Overview of:

Budget

Current Status As of: September 1, 2026 FY2026 Congress passed the FY2026 defense appropriations bill (part of a larger minibus) and the President signed it into law on February…

Budget Overview

Current Status

As of: September 1, 2026

FY2026

Congress passed the FY2026 defense appropriations bill (part of a larger minibus) and the President signed it into law on February 3, 2026. In addition to this, about $157 billion in defense reconciliation funding from the "One Big Beautiful Bill Act" or OBBBA (signed July 2025) is also available for obligation through FY2029.

FY2027

FY2027 begins on October 1. To avoid a lapse in funding on that date which would trigger a government shutdown, a stopgap continuing resolution (CR) bill that would extend federal funding to December 11 was passed and is awaiting the President's signature. This means programs will be funded at FY26 levels until a new spending bill is passed; the CR prohibits using funding to start new programs or for multiyear contracts.

Planning Programing Budgeting and Execution (PPBE)

Today PPBE is the standing process by which roughly a trillion dollars a year gets planned, argued over, appropriated, and spent, and it runs continuously, not once a year. The PPBS (as it was originally known) was created in the 1960s by then SECDEF Robert McNamara. In 2003 (the Rumsfeld era) OSD changed the name to PPBE to tack on Execution.

The version most people picture -- Plan, then Program, then Budget, then Execute, once a year, is wrong. At any given moment, four different fiscal years are each sitting in a different phase, simultaneously. In looking at the figure below you'll see the balance of calendar years and fiscal years. If you look at the red line for Jun 2022 for example, DoD will be managing four separate fiscal year budgets. It will be executing the FY22 budget, working with Congress on the FY23 budget, programming the FY24-28 (5-year FYDP) budget, and planning the FY25 budget.

The toggles below provide you insights into the PPBE budget process, the many colors of money (appropriations), and related budget terms, structures, and processes.

Funding Appropriations

The Constitution gives Congress the power of the purse, and Congress exercises it by appropriating money for specific purposes, specific time periods, and specific amounts. The term "colors of money" is the DoW's shorthand for the fact that these appropriated funds aren't fungible.

Source: Financial Management Regulation (FMR)

The RDT&E budget activities are broad categories reflecting different types of RDT&E efforts. The acquisition milestones identified in the definitions are established by Department of Defense Instruction 5000.02, “Operation of the Defense Acquisition System.”

Budget Activity 1, Basic Research.

Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. It includes all scientific study and experimentation directed toward increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental, and life sciences related to long-term national security needs. It is farsighted high payoff research that provides the basis for technological progress. Basic research may lead to:

Subsequent applied research and advanced technology developments in Defense-related technologies, and
New and improved military functional capabilities in areas such as communications, detection, tracking, surveillance, propulsion, mobility, guidance and control, navigation, energy conversion, materials and structures, and personnel support.

Program elements in this category involve pre-Milestone A efforts. These typically involve Technology Readiness Levels 1-2.

Budget Activity 2, Applied Research.

Applied research is systematic study to understand the means to meet a recognized and specific need. It is a systematic expansion and application of knowledge to develop useful materials, devices, and systems or methods. It may be oriented, ultimately, toward the design, development, and improvement of prototypes and new processes to meet general mission area requirements.

Applied research may translate promising basic research into solutions for broadly defined military needs, short of system development. This type of effort may vary from systematic mission-directed research beyond that in Budget Activity 1 to sophisticated breadboard hardware, study, programming and planning efforts that establish the initial feasibility and practicality of proposed solutions to technological challenges. It includes studies, investigations, and non-system specific technology efforts. The dominant characteristic is that applied research is directed toward general military needs with a view toward developing and evaluating the feasibility and practicality of proposed solutions and determining their parameters.

Applied Research precedes system specific technology investigations or development. Program control of the Applied Research program element is normally exercised by general level of effort. Program elements in this category involve pre-Milestone B efforts, also known as Concept and Technology Development phase tasks, such as concept exploration efforts and paper studies of alternative concepts for meeting a mission need.

