizes the 

importance of its pledge to ethical behavior 

in sustaining an effective control environment. Within the past year Boeing has 

engaged in a “Recommitment to Ethics” 

campaign throughout the organization. The 

campaign includes a variety of ethics training and awareness programs for both new 

and seasoned employees. Results of independent reviews of the company’s ethics 

program released in December 2003, were 

widely published both internally and externally. “We found Boeing’s ethics program 

to be well above average,” said Steve Priest, 

president of Ethical Leadership Group, a 

leading business ethics consulting firm. 

“More importantly, we note that Boeing’s 

culture supports ethical, responsible behavior.”4

 Boeing’s emphasis on integrity in 

their corporate climate demonstrates the 

importance of the control environment in 

establishing a successful MCP.

Risk Assessment

There is little that is accomplished in 

today’s Army that does not involve risk 

assessment. Managers use risk assessment 

to determine what key areas require attention as they develop their MCPs. The GAO 

Standards defines risk assessment as, “the 

identification and analysis of relevant risks 

associated with achieving objectives... and 

forming a basis for determining how risks 

should be managed.”5 Fundamental to 

assessing the risk for any organization is the 

need to have a comprehensive understanding of the organization and its particular 

operating environment. While these specific 

organizational characteristics are paramount there are some common areas that 

any organization will need to consider when 

assessing its risk. These areas include compliance with the law, accomplishment of 

objectives and the fostering of an effective 

control environment.

Managers have an inherent responsibility to ensure that the operations that they 

oversee perform within the bounds of all 

applicable laws and regulations. Although 

ignorance of the law is never a legitimate 

excuse it can present plausible risk. Job 

experience and professional development 

studies help familiarize individual managers with legal requirements associated with 

their organization. In addition to regulatory 

requirements, managers need to understand 

the purpose, the processes and the products 

that collectively constitute their organization’s operations. The effective manager has 

to be able to envision the desired endstate 

for the organization and articulate how this 

endstate can be achieved. Then the manager 

can begin to assess the risk pertinent to 

the envisioned operational objectives. The 

importance of an effective control environment has already been recognized. Risks to 

the control environment include influences 

that sidetrack employees from understanding the organizational standards for behavior and accepting the fact that they are individually as well as collectively responsible 

for meeting these standards.

The Boeing Company Program 

Management Process Council has performed a high-level risk assessment 

designed to be universally applicable to the 

Company’s widely varied programs. Cost, 

schedule and technical risks are common 

challenges that every program manager 

has to balance. Managing cost is essential 

to ensuring the availability of sufficient 

resources to meet contractual specifications 

and earning a profit. Producing products 

for customers within a contractual timeline requires schedule risk management. 

Effectively managing technical risk results in 

the delivery of quality products that possess 

the functionality desired by the customer. 

There are seemingly endless numbers of 

risks present in Boeing’s many programs. 

But just as all colors on the color wheel 

are a derivative of the three primary colors, most if not all of the risks present in 

Boeing’s individual programs are a derivative of the primary program risks to cost, 

schedule and technical performance.

Control Activities

After assessing the risks that the organization is subject to, managers can identify 

actions appropriate to mitigate these risks. 

“Control activities are the policies, procedures, techniques and mechanisms that 

enforce management’s directives.”6 The control activities that managers select become 

the alert sensors that indicate the organization is operating in accordance with prescribed policies and procedures to achieve 

intended results. They constitute the regular 

interface between managers and their organization’s day-to-day operations.

Control activities, when properly 

selected, allow management to identify 

deviations from expected performance 

early enough to respond in a timely manner. Figure 3 demonstrates the relationship 

between early problem identification and 

management’s ability to intervene to resolve 

Figure 3

Point at which

Management

can no Longer 

Recover

Effort Required to Correct the Issue

Ability to Influence Outcome

Manager’s Ability to

Influence Outcome
24 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

an issue. If lip service only is given to the 

MCP and the organization surges to meet 

the regulatory requirements only when an 

annual statement is due or when an audit 

is pending, the MCP will not achieve its 

intended purpose. Management needs to be 

constantly vigilant, always considering from 

where the next challenge or risk to organizational success might come.

Selecting the best control activities to 

ensure compliance with established policies and procedures should not necessarily 

create a new burden on managers. Proper 

integration of the control activities into the 

overall operating environment will ensure 

that the cost of the control activities selected 

is appropriate given the magnitude of the 

risk they are intended to monitor and the 

probability of its occurrence. The goal 

should be to identify key control activities 

whose failure will likely break or seriously 

impair the system. Typically the Pareto 

principle will apply to control activities. 

