The Difference between a Program and Execution
I'm a retired Navy and OSD senior budget analyst and branch head who worked for the Assistant Secretary of the Navy (Financial Management) and the Under Secretary of Defense (Comptroller). I've handled hundreds of program budgets across almost all appropriations (R&D, procurement, military construction, family housing, operation and maintenance, military personnel, base closure, contingency operations). I've worked with OMB, GAO, CRS and occasionally Congressional committee staff. After retirement I was asked back to Navy to rewrite and expand their online Budget Execution course and wrote a new Budget Formulation course. After that, as a contractor, I taught Planning, Programming, Budgeting and Execution (PPBE) to the Navy's OPNAV staff on a monthly basis for three years. I occasionally give PPBE training to executive leadership programs. So, I am surprised at the confusing responses to Sam Lee's request for help in explaining the difference between budget execution and the program side of budget and finance to non-budget/finance people.
Sam, you are correct an explanation should be easy, but your request mixes apples and oranges. Programs and their budgets are really two different things. So let's walk through this forest and separate the two, but showing how they relate.
First, after an assessment of challenges and threats, a whole-of-government National Security Strategy (NSS) is developed and articulated. The DoD then formulates a National Defense Strategy (NDS), highlighting specific areas DoD needs to focus on, occasionally defining specific forces (program with a capital P) with which to perform or "execute" (with a capital E) those strategies. Numerous programs (with a capital P) supporting that strategy are developed. Execution (with a capital E) can be defined as the performance of all the activities necessary to achieve the goals and objectives supporting that strategy and specific programs (with a capital P). At this level, a Program may be providing attack aircraft (fighter squadron) or fielding ground units (brigade combat team). That Program will consist of everything needed to field and support that Program. There are four kinds of primary support for every Program: people, facilities, equipment and everything else.
Money is required to finance all those support elements, and that money is called a Program Budget. The Program Budget spans from a program's inception to its conclusion. Most programs continue forever, like personnel and base operations. These are called on-and-on programs. Other programs have defined, but sometimes long duration, life expectancies, such as specific acquisition programs (development, procurement, sustainment).
Funding for National Defense programs must conform to two articles in the United States Constitution. First, like all other federal programs, all programs must be authorized. The House and Senate Armed Services committees oversee this approval. Second, all money must be appropriated. The House and Senate Appropriations committees perform this function on an annual basis.
Programs (with a capital P) are broken into categories or types of funding. While a program manager may find it easiest to manage a single pot of money, it's easier for Congress (and everyone in DoD) to segregate specific types of funding into specific categories, like personnel, R&D, procurement, operation and maintenance, construction, housing, etc. These "shopping list" categories form the specific appropriations Congress reviews in its annual budget deliberation process. These specific categories also result in specific Congressional subcommittees to review each category.
While Programs are funded/financed throughout their life expectancies, ALL funding is approved annually. Each year's funding request to Congress (the President's Budget Request) is considered that year's program budget (with a small p). Most funding is appropriated for one year (what I call one-year's-worth-of-money-for-one-year's-worth-of-effort) and is replenished each year. This is not to be confused with what's called an appropriation's fiscal year availability, which is the legal authority or permission to obligate funding across subsequent fiscal years. That authority is extended because of Congress' need to see all costs for a given fiscal year's program budget (called the full-funding policy, and mainly includes R&D and procurement programs) displayed in a single fiscal year, regardless of when spent. Once money is appropriated, it starts execution (with a small e).
Execution (with a small e) tracks the real-time cash-flow (a word that you won't see in the DoD Financial Management Regulation), usually on a monthly basis, of how a given fiscal year's program budget is doing against its game plan. That annual game plan is called an obligation phasing plan (which tracks the program's legal liabilities, or "obligations" against the government) to monitor the performance of program activities (payroll, procurements, contracts, utilities, etc.) for a given fiscal year. Execution for a program monitors the receipt of goods and services. Execution of a program budget monitors first the obligation of funds and then second the expenditures supporting that program. While obligations are the primary tracking tool, expenditures are by far the more accurate measure of a program's performance.
While annual program budgets when prepared are estimates, once funding is appropriated, execution of those budgets may differ depending on circumstances. Staffing shortages, contract delays, labor strikes, supply delays, R&D technical difficulties, testing failures, delays in receiving funding from Congress, many things may change that annual obligation phasing plan. These delays in spending usually create spillover impacts into a succeeding fiscal year(s), requiring changes to that succeeding year plan.
Because of the appropriation rules-and the need to continue to execute programs in real-time-realignments of funding triggered by various types of delays and changes are permitted by Congress rather than waiting to adjust in a subsequent fiscal year. These changes in plan are accommodated through reprogrammings, both below-threshold (specific amounts DoD can initiate) and above-threshold (those requiring prior Congressional approval).
Execution (with a small p) across all programs is tracked and monitored proactively because, under existing rules, funding can be realigned between program budgets with funding shortfalls (more R&D, contracts higher than estimates, personnel overtime, emergent requirements, etc.) paid from programs experiencing "under-execution" (staff shortages, contract delays, costs less than estimates, cancelled programs, etc.).
It's all pretty messy, but you have to again remember each year's program budget is an estimate and reality doesn't adhere to anyone's game plans. Once you get the knack, you can manage programs pretty well both across their life expectancies and on an annual basis. Hope this helps.
John O. King