These typically involve TRL 3.

Budget Activity 3, Advanced Technology Development (ATD).

This budget activity includes development of subsystems and components and efforts to integrate subsystems and components into system prototypes for field experiments and/or tests in a simulated environment. Budget Activity 3 includes concept and technology demonstrations of components and subsystems or system models. The models may be form, fit, and function prototypes or scaled models that serve the same demonstration purpose. The results of this type of effort are proof of technological feasibility and assessment of subsystem and component operability and producibility rather than the development of hardware for service use. Projects in this category have a direct relevance to identified military needs.

Advanced Technology Development demonstrates the general military utility or cost reduction potential of technology when applied to different types of military equipment or techniques. Program elements in this category involve pre-Milestone B efforts, such as system concept demonstration, joint and Service-specific experiments or Technology Demonstrations and generally have Technology Readiness Levels of 4, 5, or 6. (For further discussion on Technology Readiness Levels, see the Assistant Secretary of Defense for Research and Engineering's Technology Readiness Assessment (TRA) Guidance.)

Projects in this category do not necessarily lead to subsequent development or procurement phases, but should have the goal of moving out of Science and Technology (S&T) and into the acquisition process within the Future Years Defense Program (FYDP). Upon successful completion of projects that have military utility, the technology should be available for transition.

This typically involved TRL 4-5.

Budget Activity 4, Advanced Component Development and Prototypes (ACD&P).

Efforts necessary to evaluate integrated technologies, representative modes, or prototype systems in a high fidelity and realistic operating environment are funded in this budget activity. The ACD&P phase includes system specific efforts that help expedite technology transition from the laboratory to operational use. Emphasis is on proving component and subsystem maturity prior to integration in major and complex systems and may involve risk reduction initiatives.

Program elements in this category involve efforts prior to Milestone B and are referred to as advanced component development activities and include technology demonstrations. Completion of Technology Readiness Levels 6 and 7 should be achieved for major programs. Program control is exercised at the program and project level. A logical progression of program phases and development and/or production funding must be evident in the FYDP.

This typically involves TRL 6-7.

Budget Activity 5, System Development and Demonstration (SDD).

System Development and Demonstration (SDD) programs have passed Milestone B approval and are conducting engineering and manufacturing development tasks aimed at meeting validated requirements prior to full-rate production. This budget activity is characterized by major line item projects, and program control is exercised by review of individual programs and projects. Prototype performance is near or at planned operational system levels.

Characteristics of this budget activity involve mature system development, integration, demonstration to support Milestone C decisions, conducting live fire test and evaluation, and initial operational test and evaluation of production representative articles. A logical progression of program phases and development and production funding must be evident in the FYDP consistent with the Department's full funding policy.

This typically involves TRL 8-9.

Budget Activity 6, RDT&E Management Support.

This budget activity includes management support for research, development, test, and evaluation efforts and funds to sustain and/or modernize the installations or operations required for general research, development, test, and evaluation. Test ranges, military construction, maintenance support of laboratories, operation and maintenance of test aircraft and ships, and studies and analyses in support of the RDT&E program are funded in this budget activity.

Costs of laboratory personnel, either in-house or contractor operated, would be assigned to appropriate projects or as a line item in the Basic Research, Applied Research, or ATD program areas, as appropriate. Military construction costs directly related to major development programs are included in this budget activity.

Budget Activity 7, Operational System Development.

This budget activity includes development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year. All items are major line item projects that appear as RDT&E Costs of Weapon System Elements in other programs. Program control is exercised by review of individual projects.

Programs in this category involve systems that have received approval for Low Rate Initial Production (LRIP). A logical progression of program phases and development and production funding must be evident in the FYDP, consistent with the Department's full funding policy.

Budget Activity 8, Software and Digital Technology Pilot Programs

DOD added budget activity 8 in its FY2021 budget request to support software and digital technology pilot programs.