This principle maintains that 20 percent of 

the control activities selected will effectively 

monitor approximately 80 percent of the 

risk to which the organization is subject. 

Management will want to be most proactive in their surveillance of these “critical 

few” control activities while they in more of 

a management by exception mode for the 

remaining “trivial many”.

In the Boeing Program Management 

System the control activities are the PMBP 

established to address the cost, schedule and 

technical performance risk to programs. 

The PMBP represent the control activities 

program managers use to manage their 

programs. Each practice is aligned with one 

or more of the major components of the 

Program Management System as identified 

in Figure 4. A discussion of the individual 

Best Practices themselves is beyond the 

scope of this article. The strength of the 

PMBP, however, lie in the ability of the 

individual program manager to understand, 

adopt and implement each of these control 

activities into a integrated MCP. Collectively 

these management practices help the Boeing 

Company: a) achieve bottom-line performance, meeting customer and shareholder 

expectations; b) attain top-line growth by 

attracting new contracts based on their 

demonstrated performance7.

Information and Communication

The grease that lubricates an effective 

MCP is the information flow throughout 

the organization. All members must understand the standards for their performance. 

The control activities that are identified 

effectively communicate what activities are 

priorities for the management. They serve 

as a kind of beacon for everyone in the 

organization, providing a common focus 

and a common language for talking about 

it. In The Art of War, Sun Tzu stated that, 

“Gongs and drums, banners and flags, are 

means whereby the ears and eyes of the 

host may be focused on one particular 

point.”8 Similar fanfare when advertising 

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 measured and therefore highlights their importance throughout the organization. It also 

lets the members know collectively where 

they are meeting the standard and where 

improvement is still necessary.

Boeing’s Program Management System 

is a well-advertised, integral part of 

Boeing’s corporate climate. The Program 

Management Process Council that monitors and improves the implementation of 

the PMBP is made up of CEOs and senior 

vice presidents from across Boeing’s seven 

business units. They and many of their subordinate leaders have previous experience 

directing Boeing programs and are strong 

supporters of the Program Management 

System. There is a dedicated site on the 

Boeing intranet that describes the PMBP 

concept since its original implementation 

in the company. The concepts are formally 

taught at Program Managers’ workshops 

and at Team Leader training sessions. 

Internal assessments and audits of programs are highlighted events that bring key 

Correct & Improve Measure

Integrated Planning

Requirements Management

Baseline Management

Organization

Affordability

Customer Solutions

 • Affordable

 • Reliable

 • Supportable

Risk Management

Supplier Management

Integrated Schedules

Baseline Management

Independent Reviews

Technical Performance Measurement

Earned Value Management

Use of Independent Reviews

Customer Communication/Contact Plan

Management Information System

Help Needed

Issue & Action

Management

Plan Execute Deliver

Communicate

Figure 4

Program Management Best Practices
3 r d Q u a r t e r 2 0 0 4 25

team members from the programs together 

with their corporate subject matter expert 

counterparts for both feedback and evaluation of their performance. The Program 

Management System provides a common 

frame of reference for communicating performance priorities both within Boeing programs and throughout the company.

Monitoring

Monitoring is the regular maintenance 

required to keep the established MCP current and effective. Effective monitoring 

should focus on ensuring that the controls 

established are being implemented as prescribed and that they are effectively fostering desired performance within the organization. Boeing’s PMBP have evolved since 

they were first formally introduced in 1998. 

Then there were nine basic control activities. Now there are eighteen best practices, 

four more under review to be added and 

one in development. Regular disciplined 

evaluation of the effectives of the MCP is 

necessary to ensure that it remains a valuable tool.

Implementation of Boeing’s Program 

Management System is achieved through 

scheduled series of assessments and audits. 

The assessment process Boeing uses relies 

on a maturity model created to evaluate 

each of the PMBPs. The maturity model 

is a matrix that describes key attributes of 

each PMBP and establishes objective evaluation criteria to be used to assess program 

management’s effectiveness in utilizing 

the PMBP. Problem areas identified by the 

MCP should be thoroughly and expeditiously resolved. Brutal honesty in the feedback process of any MCP is key to improving its effectiveness. Continuous evaluation 

and improvement in an organization’s 

MCP will provide leaders with assurance 

that their organizations are achieving 

intended results in accordance with established policy and procedures.

The Result of Control - Value

The fundamental purpose behind 

management controls in the Army is to 

provide reasonable assurance to Congress, 

DoD and the Army’s own leadership that 

those actions that they expect to happen 

are indeed happening. Local responsibility 

for administering an MCP is often assigned 

to the organization’s resource management directorate for administration. The 

GAO’s Standards provides a framework for 

organizations to consider as they develop 

and implement and their MCPs. Successful 

MCPs should not be viewed as an administrative burden. Effectively integrated into 

the organization, MCPs provide leaders and 

managers with a program that highlights 

procedural and operational standards that 

when followed are likely to result in the 

accomplishment of planned performance 

objectives. Additionally, a climate that communicates and consistently assesses its MCP 

and key control activities will benefit from 

enhanced abilities to identify the root cause 

of problems within the organization in a 

timely fashion. This allows maximum flexibility in correcting these shortcomings.

A call to understand the concept of 

control is being made in the Army. Before 

departing as the Assistant Secretary of 

the Army for Financial Management and 

Comptroller (ASA(FM&C)), the Honorable 

Sandra Pack commissioned a team to 

develop a roadmap to guide the resource 

management community in their administration of management controls9

. Boeing’s 

Program Management Council is an 

example of a lead agent with a similar charter. The Program Management Council’s 

PMBPs represent Boeing’s key control 

activities that collectively constitute their 

Program Management System. Both the 

Army and Boeing recognize the important role that management controls have 

in providing assurance that the respective 

organizations are performing as intended. 

Management control is a concept that permeates the entire structure of the Army. 

Even marginal improvements in our implementation of management control processes 

can potentially achieve millions or billions 

of dollars in savings. This more efficient 

management of our allocated resources will 

directly result in better support our soldiers and thereby for our nation. So take a 

moment. Consider the effectiveness of your 

control program. And may the force be with 

you.

Any reprints of this article require prior permission from OASA (FM&C) The opinions in 

this article are the author’s, and do not necessarily reflect the official positions of the Boeing 

Company or the Department of Defense.

References:

1 US Department of the Army Regulation 11-2, 

Management Control, (Washington, DC: HQDA, 

1994), p. 3.

2 “Program Management Best Practices.” Team 

Leader Training Brochure © 2003, The Boeing 

Company

3 The Boeing Program Management Process 

Council, Program Management Guidelines, (The 

Boeing Company, 2002), p. 8.

4 “Boeing Releases Independent Reviews of 

Company Ethics Program.” Boeing News Features 

(Dec 18, 2003): n. pag. Online. Intranet. Feb 24, 

2004); http://www.boeing.com/news/releasees/2003/

q4/nr_031218a.html

5 US General Accounting Office, Standards for 

Internal Control in the Federal Government, 

(Washington, DC: GAO, 1999), p. 10.

6 US General Accounting Office, Standards for 

Internal Control in the Federal Government, 

(Washington, DC: GAO, 1999), p. 11.

7 “Boeing Program Management Best Practices – 

History, Implementation, Assessment Process” (Feb 

21, 2003): n. pag. Online. Intranet. Oct 19, 2003; 

https://pm.web.boeing.com/best_practices/01_BP_

Overview_Current_New.ppt

8 Sun Tsu, The Art of War, ed. James Clavell (New 

York, NY.: Dell Publishing, 1983), p. 33.

9 Ernest J. Gregory and LTG Jerry Sinn, “A 

Renewed Emphasis on Controls.” Resource 

Management, 4th Quarter 2003, p. 5.

About the Author:

Major Karl Kraus is one of five Functional 

Area 45 officers participating in the Training 

With Industry program, in his case with the 

Boeing Company.

 
26 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

Professional Development Institute

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 positions at the state and local levels. As Americans, our right to vote for those who will represent 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 advisory opinions on Hatch Act issues, and investigates reports or complaints of Hatch Act violations.