FY21 RDT&E by Budget Activity

Source: FMR

This is a generic term describing the process, planning, and contract under which the government may contract for the purchase of supplies or services for more than one, but not more than five, program years. Such a contract may provide that performance during the second and subsequent years of the contract is contingent upon the appropriation of funds, and may provide for a cancellation payment to be made to the contractor if such appropriations are not made. Multiyear procurements are budgeted and funded annually.

Statutory Requirements.

Section 2306b of title 10 of the United States Code and section 8008 of the annual DoD Appropriations Act, require that approval, initiation,
and execution of a multiyear contract follow certain guidelines.

MYP approval is predicated on:

Substantial Savings. The use of a multiyear contract will result in substantial savings of the total anticipated costs of carrying out the program through annual contracts.
Stability of Requirement. The minimum need for the property to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities.
Stability of Funding. There is a reasonable expectation that throughout the contemplated contract period, the head of the agency will request funding for the contract at the level required to avoid contract cancellation.
Stable Design. There is a stable design for the property to be acquired and the technical risks associated with such property are not excessive.
Realistic Cost Estimates. The estimates of the cost of the contract and the anticipated cost avoidance through the use of a multiyear contract are realistic.
National Security. Use of a multiyear contract will promote the national security of the United States.

In addition to the approval criteria, Congress requires that:

MYP contracts cannot be initiated for any system or component thereof if the value of the MYP contract would exceed $500.0 million unless specifically provided for in an Appropriations Act and an Act other than an Appropriations Act.
Proposed legislation and funding must accompany the MYP request in the President's budget submission; or the MYP request must be formally submitted as a budget amendment.
Funds appropriated for the purchase of an end item under a multiyear contract may only be used for a complete and usable end item.
Funds appropriated for advanced procurement under a multiyear contract may only be used to fund the long lead items necessary for a complete and usable end item planned and budgeted for a subsequent fiscal year. Advanced procurement funds may also be used for economic order quantity procurements in connection with a multi year contract when authorized by law.
Congressional defense committees must be notified at least 30 days in advance of a proposed contract award that: employs economic order quantity procurements in excess of $20.0 million in any one year of the contract; employs advance procurement leading to a multiyear procurement contract that employs economic order quantity procurement in excess of $20.0 million in any one year; or includes an unfunded contingent liability in excess of $20.0 million.
A multiyear procurement contract cannot be initiated for which the economic order quantity advance procurement is not funded at least to the limits of the government's liability.
A multiyear procurement contract must provide for production at not less than the minimum economic rate given the existing tooling and facilities.
A present value analysis must be used to determine the present value, or real worth, of the multiyear savings. Comparing the multiyear contracting approach to a conventional annual-buy approach derives the savings (see section 8008 for additional (new) requirements.
The Secretary of Defense must certify to the Congress that the support costs associated with the multiyear procurement with a value greater than $500 million are fully funded within the Future Years Defense Program (FYDP). The Secretary of Defense in a March 23, 1998 memorandum delegated this certification to the USD Comptroller. Components must submit the certification letter to the USD Comptroller at least 30 days prior to the anticipated contract award for approval, signature, and transmittal to the congressional defense committees.
Multiyear procurement contracts may provide for cancellation provisions to the extent that such provisions are necessary and in the best interests of the United States. The cancellation provisions may include consideration of both recurring and nonrecurring costs of the contractor associated with the production of the items to be delivered under the contract, but may not include recurring costs associated with unfunded units. The Agency Head and the USD(C) must approve the inclusion of recurring costs in a cancellation ceiling.
Before any multiyear procurement contract that contains a clause setting forth a cancellation ceiling in excess of $100.0 million may be awarded, the head of the agency concerned shall give written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the congressional defense committees. The contract may not be awarded until the end of a 30-day waiting period beginning on the date of such notification.
MYP contracts cannot be terminated without a 10-day prior notification to the congressional defense committees.