Election Year 2004

Guidelines For Federal Employees 

Under Hatch Act Amendments

By Mr. Matt Reres, Deputy General Counsel (Ethics & Fiscal)

May be candidates for public office in nonpartisan 

elections

May register and vote as they choose

May assist in voter registration drives

May express opinions about candidates and issues

May contribute money to political organizations

May attend political fundraising functions

May attend and be active at political rallies and 

meetings

May join and be an active member of a political party 

or club

May sign nominating petitions

May campaign for or against referendum questions, 

constitutional amendments, municipal ordinances

May campaign for or against candidates in partisan 

elections

May make campaign speeches for candidates in 

partisan elections

May distribute campaign literature in partisan elections

May hold office in political clubs or parties including 

serving as a delegate to a convention

May never use their official authority or influence to 

interfere with an election

May never solicit, accept or receive political contributions unless both individuals are members of the same 

federal labor organization or employee organization 

and the one solicited is never a subordinate employee

May never knowingly solicit or discourage the political activity of any person who has business before the 

agency

May never engage in political activity while on duty

May never engage in political activity in any government office

May never engage in political activity while wearing an 

official uniform

May never engage in political activity while using a government vehicle

May never be candidates for public office in partisan 

elections

May never wear political buttons on duty

1-800-85-HATCH (854-2824)

The rules that apply to our 

activities associated with 

the upcoming elections are 

easily understood.

For that reason, we may 

participate in these elections 

to the degree that is 

permitted. But whether we 

participate or decline, we 

should always exercise our 

Constitutional right—We 

should VOTE!

About the Author:

Mr. Matt Reres is the Deputy General Counsel 

(Ethics & Fiscal) in the Army’s Office of the 

General Counsel.
3 r d Q u a r t e r 2 0 0 4 27

by Helen Tierney

T he Army Day keynote speaker was 

Lieutenant Genearl (LTG) Jerry Sinn, 

the Military Deputy for Budget, 

Office of the Assistant Secretary of the Army, 

Financial Management and Comptroller. 

LTG Jerry Sinn is the senior military 

resource manager in the Army, and advises 

the political and senior military leadership 

on all fiscal Army matters. 

LTG Sinn warmly welcomed almost 800 

Army resource management professionals 

to the Professional Development Institute 

(PDI) in the beautiful Cleveland Convention 

Center Little Theater. He opened his remarks 

by drawing a parallel between the turbulent 

times when the theater was opened in the 

1930s and the world environment today. 

Following his brief welcoming remarks LTG 

Sinn presented awards to many outstanding 

Army Resource Managers Award program 

selectees. Please see the 2nd Quarter 2004 

“Resource Management” magazine for a 

brief summary of the RM award winners 

and their outstanding achievements.

In LTG Sinn’s plenary remarks he opened 

with the observation that the Army has successfully transitioned to a campaign quality 

force that is relevant and ready to prevail 

in the Global War on Terrorism (GWOT). 

He stated that demands on the Army have 

produced tremendous challenges for the 

Army Resource Management community. 

The Army comptrollers must continue to 

manage the Army’s day to day wartime fiscal 

requirements, ensure the Congressionally 

directed increase of 30,000 Soldiers is properly and seamlessly funded, and at the same 

time look towards the future to guarantee 

there is funding for transformation, especially for the Future Combat System.

LTG Sinn then looked at the 

demographics of the Army Resource 

Management community. He noted that 

there are about 3,575 military comptrollers with an average age of 31, and that 

the average age of the 9614 civilians in the 

Comptroller Civilian (CP 11) career field 

is 49. Additionally, LTG Sinn remarked 

that there are 157 interns, and that about 

half of the CP 11 SES corps is eligible to 

retire now. A good news aspect of being 

an Army comptroller is the outstanding 

training opportunities that are open to all. 

Education programs range from the highly 

prestigious Army Comptroller MBA and 

MaPA program at Syracuse University, 

to training with industry, fellowships at 

OMB and Brookings, and many other 

training opportunities. LTG Jerry Sinn 

urged all comptrollers to take advantage 

of these outstanding programs. 

LTG Sinn then presented an abbreviated 

look at trends in the Federal deficit as projected 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 

that all comptrollers everywhere need to 

understand the numbers and policies that 

impact on Army funding. It is a leader’s 

job to ensure their staffs are knowledgeable 

regarding the kind of resource management 

of information below.

LTG Sinn’s plenary remarks were followed by three thought provoking breakout 

sessions. Major General Lynn Hartsell, the 

Director of the Army Budget gave a timely 

presentation on Army FY04 and FY05 

budget. He touched on the complexities 

of the FY04 mid year review, expectations 

for closing out FY04, the FY05 President’s 

budget now being debated in Congress, 

and the FY05 GWOT Supplemental. 

Brigadier General Robert Durbin, Deputy 

Director, Program Analysis and Evaluation 

Directorate/G8 gave an excellent perspective of transformation and the future force 

in his presentation “Army Focus Areas 

Progress to Date & Army Campaign Plan.” 

Colonel Joseph Anderson, Commander of 

the Second Brigade, 101st Air Assault gave 

a fast paced multi-media presentation on 

operations in Mosul, the second largest city 

in Iraq. This presentaion provided a very 

postive and completely different perspective 

of the success of Operation Iraqi Freedom 

than what is often portrayed in the media. 

All three sessions are covered in more depth 

in other articles in this magazine.

About the Author:

Ms. Helen Tierney is a Financial 

Management Analyst in the Office of the 

Assistant Secretary of the Army (Financial 

Management and Comptroller.) 

Managing Resources

How Informed Are You?

Army Day Professional Development Institute
28 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T R e s o u r c e M a n a g e m e n t

T he theme of the 2004 Professional 

Development Institute (PDI) 

Army Day in Cleveland, Ohio was 

Managing Resources During Wartime. This 

theme was emphasized throughout the three 

information sessions that were presented. 

Colonel Joseph Anderson, Commander of 

the Second Brigade Combat Team (BCT) 

of the 101st Airborne Division, presented 

a dynamic and interesting session about 

recent operations in Iraq. The presentation 

started with a stirring and patriotic video 

entitled “The Fallen Comrade”, a compilation of pictures and video, set to music, of 

soldiers conducting operations in Iraq.

Colonel Anderson’s BCT was deployed 

to Northern Iraq from April 2003 through 

February 2004. Recently back from this 

deployment, his perspective was an 

enlightening look into operations in a 

war zone. The Second BCT’s mission in 

Iraq was to conduct stability and support 

operations in the town of Mosul and its 

surrounding areas. This included maintaining a secure and stable environment, 

identifying and detaining enemy combatants, facilitating the delivery of basic services and promoting the establishment of 

government institutions.

The 101st Airborne Division had an 

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

km, with a total of 3 BCTs. Of that area, the 

2d BCTs AO encompassed about 4,130 sq 

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 highest 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 

assets. They also trained the Iraqi Civil 

Defense Corps, who helped restore civil 

authority and protect citizens from foreign 

and domestic enemies. 

Colonel Anderson’s presentation highlighted the daily challenges in managing 

the city. The challenges included a language 

and cultural barrier, limited resources and 

competing priorities, contracting issues 

and combat hazards. According to Colonel 

Anderson, running the city was “ten times 

harder than fighting a war on a day to day 

basis”. It required a skilled and adaptive 

combat brigade team. 

Winning Hearts and Minds:

Innovative Resource Management 

in Mosul, Iraq

R E S O U R C E M A N A G E M E N T

Army Day Professional Development Institute
3 r d Q u a r t e r 2 0 0 4 29

The culture and language barriers were 

significant in Iraq. Colonel Anderson said, 

“We had 245 interpreters at the company 

level and I could have used twice that 

many.” One of the counter-intelligence 

programs the Second BCT ran was a local 

radio station. Colonel Anderson held 

weekly Q & A sessions where local citizens 

could call in and ask about anything they 

wanted to. This was all facilitated through 

the use of skilled interpreters. 

Cultural differences also created several 

contracting challenges. The contract bidding process had to be explained to locals 

interested in bidding for reconstruction 

jobs. In Iraq culture, construction jobs are 

typically given to friends of the foreman. 

Iraqis were confused by the contract bidding process, especially western rules and 

regulations. Additionally, the team only had 

one contracting officer and contracts had to 

be written for almost every local construction job. 

One of the main financial management resource tools at Colonel Anderson’s 

disposal was the Commanders Emergency 

Response Program (CERP) fund. This 

fund was used to facilitate the rebuilding 

of Mosul’s infrastructure, a critical mission 

for the Second BCT. The Commanders in 

the field determined which projects and 

in what order they would be completed. 

Colonel Anderson felt that Commanders 

were close to the situation and knew best 

where resources need to go. He said, “There 

tends to be concentration of resources to 

the major cities, but the outlying areas need 

assistance too. You can’t ignore the suburbs.” Overall, there were many tasks to be 

accomplished and issues over who gets the 

funding, but the money eventually gets to 

the right places.

There were stories of people carrying 

cash in suitcases or footlockers. Colonel 

Anderson confirmed that those stories were 

true, but those individuals were designated 

to do so and the cash had to be signed for 

when payments were made and forms were 

filled out. Everything had to be documented 

for audit and accountability purposes. It was 

all in U.S. currency and was used to pay for 

CERP projects and supplies. The civil servants and new police forces had to be paid. 