DoD Requirements.

The item should be technically mature, normally having completed RDT&E (including development testing, or equivalent) and Initial Operational, Test and Evaluation (IOT&E), with relatively few changes in item design anticipated. Deliveries of production items will indicate that the underlying technology is stable. This does not mean that changes will not occur but that the estimated cost of such changes is not anticipated to drive total costs beyond the proposed funding profile.
Estimates should be based on prior cost history for the same or similar items or proven cost estimating techniques. Normally, production assets should have been delivered in order to obtain actual costs for the comparisons (exceptions include satellites and ships).
With the exception of funding for economic order quantity (EOQ) procurement and advance procurement for long lead-time items as defined in section 010202, multiyear procurement contracts will comply with full funding. The full funding policy shall apply to each individual year of the multiyear contract. Multiyear contracts shall not be used as a vehicle for incrementally funding the items across the fiscal years covered by the contract. The production lots on the contract shall be the same as those described in the budget and advance procurement shall not be used to achieve a higher production rate for the end item. Funds shall not be “borrowed” from the amounts budgeted for items in the early fiscal years of a multiyear contract to begin work on items not budgeted until later fiscal years of the contract.
The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the Agency Head (FAR 17.106-3(e)) and the USD Comptroller.
An exception, to be approved by the USD Comptroller, is needed to structure a contract with an unfunded cancellation ceiling. Justification explaining why an unfunded cancellation ceiling is the chosen acquisition strategy should be provided. This justification should specify what costs comprise the unfunded cancellation ceiling and why these costs are not funded under the full funding policy.
In keeping with the DoD policy of not relying upon industry to finance the cost of Defense programs, even on a temporary basis, the use of unfunded cancellation ceilings on multiyear contracts shall be rare and shall not be unreasonably large relative to the total budget for any individual fiscal year.
Funds obligated for multiyear contracts must be sufficient to cover any potential termination costs. The costs of cancellation or termination may be paid from (1) appropriations originally available for the performance of the contract concerned; (2) appropriations currently available for procurement of the type of property concerned, and not otherwise obligated; or (3) funds appropriated for those payments.

The Future Years Defense Program (FYDP) is a projection of the forces, resources, and programs to support Department of Defense (DOD) operations. The FYDP is compiled every year and typically completed during the programming phase of the Planning, Programming, Budgeting, and Execution (PPBE) process. The projection is updated during the budgeting phase to reflect DOD's final funding decisions presented in the annual President's budget request.

The FYDP reflects the planned allocation of DOD resources to major strategic efforts over a multiyear period. According to the department's Future Years Defense Program (FYDP) Structure Handbook, the FYDP is intended in part to link DOD's internal review structure for programs with Congress's review structure for resources, including funding.

The FYDP projects DOD funding, manpower, and force structure needs over a five-year period. The projection is typically depicted with defense resources for the two previous fiscal years and force structure estimates for the three subsequent fiscal years. For example, the FY2021 FYDP reflects FY2019 and FY2020 appropriations, the current budget year estimate (FY2021) as part of the five year program (FY2021-FY2025), and the estimated force structure through FY2028.

Primarily used as a planning tool, the FYDP allows DOD and the military services to plan for anticipated changes to programs or priorities. Such changes may include reallocating funding for a major defense acquisition program transitioning from research and development to procurement; shifting funding from multiple programs to a larger, higher-priority procurement; or identifying funding for an emerging priority expected to require resourcing over a period of multiple years.

The FYDP can be viewed as a way to link DOD resources (or inputs) to programs (or outputs).As such, the FYDP can serve to compare or crosswalk the department's output focused internal review structure with the input-focused congressional review structure. The FYDP tracks the three broad categories of resources available to the DOD as its inputs:

Total Obligatory Authority (TOA) - Appropriated funding, in thousands of dollars
Manpower - Military end-strength and civilian fulltime equivalent work years
Forces - Identified as either items of equipment or combat units.