CERP funds were also used to purchase 

weapons and information. 

 One group of projects high on the priority list was getting the schools back up and 

running, especially the elementary schools. 

Most Ba’ath party people are well educated 

and the schools are important to them. 

The challenges in getting the schools back 

in working order included repairing the 

buildings, finding teachers and changing the 

course curriculum. Many teachers left when 

the war started and so it was a challenge to 

find new teachers. The course material had 

to be changed to a broad based education 

curriculum. The secondary and technical 

schools needed rebuilding as well. There is 

still more to be done, but significant progress has been made. 

Financial resources are an important 

issue everywhere in Iraq. The Iraqi government was establishing a new currency and 

replacing the old currency at the banks. 

People were being encouraged to set up 

individual bank accounts, sometimes for 

the first time. The Iraqi people are getting 

control of their own money and doing 

things for themselves. 

To thwart combat and security hazards, 

the Second BCT spent a lot of time tracking and analyzing the patterns and trends of 

insurgent attacks. They developed sources 

to identify where the bad guys were hiding, 

such as hotels, cottages and safe houses. 

Then they conducted raids to capture them. 

Other operations included checkpoints to 

screen Iraqi identification cards and identify 

possible bad guys. The Second BCT also 

cleared more than 800 mines and 750 unexploded ordinance sites.

One factor that hurts the stability and 

security of an area is the frequent rotation 

of troops. Too many rotations hurt efforts 

to build relationships, according to Colonel 

Anderson. He said that the key to stability is 

long-range rotations. Some regions have just 

begun to trust the troops and then they 

are rotated out and a new relationship 

of trust has to be established. The local 

population was confused and didn’t know 

whom to trust.

There were lots of questions at the end 

of Colonel Anderson’s presentation. One 

person in the audience asked about women 

in the workforce and government. Colonel 

Anderson said that women represent a small 

percentage of the workforce, but they are 

beginning to play key roles, including politics. The Kurds are the most progressive on 

this issue. Iraq is a tremendously different 

culture. The United States has assessed the 

ongoing cultural changes and tried to rebalance the power, including putting women 

into the workforce. The Second BCT helped 

build a women’s union hall for meeting and 

social gatherings. There are roundtables 

about women’s rights. Genuine progress is 

being made.

Some in the audience wanted to know 

how Army civilians could support the 

troops in Iraq and what if there were 

opportunities to serve over there. Colonel 

Colonel Anderson’s team 

established and trained 

Facility Protection Security 

Forces, who guarded 

critical sites such as banks, 

government buildings and 

other national assets.
30 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

Anderson encouraged civilians to work 

with leadership to implement programs 

such as Rapid Fielding of Equipment (RFE) 

which helps increase Warfighter lethality and survivability. Reactive Armor and 

Vehicle Hardening also increase survivability. Intelligence tracking systems such 

as Blue Force Tracking increases situational 

awareness. Jamming devices help protect 

critical intelligence. Information sharing 

on the battlefield is crucial to success. As 

for opportunities to serve in Iraq, Colonel 

Anderson said the Army needs contracting 

officers, ideally one for each Unit of Action. 

There is a shortage of contracting officers 

and finance people. Also, they need staff 

coordination people to organize administrative details.

Another major issue that came up 

was the press coverage of Operation Iraq 

Freedom. A couple of people asked why 

Americans aren’t hearing about the progress being made in Iraq or any of the good 

news stories. Colonel Anderson emphasized 

the importance of the embedded media for 

fostering good news, both there and here. 

One of the major keys to success in 

Iraq is passing on the lessons learned and 

training our troops to be better prepared 

for whatever situations they may face there 

and elsewhere. Since returning in February 

2004, Colonel Anderson has been talking 

with Commanders and troops, educating 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. 

Colonel Anderson emphasized that the 

Army is modifying the training. The Army 

is including role-playing of civil situations. 

Troops need to understand civic organization and government. The Warfighter has 

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 retenR E S O U R C E M A N A G E M E N T

tion. Colonel Anderson said he was “thrilled 

to serve”, and that “our retention is high in 

the 101st Air Assault, Soldiers are not leaving.” The Division met their recruiting goal 

one month early and the soldiers are happy.

In summary, it was very informative 

and enlightening presentation. Colonel 

Anderson brought the boots on the ground 

perspective to life for the Army financial 

management community. His presentation 

emphasized the importance of effectively 

managing personnel, equipment and financial resources to be successful in Operation 

Iraqi Freedom. Resources, such as CERP 

funds, are making a real difference in the 

war and improving the daily lives of the 

Iraqi people. Colonel Anderson ended his 

presentations by thanking everyone for their 

service and support. In return, the Army 

financial management community thanks 

Colonel Anderson for his tremendous service to the Nation.

About the Author:

Mr. Ross Canton is a Program/Management 

Analyst in the Office of the Assistant 

Secretary of the Army (Financial 

Management and Comptroller).

Resources, such as CERP 

funds, are making a real 

difference in the war and 

improving the daily lives of 

the Iraqi people. 
3 r d Q u a r t e r 2 0 0 4 31

Major General (MG) Lynn Hartsell 

presented the 2004 Army Day 

Fiscal Year 2004 (FY04) and Fiscal 

Year 2005 (FY05) Budget Session.

MG Hartsell opened the presentation 

with a warm and sincere welcome to the 

Army Resource Managers, “Thank you for 

who you are and what you do. It is what we 

do that lets the soldiers do what they have 

to do.” MG Hartsell then quickly moved 

into sharing his recent experience with the 

mid year review, predictions on closing out 

FY04, and what could be expected in the 

FY05 President’s Budget, and a FY05 Global 

War on Terrorism (GWOT) supplemental. 

MG Hartsell promised the audience that he 

would do his best to keep his presentation 

simple-something that is difficult to do with 

such a complex subject.

MG Hartsell stated that the FY04 midyear review was like no other he had ever 

experienced. Due to the GWOT OPTEMPO, 

there was an Army funding shortfall of 

$10.9 billion. Even though the Army did 

well gaining some additional funding in 

the OSD mid-year review, and the Air 

Force agreed to fund 

some of the Logistics 

Civil Augmentation 

Program bill, which 

is one of the Army’s 

highest cost contracts, there is still a 

significant funding 

shortfall. To manage 

this shortfall, the 

Army will have to 

push costs/work into 

FY05 where it is “not 

illegal, immoral, or 

where it would impact readiness.” This 

includes deferring work in the depot reset 

arena, annual facility maintenance, and 

delaying some PCS moves until FY05. 

The next topic of discussion was FY05 

President’s Budget. MG Hartsell stated the 

FY05 budget themes centered around three 

focus areas: readiness, people and future 

force. In order for the Army to provide 

ready land force capabilities to combatant commanders, transformation of the 

Army into modular forces is essential to 

meet the growing GWOT mission and 

enhance warfighting readiness. Additionally, 

Soldiers need the best available capabilities and equipment to conduct operations. 

Maintaining the quality of life for Soldiers 

and their families is also essential. The 

requirement to sustain commitment for six 

Stryker brigade combat teams in another 

FY05 budget focus. Possible budget estimates for FY05 are about $98.5 billion. 

Overall, MG Hartsell believes that from a 

funding perspective, FY05 will be similar 

to FY04, except there will be even more 

challenges. MG Hartsell concluded the 

FY05 portion of his presentation by paraphrasing the Army Chief of Staff, General 

Schoomaker, and told the assembled 

resource managers that he thought that 

FY05 would be a year of “changing the 

valves with the engine running.” 

MG Hartsell said that it is clear that 

FY05 supplemental funding will be necessary to support FY05 challenges. Operations 

in Iraq and Afghanistan, for example, are 

not funded in the President’s Budget, as 

DoD cannot predict the involvement or 

costs of future contingency operations. MG 

Hartsell stated it was critical that the Army 

receive at least a portion of the required 

supplemental funding early in the fiscal 

year, so that work deferred in FY04 due to 

the FY04 funding shortfall could be accomplished before there was an impact on 

readiness.

MG Hartsell appreciatively closed 

the session by again thanking the Army 

resource managers for all of their efforts 

and he enthusiastically invited everyone 

to, “Put a smile on your face and be happy 

about what you do.”

About the Author:

Ms. Kenneshia D.J. Murray is a Financial 

Management Analyst Intern in the Office 

of the Assistant Secretary of the Army 

(Financial Management and Comptroller).