Source: CRS Defense Primer FYDP

Source: Financing the Fight, CSIS, Nov 2021

Appropriation of Funds	Budget execution begins when Congress passes and the president signs appropriations legislation making obligating authority-that is, the authority to enter into contracts or pay personnel-available to DoD. Appropriations occur each year, ideally by the beginning of the fiscal year. Appropriation legislation sets funding levels for DoD programs, projects, and activities. Appropriation legislation also imposes many restrictions on how DoD obligates funds. Authorizing legislation-for DoD, the legislation passed by the House and Senate Armed Services Committees-also plays a role in this step. Authorization legislation does not make funds available for obligation but can establish policies and impose restrictions on DoD's authority to use appropriated funds.
Apportionment	During this step, the Office of Management and Budget makes funds available for obligation at various periods of the fiscal year, usually for each quarter. Apportionment seeks to ensure that DoD does not obligate funds so quickly that it runs out of money. Apportionments also sometimes impose restrictions on obligations.
Funds Distribution	The DoD comptroller distributes apportioned obligating authority to the military services and agencies, which in turn suballocate that authority to the organizations that will actually use the funds. Funds distribution documents represent legally binding allocations of obligating authority and may include restrictions on how those funds can be used.
Obligation of Funds	Obligations represent legally binding agreements that can eventually generate disbursement of funds from the U.S. Treasury. Once contracts with private companies are signed, and as DoD employees are employed, funds must be obligated to pay for personnel, goods, and services. An obligation requires the government to pay once employees have performed their duties or contractors have provided goods and services that meet contractual requirements.
Reprogramming Actions	Because the process of budget formulation and budget execution can take years to complete, DoD needs the ability to meet changed requirements by moving funding from lower- to higher-priority programs during budget execution. Reprogramming actions, which often require congressional approval, provide DoD with limited ability to reduce funds for some programs and move an equal amount to other programs. Typically, DoD conducts one large reprogramming action each fiscal year, called an omnibus reprogramming, with formulation starting after the middle of the fiscal year and implementation extending into the summer of that year. Smaller reprogramming actions can occur throughout the budget execution period.
Disbursement of Funds	Once DoD has obligated funds on a contract and the contractor has delivered goods or services acceptable to the government, DoD directs the Department of the Treasury to make payments by disbursing funds. (In this paper, disbursement is sometimes referred to as “spending”; in other texts, it is sometimes called outlays.) Before making a payment, DoD requires an invoice from the contractor, verification that obligated funds are available to cover the disbursement, and a document stating that the correct goods or services have been received. Payments to employees also generate disbursements.
Evaluation and Audit	Throughout the budget execution year, commanders and managers evaluate how closely execution tracks to plans and make adjustments as needed. After the execution year ends, DoD completes an audit of its financial statements. For selected programs, DoD uses program audits and other techniques to evaluate how well funds have been used to meet defense needs. Evaluation and audit are beyond the scope of this paper but remain on this list because they are sometimes considered to be part of the budget execution process.

Source: DOD FMR Chapter 6

Reprogramming Actions Requiring Written Congressional Approval.
Two types of reprogramming actions will be used to request the prior approval of the congressional defense committees. Both requests are submitted using DD 1415-1, Prior Approval. The first type is for specific stand-alone requirements. The second type is for the annual Omnibus reprogramming action that was established in FY 1991 to streamline the reprogramming process for the congressional committees and the Department. With the exception of a DD 1415 that uses section 104(d) authority (paragraph 060601C), the USD(C) submits all reprogramming actions to the congressional defense committees. The Department is expressly prohibited from preparing or forwarding to the Congress a prior approval reprogramming action except “for higher priority items, based on unforeseen military requirements, than those for which originally appropriated and in no case where the item for which reprogramming is requested has been denied by the Congress.” Reprogramming actions
requiring prior approval of the congressional committees (DD 1415-1) involve the application of funds which:

Increase the procurement quantity of a major end item, such as an individual aircraft, missile, naval vessel, tracked combat vehicle, and other weapon or torpedo and related support equipment for which funds are authorized. (In such cases where specific congressional language is provided allowing for additional quantities to be procured within appropriated funds, increases to quantities for major end items shall be submitted to the USD(C) for approval as a DD 1415-3, Internal Reprogramming action.)
Affect an item that is known to be or has been designated as a matter of special interest to one or more of the congressional committees. In rare instances, when funds from special interest items are to be reprogrammed from an existing program, subprogram, project, or subproject to another program, subprogram, project, or subproject within the same procurement line item or program element, letter notification to the congressional committees may be made. Letters shall be submitted to the congressional committees by the DoD Component involved only after advance coordination with the applicable OUSD(C) P/B Directorate.
Use general transfer authority. Any movement of funds between appropriations or legal subdivisions requires transfer authority. Unless specific transfer
authority is provided elsewhere, general transfer authority, which is provided in annual DoD Appropriations and Authorization Acts, must be used. Any movement of funds from supplemental appropriations also uses the general transfer authority provided in the annual DoD Appropriations Act. Section 2214 of Title 10 of the United States Code (U.S.C.) and the annual Appropriations Act provide limitations on programs for which general transfer authority may be used. Such authority may not be used except to provide funds for a higher priority item, based on unforeseen military requirements, than the items for which funds were originally appropriated, and may not be used if the Congress has denied funds for the item. Exceptions to the use of a DD 1415-1, Prior Approval Reprogramming action, may apply if reclassification of programs to the proper appropriation for execution is required (i.e., these actions do not change the purpose for which the funds were originally appropriated). (See paragraph 060402A).
Exceed thresholds agreed upon between the committees and the Department, as follows:

Military Personnel	A cumulative increase of $10 million or more in a budget activity.
Operation and Maintenance	A cumulative increase of $15 million or more in a budget activity. When the congressional committees impose reprogramming thresholds on specific subactivity group categories, these threshold amounts are separately identified on the DD 1414, Base for Reprogramming Actions, and reprogramming restrictions apply.
Procurement	A procurement program is defined by the items included in the DD 1414, Base for Reprogramming Actions. Increases. Cumulative increases for any program year of $10 million or more (i.e., cumulative over the entire obligational availability of a specific year appropriation). Decreases. Cumulative decreases for any program year of $10 million or more, or 20 percent of the appropriated amount (inclusive of supplemental appropriations and rescissions), whichever is greater.
Research, Development, Test, and Evaluation (RDT&E)	A research program is defined by the items included in the DD 1414, Base for Reprogramming Actions. Increases. Cumulative increases for any program year of $4 million or more in an existing program element (i.e., cumulative over the entire obligational availability of a specific year appropriation). Decreases. Cumulative decreases for any program year of $4 million or more, or 20 percent of the appropriated amount (inclusive of supplemental appropriations and rescissions), whichever is greater.

Source: DOD FMR Chapter 6

A program, subprogram, modification, project, or subproject not previously justified by the Department and funded by the Congress through the normal budget process is considered to be a new start. Congressional committees discourage the use of the reprogramming process to initiate programs. Except for extraordinary situations, consideration will not be given new start reprogramming requests for which the follow-on funding is not budgeted or programmed.

Funding for new starts may not be obligated without prior approval or written notification (see paragraphs 060403 and 060404). A program effort in one year in the Procurement and RDT&E accounts may be extended into a subsequent fiscal year without constituting a new start. This is considered an extension of the effort initiated in the prior year program, and could include a skip year for execution purposes. When this occurs, the program should be footnoted as such on the DD 1416, Report of Programs, with sufficient justification for the extension. Due to the characteristics of Military Personnel and Operation and Maintenance programs, new starts seldom occur in those appropriations. New starts in these appropriations would be significant new programs, efforts, or activities that have not been explicitly justified to the Congress in budget justification material. An example would be the establishment of a Pacific Distribution System. In some instances, a letter notification may be appropriate in these circumstances but only with the explicit approval of the USD(C). A prior approval (DD 1415-1) is required if the action involves the following:

Establishment of a new procurement line item, procurement program, procurement subprogram, modification, RDT&E program element, RDT&E project, or
RDT&E subproject with first-year costs of $2 million or more during any program year (see paragraph 060403B for programs with costs less than $2 million and paragraph 060403C for safety-related modifications whose total cost is less than $10 million).
New starts in a procurement program, procurement subprogram, modification, RDT&E program element, RDT&E project, or RDT&E subproject with estimated
total costs (all appropriations) of $10 million or more within the first 3 years.
The DD 1415-1 should include a brief description of the total program being initiated, total program costs, proposed funding and procurement quantities by
year, enough background information to demonstrate that the item is ready for research or procurement and an explanation of how subsequent years' funding will be provided, if the budget line is not included in the budget. The Department will not approve new starts that do not have budgeted or programmed follow-on funding. The DD 1415-1 should also explain why the source funds are no longer needed and any impact. See paragraph 060404 for failure to provide proper notification.

The FY22 NDAA Section 1004 establishes a PPBE Commission

The Commission shall be composed of 14 civilian individuals not employed by the Federal Government who are recognized experts and have relevant professional experience one or more of the following:

Matters relating to the planning, programming, budgeting, and execution process of the Department of Defense.
Innovative budgeting and resource allocation methods of the private sector.
Iterative design and acquisition process.
Budget or program execution data analysis

PURPOSE.-The purpose of the Commission is to-

examine the effectiveness of the planning, programming, budgeting, and execution process and adjacent practices of the Department of Defense, particularly with respect to facilitating defense modernization;
consider potential alternatives to such process and practices to maximize the ability of the Department of Defense to respond in a timely manner to current and future threats; and
make legislative and policy recommendations to improve such process and practices in order +to field the operational capabilities necessary to out24 pace near-peer competitors, provide data and analytical insight, and support an integrated budget that is aligned with strategic defense objectives.

SCOPE AND DUTIES.-The Commission shall perform the following duties:

Compare the planning, programming, budgeting, and execution process of the Department of Defense, including the development and production of documents including the Defense Planning Guidance (described in section 113(g) of title 10, United
10 States Code), the Program Objective Memorandum, and the Budget Estimate Submission, with similar processes of private industry, other Federal agencies, and other countries.
Conduct a comprehensive assessment of the efficacy and efficiency of all phases and aspects of the planning, programming, budgeting, and execution process, which shall include an assessment of-
1. the roles of Department officials and the timelines to complete each such phase or aspect;
2. the structure of the budget of Department of Defense, including the effectiveness of categorizing the budget by program, appropriations account, major force program, budget activity, and line item, and whether this structure supports modern warfighting requirements for speed, agility, iterative development, testing, and fielding;
3. a review of how the process supports joint efforts, capability and platform lifecycles, and transitioning technologies to production;
4. the timelines, mechanisms, and systems for presenting and justifying the budget of Department of Defense, monitoring program execution and Department of Defense budget execution, and developing requirements and performance metrics;
5. a review of the financial management systems of the Department of Defense, including policies, procedures, past and planned in16 vestments, and recommendations related to re17 placing, modifying, and improving such systems to ensure that such systems and related processes of the Department result in-
  1. effective internal controls;
  2. the ability to achieve auditable financial statements; and
  3. the ability to meet other financial management and operational needs; and
6. a review of budgeting methodologies and strategies of near-peer competitors to understand if and how such competitors can address current and future threats more or less successfully than the United States.
Develop and propose recommendations to improve the effectiveness of the planning, programming, budgeting, and execution (PPBE) process.