FY04 & FY05 Budget Overview

By Kenneshia D.J. Murray

Army Day Professional Development Institute
32 3 r d Q u a r t e r 2 0 0 4

R E S O U R C E M A N A G E M E N T

I

n the Little Theater, of the Cleveland 

Convention Center, people listened 

attentively as Brigadier General (BG) 

Robert Durbin, Deputy Director, Program 

Analysis and Evaluation Directorate, 

Headquarters, Department of the Army, 

presented the “Army Focus Areas Progress to 

Date and Army Campaign Plan.” BG Durbin 

is responsible for analyzing and developing 

the Army program, considering Defense and 

Army objectives, costs, and resource constraints. As Deputy Director, BG Durbin had 

the opportunity to serve on the new Army 

Chief of Staff transformation team, working 

with General Peter Schoomaker. 

BG Durbin opened the session by stating the environment under which the Army 

operated had changed. Post 911, “We are an 

Army at War.”

BG Durbin stated the Army continuously 

changes and will continue to improve relevance and readiness, however there is still a 

cloud of uncertainty. In order for the Army 

to remain “Relevant and Ready,” BG Durbin 

said it must balance two core competencies 

and land power capabilities: Train and Equip 

Solders and Grow Leaders; as well as Provide 

Relevant and Ready Land Power Capability 

to the Combatant Commander and the Joint 

Team. To balance these core competencies 

the Army must concentrate on 17 immediate focus areas. Integrating these focus areas 

will be an ongoing effort. 

BG Durbin stated the conceptual framework for integrating these focus areas 

included The Army Plan (TAP) and The 

Army Campaign Plan (ACP). The TAP has 

three parts: strategy, risk analysis, and programmatic guidance. The ACP is product 

oriented, not input focused. Its key outcomes have to do with increased jointness, 

campaign quality capabilities, and updated 

processes and policies.

BG Durbin then discussed emerging 

resource demands for the POM 06-11 

Unfunded Requirements. The Strategic 

Planning Guidance (SPG) has a set of 

funding of which sixty-two percent ($30B) 

of SPG bills are already identified within 

Emerging and POM 05-09 Unfunded 

Requirements. The Joint Planning Guidance 

(JPG), focus areas, and Integrated Priority 

Lists (IPL) requirements reflect DoD and 

Army priorities. The goal is to get all three 

requirements to co-align so that all funding 

provides the right capabilities in our Army 

for combatant commanders that support 

our Army strategies.

BG Durbin talked about the top three 

resourcing strategy decisions for POM/

BES FY 06-11. He discussed the objectives 

of Army Transformation and the Army 

Campaign Plan. The mission is to build 

a campaign-quality Army with joint and 

expeditionary capabilities now. BG Durbin 

stated this is how we will achieve balance. 

He said the Army is too resilient to break. 

The Army is going to stay with an all-volunteer force. We will bring in a quality force 

that makes the Army what it is today, which 

is the bottom line in everything we do. 

BG Durbin discussed force stabilization 

initiatives, which will align soldier assignments with unit operational cycles for a 

period of 36 months, providing stability 

and predictability. In structuring the force, 

he said the reserve component and the 

active component must compliment each 

other. Restructuring the force resulted in 

a decrease in field artillery and air defense 

units and an increase in military police 

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 

units, improve readiness and deployability 

of units, and execute military to civilian 

conversions. This is the most significant 

Army restructuring in the last 50 years.

In order to win the war on terrorism, 

the Army must provide ready and capable 

forces. The Active Component (AC) will 

operate on a 3-year cycle (1 year in 3). The 

Army National Guard (ARNG) will operate on a 5-year cycle (1 year in 5) and the 

Reserve Component (RC) will operate on 

a 6-year cycle (1 year in 6). The Army must 

manage readiness and availability of force.

BG Durbin concluded by discussing the 

POM FY 06-11 Strategy. He stated the strategy addresses fact of life changes and considers the JPG and Combatant Commander 

Integrated Priotity Lists funding requirements. In addition, modularity programs 

will be resourced by supplemental funding. BG Durbin then discussed the Army 

resourcing status, in which it has an $11B 

resourcing shortfall. The goal is to eliminate 

the shortfall and buy back the program risk.

Ms. Monica Davis is a Financial 

Management Analyst Intern, in the Office 

of the Assistant Secretary of the Army, 

(Financial Management and Comptroller). 

Transformation Resource 

Strategy—Relevant and Ready 

Core Competencies

By Ms. Monica Davis

R E S O U R C E M A N A G E M E N T

Army Day Professional Development Institute
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.