PPBE Commissioners

Chair: Bob Hale; Vice Chair: Ellen Lord
Commissioners: Jonathan Burks, Susan Davis, Lisa Disbrow, Eric Fanning, Peter Levine, Jamie Morin, David Norquist, Diem Salmon, Jennifer Santos, Arun Seraphin, Raj Shah, and John Whitley.

The PPBE Commission published their Interim Report in Aug 2023.

Potential Recommendations Requiring Stakeholder Feedback

Promote Innovation and Adaptability

Colors of money, a different approach*
Modify thresholds for Below Threshold Reprogrammings*
Modify internal DoD reprogramming requirements*
Modify availability of appropriations*
Mitigate problems caused by Continuing Resolutions*
RDT&E Budget Activities consolidation

Improve Alignment of Budgets to Strategy

Transform the budget structure*
Strengthen the Defense Planning Guidance*
Create continuous planning, analysis, & operational metrics to inform all PPBE phases

Improve the Capability of the DoD Programming and Budgeting Workforce

Increase staffing levels for programming and budgeting workforce

Actions That Can Be Implemented Now

Improve PPBE-related relationships between DoD and Congress
DoD midyear update briefing to Congress*
Improve training for DoD liaisons to Congress
Restructure budget justification books
Improve training for preparation of budget justification materials

Promote Innovation and Adaptability

Systematic review and consolidation of budget line items*
Systematically review and update PPBE-related Guidance Documents, including the FMR

Improve Alignment of Budgets to Strategy

Improve understanding of private sector practices

Improve PPBE Business Systems and Data Analytics

Accelerate OSD Comptroller and CAPE IT system consolidation*
Establish enclaves for DoD-Congressional information sharing*
Annual Report on the Department's strategy for consolidation of DoD PPBE business systems
Expand PPBE analytics via ADVANA

Improve the Capability of the DoD Programming and Budgeting Workforce

Improve recruiting and retention of PPBE personnel
Streamline processes and improve analytic capabilities to reduce workload

DoD Implementation Plan from PPBE Commission Interim Report Dec 2023

DoD PPBE Reform Implementation Report Jan 2025

As part of the FY26 President's Budget Request, the DoW submitted the FY26 President's Budget Activities and Proposals in Support of PPBE Reform and Other Budget Execution Flexibilities.

It is a strategic imperative for the Department of Defense (DoD) to improve speed, flexibility, and execution through cutting red tape and making the best use of taxpayer dollars. This includes modernizing and making changes to the Planning, Programming, Budgeting, and Execution (PPBE) process. The rate of technological change and the national security threat posed by our adversaries demands we respond quickly and effectively to emergent requirements and opportunities to adopt innovative solutions and absorb ongoing technology refresh and insertion, all at the speed of relevance.

As part of the Fiscal Year (FY) 2026 President's Budget, the DoD is pursuing reforms to increase flexibility in resourcing and acquisition authorities, eliminate and replace antiquated and inefficient systems and processes with modern analytical ones, strengthen governance for DoD business systems that directly affect passing an audit by 2028, and improve and strengthen our communications with Congress. This document provides an overview of those PPBE reform and other budget flexibility
initiatives as well as an overview of select non-legislative reforms that will strengthen the relationship between DoD and Congress, support audit readiness, and enable execution and acquisition agility. By streamlining congressional oversight, reducing fiscal
inefficiencies, and accelerating modernization investments, these reforms ensure more effective defense resource execution, and will facilitate delivering the American warfighter the capabilities needed to remain the strongest and most lethal fighting force in the world.

Today's complex national security environment and the relentless pace of innovation requires that all our processes evolve to fill critical capability gaps with the focus, speed, and scale needed for strategic effect.

The Department is grateful to Congress for their interest and dedication to improving the Department's PPBE processes and is committed to continuous engagement and collaboration on these efforts. We look forward to working with all stakeholders and Congress to enact these changes and build a fiscally agile, operationally responsive defense resourcing enterprise poised to achieve peace through strength while restoring the warrior ethos, rebuilding our military, and reestablishing deterrence.